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GAO Report Identifies Cost-Saving Strategies for Contracting for Services

Press Release

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Date:
Location: Washington, DC

Today, Senate Homeland Security and Governmental Affairs Ranking Member Tom Coburn, M.D. (R-OK), Chairman Tom Carper (D-DE), and Senate Susan Collins (R-ME) highlighted a new report from the Government Accountability Office (GAO) entitled, Strategic Sourcing: Leading Commercial Practices Can Help Federal Agencies Increase Savings When Acquiring Services. The report highlights a number of best practices exercised by private corporations that can be applied to how the federal government contracts for services. The GAO examined practices from seven large companies, along with an industry group and consulting firm, to identify leading procedures used to procure services. The GAO found these companies buy many of the same services as the federal government and identified strategies the federal government can implement including flexible, tailored buying strategies that rely on detailed data to drive savings. In fiscal year 2012, the federal government spent $307 billion on contracts for such services including facilities management, engineering, and information technology services. GAO estimated conservatively that federal agencies could achieve savings of $12 billion dollars by implementing these strategies.

"Today's GAO report shows the federal government can learn immensely from procurement practices used by their private sector counterparts," Dr. Coburnsaid. "Private sector companies focus on efficient and effective practices to bring their customers the best products at the lowest prices. The federal government should focus on their operations in a similar manner. With $307 billion in taxpayer funds spend in FY 2012 on contracts for services purchased by the federal government, it is imperative agencies use cost-effective methods and clear metrics while ensuring contracts are thoroughly competed and prudently managed. OMB should work with agencies to heed GAO's advice on mirroring procurement practices of private companies as part of its ongoing efforts to make much needed progress on strategic sourcing initiatives."

"Today's report from the Government Accountability Office (GAO) provides some important lessons for the federal government from some of the most successful U.S. companies," said Chairman Carper. "Given our nation's current budget constraints, we have to carefully scrutinize how we spend each and every taxpayer dollar to ensure that we're spending it in the most cost-efficient way possible. One way we can do this is by adopting some of the best practices used successfully in the private sector. Private companies are able to save money by examining their purchases on a company-wide basis and developing company-wide strategies for getting the most for their money. Unfortunately, far too often our federal contracting officers pay one price for a product or service without knowing that another federal agency -- or even another part of the same agency -- is paying a completely different price for the same good or service. Our government should use its power as the nation's largest purchaser to secure the best prices and ensure that taxpayers are getting the most bang for their buck. We can do this by increasing communication between agencies and taking the recommendations in this report to heart."

"This GAO report makes clear that there are lessons to be learned from the private sector in terms of maximizing returns and efficiencies in the strategic sourcing of services, said Senator Collins. "We must examine what has worked in the private sector in the strategic sourcing of services and apply these lessons in the Federal government. If the Federal government were to save just four percent of spending on services by strategically sourcing services, the government could have saved $12 billion of the $307 billion spent in acquiring services in FY 2012. OMB needs to ensure that we are effectively leveraging the buying power of the Federal government in the acquisition of services. We need to leverage the vast buying power of the federal government."


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