STRATEGIC SOURCING

Improved and Expanded 

Use Could Provide 

Procurement Savings for 

Federal Information 

Technology

Statement of Cristina Chaplain, Director 

Acquisition and Sourcing Management 

Testimony 

Before the Committee on Oversight and 

Government Reform, House of 

Representatives

For Release on Delivery 

Expected at 9:30 a.m. EST

Wednesday, February 27, 2013

GAO-13-408T 

United States Government Accountability Office

GAO 
United States Government Accountability Office

Highlights of GAO-13-408T a testimony before 

the Committee on Oversight and Government 

Reform, U.S. House of Representatives 

February 27, 2013 

STRATEGIC SOURCING

Improved and Expanded Use Could Provide 

Procurement Savings for Federal Information 

Technology

Why GAO Did This Study

Federal agencies plan to spend about 

$20 billion on development and 

acquisition of IT investments in fiscal 

year 2013, but GAO’s prior work has 

found that IT projects too frequently 

incur cost overruns and result in 

duplicate systems. The proposed 

FITARA bill seeks to implement 

important reforms to maximize the 

return on investment for IT services 

and supplies. For many years, GAO 

has reported that the government is 

not fully leveraging its aggregate 

buying power and found that strategic 

sourcing, a process that moves a 

company away from numerous 

individual procurements to a broader 

aggregate approach, enabled 

companies to achieve savings of 10 to 

20 percent. In 2012, GAO reported that 

expanded agency use of strategic 

sourcing could save billions in federal 

procurement costs. 

GAO was asked to testify on the value 

of strategic sourcing as an important 

tool to achieve greater savings and 

efficiencies in information technology 

and other procurements. This testimony 

is based largely on GAO’s September 

2012 report on strategic sourcing as 

well as a body of work on IT 

management and acquisition practices. 

What GAO Recommends

GAO is not making any new 

recommendations in this testimony. 

GAO has issued recommendations to 

OMB and agencies on key aspects of 

strategic sourcing and IT management

in the past. OMB and agencies 

concurred with the recommendations, 

and are in the process of implementing 

them.

What GAO Found

In September 2012, GAO reported that many large procurement agencies were 

in the early stages of implementing strategic sourcing and had achieved limited 

results. For example, in fiscal year 2011, the Departments of Defense, Homeland 

Security, Energy, and Veterans Affairs accounted for 80 percent of the $537 

billion in federal procurement spending, but reported managing about 5 percent 

of that spending, or $25.8 billion, through strategic sourcing efforts. These 

agencies reported savings of $1.8 billion—less than one-half of 1 percent of

federal procurement spending. Further, most of these agencies’ strategic 

sourcing efforts did not address their highest spending areas—including some 

information technology (IT)-related services—which may provide opportunities for 

additional savings. While strategic sourcing may not be suitable for all 

procurements, leading companies strategically manage about 90 percent of their 

procurements and report annual savings of 10 percent or more. When strategic 

sourcing contracts were used, federal agencies generally reported achieving 

savings between 5 and 20 percent. 

Agencies also continue to face challenges in obtaining and analyzing reliable and 

detailed data on spending, securing leadership support for strategic sourcing, 

and applying this approach to acquiring services. In 2012, GAO reported that 

agencies and federal strategic sourcing programs generally continued to rely on 

the government’s current system for tracking contracting information data, and 

noted numerous deficiencies with this data for the purposes of conducting 

strategic sourcing research. GAO also found that most of the reviewed agencies 

were challenged by a lack of leadership commitment to strategic sourcing,

though improvements were under way. Additionally, officials reported that they 

have been reluctant to strategically source services (as opposed to goods) for a 

variety of reasons, such as difficulty in standardizing requirements. However, 

leading companies GAO spoke with have focused their efforts on services, such 

as telecommunications and IT services, over the past 5 to 7 years because of the 

growth in spending in that area, and have achieved significant savings. Leading 

companies employ more sophisticated strategic sourcing techniques, using 

spend analyses and in-depth market research to tailor their acquisition 

approaches to the complexity and availability of the particular good or service 

they are acquiring. 

Agencies and the Office of Management and Budget (OMB) have taken some

recent actions to increase the use of strategic sourcing and improve IT 

management. For example, in 2012, OMB called for agencies to strategically 

source at least two new products or services in 2013 and 2014 with at least one

to target an IT commodity or service. To increase transparency and visibility into 

agencies' potentially duplicative IT investments, OMB required in March 2012

that agencies conduct IT portfolio reviews to idenfity duplicative IT investments.

Strategic sourcing is not the only tool to improve IT acquisitions. GAO has 

previously reported on the value of matching requirements to resources, ensuring 

cost estimates are complete and accurate, and empowering program managers, 

among other practices, in preventing the types of acquisition problems the 

proposed Federal Information Technology Acquisition Rerform Act (FITARA)

would address. 

View GAO-13-408T. For more information, 

contact Cristina Chaplain at (202) 512-4841 or 

chaplainc@gao.gov. 
Page 1 GAO-13-408T 

United States Government Accountability Office

Washington, DC 20548

Chairman Issa, Ranking Member Cummings, and

Members of the Committee:

I am pleased to be here today to discuss the proposed Federal 

Information Technology Acquisition Reform Act (FITARA) bill provisions 

and the value of strategic sourcing as an important tool to achieve greater 

savings and efficiencies in information technology and other 

procurements. Given the increasing fiscal pressures facing the federal 

government, there has been a renewed focus on maximizing efficiencies 

in the procurement process to achieve cost savings. In prior reports, we 

have found that because procurement within the federal government is 

generally decentralized, the government is not fully leveraging its 

aggregate buying power to obtain the most advantageous terms and 

conditions for its procurements, and could benefit from further adoption of 

a process known as strategic sourcing. This process, used by leading 

companies, involves a range of activities, from using spend analysis to 

develop a better picture of how much an agency is spending on goods 

and services, to taking an enterprisewide approach that moves an 

organization away from numerous individual procurements to a broader 

aggregate approach. Our prior work has found that such an approach can 

help agencies leverage their buying power, reduce costs, and better 

manage suppliers.1

As FITARA recognizes, federal information technology (IT) investments 

could benefit from adoption of strategic sourcing practices. Federal 

agencies plan to spend about $20 billion on development and acquisition 

of IT investments in fiscal year 2013, but our prior work has found that IT 

projects too frequently incur cost overruns and result in duplicate systems 

while contributing little to mission-related outcomes.

While strategic sourcing may not be suitable for all 

procurements, we have found that leading companies generally 

strategically manage about 90 percent of their procurement spending and

achieve savings of 10 to 20 percent of total procurement costs.

2

 

1

GAO, Strategic Sourcing: Improved and Expanded Use Could Save Billions in Annual 

Procurement Costs, 

The proposed 

GAO-12-919 (Washington, D.C.: Sept. 20, 2012).

2

GAO, Information Technology: OMB and Agencies Need to Fully Implement Major 

Initiatives to Save Billions of Dollars, GAO-13-297T (Washington, D.C.: Jan. 22, 2013); 

and Information Technology: Better Informed Decision Making Needed on Navy’s Next 

Generation Enterprise Network Acquisition, GAO-11-150 (Washington, D.C.: 

Mar. 11, 2011). 

 
 

Page 2 GAO-13-408T 

FITARA bill also recognizes that it is vitally important for agencies to 

conduct meaningful spend analyses of IT procurement data to identify 

unnecessary duplication of contracts and where possible, aggregate 

demand to get the best price for commonly used IT products and 

services. The bill also stresses the importance of greater Chief 

Information Officer (CIO) accountability and authority, and the need to 

establish centralized IT centers to manage an optimal mix of 

governmentwide IT contracts.

You asked us to testify on the value of strategic sourcing as an important 

tool to achieve greater savings and efficiencies in information technology 

and other procurements. In September 2012, we issued a report to this 

committee on selected federal agencies’ use of strategic sourcing 

practices, and found that many large procurement agencies were in the 

early stages of implementing strategic sourcing and had difficulties 

collecting and analyzing procurement data, as well as obtaining 

leadership support to achieve savings and efficiencies on par with leading 

companies.3

GAO has identified other acquisition leading practices that are relevant to 

the proposed FITARA. In particular, our visits to leading companies over 

the past decade have repeatedly confirmed that acquisition success 

hinges on practices such as: 

For example, in fiscal year 2011, the Departments of 

Defense (DOD), Homeland Security (DHS), Energy, and Veterans Affairs 

(VA) accounted for 80 percent of the $537 billion in federal procurement 

spending, but reported managing about 5 percent of that spending, or 

$25.8 billion, through strategic sourcing efforts. These agencies reported 

savings of $1.8 billion—less than one-half of one percent of procurement 

spending. For all categories of spending, including information 

technology, agencies we reviewed faced challenges to collect and 

analyze procurement spending data needed to identify strategic sourcing 

opportunities, some struggled to obtain senior leadership support, and 

once strategic sourcing initiatives were implemented, most agencies did 

not monitor progress against established goals to achieve savings and 

other benefits. To successfully implement the proposed FITARA and 

achieve its intended results, it is important for agencies to overcome 

these challenges.

 

3

GAO-12-919. 
 

Page 3 GAO-13-408T 

• prioritizing investments so that projects can be fully funded and it 

is clear where projects stand in relation to the overall portfolio; 

• researching and defining requirements before programs are 

started and limiting changes after they are started;

• matching resources to requirements, that is time, money, 

technology and people, before undertaking a new development 

effort;

• using quantifiable data and demonstrable knowledge to make 

go/no-go decisions, covering critical facets of the program such as 

cost, schedule, technology readiness, and relationships with 

suppliers;

• ensuring cost estimates are complete, accurate, and updated 

regularly; and

• empowering program managers to make decisions on the 

direction of the program and to resolve problems and implement 

solutions as well as holding program managers accountable for 

their choices.

These and other leading practices we have identified can be employed on 

IT projects as well as any other complex, sophisticated government 

technology program. 

This testimony is based largely on GAO’s September 2012 report on 

strategic sourcing, as well as a body of work on IT management and 

acquisition practices. All work on which this testimony is based was 

performed in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objective.

GAO has been assessing strategic sourcing and the potential value of 

applying these techniques to federal acquisitions for more than a decade. 

In 2002, we studied leading companies that made a number of dramatic 

changes to the way they managed procurement and found that these 

changes, in turn, resulted in significant cost savings and other 

Background
 

Page 4 GAO-13-408T 

improvements. In 2004, we identified four broad principles that were 

critical to successfully carrying out the companies’ strategic approach to 

procuring both products and services.

Figure 1: Broad Principles and Practices of Leading Companies’ Strategic Approach

A strategic sourcing effort begins with an opportunity assessment—an 

analysis of spending and the identification of products and services for 

which strategic sourcing should be implemented. Spend analysis provides 

knowledge about how much is being spent for which products and 

services, who the buyers are, who the suppliers are, and where the 

opportunities are for leveraged buying and other tactics to save money 

and improve performance. Data on spending are analyzed on a continual 

basis to support decisions on strategic sourcing and procurement 

management in areas such as cost cutting, streamlining operations, and 

reducing the number of suppliers.
 

Page 5 GAO-13-408T 

Once a product or service is selected for strategic sourcing, a 

standardized process is followed to develop, implement, and manage the 

sourcing strategy for that product or service. See figure 2 for key steps in 

the strategic sourcing process.

Figure 2: Overview of the Strategic Sourcing Process

Recognizing the benefits of strategic sourcing, the Office of Management 

and Budget (OMB) issued a memorandum in 2005 that implemented 

strategic sourcing practices.4 Agencies were directed to develop and 

implement strategic sourcing efforts based on the results of spend 

analyses.5

 

4

Office of Management and Budget, Memorandum for Chief Acquisition Officers, Chief 

Financial Officers, and Chief Information Officers on Implementing Strategic Sourcing 

(Washington, D.C.: 2005). 

In addition to individual agency efforts, a governmentwide 

strategic sourcing program—known as the Federal Strategic Sourcing 

Initiative (FSSI)—was established in 2005. FSSI was created to address 

governmentwide opportunities to strategically source commonly 

purchased products and services and eliminate duplication of efforts 

5

“Spend analysis” is a tool that provides knowledge about who are the buyers, who are 

the suppliers, how much is being spent for what goods and services, and where are the 

opportunities to leverage buying power. Private sector companies are using spend 

analysis as a foundation for employing a strategic approach to procurement.
 

Page 6 GAO-13-408T 

across agencies. The FSSI mission is to encourage agencies to 

aggregate requirements, streamline processes and coordinate purchases 

of like products and services to leverage spending to the maximum extent 

possible. At the time of our 2012 report, four FSSI efforts were ongoing 

and three were planned. The FSSI website indicates that as of February 

1, 2013, that status is unchanged. Table 1 describes the four 

implemented governmentwide strategic sourcing initiatives.

Table 1: Implemented Federal Strategic Sourcing Initiatives (FSSI), Fiscal Year 2011

Initiative Description

Date 

implemented

Governmentwide 

spending on 

applicable products 

and services

Spending 

through 

strategic 

sourcing

Savings reported 

by FSSI Program 

Management

Office 

Office Supplies -

Second Generation 

Offers a catalog of 

consumable office 

supplies

June 2010 $1.6 billion $202 million $24 million

Domestic Delivery 

Services – Second 

Generation 

Offers delivery service 

for small packages

August 2009 $505 million $109 million $31 million

Telecommunications 

Expense Management 

Services 

Optimizes wireless rate 

plans, reduces billing 

errors, and increases 

visibility into spending

January 2008 $100 million $28 million $5 million

Print Management Reduces equipment 

needed for printing, 

copying, scanning, and 

faxing, and includes 

print behavior and 

continuous process 

improvement 

components

September 2011 Spending not yet under 

management in fiscal 

year 2011

Spending not yet 

under 

management in 

fiscal year 2011

Spending not yet 

under 

management in 

fiscal year 2011

Source: GAO analysis of GSA data

Three additional initiatives are planned as of February 2013. SmartBUY is 

an existing federal procurement vehicle that was started in 2003 and 

leverages the government’s buying power to reduce the cost of 

commercial off-the-shelf software and services. As of the end of fiscal 

year 2011, SmartBUY was not classified as an FSSI effort, but the 

Strategic Sourcing Working Group in June 2012 formally accepted it as 

an FSSI. The FSSI Program Management Office planned that going 

forward, the FSSI SmartBUY will develop strategies to address as many 

large software publishers as possible. A second planned initiative targets 

wireless rate plans and devices, and will aim to deliver acquisition savings 

due to lower purchasing costs as well as operational savings through 
 

Page 7 GAO-13-408T 

improvement of processes and information. Finally, a third upcoming 

FSSI effort for publication licenses will be led by the Library of Congress.

To allow government agencies to purchase jointly, the FSSIs use 

interagency acquisition vehicles. An interagency acquisition takes place 

when an agency needing supplies or services (the requesting agency) 

either places an order using another agency’s contract in a direct 

acquisition or obtains acquisition assistance from another agency (the 

servicing agency) in an assisted acquisition. Agencies spend tens of 

billions of dollars annually through interagency contract vehicles, such as 

the General Services Administration’s Multiple Award Schedules (MAS) 

program, governmentwide acquisition contracts, and multi-agency 

contracts. In recent years, for example, annual spending through 

governmentwide acquisition contracts and GSA’s MAS program has 

totaled more than $40 billion. Citing risks in the use of interagency 

contracts as well as instances of agencies awarding out-of-scope work 

through interagency contracts and not complying with laws and 

regulations, GAO designated the management of interagency contracting 

as a governmentwide high-risk area in 2005. In 2013, GAO found that 

sufficient progress has been made to remove the high-risk designation 

from management of interagency contracting.

6 Improvements include (1) 

continued progress made by agencies in addressing identified 

deficiencies, (2) establishment of additional management controls, (3) 

creation of a policy framework for establishing new interagency contracts, 

and (4) steps taken to address the need for better data on these 

contracts.

In our September 2012 report, we found that most of the selected 

agencies we reviewed leveraged a fraction of their buying power. More 

specifically, in fiscal year 2011, DOD, DHS, Energy, and VA accounted 

for 80 percent of the $537 billion in federal procurement spending, but 

reported managing about 5 percent of that spending, or $25.8 billion, 

through strategic sourcing efforts. Similarly, we found that the FSSI 

program had only managed a small amount of spending through its four 

governmentwide strategic sourcing initiatives in fiscal year 2011, although 

it reported achieving significant savings on those efforts. Further, we 

found that most selected agencies’ efforts did not address their highest 

 

6

GAO, High-Risk Series: An Update, GAO-13-283 (Washington, D.C.: February 2013). 

Expanded Use of 

Strategic Sourcing 

Could Save Billions in 

Federal Procurement 

Costs
 

Page 8 GAO-13-408T 

spending areas such as services—including some IT-related services—

which may provide opportunities for additional savings. However, we 

found that when strategically sourced contracts were used, agencies 

generally reported achieving savings. For example, selected agencies 

generally reported savings ranging from 5 percent to over 20 percent of 

spending through strategically sourced contracts. DHS reported fiscal 

year 2011 savings of $324 million. At the governmentwide level, the FSSI 

program reported managing $339 million through several 

governmentwide initiatives in fiscal year 2011 and achieving $60 million in 

savings, or almost 18 percent of the procurement spending it managed 

through these initiatives. These savings are on par with leading 

companies, though on a much lower scale, as leading companies 

strategically manage 90 percent of their procurement spending.

After strategic sourcing contracts are awarded, realizing cost savings and 

other benefits depends on utilization of these contracts. We found that 

only 15 percent of governmentwide spending for the products and 

services covered by the FSSI program went through FSSI contracts in 

fiscal year 2011. Agencies cited a variety of reasons for not participating, 

such as wanting to maintain control over their contracting activities, or 

because the agency had unique requirements. FSSI use is not mandatory 

and agencies face no consequences for not using FSSI contract vehicles. 

Proposed FITARA provisions seek to maximize the benefits of FSSIs by 

prioritizing FSSI use over other sources for similar products or services.

Agencies also continue to face challenges in obtaining and analyzing 

reliable and detailed data on spending, securing leadership support, and 

acquiring services through strategic sourcing. Practices used by leading 

companies offer some insights into how these challenges may be 

addressed. 

Agencies continue to face challenges in obtaining and analyzing reliable 

and detailed data on spending. In March 2011, we reported that the 

starting point for strategic sourcing efforts is having good data on current 

spending, and we suggested that agency leaders across the government 

Agencies Need to 

Overcome Key 

Challenges to 

Improve Strategic 

Sourcing Efforts

Spending Data
 

Page 9 GAO-13-408T 

need to collect, maintain, and analyze data on current procurement 

spending.7

This provision focuses on the biggest stumbling block to increasing the 

use of strategic sourcing in the federal government. In 2012, we found 

that agencies were still challenged to obtain and analyze suitable 

agencywide spending data.

Likewise, the proposed FITARA underscores the importance 

of using spend analyses to identify wasteful spending on duplicative 

contracts and opportunities to aggregate demand and leverage scale to 

achieve procurement savings. Specifically, section 211 of the proposed 

FITARA would require that an analysis of governmentwide spending on 

software products or services be conducted as part of a governmentwide 

inventory of information technology assets. The information gained 

through this spend analysis would be used to support decisions for 

strategic sourcing under the FSSI program.

8 Conducting a spend analysis to obtain 

knowledge of procurement spending is a foundational component of an 

effective strategic approach. The analysis reveals how much is spent 

each year, what was bought, from whom it was bought, and who was 

purchasing it. The analysis also identifies where numerous suppliers are 

providing similar goods and services—often at varying prices—and where 

purchasing costs can be reduced and performance improved by better 

leveraging buying power and reducing the number of suppliers to meet 

needs. For example, we have previously reported that the General 

Services Administration estimated federal agencies spent about $1.6 

billion during fiscal year 2009 purchasing office supplies from more than 

239,000 vendors.9

 

7

GAO, Opportunities to Reduce Potential Duplication in Government Programs, Save Tax 

Dollars, and Enhance Revenue, 

GSA used available data on spending to support

development of the Office Supplies Second Generation FSSI, which 

focuses office supply spending to 15 strategically sourced contracts.

Agencies and the federal strategic sourcing program generally continued 

to rely on the government’s current system for tracking contracting 

information data, and noted numerous deficiencies with this data for the 

purposes of conducting strategic sourcing research. Although we noted 

that some agencies had been able to identify some strategic sourcing 

opportunities despite flaws in the available data, the difficulty of obtaining

GAO-11-318SP (Washington, D.C.: Mar. 1, 2011). 

8

GAO-12-919. 

9

See, Strategic Sourcing: Office Supplies Pricing Study Had Limitations, but New Initiative 

Shows Potential for Savings, GAO-12-178 (Washington D.C.: Dec. 20, 2011).
 

Page 10 GAO-13-408T 

reliable and detailed data on spending hindered their ability to assess 

which strategic sourcing opportunities offered the most potential benefits. 

Section 301(i) of FITARA provides for assisting agencies by requiring the 

compilation of a price list and catalog containing current pricing 

information by vendor for IT commodities, accessible to executive 

agencies. This could assist agencies in conducting spend analyses of IT 

investments by enhancing their ability to conduct price comparisons and 

make more informed purchasing decisions. 

We also found in 2012 that most of the agencies we reviewed were 

challenged by a lack of leadership commitment to strategic sourcing, 

though improvements were under way.10 We have reported that in the 

private sector, the support and commitment of senior management is 

viewed as essential to facilitating companies’ efforts to re-engineer their 

approaches to acquisition as well as to ensuring follow through with the 

strategic sourcing approach. However, we found in 2012 that leaders at 

some agencies were not dedicating the resources and providing the

incentives that were necessary to build a strong foundation for strategic 

sourcing. In addition, a lack of clear guidance on metrics for measuring 

success had also impacted the management of ongoing FSSI efforts as 

well as most selected agencies’ efforts. We found that agencies were

challenged to produce utilization rates and other metrics—such as 

spending through strategic sourcing contracts and savings achieved—

that could be used to monitor progress. Several agencies also mentioned 

a need for sustained leadership support and additional resources in order 

to more effectively monitor their ongoing initiatives.

Finally, agencies have reported a perception that strategically sourcing 

the purchase of services (rather than products) entails additional 

challenges. In fiscal year 2011, more than half of the procurement 

spending at the four agencies we reviewed was used to acquire services. 

However, we found that strategic sourcing efforts addressed products 

significantly more often than services. Officials reported that they have 

been reluctant to strategically source services for a variety of reasons, 

such as difficulty in standardizing requirements or a decision to focus on 

less complex commodities that can demonstrate success. However, 

 

10GAO-12-919. 

Leadership Commitment

Purchasing Services
 

Page 11 GAO-13-408T 

leading companies we spoke with have focused their efforts on services 

in the past 5 to 7 years because of the growth in spending in that area, 

and have achieved significant savings. Leading companies reported 

viewing telecommunications and IT services, among others, as prime 

candidates for centralized procurement in order to achieve savings and 

efficiencies.

Our recent work indicates leading companies have moved into more 

sophisticated strategic sourcing techniques, using spend analyses and indepth market research to tailor their acquisition approaches to the 

complexity and availability of the particular good or service they are 

acquiring. Leading companies anchor their procurement strategies for 

both goods and services on certain key practices such as maintaining 

spend visibility, centralizing procurement, and using category strategies in 

order to build spending and market knowledge. For example, companies 

establish automated systems to extract and compile internal financial data 

covering everything they buy; organize data into complete and consistent 

categories of products, services, and suppliers; and have data continually 

analyzed. This knowledge allows companies to take a tailored approach 

to individual purchase decisions: for example, leveraging buying power 

across the company for relatively less complex commodity items with 

many suppliers, and negotiating costs of individual components of more 

complex goods and services that have few suppliers.

Our work has found that companies’ centralized procurement approach 

relies on robust spending and market knowledge that allows for a tailored 

procurement approach to each type of service. Telecommunications and 

IT services vary in requirements complexity, but are generally served by 

many suppliers and a competitive marketplace. For telecommunications 

services—viewed as relatively simple—companies rely on the classic 

tactic of aggregating demand and leveraging volume and competition to 

lower costs. Companies view IT services as more complex, requiring 

greater attention to the trade-off between price and quality. Nevertheless, 

companies are able to lower costs through leveraging competition among 

suppliers prequalified by skill and effectiveness.

In addition, leading companies we most recently spoke with highlighted 

the use of procurement catalogs with pre-negotiated prices for services, 

particularly those that are less complex. The catalogs allow the 

companies to leverage their detailed knowledge about vendor pricing.

One company that was in the midst of developing such catalogs at that 

Leading Company 

Practices
 

Page 12 GAO-13-408T 

time, planned to implement them for commonly acquired, routine services 

so that business units could directly contract for these services up to a 

specified dollar amount. Companies emphasized the need to frequently 

review and revise tactics to account for market trends and ensure they 

are getting the best value.

OMB and other agencies have recently taken actions to expand the use 

of strategic sourcing, reduce duplicative IT contracts, and improve the use 

of interagency contracts. In September 2012, GAO recommended that

the Secretary of Defense, the Secretary of Veterans Affairs, and the 

Director of OMB take a series of detailed steps to improve strategic 

sourcing efforts. More specifically: 

• the Secretary of Defense should evaluate the need for additional 

guidance, resources, and strategies, and focus on DOD’s highest 

spending categories;

• the Secretary of Veterans Affairs should evaluate strategic sourcing 

opportunities, set goals, and establish metrics; and

• the Director of OMB should issue updated governmentwide guidance 

on calculating savings, establish metrics to measure progress toward 

goals, and identify spending categories most suitable for strategic 

sourcing.

In commenting on the September 2012 report, DOD, VA, and OMB 

concurred with the recommendations and stated they would take action to 

adopt them.

In 2012, OMB also released a Cross-Agency Priority Goal Statement, 

which called for agencies to strategically source at least two new products 

or services in both 2013 and 2014 that yield at least 10 percent savings. 

At least one of these new initiatives is to target IT commodities or 

services. In December 2012, OMB further directed agencies to reinforce 

senior leadership commitment by designating an official responsible for 

coordinating the agency’s strategic sourcing activities. In addition, OMB 

identified agencies that should take a leadership role on strategic 

sourcing. OMB called upon these agencies to lead governmentwide 

strategic sourcing efforts by taking steps such as recommending 

management strategies for specific goods and services—including 

several that are IT-related—to ensure that the federal government 

receives the most favorable offer possible. Additionally, OMB directed 

Recent Actions Could 

Facilitate Making IT 

Investments More 

Efficient
 

Page 13 GAO-13-408T 

these agencies to promote strategic sourcing practices inside their 

agencies by taking actions including collecting data on procurement 

spending.

We previously reported and testified on the issue of duplicative IT 

investments at DOD and the Department of Energy.11 Specifically, we 

found 37 potentially duplicative investments, accounting for about $1.2 

billion in total IT spending for fiscal years 2007 through 2012. We made 

recommendations to those agencies to report on the progress of efforts to 

identify and eliminate duplication, where appropriate. To increase 

transparency and visibility into agencies' potentially duplicative IT 

investments, OMB required in March 2012 that agency Deputy 

Secretaries or Chief Operating Officers lead PortfolioStats—IT portfolio 

reviews—working in coordination with CIOs, Chief Financial Officers, and 

Chief Acquisition Officers. Such an effort, as planned, is appropriate given 

the numerous investments performing the same function, as we reported 

in February 2012.12 For example, 27 major federal agencies planned to 

spend $2.7 billion on 580 financial management systems in 2011. OMB 

believes that the PortfolioStat effort has the potential to save the 

government $2.5 billion over the next 3 years by, for example, 

consolidating duplicative systems.

In response to our recommendations aimed at improving data on 

interagency contracts, OMB and GSA have taken a number of steps to 

address the need for better data on interagency contracting vehicles. 

These efforts should enhance both governmentwide efforts to manage 

interagency contracts and agency efforts to conduct market research and 

negotiate better prices. To promote better and easier access to data on 

existing contracts, OMB has made improvements to its Interagency 

Contract Directory, a searchable online database of indefinite-delivery 

vehicles available for interagency use. It has also posted information on 

governmentwide acquisition contracts and blanket purchase agreements 

available for use under the Federal Strategic Sourcing Initiative on an OMB 

website accessible by federal agencies. A policy framework established by 

 

11GAO, Information Technology: Departments of Defense and Energy Need to Address

Potentially Duplicative Investments, GAO-12-241 (Washington, D.C.: Feb. 17, 2012).

12GAO-12-241. 

Actions to Reduce 

Duplicative IT Investments

Actions to Improve Use of 

Interagency Contracts
 

Page 14 GAO-13-408T 

OMB addresses concerns about potential duplication by requiring agencies 

to develop a thorough business case prior to establishing certain contract 

vehicles. The guidance further requires senior agency officials to approve 

the business cases and post them on an OMB website to provide 

interested federal stakeholders an opportunity to offer feedback. OMB then 

is able to conduct follow-up with sponsoring agencies if significant 

questions, including those related to duplication, are raised during the 

vetting process. While these actions are steps in the right direction, it is too 

early to determine what results these actions will have. The importance of 

ensuring these efforts are supported with rigorous spend analysis and 

strong leadership cannot be stressed enough. We observed during our 

review that when roadblocks were encountered by agencies, officials too 

easily gave up on the idea of applying strategic sourcing techniques to 

more complex goods and services.

In closing, current fiscal pressures and budgetary constraints have 

heightened the need for agencies to take full advantage of strategic 

sourcing and other efficiencies. These practices drive efficiencies and 

yield benefits beyond savings, such as increased business knowledge. 

Governmentwide strategic sourcing efforts have been initiated, and 

federal agencies have improved and expanded upon their use of strategic 

sourcing to achieve cost savings and other benefits. However, as the

proposed FITARA bill recognizes, much more needs to be done to better 

incorporate strategic sourcing leading practices, increase the amount of 

spending through strategic sourcing, and direct more efforts at high spend 

categories, such as IT services. Strategic sourcing efforts to date have 

targeted a small fraction of federal procurement spending, and progress 

to expand strategic sourcing has been slow. If implemented effectively, 

billions of dollars in potential savings may be realized, providing agencies 

a valuable tool for maximizing their ability to carry out critical missions 

under tight budgets.

Chairman Issa, Ranking Member Cummings, and Members of the 

Committee, this concludes my statement. I would be pleased to answer 

any questions at this time.

For future questions about this statement, please contact me at 

(202) 512-4841 or chaplainc@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this statement. Individuals making key contributions to this statement 

include W. William Russell, Assistant Director; Raj Chitikila; Laura 

Greifner; John Krump; Ann Marie Udale; and Rebecca Wilson.

GAO Contact and 

Staff 

Acknowledgments

(121127)
 

Page 15 GAO-13-408T 

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