STRATEGIC 

SOURCING

Selected Agencies 

Should Develop 

Performance 

Measures on 

Inclusion of Small 

Businesses and OMB 

Should Improve 

Monitoring

Report to Congressional Requesters

January 2014

GAO-14-126

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-126, a report to 

congressional requesters

January 2014

STRATEGIC SOURCING

Selected Agencies Should Develop Performance 

Measures on Inclusion of Small Businesses and OMB 

Should Improve Monitoring

Why GAO Did This Study

Since 2005, OMB has emphasized

using strategic sourcing to improve

efficiency in federal procurement. 

Strategic sourcing is a process that 

moves an organization away from 

numerous individual procurements 

toward a broader aggregate approach. 

GAO was asked to review how 

strategic sourcing affects small 

businesses, including small 

disadvantaged businesses. This report 

discusses (1) how OMB, GSA, and 

selected agencies have considered 

small businesses in their strategic 

sourcing efforts and (2) the extent to 

which data and performance measures 

are available on the inclusion of small 

businesses in strategic sourcing 

initiatives. GAO reviewed guidance 

and documentation from OMB, GSA,

and five other agencies selected based 

on factors such as dollars awarded to 

small businesses. GAO also reviewed 

GSA data as of 2013, DHS data from 

fiscal year 2005 through the first 

quarter of fiscal year 2013, and agency 

reports from fiscal years 2005 to 2012.

What GAO Recommends

GAO makes recommendations to 

GSA, selected agencies, and OMB to 

improve data collection and 

performance measures related to the 

inclusion of small businesses in 

strategic sourcing. DOD, DHS, GSA, 

HUD, and OMB agreed with GAO’s 

recommendation. Interior partially 

agreed, suggesting that a more 

effective approach would be to work 

with OMB and other agencies to 

develop common approaches. NASA 

disagreed, stating it already tracks 

related spending for the agency. GAO 

believes its recommendations remain 

valid as discussed in the report.

What GAO Found

The Office of Management and Budget (OMB), the General Services 

Administration (GSA), and selected agencies have taken steps to consider small 

businesses, including small disadvantaged businesses, in their strategic sourcing 

efforts. (Small disadvantaged businesses are those unconditionally owned and 

controlled by socially and economically disadvantaged individuals.) OMB and 

GSA have developed guidance on strategic sourcing that stresses the 

importance of including small businesses. GAO’s review of documentation for 

three ongoing government-wide strategic sourcing initiatives showed that GSA

considered the inclusion of small businesses in the strategic sourcing process. 

For example, when developing strategic sourcing initiatives for office supplies 

and print management, GSA identified the current market share of small 

businesses with these products and also set aside specific contracts for various 

categories of small businesses, such as service-disabled veteran-owned small 

businesses. In addition, GAO’s review of agency-wide strategic sourcing 

initiatives at each of five agencies—Departments of Defense (DOD), specifically 

Army and the Defense Logistics Agency; Homeland Security (DHS); Housing and 

Urban Development (HUD); and the Interior and the National Aeronautics and 

Space Administration (NASA)—showed that the agencies generally considered 

the inclusion of small businesses.

Data and performance measures that would provide a more precise 

understanding of the inclusion of small and disadvantaged businesses in 

strategic sourcing initiatives are limited. Although GSA has collected baseline 

data on proposed government-wide initiatives, it has not developed a 

performance measure to determine changes in small business participation going 

forward. Further, DHS has collected some data on contracts awarded to small 

businesses under strategic sourcing initiatives, but it and the other agencies in 

GAO’s review generally did not have baseline data and performance measures 

to determine how small businesses were affected by strategic sourcing. OMB 

guidance requires agencies to establish baselines for small business 

participation prior to implementing strategic sourcing and set goals for small 

business participation. In addition, federal internal control standards state that 

information is needed to determine whether the agency is achieving its 

compliance requirements under various laws and regulations. Without baseline 

data and performance measures, the effect of strategic sourcing initiatives on 

small businesses will be difficult to determine. Moreover, OMB has not monitored 

agencies’ compliance in reporting baseline data and performance measures on 

the inclusion of small businesses in government-wide and agency-wide strategic 

sourcing initiatives. OMB required agencies to submit annual reports on the 

implementation of strategic sourcing from fiscal years 2005 through 2007 and 

prepare information for acquisition status sessions from fiscal years 2010 through

2012. (No reporting was in place for fiscal years 2008 or 2009.) However, 

virtually none of this information included baseline data or measures of the effect 

of strategic sourcing on small businesses. Federal internal control standards 

state that effective monitoring should assess the quality of performance over 

time. Without effective monitoring, it will be difficult for OMB to help ensure that 

agencies are tracking the impact of strategic sourcing on small businesses.

View GAO-14-126. For more information, 

contact William B. Shear at (202) 512-8678 or 

shearw@gao.gov.
Page i GAO-14-126 Strategic Sourcing and Small Businesses

Letter 1

Background 4

OMB, GSA, and Selected Agencies Have Taken Steps to 

Consider Small Businesses in Their Strategic Sourcing Efforts 8

Agency Data and Measures on Inclusion of Small Businesses in 

Strategic Sourcing Are Limited, and OMB Has Not Monitored 

Agencies’ Efforts 14

Conclusions 19

Recommendations for Executive Action 20

Agency Comments and Our Evaluation 20

Appendix I Objectives, Scope, and Methodology 24

Appendix II Comments from the Department of Defense 27

Appendix III Comments from the Department of Homeland Security 29

Appendix IV Comments from the Department of Housing and Urban 

Development 31

Appendix V Comments from the General Services Administration 32

Appendix VI Comments from the National Aeronautics and Space Administration 34

Appendix VII Comments from the Small Business Administration 36

Table

Table 1: Data on Three of GSA’s Ongoing Government-wide 

Strategic Sourcing Initiatives, 2013 15

Contents
Page ii GAO-14-126 Strategic Sourcing and Small Businesses

Abbreviations

DHS Department of Homeland Security

DLA Defense Logistics Agency

DOD Department of Defense

FPDS-NG Federal Procurement Data System-Next 

Generation

FSSI Federal Strategic Sourcing Initiative

GSA General Services Administration

HUBZone Historically Underutilized Business Zone

HUD Department of Housing and Urban Development

NASA National Aeronautics and Space Administration

OMB Office of Management and Budget

OSDBU Office of Small and Disadvantaged Business 

Utilization

SBA Small Business Administration

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page 1 GAO-14-126 Strategic Sourcing and Small Businesses

441 G St. N.W.

Washington, DC 20548

January 23, 2014

The Honorable Mary L. Landrieu

Chair

Committee on Small Business and Entrepreneurship

United States Senate

The Honorable Bennie G. Thompson

Ranking Member

Committee on Homeland Security

House of Representatives

In fiscal year 2012, the federal government obligated approximately $517 

billion for products and services, approximately $100 billion of which was 

obligated to small businesses. Since 2005, the Office of Management and 

Budget (OMB) has put increased emphasis on making federal 

procurement more efficient and achieving greater cost savings for the 

taxpayer through strategic sourcing. Strategic sourcing is a process—

sometimes led by a central procurement organization—that moves an 

organization away from numerous individual procurements for the same 

or similar products or services toward a broader aggregate approach. The

benefits of strategic sourcing can include cost savings and less 

duplication of effort. However, because strategic sourcing can reduce the 

number of available contracting opportunities, some members of the 

small business community are concerned that small businesses may be 

negatively affected.

Given these views, you requested that we review how strategic sourcing 

has affected small businesses. This report discusses (1) the ways in 

which OMB and the General Services Administration (GSA) have 

considered small businesses in their strategic sourcing guidance and 

GSA and selected agencies have considered small businesses in their 

strategic sourcing initiatives and (2) the extent to which data and 

performance measures are available on the inclusion of small businesses 

in government-wide and selected agencies’ internal strategic sourcing 

initiatives. Small businesses include those unconditionally owned and 

controlled by socially and economically disadvantaged individuals (small 

disadvantaged businesses).

To describe the ways in which OMB, GSA, and selected agencies have 

considered various categories of small businesses in their strategic 

sourcing guidance and efforts, we reviewed OMB and GSA guidance on 
Page 2 GAO-14-126 Strategic Sourcing and Small Businesses

strategic sourcing.1 We also reviewed documentation on three 

government-wide strategic sourcing initiatives managed by GSA 

(domestic delivery services, office supplies, and print management) to 

determine steps taken to consider small businesses.2 At selected 

agencies, we reviewed guidance on strategic sourcing and 

documentation on a sample of specific initiatives to determine how small 

businesses were considered in the strategic sourcing process.3 The 

selected agencies included in our review were the Departments of 

Defense (DOD), specifically the Department of the Army (Army) and the 

Defense Logistics Agency (DLA); Homeland Security (DHS); Housing and 

Urban Development (HUD); and the Interior (Interior) and the National 

Aeronautics and Space Administration (NASA). We selected these 

agencies to ensure a range of agencies based on the dollars they 

awarded to small businesses in fiscal year 2012, the extent to which they 

had adopted strategic sourcing, scores on the Small Business 

Administration’s (SBA) procurement scorecards in fiscal years 2010 and 

2011, and membership in the Strategic Sourcing Leadership Council.4

 1

We included OMB in our scope because it includes the Office of Federal Procurement 

Policy and is the agency responsible for issuing guidance on strategic sourcing and 

approving government-wide strategic sourcing initiatives. We included GSA because it is 

the lead agency for most government-wide strategic sourcing initiatives. 

Finally, we interviewed officials from OMB, GSA, SBA, and selected 

agency procurement offices and Offices of Small and Disadvantaged 

2

We selected the three initiatives that had been implemented by fiscal year 2012 and that 

were ongoing at the time of our review. The domestic delivery services initiative offers 

delivery service for small packages. The office supplies initiative offers a catalogue of 

consumable office supplies. The print management initiative reduces equipment needed 

for printing, copying, scanning, and faxing. GSA has implemented multiple versions of

some of these initiatives. For the purposes of this report, we generally focused on the 

second generations of the domestic delivery services and office supplies initiatives and 

functional areas I and II of the print management initiative because these were the 

versions ongoing at the time of our review. We did not select the telecommunications

expense management services initiative, which involved wireless rate plans, because it 

expired in July 2013. We do not discuss GSA’s current wireless initiative because it was 

awarded in May 2013. 

3

We chose a purposive, nonrandom sample of strategic sourcing initiatives based on 

factors such as timing of the initiative, inclusion of small businesses, and commodity type. 

4

As discussed later in this report, the Strategic Sourcing Leadership Council was created 

in December 2012 and consists of the seven largest procurement agencies and SBA. The 

council was charged with leading the government’s efforts to increase the use of strategic 

sourcing.
Page 3 GAO-14-126 Strategic Sourcing and Small Businesses

Business Utilization about the extent to which the agencies have 

considered small businesses in the implementation of strategic sourcing. 

To evaluate the extent to which data and performance measures were 

available on the inclusion of small businesses in government-wide and 

selected agencies’ internal strategic sourcing initiatives, we reviewed the 

data elements in the Federal Procurement Data System-Next Generation 

(FPDS-NG) to determine if there were data on strategic sourcing. In 

addition, we analyzed GSA data as of 2013 on government-wide strategic 

sourcing initiatives. We also determined whether GSA had taken steps to 

track the effect of recently proposed strategic sourcing initiatives on small 

businesses by reviewing relevant documentation on these initiatives. In 

addition, we reviewed documentation at the selected agencies to identify 

any data and performance measures that track the inclusion of small 

businesses. This documentation included a strategic sourcing dashboard 

from DHS that contained data on its initiatives from fiscal year 2005 

through the first quarter of fiscal year 2013. We assessed the reliability of 

data from FPDS-NG, GSA, and DHS by interviewing knowledgeable 

officials, reviewing documents about the sources of the data, and 

comparing selected data to other sources and determined they were 

sufficiently reliable for the purpose of reporting government-wide and 

agency strategic sourcing spending. We compared available data and 

performance measures to OMB’s guidance and federal internal control 

standards.5

We conducted this performance audit from February 2013 to January 

2014 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 objectives.

Further, we interviewed OMB, GSA, SBA, and selected 

agency officials about current and planned efforts to collect data and track 

performance measures on strategic sourcing and the inclusion of small 

businesses. Appendix I contains additional information on our scope and 

methodology.

 5

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).
Page 4 GAO-14-126 Strategic Sourcing and Small Businesses

The federal government has a long-standing policy of maximizing 

procurement opportunities for small businesses, including small 

disadvantaged businesses. To encourage the award of federal contracts 

to small businesses, Congress has set an annual government-wide goal 

of awarding not less than 23 percent of prime contract dollars to small 

businesses. SBA negotiates specific goals with each agency to help 

ensure that the federal government collectively meets this statutory goal. 

In addition, Congress has established statutory goals for various 

socioeconomic categories of small businesses. The current goals are

• 5 percent of prime contract and subcontract dollars are to be awarded 

to women-owned small businesses, 

• 5 percent of prime contract and subcontract dollars are to be awarded 

to small disadvantaged businesses,6

• 3 percent of prime contracts and subcontract dollars are to be 

awarded to service-disabled veteran-owned small businesses, and

• 3 percent of prime contract and subcontract dollars are to be awarded 

to small businesses in Historically Underutilized Business Zones 

(HUBZone).7

To increase small businesses’ visibility within federal agencies, in 1978 

Congress amended the Small Business Act to require that all federal 

agencies with procurement powers establish an Office of Small and 

Disadvantaged Business Utilization (OSDBU), which would advocate for 

 6

SBA defines a small disadvantaged business as a firm that is 51 percent or more 

unconditionally owned and controlled by one or more disadvantaged persons. The 

disadvantaged person or persons must be both socially and economically disadvantaged. 

7

SBA’s HUBZone program helps small businesses located in designated urban and rural 

communities gain preferential access to federal procurement opportunities. 

Background

Small Business
Page 5 GAO-14-126 Strategic Sourcing and Small Businesses

small businesses within the agencies.8 The OSDBU is managed by a 

director who is responsible for implementing and executing the agency’s 

functions and duties related to the award of contracts and subcontracts to 

small and disadvantaged businesses. The Small Business Act lists a 

number of functions that OSDBU directors are responsible for carrying 

out, including making recommendations to contracting officers as to 

whether particular contract requirements should be set aside for small 

businesses.9

In general, a strategic sourcing effort begins with an opportunity 

assessment—an analysis of spending (spend analysis) 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 cutting costs 

and streamlining operations. Based on this analysis, organizations 

evaluate and prioritize commodities to create a list of top products or 

services to target for strategic sourcing. This list typically includes the 

products or services on which most of the organization’s spending is 

focused. In addition to spending, criteria such as potential savings and 

relative ease of implementation are considered. Once a product or 

service is selected for strategic sourcing, a general process is followed 

that includes steps such as developing, implementing, and managing the 

sourcing strategy for that product or service. A strategic sourcing initiative 

can involve multiple contracts. 

Procurement staff in most agencies also include small 

business specialists, who are responsible for working with OSDBUs and 

agency contracting officers to advocate for small businesses. 

Recognizing the benefits of strategic sourcing, OMB issued a 

memorandum in 2005 that directed federal agencies to develop and 

 8

Pub. L. No. 95-507, § 221, 92 Stat. 1757, 1770 (1978). Several agencies in our review do 

not use the term OSDBU. For example, DOD refers to its OSDBU as the Office of Small 

Business Programs. For simplicity, we use the term OSDBU for all agencies in our study. 

Some components within DOD, such as the Army and DLA, have their own OSDBU. 

9

The purpose of small business set-asides is to award certain acquisitions (either total or 

partial acquisitions) exclusively to small businesses. A small business set-aside may be 

open to all small businesses or to a particular socioeconomic category.

Strategic Sourcing
Page 6 GAO-14-126 Strategic Sourcing and Small Businesses

implement a strategic sourcing effort to help control spending. This 

memorandum defined strategic sourcing as the “collaborative and 

structured process of critically analyzing an organization’s spending and 

using this information to make business decisions about acquiring 

commodities and services more effectively and efficiently.” According to 

the memorandum, the process helps agencies optimize performance, 

minimize price, increase achievement of socioeconomic acquisition goals, 

evaluate total life-cycle management costs, improve vendor access to 

business opportunities, and otherwise increase the value of each dollar. 

The memorandum also stated that any strategic sourcing plan must be 

balanced with goals for small businesses. Finally, the memorandum 

required agencies to identify at least three commodities that could be 

strategically sourced and develop agency-wide strategic sourcing plans to 

implement their strategic sourcing programs.

In subsequent memorandums, OMB offered further guidance on 

implementing strategic sourcing. Most recently, in December 2012 OMB 

issued a memorandum reiterating the importance of strategic sourcing 

and emphasizing that to the extent practicable, all strategic sourcing 

opportunities should seek to increase participation by small businesses. 

In addition, the guidance created a new Strategic Sourcing Leadership 

Council consisting of the seven largest procurement agencies and SBA.10

In addition to individual agency efforts, a government-wide strategic 

sourcing program known as the Federal Strategic Sourcing Initiative 

(FSSI) was established in 2005 as a direct result of the OMB 

memorandum. FSSI was created to address government-wide 

opportunities to strategically source commonly purchased products and 

services and eliminate duplication of efforts across agencies. The Office 

of Federal Procurement Policy—the office within OMB assigned to 

The council was charged with leading the government’s efforts to 

increase the use of strategic sourcing. OMB’s guidance related to 

strategic sourcing and small businesses is discussed in greater detail in 

the next section of this report.

 10The seven largest procurement agencies included in the Strategic Sourcing Leadership 

Council are the Departments of Defense, Energy, Health and Human Services, Homeland 

Security, and Veterans Affairs; GSA; and NASA. The predecessor to the council was the 

Strategic Sourcing Working Group chartered by the Chief Acquisition Officers Council to 

serve as a working group to facilitate collaboration on strategic sourcing across the federal 

government to drive savings and process improvements and achieve increased 

participation by small businesses, including those in various socioeconomic categories. 
Page 7 GAO-14-126 Strategic Sourcing and Small Businesses

oversee the FSSI program—is ultimately responsible for providing 

oversight and guidance, as well as ensuring the overall effectiveness of 

FSSI. In addition, there is an FSSI Program Management Office located 

within GSA. The mission of the FSSI program is to encourage agencies to 

aggregate contract requirements, streamline processes, and coordinate 

purchases of like products and services to leverage spending to the 

maximum extent possible. Four government-wide initiatives had been 

implemented as of fiscal year 2012: office supplies, print management, 

telecommunications expense management services, and domestic 

delivery services.11

We have previously reported on strategic sourcing. For example, we 

found in September 2012 that the agencies we reviewed—DOD, DHS, 

and the Departments of Veterans Affairs and Energy—leveraged only a 

fraction of their buying power through strategic sourcing and achieved 

limited savings.

Office supplies offers a catalogue of consumable 

office supplies; print management reduces equipment needed for printing, 

copying, scanning, and faxing; telecommunications expense 

management services works to optimize wireless telecommunications 

expenses and plan selection; and domestic delivery services offers 

delivery service for small packages.

12 We made a number of recommendations, including that 

DOD and the Department of Veterans Affairs evaluate the best ways to 

strategically source their highest spending categories. These agencies 

agreed with the recommendation and have since told us that they are 

analyzing spending data. However, they had not completed this analysis 

as of August 2013. We also found that a few agencies had experienced 

challenges in meeting requirements unique to government procurements, 

such as meeting small business goals. However, while acknowledging 

that reducing the number of vendors providing a product or service 

means that some vendors will be unable to participate, agency officials 

reported finding ways to conduct strategic sourcing efforts that allow for 

maximum feasible small business participation.

 11We do not discuss the telecommunications expense management services initiative in 

this report because it expired in July 2013. 

12GAO, Strategic Sourcing: Improved and Expanded Use Could Save Billions in Annual 

Procurement Costs, GAO-12-919 (Washington, D.C.: Sept. 20, 2012). At DOD, the review 

included four components: Air Force, Army, DLA, and Navy.
Page 8 GAO-14-126 Strategic Sourcing and Small Businesses

OMB and GSA have developed guidance on strategic sourcing that 

emphasizes the importance of including small businesses and small 

disadvantaged businesses. In addition, our review of documentation for 

three ongoing government-wide strategic sourcing initiatives showed that 

GSA considered the inclusion of small and disadvantaged businesses in 

the strategic sourcing process. Our review of agency-wide strategic 

sourcing initiatives at each of five agencies showed that the agencies also 

generally considered the inclusion of small and disadvantaged 

businesses.

Both OMB and GSA have issued guidance on strategic sourcing that 

discusses the importance of including small businesses and small 

disadvantaged businesses. Since 2005, OMB’s Office of Federal 

Procurement Policy has issued five memorandums on carrying out 

strategic sourcing:

• 2005 memorandum: This memorandum laid out the general 

framework for establishing and implementing agency-wide strategic 

sourcing programs. The memorandum called for the creation of a 

strategic sourcing governance structure, goals (including small 

business goals), and performance measures, among other things. It 

also indicated that agencies should develop baseline data on such 

factors as small business spending and report annually on changes in 

relation to the baseline.

• 2007 memorandum: This memorandum listed some accomplishments 

or “best practices” from selected agencies’ strategic sourcing 

initiatives, including some involving small businesses. For example, 

the memorandum noted that DOD reported in fiscal year 2006 that 41 

percent of $4.3 billion awarded through strategic sourcing went to 

small businesses. The memorandum also strongly encouraged 

agencies to participate in government-wide initiatives, such as the 

office supplies initiative.

• December 2006 and March 2008 memorandums: These 

memorandums provided guidance on the information that should be 

included in annual strategic sourcing reports for fiscal years 2006 and 

2007, respectively. The memorandums asked agencies to provide, 

among other things, goals and performance measures used to assess 

the agencies’ strategic sourcing activity and the methodologies used 

OMB, GSA, and 

Selected Agencies 

Have Taken Steps to 

Consider Small 

Businesses in Their 

Strategic Sourcing 

Efforts

OMB and GSA Have 

Issued Guidance on 

Strategic Sourcing That 

Addresses the Importance 

of Including Small 

Businesses
Page 9 GAO-14-126 Strategic Sourcing and Small Businesses

to calculate them. The goals and measures generally were to include 

the impact on small business.

• 2012 memorandum: This memorandum established the Strategic 

Sourcing Leadership Council to lead the government’s efforts to 

increase the use of government-wide strategic sourcing of goods and 

services. SBA was included in the council because of the role small 

businesses play in federal procurement. The memorandum required 

the designation of a Strategic Sourcing Accountable Official at 24 

agencies to coordinate agencies’ internal strategic sourcing 

activities.13

GSA issued guidance (an FSSI Concept of Operations) in May 2008 on 

the structure, management, and operations of government-wide strategic 

sourcing initiatives. For example, the guidance suggested that in the 

governance of strategic sourcing initiatives, a small business 

representative, such as an OSDBU official or small business specialist, 

be involved early to ensure that small businesses’ concerns are 

addressed throughout the process. GSA’s guidance sets out four core 

goals for government-wide strategic sourcing initiatives. One of the goals 

is to establish mechanisms to increase savings, value, and 

socioeconomic participation. More specifically, the goal is to minimize the 

total cost for the federal government while ensuring the utilization of small 

businesses and the fulfillment of socioeconomic goals by matching small 

business capabilities to the government’s requirements. The guidance 

calls for a performance measure that measures the total small business 

It also placed added responsibilities on GSA to 

promulgate requirements, regulations, and best practices for acquiring 

and using strategic sourcing initiatives, among other things. In 

addition, the memorandum stated that to the maximum extent 

practicable, all strategic sourcing opportunities should seek to 

increase participation by small businesses and that all proposed 

agreements must establish a baseline for small business use under 

current strategies and set goals to meet or exceed that baseline under 

the new vehicles.

 13These 24 agencies are those subject to the Chief Financial Officers Act of 1990. Pub. L. 

No. 101-576, 104 Stat. 2838 (1990).The 24 agencies are DOD; DHS; HUD; the 

Departments of Agriculture, Commerce, Education, Energy, Health and Human Services, 

the Interior, Justice, Labor, State, Transportation, the Treasury, and Veterans Affairs; the 

Environmental Protection Agency; NASA; the Agency for International Development; GSA; 

the National Science Foundation; the Nuclear Regulatory Commission; the Office of 

Personnel Management; SBA; and the Social Security Administration. 
Page 10 GAO-14-126 Strategic Sourcing and Small Businesses

and socioeconomic spending for commodities being strategically sourced 

versus baseline spending levels. 

In addition to OMB’s and GSA’s guidance, some agencies have issued 

their own guidance on strategic sourcing. DOD, DHS, and NASA have 

guidance on implementing strategic sourcing within their agencies that 

mentions small businesses. For example, similar to GSA’s guidance, 

DOD’s June 2013 guidance calls for a performance measure to identify 

the change in small business and socioeconomic utilization as a result of 

strategic sourcing. DHS’s strategic sourcing guidance states that one of 

the goals of its strategic sourcing program is to improve the agency’s 

ability to meet its overall small business goals. NASA’s guidance notes 

that an OSDBU representative is a member of the agency’s strategic 

sourcing team. At the time of our review, Interior and HUD did not have 

specific guidance related to developing or implementing internal strategic 

sourcing initiatives.14

 14In its comments on a draft of this report, HUD noted that it had issued guidance on 

strategic sourcing on December 17, 2013. This is discussed later in this report.

However, Interior and HUD, as well as Army, DLA, 

and DHS, have issued memorandums mandating the use of the office 

supplies II government-wide initiative. HUD and DLA’s memorandums 

also require their contracting officers to purchase office supplies from the 

13 small business contractors in the initiative before purchasing from the 

2 large business contractors. 
Page 11 GAO-14-126 Strategic Sourcing and Small Businesses

Our review of documentation for three ongoing government-wide strategic 

sourcing initiatives—office supplies II, print management functional areas 

I and II, and domestic delivery services—showed that GSA considered 

the inclusion of small businesses and small disadvantaged businesses in 

the strategic sourcing process.15

In addition to these ongoing initiatives, GSA is the lead agency for three 

initiatives proposed in fiscal year 2013: janitorial and sanitation supplies; 

maintenance, repair, and operations; and print management functional 

For example, when developing the office 

supplies II and print management initiatives, GSA identified the current 

market share for small businesses and specific opportunities that could 

be set aside for socioeconomic categories, such as service-disabled 

veteran-owned businesses. In addition, GSA held presolicitation meetings 

with potential vendors in which small businesses discussed barriers to 

their participation. According to GSA officials, the agency then made 

changes to the contract requirements for the office supplies initiative—

such as increasing the required delivery time from 3 days to 4 days and 

the minimum order requirement from $50 to $100—that allowed small 

businesses to be more competitive. In the domestic delivery services 

initiative, GSA identified that the market did not include many small 

businesses, but looked for opportunities in the contract to include small 

businesses as subcontractors. In addition, GSA OSDBU officials 

explained they take additional steps on government-wide strategic 

sourcing initiatives to ensure the consideration of small businesses. 

Specifically, they get involved earlier in the acquisition process by 

reviewing the business cases for the initiatives, and they involve more 

people in the review of the contracting process for these initiatives. We 

discuss more detailed information collected by GSA on the inclusion of 

small businesses in strategic sourcing later in this report.

 15For each initiative, we reviewed documents such as the market research, acquisition 

plan, request for proposals or quotations, and contract excerpts. We also reviewed some 

presolicitation meeting documentation. Print management functional area I consisted of 

conducting a vendor-neutral fleet assessment analysis to determine if the number of print 

devices an agency owned matched the number needed. Print management functional 

area II focused on procuring new print devices and related maintenance. The phases of 

the strategic sourcing process include commodity selection, acquisition strategy, 

implementation, and commodity management. 

GSA Has Taken Steps to 

Consider Small 

Businesses in Selected 

Government-wide 

Strategic Sourcing 

Initiatives
Page 12 GAO-14-126 Strategic Sourcing and Small Businesses

areas III and IV.16

Our review of documentation on agency-wide strategic sourcing initiatives 

at each of the five selected agencies showed that the agencies generally 

considered the inclusion of small businesses and small disadvantaged 

businesses.

Our review of documentation for these three 

government-wide strategic initiatives found that GSA considered the 

inclusion of small businesses. For example, market research conducted 

on janitorial and sanitation supplies indicated that about 90 percent of the 

approximately 200 contractors capable of meeting the requirements of the 

janitorial and sanitation supply categories were small businesses. In 

addition, GSA held a small business partnership session on the janitorial 

and sanitation supplies and maintenance, repair, and operations 

initiatives in order to obtain input on these two planned initiatives. 

According to minutes from the meeting, officials stated that if GSA could 

not be assured that the small business market share would be increased, 

the initiatives would not go forward. For print management functional 

areas III and IV, GSA’s research revealed that small businesses typically 

had the ability to provide service to printer-based equipment but that 

copier-based equipment typically was dominated by large businesses. In 

addition to small business language in business cases, acquisition plans, 

and requests for quotation, GSA created small business set-asides in 

these three initiatives. 

17

 16The janitorial and sanitation supplies initiatives include items such as bleach, trash bags, 

and mops. The maintenance, repair, and operations initiative includes items such as 

ladders, power drills, and extension cords. Print management functional areas III and IV 

include printer-based and copier-based managed services conducted by both large and 

small businesses. As of October 2013, a fourth initiative to be led by GSA had not been 

announced publically. 

In general, agencies that included small businesses in their 

agency-wide strategic sourcing initiatives did so by using small business 

set-asides. Examples include the following initiatives:

17For each initiative examined, we reviewed documents such as the market research, 

acquisition plan, request for proposals or quotations, small business review form, and 

contract excerpts. We selected a total of 12 strategic sourcing initiatives. More specifically, 

from each of the selected agencies (DOD, specifically Army and DLA; DHS; HUD; Interior; 

and NASA), we chose two initiatives that were undertaken between fiscal year 2005 and 

fiscal year 2012, generally one that included only large businesses and one that also 

included small businesses. At DHS, HUD, and Interior, we had to request replacement 

initiatives due to a lack of information on the initial initiative(s) we selected. At DLA, both of 

the initiatives we examined involved only large businesses. HUD and Interior were able to 

provide information on one initiative involving only large businesses. As a result, our final 

sample consisted of 10 initiatives. 

Selected Agencies Have 

Generally Considered 

Small Businesses in Their 

Agency-wide Strategic 

Sourcing Initiatives
Page 13 GAO-14-126 Strategic Sourcing and Small Businesses

• For NASA’s Solutions for Enterprise-Wide Procurement IV contract for 

information technology awarded in November 2005, the agency 

considered small businesses in multiple stages of the contracting 

process by setting a goal of 30 percent small business participation in 

its acquisition strategy documentation and setting aside part of the 

contract for small businesses.

• DHS’s FirstSource II contract for information technology products 

awarded in September 2012 included set-asides for all five categories 

of small businesses (small businesses in general and more 

specifically for 8(a) firms, service-disabled veteran-owned, womenowned, and HUBZone small businesses).18

• Army’s Expedited Professional and Engineering Support Services 

program awarded contracts to small businesses, including small 

disadvantaged businesses, 8(a) small businesses, and woman-owned 

small businesses.19

For agency-wide strategic sourcing initiatives that did not include contract 

awards to small businesses, in general the agencies showed 

consideration of small businesses through subcontracting requirements or 

by including small business officials in the approval process. For 

example, NASA and Army determined that small businesses might be 

unable to provide the services needed for their Enterprise Application 

Service Technology and Next Generation Wireless initiatives, 

respectively. However, small businesses were identified as being able to 

provide specialty services, and large businesses were encouraged to 

partner with small businesses. In addition, for NASA, the robustness of 

subcontracting plans was part of its evaluation of proposals received by 

potential applicants. For initiatives involving a weapons system and gun 

parts, DLA required the subcontracting plans to include small businesses. 

Since the program started in January 2005, 42 

percent of obligations have gone to small businesses. 

 18SBA’s 8(a) Business Development Program is the government’s primary means of 

developing small businesses owned by socially and economically disadvantaged 

individuals, including firms owned by Alaska Native Corporations and Indian tribes. 

19The Expedited Professional and Engineering Support Services program is a group of 27 

blanket purchase agreements divided into four domains (business and analytical, logistics, 

programmatic, and technical) that provide a full array of advisory and assistance services 

to the Army. Agencies use blanket purchase agreements to award contracts to multiple 

vendors for commercial goods and services. Under such agreements, funds are obligated 

when orders are placed. 
Page 14 GAO-14-126 Strategic Sourcing and Small Businesses

DHS and HUD determined that initiatives for vaccines for a pandemic 

outbreak and multifunctional printing devices, respectively, did not have 

opportunities for small businesses, but an OSDBU representative was 

included in the planning for the contract and approved documents such 

as the acquisition plan or contract award. For an initiative involving printer 

devices, Interior documented on a small business form its determination 

that small businesses could not provide the services needed.

The role of the OSDBU in strategic sourcing initiatives varied among the 

agencies we reviewed. DOD, HUD, Interior, and NASA officials noted that 

the role of the OSDBU in strategic sourcing was the same as its role in 

traditional procurement. At DHS, the OSDBU has a role in determining 

whether to implement a strategic sourcing initiative and signs the 

business case for initiatives. It also coordinates with the department’s 

strategic sourcing program office and working group. Further, some 

agencies—such as DOD (including Army and DLA), NASA, and Interior—

had strategic sourcing committees or councils in place that included the 

OSDBU.

While our review of agency documentation indicates that agencies do 

generally consider small businesses and small disadvantaged businesses 

in their strategic sourcing initiatives, agency data and performance 

measures that would provide a more precise understanding of the 

inclusion of small businesses in strategic sourcing are limited. FPDSNG—the federal government’s current system for tracking information on 

contracting actions—cannot be used to track the extent of strategic 

sourcing across the federal government and its effects on small 

businesses because there is no strategic sourcing category or 

designation in the system.20

 20Although FPDS-NG does not have a separate field that designates strategic sourcing 

initiatives, OMB staff told us that the agency asked Chief Acquisition Officers in January 

2013 to include information in the description field identifying the contract as part of a 

government-wide strategic sourcing initiative. However, such information, if provided, 

would not help to identify agency-specific initiatives. 

As a result, each individual agency must 

maintain data on its own strategic sourcing initiatives if it wants to track 

them. Although GSA has collected baseline data on proposed 

government-wide initiatives, it has not developed a performance measure 

to determine changes in small business participation going forward. 

Further, DHS has collected some data on contracts awarded to small 

businesses under strategic sourcing initiatives, but it and the other 

Agency Data and 

Measures on 

Inclusion of Small 

Businesses in 

Strategic Sourcing 

Are Limited, and 

OMB Has Not 

Monitored Agencies’ 

Efforts
Page 15 GAO-14-126 Strategic Sourcing and Small Businesses

agencies in our review generally did not have baseline data and 

performance measures to determine how small businesses were affected 

by strategic sourcing.

For ongoing government-wide strategic sourcing initiatives, GSA was able 

to provide us with data on the total number of vendors, the number of 

small business vendors, and small business spending (see table 1). GSA 

also had some data on two of its planned initiatives for fiscal year 2013. 

For example, the agency expected to award 16 of 23 contracts under the 

maintenance, repair, and operations initiative to small businesses. In 

addition, it expected 17 of 21 contracts awarded under the janitorial and 

sanitation supplies initiative to go to small businesses.21

Table 1: Data on Three of GSA’s Ongoing Government-wide Strategic Sourcing 

Initiatives, 2013

Because all three 

initiatives planned for fiscal year 2013 are in the beginning phases, GSA 

has not yet started to collect data on small business spending.

Total number of 

vendors

Number of small 

business vendors

Cumulative small 

business spenda

Domestic delivery 

services

(percentage)

1 0 0%

Office supplies II 15 13 76

Print management 

(functional area I) 5 5 100

Print management 

(functional area II) 9 3 11

Source: GSA documents and data systems.

a

Spend data on domestic delivery services are as of February 2013; office supplies spend data are as 

of April 2013; and print management data are as of March 2013.

Most of the selected agencies in our review collect only limited 

information on their agency-wide strategic sourcing initiatives. DHS, the 

one exception, collects information on its strategic sourcing initiatives in a 

quarterly strategic sourcing dashboard, which includes information on 

small business participation. The dashboard data show that from fiscal 

 21GSA officials stated that as of October 2013, they had not yet determined how many 

contracts would be awarded under the print management functional areas III and IV 

initiative and to what types of businesses.
Page 16 GAO-14-126 Strategic Sourcing and Small Businesses

year 2005 through the first quarter of fiscal year 2013, DHS implemented 

72 strategic sourcing initiatives, and 43 percent of the spending went to 

small businesses. In addition, DHS was able to produce a report that 

broke down spending to small businesses by socioeconomic categories 

such as women-owned and HUBZone small businesses. Army, DLA, 

NASA, Interior, and HUD were able to provide lists of their strategic 

sourcing initiatives at our request, but were not able to provide data on 

small business spending through all of the initiatives.

We also found that GSA could provide some baseline data, but had not 

developed performance measures to determine the extent to which small 

businesses had been affected by strategic sourcing initiatives. Our review 

of three current government-wide strategic sourcing initiatives showed 

that GSA did not include the baseline information on small business 

participation in key documents used in developing and tracking the 

initiatives. However, in a congressional testimony on GSA’s initiatives, 

OMB stated that total dollars going to small businesses for one of the 

initiatives, office supplies, increased from a baseline of 67 percent prior to 

the strategic sourcing initiative to 76 percent after strategic sourcing.22

Moreover, our review of selected agencies’ documentation, including 

strategic sourcing reports provided to OMB and information prepared for 

OMB’s acquisition status sessions, found that the agencies generally did 

Our review of documentation for three proposed government-wide 

initiatives showed that GSA had developed baselines for small business 

use prior to strategic sourcing. For instance, with the janitorial and 

sanitation supplies initiative, the baseline for small business participation 

was 26 percent of the spending in fiscal year 2011. For the maintenance, 

repair, and operations initiative, the baseline for small business 

participation was 55 percent of the spending in fiscal year 2012. For print 

management functional areas III and IV, the baseline for small business 

participation was 5 percent. However, GSA had not yet developed the 

performance measure it plans to use to determine changes in small 

business participation going forward, as outlined in its 2008 guidance and 

OMB’s December 2012 memorandum. GSA officials stated one of GSA’s 

goals was to improve how it measures small business participation.

 22Joseph G. Jordan, Administrator for Federal Procurement Policy, OMB, Putting the 

Strategy in Sourcing: Challenge and Opportunities for Small Business Contractors, 

testimony before the House Subcommittee on Contracting and Workforce, Committee on 

Small Business, 113th Cong., 1st sess., June 13, 2013. 
Page 17 GAO-14-126 Strategic Sourcing and Small Businesses

not include baseline data or performance measures on changes in the 

use of small businesses.23 DHS’s dashboard does not include such 

information. The agencies’ strategic sourcing reports generally provided a 

broad overview of their strategic sourcing programs, but did not provide 

specific baseline data on the inclusion of small businesses prior to 

strategic sourcing or performance measures for the inclusion of small 

businesses going forward.24 Similarly, the information prepared for 

acquisition status sessions contained a section on strategic sourcing that 

did not include such baseline data and performance measures. In a 

previous report on strategic sourcing, we found that DOD and the 

Department of Veterans Affairs 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.25

As previously discussed, OMB’s 2005 memorandum requires agencies to 

develop baseline data, such as data on small business spending, and 

report annually on changes in relation to the baseline. Also, its 2012 

memorandum states that all proposed strategic sourcing agreements 

must establish a baseline for small business use under current strategies 

Therefore, we recommended that these agencies set goals 

and establish metrics to monitor and track progress towards strategic 

sourcing goals. Both agencies agreed with the recommendation and have 

since told us they are working to develop goals and metrics. However, the 

agencies had not completed their efforts as of August 2013. Similarly, we 

found in this review that agencies lacked baseline data and performance 

measures on the inclusion of small businesses in strategic sourcing.

 23OMB first required agencies to report on strategic sourcing in annual strategic sourcing 

reports. OMB now asks agencies to prepare information on strategic sourcing for their 

acquisition status sessions. These sessions are periodic briefings that agencies provide to 

OMB to assess agencies’ progress in acquisition practices and results. The briefings 

include information on general contract spending, use of strategic sourcing, the acquisition 

workforce, and opportunities for small businesses. 

24In its section of DOD’s 2006 report, DLA provided baseline data on small business 

spending for one large initiative. However, the DOD reports we reviewed for fiscal years 

2005 and 2007 did not include such information. In addition to the information included in 

the strategic sourcing reports, DOD provided data for some of Air Force’s strategic 

sourcing initiatives that included small business spending prior to (baseline) and after 

strategic sourcing. However, Army and DLA—the components that were the focus of our 

review—could not provide such data. 

25GAO-12-919. The four agencies included in this review were DOD, DHS, and the 

Departments of Veterans Affairs and Energy. 
Page 18 GAO-14-126 Strategic Sourcing and Small Businesses

and set goals to meet or exceed that baseline under the new vehicles. In 

addition, federal internal control standards state that operating information 

is needed to, among other things, determine whether the agency is 

achieving its compliance requirements under various laws and 

regulations.26

In addition, although OMB’s memorandums state that agencies should 

report baseline data and performance measures on the inclusion of small 

businesses in strategic sourcing, OMB has not monitored agencies’ 

compliance in reporting baseline data and performance measures. OMB 

has monitored the implementation of strategic sourcing by having 

agencies submit annual strategic sourcing reports from fiscal year 2005 to 

fiscal year 2007 and prepare information for acquisition status sessions 

from fiscal year 2010 to fiscal year 2012. (There was no reporting in place 

for fiscal years 2008 or 2009.) Virtually none of this information included 

baseline data or measures of the effect of strategic sourcing on small 

businesses. According to OMB staff, the most recent acquisition status 

sessions were held prior to issuance of the December 2012 

memorandum. They stated that they plan to modify the information 

required to collect information on strategic sourcing and small 

businesses.

Although our review indicates that GSA has collected 

baseline data on proposed government-wide initiatives, it has not 

developed a performance measure to determine changes in small 

business participation going forward. Further, we found that the data and 

measures maintained by the other agencies in our review do not meet the 

OMB reporting requirements. Officials at most of these agencies told us 

that they generally limit their tracking of strategic sourcing initiatives to 

what OMB specifically requested for the acquisition status sessions. 

Officials at two agencies also cited the fact that their total small business 

spending had increased since they started implementing strategic 

sourcing as an indication that small businesses had not been negatively 

impacted. However, the OMB memorandums require baseline data and a 

measure of the change in small business spending for each individual 

initiative. The absence of such data and measures makes it difficult to 

determine the effect of strategic sourcing initiatives on small businesses.

27

 26

However, the current template does not link strategic 

sourcing with small business. Federal internal control standards state that 

GAO/AIMD-00-21.3.1. 

27OMB staff also noted that they have discussions beyond the acquisition status sessions 

that present opportunities for further consideration of strategic sourcing. 
Page 19 GAO-14-126 Strategic Sourcing and Small Businesses

monitoring should assess the quality of performance over time.28 Without 

effective monitoring, it will be difficult for OMB to help ensure that 

agencies are tracking the impact of strategic sourcing on small 

businesses.

Since 2005, OMB has encouraged federal agencies to implement 

strategic sourcing in order to increase cost savings and to consider the 

effects of strategic sourcing on goals for small businesses. As recently as 

December 2012, OMB reiterated the importance of strategic sourcing and 

stated that agencies should seek to increase participation by small 

businesses. In addition, OMB guidance states that agencies must 

develop the baseline data and performance measures necessary to 

determine how strategic sourcing initiatives have affected small 

businesses. Despite this guidance and federal internal control standards 

stating that information is necessary to determine whether agencies are in 

compliance with requirements under various laws and regulations, the 

agencies in our review generally did not have baseline data and 

performance measures to determine how small businesses had been 

affected by strategic sourcing. GSA had collected baseline data on 

proposed government-wide initiatives, but had not developed a 

performance measure to track the change in small business participation 

going forward. DHS had collected some data on contracts awarded to 

small businesses under strategic sourcing initiatives, but it and the other 

agencies in our review generally did not have baseline data and 

performance measures to determine how small businesses were affected 

by strategic sourcing. Without such data and measures, it is difficult to 

determine the effect of strategic sourcing initiatives on small businesses. 

Moreover, OMB has not monitored agencies’ compliance with its 

requirements to report baseline data and performance measures on the 

inclusion of small businesses. Without effective monitoring, it will be 

difficult for OMB to help ensure that agencies are tracking the impact of 

strategic sourcing on small businesses. Such tracking will be increasingly 

important as the use of strategic sourcing in future federal procurement 

grows.

 28GAO/AIMD-00-21.3.1.

Conclusions
Page 20 GAO-14-126 Strategic Sourcing and Small Businesses

Consistent with OMB guidance and to track the effect of strategic 

sourcing on small businesses, we recommend that (1) the Administrator 

of GSA establish performance measures on the inclusion of small 

businesses in strategic sourcing initiatives and (2) the Secretaries of 

DOD, DHS, HUD, and the Interior, and the Administrator of NASA collect 

baseline data and establish performance measures on the inclusion of 

small businesses in strategic sourcing initiatives.

To help ensure that agencies are tracking the effect of strategic sourcing 

on small businesses, we recommend that OMB’s Administrator for 

Federal Procurement Policy monitor agencies’ compliance with the 

requirement to maintain baseline data and performance measures on 

small business participation in strategic sourcing initiatives.

We sent a draft of this report to eight agencies for their review and 

comment. DOD, DHS, HUD, GSA, NASA, and SBA provided written

comments, which are reproduced in appendixes II through VII. Interior 

and OMB provided comments by e-mail. DHS, DLA (a component within 

DOD), and OMB also provided technical comments, which have been 

incorporated as appropriate. DOD, DHS, HUD, GSA, and OMB agreed 

with our conclusions and recommendations. Interior partially agreed, and 

NASA disagreed. Although we did not make a recommendation to SBA, it 

agreed with our observations. The agencies’ specific comments and our 

responses are summarized below.

• DOD agreed with our recommendation to collect baseline data and 

establish performance measures on the inclusion of small businesses 

in strategic sourcing initiatives and acknowledged the lack of complete 

baseline data on strategic sourcing initiatives and small business 

utilization. The agency also mentioned examples of strategic sourcing 

initiatives that have included 100 percent set-asides for small 

businesses. To address our recommendation, DOD stated that 

strategic sourcing teams will be required to begin building baseline 

data for future initiatives to provide metrics on small business 

participation. In one of its technical comments, DLA disagreed with 

our statement that it could not provide data on small business 

spending through its strategic sourcing initiatives, noting that it had 

provided data on total small business spending over time. However, 

as we noted in the report, the OMB memorandums require baseline 

data and a measure of the change in small business spending for 

each individual initiative. Therefore, we made no change to the report. 

Recommendations for 

Executive Action

Agency Comments 

and Our Evaluation
Page 21 GAO-14-126 Strategic Sourcing and Small Businesses

• DHS agreed with our recommendation to collect baseline data and 

establish performance measures on the inclusion of small businesses 

in strategic sourcing initiatives and stated that in addition to its current 

collection of small business spend data and analysis performed on 

strategic sourcing initiatives, the agency plans to review how it 

collects baseline data and establishes performance measures and 

intends to make changes to more clearly meet OMB’s requirements. 

DHS stated that it intends to complete this effort by March 31, 2014.

DHS also stated many of its strategic sourcing vehicles are set-aside 

100 percent for small business or include substantial small business 

tracks. As we noted in the report, from fiscal year 2005 through the 

first quarter of fiscal year 2013, DHS implemented 72 strategic 

sourcing initiatives, and 43 percent of the spending went to small 

businesses. 

• HUD agreed with our recommendation to collect baseline data and 

establish performance measures on the inclusion of small businesses 

in strategic sourcing initiatives and issued guidance on December 17, 

2013, to document the process for collecting baseline data and 

establishing metrics on small business participation in strategic 

sourcing initiatives going forward. Implementing and following through 

on this guidance should help in tracking the effects of HUD’s strategic 

sourcing initiatives on small businesses.

• GSA agreed with our findings and recommendation to establish 

performance measures on the inclusion of small businesses in 

strategic sourcing initiatives and commented that it would coordinate 

internally to collect small business participation metrics against 

baseline data for its government-wide strategic sourcing initiatives and 

provide the results to OMB in order for OMB to monitor compliance 

with its requirements.

• In an e-mail received on December 24, 2013, OMB staff stated that 

OMB agreed with the recommendation to monitor agencies’ 

compliance with the requirement to maintain baseline data and 

performance measures on small business participation in strategic 

sourcing initiatives.

• In an e-mail received on December 18, 2013, the audit liaison for the 

Department of the Interior stated that Interior partially agreed with the 

recommendation to collect baseline data and establish performance 

measures on the inclusion of small businesses in strategic sourcing 

initiatives. The agency acknowledged it does not currently collect data 

that specifically track the impact of strategic sourcing on small 
Page 22 GAO-14-126 Strategic Sourcing and Small Businesses

businesses and agreed with the need for effective planning and 

monitoring of strategic sourcing initiatives, including establishing 

performance measures and small business goals. Interior suggested 

that a more effective approach would be to work with OMB and other 

agencies similar to Interior to develop common approaches for 

collecting baseline data and setting performance measures. We 

believe such action would be consistent with the intent of the

recommendation.

• NASA disagreed with our recommendation to collect baseline data 

and establish performance measures on the inclusion of small 

businesses in strategic sourcing initiatives and stated it already tracks 

small business spending for the entire agency. In addition, NASA 

cited specific regulations that it follows in the Federal Acquisition 

Regulation that are related to small business and stated that its 

acquisition process allows for all contracting, including strategic 

sourcing, to set small business goals. However, as we noted in the 

report, the OMB memorandums require baseline data and a measure 

of the change in small business spending for each individual initiative. 

In addition, we concluded that such tracking will be increasingly 

important as the use of strategic sourcing grows. Therefore, we 

continue to believe that our recommendation is valid and should be 

implemented.

• SBA noted that agencies have generally considered small business 

participation as a percentage of total contract dollars and stated that it 

has been an advocate for establishing a baseline of small business 

performance, with triggers requiring small business participation 

where agencies fall below those baselines. SBA also noted that 

although strategic sourcing may result in savings for the federal 

government, strategic sourcing generally reduces the number of 

participating suppliers and vendors, including small businesses, and 

the impact on small businesses has not been quantified. 

As agreed with your offices, unless you publically announce the contents 

of this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Director of OMB; the 

Secretaries of DOD, DHS, HUD, and the Interior; the Administrators of 

GSA, NASA, and SBA; and other interested parties. This report will also 

be available at no charge on GAO’s website at http://www.gao.gov.

If you or your staff have any questions about this report or need additional 

information, please contact me at (202) 512-8678 or shearw@gao.gov. 
Page 23 GAO-14-126 Strategic Sourcing and Small Businesses

Contact points for our Offices of Congressional Relations and Public 

Affairs may be found on the last page of this report. Staff 

acknowledgements are provided in appendix VIII.

William B. Shear

Director, Financial Markets and

 Community Investment
Appendix I: Objectives, Scope, and 

Methodology

Page 24 GAO-14-126 Strategic Sourcing and Small Businesses

Our objectives for this report were to discuss (1) the ways in which the 

Office of Management and Budget (OMB) and the General Services 

Administration (GSA) have considered small businesses in their strategic 

sourcing guidance and GSA and selected agencies have considered 

small businesses in their strategic sourcing initiatives and (2) the extent to 

which data and performance measures are available on the inclusion of 

small businesses in government-wide and selected agencies’ internal 

strategic sourcing initiatives. Small businesses include those 

unconditionally owned and controlled by socially and economically 

disadvantaged individuals (small disadvantaged businesses).

To describe the ways in which OMB, GSA, and selected agencies have 

considered various categories of small businesses in their strategic 

sourcing guidance and efforts, we reviewed OMB and GSA guidance on 

strategic sourcing.1 These documents included OMB memorandums and 

GSA’s Concept of Operations for government-wide strategic sourcing 

efforts. We also reviewed documentation on three ongoing governmentwide strategic sourcing initiatives managed by GSA (domestic delivery 

services, office supplies, and print management) to determine steps taken 

to consider small businesses.2

 1

We included OMB in our scope because it includes the Office of Federal Procurement 

Policy and is the agency responsible for issuing guidance on strategic sourcing and 

approving government-wide strategic sourcing initiatives. We included GSA because it is 

the lead agency for most government-wide strategic sourcing initiatives. 

In addition, we reviewed documentation on 

three proposed initiatives managed by GSA (janitorial and sanitation 

supplies; maintenance, repair, and operations; and print management 

functional areas III and IV). At selected agencies, we reviewed any 

guidance on strategic sourcing and documentation on a sample of 

specific agency-wide initiatives to determine how small businesses were 

2

We selected the three initiatives that had been implemented by fiscal year 2012 and that 

were ongoing at the time of our review. The domestic delivery services initiative offers 

delivery service for small packages. The office supplies initiative offers a catalogue of 

consumable office supplies. The print management initiative reduces equipment needed 

for printing, copying, scanning, and faxing. GSA has implemented multiple versions of 

some of these initiatives. For the purposes of this report, we generally focused on the 

second generations of the domestic delivery services and office supplies initiatives and 

functional areas I and II of the print management initiative because these were the 

versions ongoing at the time of our review. We did not select the telecommunications

expense management services initiative, which involved wireless rate plans, because it 

expired in July 2013. We do not discuss GSA’s current wireless initiative because it was 

awarded in May 2013. 

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 25 GAO-14-126 Strategic Sourcing and Small Businesses

considered in the strategic sourcing process.3 The type of documentation 

we reviewed for GSA and our selected agencies generally included spend 

analyses, business case documentation, acquisition plans, requests for 

quotations, small business review forms, and excerpts from the awarded 

contracts. The selected agencies included in our review were the 

Departments of Defense (DOD), specifically the Department of the Army 

(Army) and the Defense Logistics Agency (DLA); Homeland Security 

(DHS); Housing and Urban Development (HUD); and the Interior (Interior) 

and the National Aeronautics and Space Administration (NASA). We 

selected these agencies to ensure a range of agencies in terms of dollars 

they awarded to small businesses in fiscal year 2012, the extent to which 

they have adopted strategic sourcing, scores on the Small Business 

Administration’s (SBA) procurement scorecards in fiscal years 2010 and 

2011, and membership in the Strategic Sourcing Leadership Council.4

To evaluate the extent to which data and performance measures were 

available on the inclusion of small businesses in government-wide and 

selected agencies’ internal strategic sourcing initiatives, we reviewed the 

data elements in the Federal Procurement Data System-Next Generation 

(FPDS-NG) to determine if there were data on strategic sourcing. In 

addition, we analyzed GSA data as of 2013 on government-wide strategic 

Finally, we interviewed OMB, GSA, SBA, and selected agency officials 

from procurement offices and Offices of Small and Disadvantaged 

Business Utilization about the extent to which the agencies have 

considered small businesses in the implementation of strategic sourcing. 

 3

We chose a purposive, nonrandom sample of 12 strategic sourcing initiatives based on 

factors such as timing of the initiative, inclusion of small businesses, and commodity type. 

More specifically, from each of the selected agencies (DOD, specifically Army and DLA; 

DHS; HUD; Interior; and NASA), we chose two strategic sourcing initiatives that were 

undertaken between fiscal year 2005 and fiscal year 2012, generally one that included 

only large businesses and one that also included small businesses. At the Departments of 

Homeland Security, Housing and Urban Development, and the Interior, we had to request 

replacement initiatives due to a lack of information on the initial initiative(s) we selected. At 

DLA, both of the initiatives we examined involved only large businesses. The Departments 

of Housing and Urban Development and the Interior were able to provide information on 

one initiative involving only large businesses. As a result, our final sample consisted of 10 

initiatives. 

4

The Strategic Sourcing Leadership Council was created in December 2012 and consists 

of the seven largest procurement agencies and SBA. The council was charged with 

leading the government’s efforts to increase the use of strategic sourcing. 
Appendix I: Objectives, Scope, and 

Methodology

Page 26 GAO-14-126 Strategic Sourcing and Small Businesses

sourcing initiatives.5 We also determined whether GSA had taken steps to 

track the effect of recently proposed strategic sourcing initiatives on small 

businesses by reviewing relevant documentation on these initiatives. In 

addition, we reviewed available documentation at the selected agencies, 

including strategic sourcing reports provided to OMB and information 

prepared for OMB’s acquisition status sessions, to identify any data and 

performance measures that track the inclusion of small businesses. At 

DHS, we also reviewed the agency’s strategic sourcing dashboard, which 

contained data on its initiatives from fiscal year 2005 through the first 

quarter of fiscal year 2013. We assessed the reliability of data from 

FPDS-NG, GSA, and DHS by interviewing knowledgeable officials, 

reviewing documents about the sources of the data, and comparing 

selected data to other sources and determined they were sufficiently 

reliable for the purpose of reporting government-wide and agency 

strategic sourcing spending. We also compared available data and 

performance measures to OMB’s guidance and federal internal control 

standards.6

We conducted this performance audit from February 2013 to January 

2014 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 objectives.

Further, we interviewed OMB, GSA, SBA, and selected 

agency officials about current and planned efforts to collect data and track 

performance measures on strategic sourcing and the inclusion of small 

businesses.

 5

FPDS-NG does not have a separate field that designates strategic sourcing initiatives 

and generally does not include purchases of $3,000 or less. GSA has developed portals to 

collect information on spending for its government-wide strategic sourcing initiatives, 

including small business spending through the initiatives. The information collected 

includes purchases not captured in FPDS-NG.

6

GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999).
Appendix II: Comments from the Department 

of Defense

Page 27 GAO-14-126 Strategic Sourcing and Small Businesses

Appendix II: Comments from the Department 

of Defense
Appendix II: Comments from the Department 

of Defense

Page 28 GAO-14-126 Strategic Sourcing and Small Businesses
Appendix III: Comments from the Department 

of Homeland Security

Page 29 GAO-14-126 Strategic Sourcing and Small Businesses

Appendix III: Comments from the 

Department of Homeland Security
Appendix III: Comments from the Department 

of Homeland Security

Page 30 GAO-14-126 Strategic Sourcing and Small Businesses
Appendix IV: Comments from the Department 

of Housing and Urban Development

Page 31 GAO-14-126 Strategic Sourcing and Small Businesses

Appendix IV: Comments from the 

Department of Housing and Urban 

Development 
Appendix V: Comments from the General 

Services Administration

Page 32 GAO-14-126 Strategic Sourcing and Small Businesses

Appendix V: Comments from the General 

Services Administration
Appendix V: Comments from the General 

Services Administration

Page 33 GAO-14-126 Strategic Sourcing and Small Businesses
Appendix VI: Comments from the National 

Aeronautics and Space Administration

Page 34 GAO-14-126 Strategic Sourcing and Small Businesses

Appendix VI: Comments from the National 

Aeronautics and Space Administration
Appendix VI: Comments from the National 

Aeronautics and Space Administration

Page 35 GAO-14-126 Strategic Sourcing and Small Businesses
Appendix VII: Comments from the Small Business 

Administration

Page 36 GAO-14-126 Strategic Sourcing and Small Businesses

Appendix VII: Comments from the Small 

Business Administration
Appendix VIII: GAO Contact and Staff 

Acknowledgments

Page 37 GAO-14-126 Strategic Sourcing and Small Businesses

William B. Shear, (202) 512-8678 or shearw@gao.gov

In addition to the contact named above, Paige Smith (Assistant Director), 

Pamela Davidson, Meredith Graves, Julia Kennon, Nadine Garrick 

Raidbard, William Russell, Jessica Sandler, Jennifer Schwartz, and 

William T. Woods made key contributions to this report.

Appendix VIII: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff Acknowledgments

(250711)
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