GSA Cuts New Deal on Office Supplies

The torrid pace of activity on the management front over at OMB continues today, with the announcement of the first in a series of new governmentwide blanket purchase agreements negotiated by the General Services Administration, covering office supplies.

Dan Gordon, head of the Office of Federal Procurement Policy, will testify on Capitol Hill this afternoon about the new BPAs. The interesting part of the new approach is in Peter Orszag's description of it on the OMB blog: "unlike BPAs signed in the past, which typically covered only one agency, these BPAs apply to everyone, in every federal agency. Now every federal employee who buys office supplies from the winning contractors will automatically get the better prices GSA negotiated."

This marks a reversal of sorts of a trend that started several years ago known as "strategic sourcing." Under that approach, some agencies figured they actually could negotiate better deals for themselves than GSA could for government as a whole. Even before that, with the dawn of governmentwide acquisition contracts in the late 1990s, agencies looked to open up their contracts to other agencies, openly competing with contracts negotiated by GSA. Now it looks like the pendulum is swinging back in GSA's direction.

Update, 4:36 p.m.: Here's Gordon's testimony from the hearing. He said, "The efficiency of interagency and agency-wide contracts makes their popularity easy to understand, but concerns that we are not getting the best possible returns from these vehicles are also well founded. We have made some progress, but we must make much more."

On the issue of leveraging government's buying power, he noted:

Agency spending for many commonly-used items is typically fragmented across multiple departments, programs, and functions, which means that agencies often rely on hundreds of separate contracts, with pricing that varies widely. The result is that agencies often do not get the best price they could, leading to an unacceptable waste of taxpayer dollars.

We are working with agencies to change these inefficient practices. Effective strategic sourcing begins with good acquisition planning. The first step is convening a team of agency experts on the commodity at issue to understand agencies' needs, share pricing information, analyze spend data, and identify common requirements. This information allows us to maximize the benefits of competition by securing up-front spending commitments from agencies to increase vendor interest in the procurement (a point whose importance industry has underscored repeatedly). The competition should be structured in a way to maximize small business participation, and we should use innovative practices, such as reverse auctions, to drive down prices. Wherever appropriate, we should structure pricing to include ongoing price reductions during the life of the contract, as the quantity of the government's purchases passes cumulative thresholds. Finally, we need to require that vendors provide agency customers with detailed spend data so they can continually analyze their internal business processes, identify more efficient practices, achieve additional savings, and share best demonstrated practices with the commodity team in crafting future agreements.

Gordon said the new office supply BPAs will cut procurement costs for these items by as much as 20 percent, or close to $200 million, over the next four years.