Government agencies urged to save money by banding together, buying in bulk
Thursday, July 1, 2010
Government purchasing officials said Wednesday that they will push agencies to buy goods such as furniture and office supplies as if they were shopping at warehouse retailers Costco and Sam's Club.
Agencies will be encouraged to use "blanket purchase agreements," getting savings for taxpayers by banding together to buy things in bulk, purchasing officials said at a hearing of the Senate's subcommittee on contracting oversight.
Under new acquisition guidelines, government purchasing officials have established 12 new acquisition procedures that will apply to every agency. They could save about $200 million in the next four years, according to officials at the Office of Management and Budget.
The federal government spends more than $500 billion a year buying goods and services. With that kind of purchasing power, said Sen. Scott Brown (Mass.), the subcommittee's ranking Republican, "you expect to get a break and get the best bang for your dollar."
"The federal government should be receiving the best prices in the marketplace, but unfortunately that's rarely the case," he said.
Daniel Gordon, head of the Office of Federal Procurement Policy, said the handling of interagency contracts has improved, but he agreed with some of the criticism leveled by lawmakers. "We have much more work to do in terms of leveraging the government's buying power," he said.
A study released in April by the Government Accountability Office found little oversight and accountability on about $60 billion worth of interagency contracts that many agencies use.
The auditors raised concerns about duplication, noting that "many of the same vendors provided similar products and services on multiple contracts." They said that the problem led to cost increases for "both the vendor and the government" and resulted in "missed opportunities to leverage the government's buying power."
Over the past decade, the number of workers issuing and overseeing federal procurement has dwindled, creating problems in the management of contracts, auditors said. The Obama administration has said it is pushing to reform how the government buys goods and services.
At Wednesday's hearing, Sen. Claire McCaskill (D-Mo.), chairman of the subcommittee, asked the five federal contracting officials before her panel how confident they are that government purchasing officers get the lowest price in buying goods.
At first, there was silence from the officials. Then Diane Frasier, director of the acquisition office at the National Institutes of Health, answered.
"The community is taught they should be reviewing and getting goods at the best price," she said of contracting officers. "In practice, that is debatable."