Strategic Sourcing Group Aims To Cut Prices Federal agencies will begin pooling their buying power this spring to drive down prices of five commodity items in a new Strategic Sourcing Initiative. Leaders of the initiative said “Wave One” will target purchases of copiers, printers, office supplies, domestic delivery services and handheld wireless devices/services such as cell phones. Twenty-two agencies have signed up to participate in strategic sourcing of some or all of those commodities, said Tom Sharpe, chief procurement executive of the Treasury Department and co-chairman of the interagency working group. The prices the government pays “can be markedly improved” by leveraging buying power, he told a Feb. 15 meeting of the Coalition for Government Procurement, a contractor group. But several vendors said they are already under pressure to discount the catalog prices posted on their GSA schedule contracts. Discounting “is happening every minute,” one said. Sharpe said participating agencies have pledged to increase their purchases from small businesses: “Every time you hear me say ‘strategic sourcing’ you’re going to hear me say ‘small business.’ We want to increase small business participation in all socioeconomic categories.” He said the initiative is not intended to reduce the number of vendors, but rather to have “fewer contracts with the same vendors” by ordering in quantity. Details of how strategic sourcing will work are not yet certain. Purchases could be made through GSA schedules, new blanket purchasing agreements or new RFPs, said the working group’s co-chair, Mary Davie, acting assistant commissioner of GSA’s Federal Acquisition Service. She said working groups are currently reviewing agencies’ spend analyses to determine what they are buying and how they are buying it. The groups will begin formulating acquisition strategies in the spring. Davie described strategic sourcing as “an 80% solution” because agencies should be able to buy that portion of their requirements strategically. Sharpe said the initiative is not focused on price alone: “It’s best value. We’re not forgetting about quality or delivery.” Several contractors said strategic sourcing will undermine the GSA schedules, and Sharpe acknowledged, “These initiatives are going to put [price] pressure on the schedules.” He said the schedules were designed to be a convenient source for relatively small procurements, while the government should be able to negotiate bigger discounts on large-volume purchases. OMB’s Office of Federal Procurement Policy launched the strategic sourcing initiative last May when it directed agencies to choose three commodities to be purchased strategically. OFPP officials pointed to GSA’s SmartBuy program for governmentwide software licenses as an example of the kind of leveraging they were looking for. David Safavian, then administrator of OFPP, predicted strategic sourcing would bring about “radical” change in the way the government purchases commodities. Agencies are proceeding with their own strategic sourcing plans for other commodities in addition to the governmentwide initiative. Industry executives attending the conference in Arlington, VA, urged the working group to seek advice from contractors before making final decisions. Sharpe said there would be an opportunity for industry to participate. Sharpe said a “Wave Two” of strategic sourcing initiatives might include services as well as commodities. No timetable for that has been determined.