With steep budget cuts threatening ahead, Obama administration officials are giving a renewed push to strategic sourcing for federal procurements.

The goals are saving money and being more efficient, primarily by centralizing and standardizing. However, the impact on small vendors has been controversial.

The government is looking for savings in about $150 billion worth of programs of the total $535 billion federal procurement portfolio, Joe Jordan, administrator of the Office of Federal Procurement Policy, said at a July 17 meeting of the President’s Management Advisory Board.

“The goal would be to try to save $10 billion over the next two years through strategic sourcing,” Jordan said. “It is a real number, an aggressive man-on-the-moon type target, but one that we think is achievable.”

To reach that level, agencies would have to utilize more of the existing contracts under the Federal Strategic Sourcing Initiative (FSSI), including an FSSI contract for office supplies initiated in 2010. General Services Administration (GSA) officials said the office supply program has saved $39 million in its first 18 months, according to Federal News Radio.

Not everyone sees benefits. While small business set-asides are included in the FSSI initiatives, consolidation usually means fewer vendors have access to opportunities, owners contend.

Small business owners on GSA Schedule 75 for office supplies and services—but not on the office supply FSSI contract—say they have lost substantial revenues and have been forced to lay off employees due to less work. A group of those vendors recently organized the StopFSSI.org coalition.

Other small firms also predict a tough road for vendors who do not win a place on the new vehicles. “If you’re not on the (consolidated contract), then what do you do for the next 10 years?” asked Ricardo Silva, director of business development for Solutions by Design LLC, an 8a firm in Vienna, VA.

GSA officials emphasize that strategic sourcing is intended tohelp meet socio-economic goals, including small business set-asides, and not just lower prices, Jeffrey Koses, director of the GSA’s Federal Acquisition Service’s Office of Acquisition Operations, said at a recent industry event.

The GSA, Homeland Security Department and Navy are among the agencies implementing strategic sourcing programs.

The GSA began implementing the FSSI in 2005, forming new centralized buying programs. GSA recently announced it is removing underperforming vendors from GSA schedules and closing off parts of schedules to new entrants.

Under FSSI, in addition to office supplies, there are acquisition vehicies for Express and Ground Domestic Delivery Services (FSSI DDS2), Print Management (FSSI PM) and Wireless Telecommunications Expense Management Services (FSSI TEMS).

Under development are Wireless solutions (FSSI Wireless), SmartBUY commercial software (FSSI SB2.0) and Information Resources (FSSI IR), for which the Library of Congress is the executive agent.

The initiatives are dampening prices, Koses said. “We have seen a 4.5% decrease in office supply pricing vs. a 3% increase in wholesale markets,” he said.

DHS currently has 42 strategic sourcing initiatives and has channeled about $2.8 billion in annual spending through strategic sourcing programs out of total expenditures of about $14 billion, said Michael Smith, director of the strategic sourcing program office.

About 35 percent went to small firms, Smith said.

Strategic sourcing has saved DHS about $1.5 billion since 2005, including $336 million in fiscal 2011, Smith said.

The Navy also is strategically sourcing, although Elliot Branch, deputy assistant secretary for acquisition and procurement in the Office of Research, Development and Acquisition, said he is not a fan of the term. “All of our sourcing should be strategic,” he said.

The Navy is concentrating on demand management, acquisition strategy, contract formation and contract administration.

“We need visibility into the spend of our 18 budget-submitting offices,” Branch said.