Federal agencies are getting off to a slow start in strategic sourcing, according to a new GAO report.

The report looked at the four agencies—Defense, Energy, Homeland Security and Veterans Affairs—that together accounted for $430 billion in federal procurement spending in fiscal 2011, which was 80% of the government’s total contract spending.

As a group, the four departments managed 5% of their budgets, or $26 billion in total, through strategic sourcing, the GAO said. Together they achieved savings of $1.8 billion, which was 0.4% of their total spending.

That is a low percentage of savings in comparison to the 10% savings through bulk purchasing reported by companies and corporations, the GAO said.

“Selected agencies leveraged only a fraction of their buying power through strategic sourcing and achieved limited savings,” the GAO concluded, making nine recommendations for changes.

In addition, most of the agencies are not targeting their highest spending areas—”such as services, which may provide opportunities for additional savings,” the GAO said. However, many specialists are skeptical of applying bulk purchasing to services, aside from a few easily-standardized services.

Of the four agencies, DHS was the furthest along, with nearly 20% of spending being directed through bulk purchasing contracts, the GAO report indicated. The department saved 2.3% through those efforts.

The other agencies were lagging: DOD devoted “limited resources” while DOE and VA were just getting started, GAO said.

The Pentagon channeled 6% through bulk buying, saving .06%.

DOE directed 9% through bulk deals, saving 1%; and VA directed 1%, saving .3%.

However, VA officials disputed those figures, claiming 33% in bulk buys with savings of 13%, based on an updated database.

Richard Ginman, director of defense procurement and acquisition policy at DOD, said he will deliver a list of products and services for bulk purchasing by March 13.

DOD will identify and track bulk buying, publish and implement a DOD-wide strategic sourcing program concept of operations, link strategic sourcing to Better Buying power and establish metrics to track progress, Ginman wrote.

The Obama administration in recent months set a goal of saving $10 billion over two years through bulk purchasing. The initiatives have been controversial for small contractors (SAA 7-27-12 issue).

GAO report: http://www.gao.gov/products/GAO-12-919