Uninformed Procurement Decisions for Commercial Products Are Costly

Federal Government expenditures for commercial products will command a sizable portion of the $66 billion estimated for federal procurement in fiscal year (FY) 1977. Although the government is usually able to buy products at a lower unit price if purchased for stock in large volume, the use of commercial distribution channels is frequently more advantageous. The Commission on Government Procurement recommended in 1972 that, in making procurement and stockage decisions, the Defense Logistics Agency (DLA), General Services Administration (GSA), and the Veterans Administration (VA) should consider the full cost of any government distribution system involved. These three agencies are the government's primary supply agencies; during FY 1975, they spent about $8.1 billion on commercial and commercial-type supplies and had an ending inventory valued at about 4.1 billion.