From the U.S. Government Accountability Office, www.gao.gov Transcript for: Federal Smarter Buying Initiatives Description: Audio interview by GAO staff with Tim DiNapoli, Director, Acquisition and Sourcing Management Related GAO Work: GAO-17-164: Federal Procurement: Smarter Buying Initiatives Can Achieve Additional Savings, but Improved Oversight and Accountability Needed Released: October 2016 [ Background Music ] [ Narrator: ] Welcome to GAO's Watchdog Report, your source for news and information from the U.S. Government Accountability Office. It's October 2016. Each year, federal agencies spend over $400 billion on goods and services. If they coordinated their purchases to take advantage of this massive collective buying power, the federal government could potentially save a lot of money. Recognizing this, the Office of Management and Budget has several programs and initiatives underway aimed at smarter buying. A team led by Tim DiNapoli, a director in GAO's Acquisition and Sourcing Management team, recently looked into how those initiatives are faring. GAO's Jacques Arsenault sat down with Tim to talk about what they found. [ Jacques Arsenault: ] What exactly are federal smarter buying initiatives, and how much could they save the government? [ Tim DiNapoli: ] So we looked at two specific buying initiatives, both related to the concept of strategic sourcing. Strategic sourcing is a leading commercial practice that takes a look from an enterprise-wide perspective of how a company is buying goods and services. And what they want to do is leverage their buying power and make sure they're making smarter buying decisions for the corporation rather than individual business units. [ Jacques Arsenault: ] So on a very kind of small, hypothetical level, you know, if a company has 15 different offices and each office is buying their own computers, or pencils, or things like that, you don't want them going out and all buying retail when they could pool and get a better deal? [ Tim DiNapoli: ] Very concept that we're trying to get across in the government, because the government buys exactly that same way when you have, you know, multiple organizational units within any department. And everybody was buying for themselves as opposed to buying for the department. [ Jacques Arsenault: ] So then could you talk about these sourcing initiatives? [ Tim DiNapoli: ] The federal government has been trying to do that for about 15 years. About 10 years ago, the Office of Management and Budget started the Federal Strategic Sourcing Initiative. The second one's Category Management, which is going to take what we were trying to do under the Federal Strategic Sourcing Initiatives and expand it dramatically. [ Jacques Arsenault: ] So it sounds like they both could be saving some money, but you looked at how much agencies are using--I mean, it sounds like that's not all good news. Can you talk about what you found? [ Tim DiNapoli: ] It all depends on one's perspective. So when we looked at the Federal Strategic Sourcing Initiatives in 2015, we found that the agencies saved $129 million, or about 28 percent of their spent. That is an excellent result, and we're very happy about that, and we think, need to commend the folks over the General Services Administration and the government for doing much better. But you also need to look at what we could have saved, and that's really what the story is about is that there are opportunities to save significantly more money than we did, and literally, we could save billions of dollars. Just to give you a reference point, let's take 2015 as an example. Federal agencies spent $6.9 billion on the types of goods and services that were offered for sale under the Federal Strategic Sourcing Initiatives that were in existence. It's about the size of a softball. Now, not everything can be bought using strategic sourcing. Some things are just not applicable. It doesn't make sense. And so you kind of reduce that $6.9 billion down to about $4.6 billion, and that's the amount that federal agencies or the, were targeting. That's about the size of a baseball. So we really want to play with a baseball, but what we found is that only $469 million went through the FSSI's. So that's about the size of a marble. So instead of going for a baseball, we're going for a marble. What we saved comes up as the size of a pea, and so peas are great. I love peas, but I want to be playing baseball. And so that's what we need to be doing. [ Jacques Arsenault: ] Definitely sounds like there's room for growth in that strategic sourcing initiative. How about the second one that you talked about, Category Management? Is OMB moving on that? [ Tim DiNapoli: ] For Category Management, it's going to take what we learned under the Federal Strategic Sourcing Initiatives and fundamentally change the federal landscape for spending. And so this is a big deal. If you think about the $6.9 billion that we spent or could have spent in 2015 through the Federal Strategic Sourcing Initiatives, OMB wants to take that to $270 billion. So this is a world changer. I mean, this is a dramatic change in the scope and magnitude. What we wanted to do as part of our review is take a look at, did OMB collect and use the lessons learned from the FSSI program and incorporate them into Category Management? The bottom line is the more you spend through these initiatives, the more you save. And as you can tell from 2015, we didn't do a very good job in spending money through these leading practices. We found a number of things that the FSSI's did not do. The government structure of the FSSI's are composed of eight leading federal agencies, the big spenders -- Department of Defense, Department of Homeland Security, NASA, and others. They helped develop the strategies. So they helped create these FSSI's. They sent in commitment letters that said, "We will use these to the maximum extent practical. We're going to put mandatory use policies in place. We're going to make this a reality." But we found that those eight agencies that make up the leadership council spent less than 10 percent of their dollars through the very programs that they established. They didn't create the transition plans to take from what they were doing in the agencies to what they wanted to do on the FSSI's, and nobody held them accountable. What we've found that OMB was doing when they were creating the new Category Management initiative was doing a better job in some cases in creating more accountability measures ,but not completely. So we have a number of recommendations that we made to help improve the accountability measures and techniques. [ Jacques Arsenault: ] And finally, what would you say is the bottom line of this report? [ Tim DiNapoli: ] Oh, you know, the bottom line is truly about the bottom line. We're talking about money, and we're talking about money being left on the table. You know, we can continue to do what we do, which is to buy goods and services, trying to get the best price we can, but on an individual basis, or we can leverage our collective buying power, save more money, and keep more money in the bank so that either we can spend it on other things that we desperately need in the government, or perhaps we can just return it to the taxpayers. Any way you look at it, we're talking about money that can be saved in a significant fashion. [ Background Music ] [Narrator:] To learn more, visit GAO.gov and be sure to tune in to the next episode of GAO's Watchdog Report for more from the congressional watchdog, the U.S. Government Accountability Office.