New GAO Report Finds Federal Agencies Can Achieve Significant Savings Through Improved Management of IT Acquisitions
WASHINGTON – – Today, Homeland Security and Governmental Affairs Committee members Tom Carper (D-Del.), Ron Johnson (R-Wis.) and Claire McCaskill (D-Mo.), highlighted a new Government Accountability Office (GAO) report that found that federal agencies can achieve significant savings and avoid unnecessary costs through streamlining acquisitions of Information Technology (IT) services.
The GAO report, “Strategic Sourcing: Opportunities Exist to Better Manage Information Technology Services Spending,” found that the Departments of Defense, Army, Navy, Air Force, Homeland Security and NASA have each initiated activities to leverage their buying power through an approach known as strategic sourcing. However, GAO found that the majority of dollars that these agencies spend on IT services flow through hundreds of duplicative contracts instead of through strategically sourced contracts. As a result, agencies pay varying rates for similar services with the same contractors, and are missing out on opportunities for savings. For example, GAO found that the Department of Defense was paying between $103 and $195 an hour for IT Project Management services under different contracts.
“The government is missing out on economies of scale when it buys information technology (IT) services in a fragmented manner,” said Ranking Member Carper. “This report highlights the fact that there can be a significant difference in the prices that agencies are paying for the same service, even within the same department. This is like one member of a family going to the grocery store and paying one price for a gallon of milk, while another family member goes to another store and paying twice as much. We must use some common sense and get a better result for the American taxpayer. The good news is that there are promising efforts underway to address this problem. The Federal Information Technology and Acquisition Reform Act (FITARA), signed into law last year, will help agencies identify duplicative contracts. The Administration is also working to make sure agencies share pricing data so that they can be smarter shoppers. And many agencies are already showing progress. I’d like to commend the Department of Homeland Security as a leader in using strategic sourcing aggressively. If leadership at all agencies across the government embrace and build on these efforts, we could save billions of dollars.”
“What Americans expect is simple: Federal employees should spend taxpayer money using the same care that they use when spending their own,” Chairman Johnson said. “There’s a reason private sector companies leverage their purchasing power to save money – because owners and investors expect nothing less. Once again, GAO has found that federal buyers do not effectively utilize the massive size of the federal government to buy smarter.”
“We’ve got to ensure our government is being smart when it comes to buying and managing information technology,” said Senator McCaskill, former Missouri State Auditor. “This report shows that we have hundreds of duplicative contracts and huge disparities across agencies in terms of how they handle helpdesk contractors and other IT folks—so it’s important we figure out a way to make government smarter and more streamlined in spending taxpayer dollars in this important area.”
Strategic sourcing is proven to reduce costs to companies and large organizations. For example, implementing strategic sourcing has saved companies in the private sector 4-15 percent. Applying just 4 percent savings to the money federal agencies spend annually on IT services would result in over a billion dollars of cost avoidance.
Today’s report is the latest in a series of reports focused on acquisition practices of federal agencies. Two other recent GAO reports, Sole Source Contracting: Defining and Tracking Bridge Contracts Would Help Agencies Manage their Use, and Federal Supply Schedules: More Attention Needed to Competition and Prices also shine a light on areas that can be improved in federal acquisition processes.