Dan Gordon, administrator of the Office of Federal Procurement Policy, in a letter to chief acquisition officers and senior procurement executives, wrote that too often, "agencies establish new overlapping and duplicative contracts for supplies or services because the agencies have not adequately considered the suitability of existing interagency contract vehicles: governmentwide acquisition contracts, multiagency contracts and blanket purchase agreements."
Failure to exploit such opportunities for new efficiencies, he said, "results in higher prices and unnecessary administrative costs."
Beginning in January 2012, the guidance directs, agency managers should not enter into a new contract without first performing a cost-benefit analysis to "balance the value of creating a new contract against the benefit of using an existing one, and whether the expected return from investment in the proposed contract is worth the taxpayer resources," Gordon wrote on the White House blog.
The guidance is intended to deal with goods and services such as office supplies and wireless services. "This kind of due diligence and comparison shopping is something that many families across the country do," the letter stated.
"The guidance will also increase information sharing among agencies," it added, noting that for years many agencies have focused solely on doing all their own contracting. "We have seen firsthand that interagency contracting -- done intelligently, and in a way that reduces duplication -- can help us leverage the federal government's buying power to get better prices."
Such savings, Gordon said, also would help persuade the Government Accountability Office to remove interagency contracting from its high-risk list.
He praised the General Services Administration's move in spring 2010 to sign a series of blanket purchase agreements for office supplies. GSA's award of 15 contracts, 13 of them to small businesses, has produced savings up to 20 percent on office supplies, which will add up to more than $200 million in the next few years, Gordon said.
The new guidance is part of the Obama administration's Campaign to Cut Waste led by Vice President Joe Biden, who met with Cabinet members on the effort this month.
The approach drew praise from Sean Moulton, director of federal information policy for the nonprofit OMB Watch. "It makes a lot of sense, this idea of coordinating purchases of common elements, getting more consistent -- and probably lower -- prices and not wasting time," he said. A similar approach used by the Texas state comptroller of public accounts, he added, has saved millions of dollars. Scott Amey, general counsel of the nonprofit Project on Government Oversight, said, "There might be slight improvements and savings associated with today's announcement. Buying in bulk and eliminating duplication will help, but we need to make sure we ask two critical questions, what are we buying and how are we buying it?"