Shopping Together

As agencies combine buying power, stragglers hurry to get on board.

Pistols are like toothbrushes: People don't like to share them, and everyone has a favorite. So when Thomas Trotto, director of the national firearms and tactical training unit for Immigration and Customs Enforcement, tried to get pistol users throughout the Homeland Security Department to agree on what kind to share, he expected some trouble.

As co-chair of the department's commodity council on weapons and ammunition, Trotto led eight pistol experts and procurement representatives in a debate over grips, weights, types of finish and 50 other pistol characteristics. After council members reached consensus, ICE awarded pistol contracts to firearms makers Heckler & Koch and Sigarms in the summer of 2004. Today, Trotto, who carries his own Sigarms pistol to work in an ankle holster, says he can hardly keep up with demand from other Homeland Security agencies that want to buy pistols through ICE's contracts. The department estimates the contracts, which are worth $50 million over a five-year period, will save about 35 percent a year on pistol purchases.

That commodity council is one of 14 such groups at Homeland Security that are examining $8.5 billion of the department's $13 billion annual spending on supplies and services. The groups are designed to consolidate purchases and get better deals. Other selected commodities, some of which are just as contentious as pistols, include copiers, professional services, boats and uniforms. "Strategic sourcing has taken root here at DHS as a way of doing business," says Al Sligh, head of strategic sourcing at the department.

The strategic sourcing party is just getting started. Treasury Department procurement executive Tom Sharpe founded the Federal Strategic Sourcing Initiative late last year and has recruited nine federal agencies to participate on FSSI's five commodity councils. By springtime, the councils will decide on common contracting solutions that combine agencies' collective buying power. That could mean more interagency contracting or new contracts altogether.

The Office of Management and Budget, which jump-started a strategic sourcing frenzy when it announced in May 2005 that each agency was required to develop an in-depth strategic sourcing plan by early 2006, also has lent its support to FSSI by encouraging agencies to participate or asking them to explain why they're not. And the General Services Administration, which potentially has the most to lose if agencies turn to contracting vehicles other than the ones GSA offers, has joined the project as a co-leader.

"I think GSA would like to help set up the resulting procurements. That's why we're helping facilitate them, to see if we can't help each agency," says Emily W. Murphy, chief acquisition officer at GSA. She says it's too early to know whether the commodity councils will end up selecting a contracting solution at GSA, other agencies, or another option altogether. Is she concerned that agencies will decide that they can get better deals on their own? Murphy says GSA's job is just to offer the best service it can.

One might think that the agency charged with managing governmentwide procurement would be worried about its future. "Commodity councils are doing what GSA is set up to do. . . . Somebody's hand has to be on the rudder, and this is exactly the type of behavior you'd expect to see in a rudderless environment," says Larry Allen, an executive vice president with the nonprofit Coalition for Government Procurement, a Washington-based industry group.

Allen says his members, which range from small to large government contractors, are confused because no one has clearly explained the likely impact of strategic sourcing. They imagine worst-case scenarios that involve the government choosing one supplier for each commodity and leaving all other companies on the doorstep.

Two information technology contracts at Homeland Security-First Source and Enterprise Acquisition Gateway for Leading Edge Solutions (known as EAGLE), which are part of the department's strategic sourcing program-have come under fire for delays and bulky size. The deadline for First Source, worth up to $3 billion and reserved for small business, was extended to late January. EAGLE, worth up to $45 billion and focused on technology services, consolidates a wide range of services previously handled separately.

Allen says because EAGLE is so comprehensive, it is costing companies more than usual-in the high six figures-to bid on it. "They're very concerned about the cost . . . to bid, relative to what they're going to get out of it in the end," he says.

The two procurements are being managed by Homeland Security's Information Technology Acquisition Center, but Sligh says the department's information technology commodity council is determining Homeland Security's needs and how to use First Source and EAGLE to strategically fill them.

The fact that First Source is reserved for small business also speaks to the emphasis on smaller firms within governmentwide strategic sourcing efforts. Sharpe says he never mentions strategic sourcing without emphasizing that small business will play a starring role. Some competitions could be reserved for small business, or one of multiple contracts could include only small firms.

Agencies, including Veterans Affairs and the Air Force, also are launching small public relations campaigns within their own departments in an attempt to win over skeptics. Jan R. Frye, deputy assistant secretary for acquisition and materiel management at Veterans Affairs, which is an active participant on FSSI's express delivery council, says he is launching a Web site, conference calls and training sessions to help win converts. In a draft of its January 2006 annual report on strategic sourcing, the Air Force called communication about the acquisition technique one of its major fiscal 2006 challenges. To help spread the word about available sourcing vehicles, it will publish internal memos and directives on Air Force commodity councils, which cover cell phones, landing gear, aircraft accessories and other products.

Strategic sourcing leaders are reluctant to make predictions about the contracting solutions the FSSI commodity councils will select. Interagency contracts, which in January 2005 were added to the Government Accountability Office's high-risk list for waste, fraud and abuse, appear likely to become more popular. "None of us is looking to build an empire, but if I can set up a contract [other departments] can buy off of . . . [when it] might otherwise take them months, that's the benefit," says John R. Bashista, a procurement services director at the Energy Department. With contracting staffs squeezed and OMB pressuring departments to pursue strategic sourcing, sharing contracts often looks like the best solution.

Shared Products

The Federal Strategic Sourcing Initiative, an interagency group that is working on consolidating the federal government's buying power, focuses on five products.

• Copiers
• Cell phones
• Office supplies
• IT products
• Express delivery

Source: Treasury Department