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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: May 25, 2005

SUBJECT: Office of Management and Budget (OMB); Implementing Strategic Sourcing

SOURCE: OMB Memorandum dated May 20, 2005

AGENCIES: OMB

ACTION: Notice

SYNOPSIS: On May 20, 2005, Deputy Director for Management Clay Johnson III issued a memorandum to chief acquisition officers (CAOs), chief financial officers (CFOs), and chief information officers (CIOs) directing them to develop and implement an agency strategic sourcing effort to “optimize performance, minimize price, increase achievement of socio-economic acquisition goals, evaluate total life cycle management costs, improve vendor access to business opportunities, and otherwise increase the value of each dollar spent.”

FOR FURTHER INFORMATION CONTACT: Leslie Field, OFPP, e-mail: lfield@omb.eop.gov.

SUPPLEMENTAL INFORMATION: According to OMB, “strategic sourcing is the collaborative and structured process of critically analyzing an organization’s spending and using this information to make business decisions about acquiring commodities and services more effectively and efficiently.” To maximize the value of each dollar spent, OMB is directing each agency’s CAO, CFO, and CIO to develop and implement a strategic sourcing effort. The CAO will take the lead on this.

• “Not later than October 1, 2005, the CAO shall identify no fewer than three commodities that could be purchased more effectively and efficiently through the application of strategic sourcing...”
  
  
• The CAO, with the CFO, CIO, the agency’s Office of Small and Disadvantaged Business Utilization, and others as appropriate, is to develop a strategic sourcing plan, which should include the following elements:
  
  
  • A charter
    
    
  • Goals and objectives. “In addition to cost and performance goals, any strategic sourcing plan must be balanced with socio-economic goals for small businesses, small disadvantaged businesses, women-owned small businesses, veteran-owned businesses, service-disabled veteran-owned businesses, HUBZone and preference programs (e.g., Javits-Wagner-O’Day), and others, as appropriate.”
    
    
  • Performance measures
    
    
  • A communications strategy “that clearly conveys senior management’s commitment to the effort, describes the scope of the effort, and identified any organizational changes. The communications strategy should also include steps to make agency employees aware of awarded strategic sourcing contracts and how they are to be used.”
    
    
  • A training strategy
  
  
• “Beginning in January 2006, the CAO shall report annually to the Office of Federal Procurement Policy (OFPP) regarding, at a minimum, reductions in the prices of goods and services, reductions in the cost of doing business, improvements in performance, and changes in achievement of socio-economic acquisition goals at the prime contract and, if possible, the subcontract level. Agencies shall develop methodologies for establishing baseline data and subsequent changes to this baseline and shall consistently apply this methodology throughout the strategic sourcing process.”

Based on information from the agency reports and other data, “OFPP may identify several commodities that could be strategically sourced government-wide, and will establish an interagency structure for managing the acquisition of these commodities.”

Agencies are to appoint a strategic sourcing point of contact by July 1, 2005.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953.

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