NASA Inspector General Paul Martin today released a report that examines NASA's "strategic sourcing" efforts. Overall, the Federal Government spends more than $500 billion annually to buy products and services in a highly decentralized manner, resulting in wasteful spending. As a result, Federal agencies have been directed to practice strategic sourcing and consolidate their spending, either by centralizing their contracting decisions or by using government-wide contracts to lower prices and reduce administrative duplication.
The Office of Inspector General found that despite a 7-year effort, NASA has failed to develop a robust, Agency-wide strategic sourcing program, thereby missing opportunities to maximize savings by aggregating its purchasing power and market position when procuring goods and services, such as office supplies and domestic delivery services. While NASA established a Strategic Sourcing Program as required by a 2005 Office of Management and Budget memorandum, it has never conducted a comprehensive, Agency-wide spend analysis to identify commodities that could benefit from a more strategic procurement approach. Further, although NASA performed limited spend analyses on individual commodities, it has not established requirements regarding how such analyses should be developed, analyzed, and used. While NASA officials said they have realized savings under specific strategic sourcing initiatives, NASA does not track its Agency-wide strategic sourcing efforts and therefore was unable to determine the extent of any efficiencies or cost savings.
The OIG made six recommendations to strengthen NASA's Strategic Sourcing Program and the Agency concurred or partially concurred with four. The Agency disagreed with a recommendation to perform a comprehensive spend analysis of all procurement activities across NASA. However, the OIG continues to believe that NASA would benefit from such an Agency-wide analysis and therefore the recommendation remains unresolved. NASA also disagreed with our recommendation to incorporate into Agency policy the use of strategic sourcing initiatives to the maximum extent possible. Similarly, because we continue to believe that NASA would benefit from adopting policy requiring the use of strategic sourcing initiatives, the recommendation remains unresolved.
The full report can be found on the OIG's website at http://oig.nasa.gov/ under "Reading Room" or at the following link: http://oig.nasa.gov/audits/reports/FY14/IG-14-010.pdf
Because NASA has failed to develop a robust, Agency-wide strategic sourcing program over the past 7 years, it has missed opportunities to maximize savings by aggregating the Agency's substantial purchasing power and market position when procuring commodities. This resulted from the poor development and implementation of an Agency-wide plan as well as limited Agency-wide communication and senior-level management commitment. While NASA established a plan to manage its strategic sourcing program as required by OMB's 2005 memorandum, the Agency never conducted a comprehensive Agency-wide "spend analysis" to identify additional commodities that could benefit from a more strategic approach to procurement. Further, while NASA performed limited spend analyses on several individual commodities, the Agency did not establish requirements regarding how the analysis should be developed, analyzed, and used. While NASA officials informed us that they have realized savings with regard to specific strategic sourcing initiatives, the Agency does not track Agency-wide strategic sourcing efforts to maximize potential cost savings. As a result, NASA was unable to demonstrate the extent of efficiency or cost savings achieved through its Strategic Sourcing Program.
According to Headquarters Procurement guidance, the primary goal of NASA's Strategic Sourcing Program is "to establish a process that enables NASA to strategically acquire products and services common across the Agency, Centers, or organizations to support the Agency's mission in a more effective and efficient manner."12However, poor development of an Agency-wide plan, coupled with the insufficient implementation of key aspects of that plan, has significantly impaired NASA's Strategic Sourcing Program. NASA developed the Program plan to begin with the analysis of the Agency's procurement activities (spend analysis), carry through contract award and management, and end with measurement of performance results. However, NASA failed to follow critical elements of its plan - specifically, the spend analysis and performance measurement. In addition, limited direction to and communication with its decentralized procurement community regarding strategic sourcing initiatives, coupled with a historic culture of autonomy among the Centers, has resulted in the insufficient implementation of strategic sourcing across NASA.