Alternatively, GSA  provides federal agencies with a simplified method for procuring office  supplies through its Federal Supply Schedule program, also known as the  Multiple Award Schedules (MAS) or schedules program. The schedules  program can leverage the government’s significant aggregate buying  power. The GSA report estimated that the 10 agencies with the highest spending  on office supplies accounted for about $1.3 billion, about 81 percent of  the total $1.6 billion spent governmentwide on the 14 categories of office  supplies during fiscal year 2009. On  average, GSA found that agencies paid 75 percent more than schedule  prices and 86 percent more than OS II prices for their retail purchases. We were not able to fully quantify the impact of these limitations. Other  agencies also questioned the study’s specific findings related to price  premiums, but their own studies of price premiums support GSA’s  conclusion that better prices can be obtained through consolidated,  leveraged purchasing. The GSA study also concluded that buyers  compared prices before making purchases, but this conclusion was not  based on information from actual purchase card holders. In its report, GSA acknowledged that the data used to  analyze governmentwide purchases of office supplies in 2009 had  limitations, in part due to the decentralized data sources for office supply  purchases and the limited time GSA had to conduct its study. The existence of  substantial price differences for a number of items indicates that GSA’s  attempts to compare prices may not have adequately controlled for  variations in quantities. However, the agencies agreed with GSA’s overall conclusion  that better prices can be obtained through leveraged buys. GSA Conclusion on Buyer Price Comparisons Not Supported by Information from Actual Buyers

GSA interviewed senior-level acquisition officials to determine how office  supply purchasing decisions were made within their respective agencies  and concluded that purchase cardholders compared costs at some level  prior to making a purchase. New Strategic Sourcing Initiative for Office Supplies Shows Potential for Generating Savings

According to initial available data, GSA’s new OS II BPAs have produced  savings. The OS II initiative, more so than past efforts, is demonstrating  that leveraged buying can produce greater savings and has provided  improvements for managing ongoing and future strategic sourcing  initiatives. For example, a  key aspect of the initiative is that participating vendors provide sales and  other information to GSA to help monitor prices, savings, and vendor  performance. GSA’s Analysis of OS II Data Shows Savings Are Being Achieved

On the basis of the sales data provided by OS II vendors, GSA estimates  the federal government saved $16 million from June 2010 through August  2011 by using these BPAs. In addition to the savings from the BPAs, GSA  representatives told us that they are also seeing prices decrease on  schedules program contracts as vendors that were not selected for the  OS II program react to the additional price competition created by the OS  II initiative by reducing their schedule prices. OS II Initiative Offers Lessons for Other Strategic Sourcing Initiatives

GSA is learning lessons from OS II, its first of the second generation of  strategic sourcing initiatives, and is attempting to incorporate these  lessons into other strategic sourcing initiatives. To this end, GSA established an office  supplies commodity council to identify agencies’ goals and needs. Additional savings are expected as more government agencies  participate in the OS II initiative and further leverage the government’s  buying power. Agency Comments and Our Evaluation

We provided a draft of this report to GSA, DHS, and DOD. GSA also provided additional information  on its strategic sourcing initiatives. We revised our report to reflect GSA’s comment. We are sending copies of this report to the Administrator of General  Services, the Secretaries of the Department of Homeland Security and  Defense as well as the Air Force, Army, and Navy.
Why GAO Did This Study

Concerned that federal agencies may not be getting the best prices available, Congress directed the General Services Administration (GSA) to study office supply purchases by the 10 largest federal agencies. GSA delivered the results of its study in November 2010. The study also discussed GSAs efforts to implement an initiative focused on leveraging the governments buying power to realize savings when buying office supplies, known as Office Supplies II (OS II). Under this initiative, GSA entered into agreements with vendors based on discounted prices to be offered to all federal agencies.
Congress directed GAO to assess the GSA study, with particular attention to the potential for savings. Accordingly, GAO assessed (1) the support for the findings and conclusions in GSAs report and (2) how GSA's new office supply contracts support the goal of leveraging the governments buying power to achieve savings.
To conduct this work, GAO analyzed the data GSA used for its study; met with and obtained documentation from officials at GSA and the Departments of Homeland Security (DHS), Air Force, Navy, and Army, which were among the 10 agencies in GSAs study; and reviewed contract documentation associated with GSAs new office supplies initiative.
GSA and DHS commented on a draft of this report. GSA said it appreciated our recognition that leveraged purchasing can produce savings and also provided technical comments, which we incorporated as appropriate. DHS provided additional information on its strategic sourcing initiatives.

What GAO Found

GSA estimated that federal agencies spent about $1.6 billion during fiscal year 2009 purchasing office supplies from more than 239,000 vendors. GSA concluded that agency buyers paid higher prices when they bought office supplies outside GSAs Multiple Award Schedule program than they would have using the schedules or OS II. According to GSA, the price premiums averaged 75 percent compared to the schedule prices and 86 percent compared to OS II. GAO identified data and other limitations in GSAs study, such as not always controlling for variation in quantities of identical items when comparing prices. GAO was not able to fully quantify the impact of these limitations. Officials from other agenciesAir Force, Army, Navy, and DHSalso questioned the studys specific findings on price premiums, believing them to be overstated, but their own studies support GSAs general conclusion that better prices can be obtained through consolidated, leveraged purchasing. The GSA study also concluded that buyers compared prices before making purchases, but this conclusion was based on interviews with senior-level acquisition officials and not on information obtained from any of the approximately 270,000 government purchase cardholders who made the purchasing decisions.
According to available data, GSAs new office supplies sourcing initiative, OS II, has produced savings. GSA estimated that the government saved $16 million from June 2010 through August 2011 through this initiative. According to GSA, the OS II initiative is demonstrating that leveraged buying can produce savings and has provided improvements for managing ongoing and future strategic sourcing initiatives. GSA reports that OS II allowed it to negotiate discounts with vendors who were selected for the initiative, and has spurred price competition among schedule vendors that were not selected as they react to the OS II pricing, resulting in decreased schedule prices. The initiative is also expected to lower government-wide office supply costs through more centralized contract management. Another key aspect of the initiative is that participating vendors provide sales and other information to GSA to help monitor prices, savings, and vendor performance. Finally, the OS II initiative offers lessons learned for other strategic sourcing initiatives, including the importance of identifying agencies goals and needs and ensuring buying agency participation.