OMB, GSA, and Selected Agencies Have Taken Steps to Consider Small Businesses in Their Strategic Sourcing Efforts

OMB and GSA have developed guidance on strategic sourcing that  emphasizes the importance of including small businesses and small  disadvantaged businesses. Our review of agency-wide strategic  sourcing initiatives at each of five agencies showed that the agencies also  generally considered the inclusion of small and disadvantaged  businesses. GSA Has Taken Steps to Consider Small Businesses in Selected Government-wide Strategic Sourcing Initiatives

Our review of documentation for three ongoing government-wide strategic  sourcing initiatives—office supplies II, print management functional areas  I and II, and domestic delivery services—showed that GSA considered  the inclusion of small businesses and small disadvantaged businesses in  the strategic sourcing process. For example, when developing the office  supplies II and print management initiatives, GSA identified the current  market share for small businesses and specific opportunities that could  be set aside for socioeconomic categories, such as service-disabled  veteran-owned businesses. Agency Data and Measures on Inclusion of Small Businesses in Strategic Sourcing Are Limited, and OMB Has Not Monitored Agencies’ Efforts

While our review of agency documentation indicates that agencies do  generally consider small businesses and small disadvantaged businesses  in their strategic sourcing initiatives, agency data and performance  measures that would provide a more precise understanding of the  inclusion of small businesses in strategic sourcing are limited. Although GSA has collected baseline data on proposed  government-wide initiatives, it has not developed a performance measure  to determine changes in small business participation going forward. Further, DHS has collected some data on contracts awarded to small  businesses under strategic sourcing initiatives, but it and the other  agencies in our review generally did not have baseline data and  performance measures to determine how small businesses were affected  by strategic sourcing. In  addition, federal internal control standards state that operating information  is needed to, among other things, determine whether the agency is  achieving its compliance requirements under various laws and  regulations. OMB  has monitored the implementation of strategic sourcing by having  agencies submit annual strategic sourcing reports from fiscal year 2005 to  fiscal year 2007 and prepare information for acquisition status sessions  from fiscal year 2010 to fiscal year 2012. (There was no reporting in place  for fiscal years 2008 or 2009.) Virtually none of this information included  baseline data or measures of the effect of strategic sourcing on small  businesses. Federal internal control standards state that   However, the current template does not link strategic  monitoring should assess the quality of performance over time.effective monitoring, it will be difficult for OMB to help ensure that  agencies are tracking the impact of strategic sourcing on small  businesses. Recommendations for Executive Action

Consistent with OMB guidance and to track the effect of strategic  sourcing on small businesses, we recommend that (1) the Administrator  of GSA establish performance measures on the inclusion of small  businesses in strategic sourcing initiatives and (2) the Secretaries of  DOD, DHS, HUD, and the Interior, and the Administrator of NASA collect  baseline data and establish performance measures on the inclusion of  small businesses in strategic sourcing initiatives. DOD, DHS, HUD, GSA, and OMB agreed  with our conclusions and recommendations. Interior partially agreed, and  NASA disagreed. As we noted in the report, from fiscal year 2005 through the  first quarter of fiscal year 2013, DHS implemented 72 strategic  sourcing initiatives, and 43 percent of the spending went to small  businesses. Interior suggested  that a more effective approach would be to work with OMB and other  agencies similar to Interior to develop common approaches for  collecting baseline data and setting performance measures. Appendix I: Objectives, Scope, and Methodology

Our objectives for this report were to discuss (1) the ways in which the  Office of Management and Budget (OMB) and the General Services  Administration (GSA) have considered small businesses in their strategic  sourcing guidance and GSA and selected agencies have considered  small businesses in their strategic sourcing initiatives and (2) the extent to  which data and performance measures are available on the inclusion of  small businesses in government-wide and selected agencies’ internal  strategic sourcing initiatives. Small businesses include those  unconditionally owned and controlled by socially and economically  disadvantaged individuals (small disadvantaged businesses). The selected agencies included in our review were the  Departments of Defense (DOD), specifically the Department of the Army  (Army) and the Defense Logistics Agency (DLA); Homeland Security  (DHS); Housing and Urban Development (HUD); and the Interior (Interior)  and the National Aeronautics and Space Administration (NASA).
Why GAO Did This Study

Since 2005, OMB has emphasized using strategic sourcing to improve efficiency in federal procurement. Strategic sourcing is a process that moves an organization away from numerous individual procurements toward a broader aggregate approach. GAO was asked to review how strategic sourcing affects small businesses, including small disadvantaged businesses. This report discusses (1) how OMB, GSA, and selected agencies have considered small businesses in their strategic sourcing efforts and (2) the extent to which data and performance measures are available on the inclusion of small businesses in strategic sourcing initiatives. GAO reviewed guidance and documentation from OMB, GSA, and five other agencies selected based on factors such as dollars awarded to small businesses. GAO also reviewed GSA data as of 2013, DHS data from fiscal year 2005 through the first quarter of fiscal year 2013, and agency reports from fiscal years 2005 to 2012.

What GAO Found

The Office of Management and Budget (OMB), the General Services Administration (GSA), and selected agencies have taken steps to consider small businesses, including small disadvantaged businesses, in their strategic sourcing efforts. (Small disadvantaged businesses are those unconditionally owned and controlled by socially and economically disadvantaged individuals.) OMB and GSA have developed guidance on strategic sourcing that stresses the importance of including small businesses. GAO's review of documentation for three ongoing government-wide strategic sourcing initiatives showed that GSA considered the inclusion of small businesses in the strategic sourcing process. For example, when developing strategic sourcing initiatives for office supplies and print management, GSA identified the current market share of small businesses with these products and also set aside specific contracts for various categories of small businesses, such as service-disabled veteran-owned small businesses. In addition, GAO's review of agency-wide strategic sourcing initiatives at each of five agencies--Departments of Defense (DOD), specifically Army and the Defense Logistics Agency; Homeland Security (DHS); Housing and Urban Development (HUD); and the Interior and the National Aeronautics and Space Administration (NASA)--showed that the agencies generally considered the inclusion of small businesses.
Data and performance measures that would provide a more precise understanding of the inclusion of small and disadvantaged businesses in strategic sourcing initiatives are limited. Although GSA has collected baseline data on proposed government-wide initiatives, it has not developed a performance measure to determine changes in small business participation going forward. Further, DHS has collected some data on contracts awarded to small businesses under strategic sourcing initiatives, but it and the other agencies in GAO's review generally did not have baseline data and performance measures to determine how small businesses were affected by strategic sourcing. OMB guidance requires agencies to establish baselines for small business participation prior to implementing strategic sourcing and set goals for small business participation. In addition, federal internal control standards state that information is needed to determine whether the agency is achieving its compliance requirements under various laws and regulations. Without baseline data and performance measures, the effect of strategic sourcing initiatives on small businesses will be difficult to determine. Moreover, OMB has not monitored agencies' compliance in reporting baseline data and performance measures on the inclusion of small businesses in government-wide and agency-wide strategic sourcing initiatives. OMB required agencies to submit annual reports on the implementation of strategic sourcing from fiscal years 2005 through 2007 and prepare information for acquisition status sessions from fiscal years 2010 through 2012. (No reporting was in place for fiscal years 2008 or 2009.) However, virtually none of this information included baseline data or measures of the effect of strategic sourcing on small businesses. Federal internal control standards state that effective monitoring should assess the quality of performance over time. Without effective monitoring, it will be difficult for OMB to help ensure that agencies are tracking the impact of strategic sourcing on small businesses.

What GAO Recommends

GAO makes recommendations to GSA, selected agencies, and OMB to improve data collection and performance measures related to the inclusion of small businesses in strategic sourcing. DOD, DHS, GSA, HUD, and OMB agreed with GAO’s recommendation. Interior partially agreed, suggesting that a more effective approach would be to work with OMB and other agencies to develop common approaches. NASA disagreed, stating it already tracks related spending for the agency. GAO believes its recommendations remain valid as discussed in the report.