OMB plans sourcing memo

A working group assembled by Office of Management and Budget officials is preparing a memo that will give guidance on strategic sourcing, a concept that many procurement experts describe as poorly understood.

"It's going to be distributed to the entire acquisition community," said Rob Burton, assistant administrator in the Office of Federal Procurement Policy. "We're going to try to establish a common set of principles."

Burton spoke as part of a panel discussion at Input's MarketView 2005 conference today. The memo will be ready to distribute sometime this spring, he said.

The term "strategic sourcing" is often associated with combining requirements under a single large contract. However, Burton said, the meaning is broader, and pertains to approaching the acquisition process thoughtfully and with planning. It refers to collaboration between agency officials involved in procurement, such as the chief information officer, chief financial officer and chief acquisition officer, to create a less insulated approach to buying goods and services.

He recalled a conversation with a vendor in which he had wondered why the vendor didn't give government officials a discount when they purchased merchandise using government purchase cards. The vendor told Burton that no one asked for a discount.

So, he said, strategic sourcing "is often just good negotiation."

Mike Sade, director for acquisition management and the procurement executive at the Commerce Department, who was a member of the panel with Burton, said that agency officials need the kind of direction that the OMB memo is expected to provide.

"Some people have caught on the phrase 'strategic sourcing,' but they want to go practice it haphazardly," he said. "We need guidance."

Burton said OMB officials will ask each agency to designate a person to be responsible for strategic sourcing initiatives, to strengthen communications and create accountability. However, he said the intent is to provide information, guidance and encouragement, not to prescribe specific courses of action.

"We want to allow flexibility, so we're not going to issue an edict saying 'you must do it in this way,' " he said.