DOD shown model for acquisition

"Best Practices: Taking a Strategic Approach Could Improve DOD's Acquisition of Services"

The Defense Department could save millions of dollars and improve the quality of the services it buys by taking a strategic approach to those purchases, a new analysis by the General Accounting Office suggests.

DOD, however, needs to overcome longstanding problems, including its troubled financial systems, weaknesses with its Standard Procurement System, and shortcomings with DOD's e-commerce efforts, the report said.

The report, "Best Practices: Taking a Strategic Approach Could Improve DOD's Acquisition of Services," reviewed the buying practices at six companies that have been recognized for how they purchase services. Those companies — Brunswick Corp., Dun & Bradstreet Corp., EDS, Exxon Mobil Corp., Hasbro Inc. and Merrill Lynch & Co. Inc. — have be able to show substantial savings and service improvements.

GAO found there were four general principles that the companies followed:

* Commitment: They had strong up-front commitment from top leaders.

* Knowledge: The organizations developed information systems to analyze how much was being spent on services and who the suppliers were.

* Change: To support changes to coordinate service acquisition, the companies had to make changes in business processes, organizational structure and responsibilities.

* Support: Re-engineering efforts were supported through sustained leadership, clear lines of communication and metrics for success.

"The principles and practices largely reflect a common-sense approach toward almost any business venture, that is, providing good leadership, developing and harnessing knowledge, making sure business processes maximize return, and measuring results," the GAO report says.

The GAO analysis acknowledges that strategic buying of services is a difficult task. Furthermore, given DOD's scope and size, a one-size-fits-all approach will not necessarily work. DOD "will need to tailor its approach to meet its specific needs and requirements," the GAO report says.

In addition, DOD will need to assess how the existing problems with its IT and financial management systems could impact its service contracting initiatives, GAO said.