Department of Energy's Implementation of Strategic Sourcing
November 25, 2014
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November 25, 2014
Department of Energy's Implementation of Strategic Sourcing
In response to the Office of Management and Budget directives issued to maximize the value of each dollar spent through the use of strategic sourcing, the Department of Energy (Department) developed performance goals to expand the use of strategic sourcing, increase cost savings, and improve the effectiveness and efficiency of its acquisitions. The Department's Strategic Programs Division (Strategic Programs) within the Office of Management, Office of Acquisition and Project Management, is responsible for establishing strategic sourcing processes, policies, and procedures on a Department-wide basis, as well as collecting strategic sourcing savings data.
We found that the Department had taken a number of positive steps to implement strategic sourcing, including the establishment of cost savings reporting guidance, issuance of management commitment memos by senior Department officials, and the development of performance goals and objectives; however, we also noted discrepancies in the savings reported by the sites to Strategic Programs. The Department had overstated strategic sourcing savings by approximately $8.7 million, or about 22 percent, of the approximate $39.8 million claimed in FY 2013 for six sites we evaluated. Based on our review, we noted discrepancies such as calculation errors and incorrect categorization of savings.
The identified errors occurred because some sites misinterpreted the guidance when classifying savings as "strategic sourcing." Additionally, while sites had various controls in place to prevent or detect errors, these controls did not always work as intended. Finally, Strategic Programs did not have a process in place to ensure the accuracy of site-reported savings but instead relied on Department program offices to verify and validate their sites' submissions and ensure that the savings were accurate.
Although the Department reported that it had exceeded its FY 2013 strategic sourcing goal of saving $195 million by 21 percent, these inaccuracies posed a risk that the Department's savings calculations may be misstated. These inaccuracies could also lead Department management to rely on less than reliable information to monitor the success of strategic sourcing efforts.
Topic: Management & Administration