Federal Agencies Could Save Billions Through Strategic Purchasing Initiative

The U.S. Government Accountability Office (GAO) has highlighted significant opportunities for federal agencies to achieve substantial cost savings by more effectively managing their purchasing of common goods and services. In fiscal year 2024 alone, agencies allocated over $495 billion to these essential items, including medical supplies and information technology. The GAO’s ongoing work over the past two decades has consistently identified strategies that, when implemented, have the potential to yield billions of dollars in savings for taxpayers.

The category management initiative, spearheaded by the Office of Management and Budget (OMB) with support from the General Services Administration (GSA) since 2014, aims to consolidate federal purchasing power. The underlying principle is to have agencies operate as a unified entity to negotiate better prices, eliminate redundant contracts, and ultimately reduce wasteful spending. OMB has reported that this initiative has already generated more than $111 billion in savings since its inception. This approach has led to the establishment of ten distinct spending categories, which collectively represent over half of all federal contract spending, and the creation of government-wide contracts designed to offer competitive pricing and enhance transparency in purchasing data.

Recent directives from the executive branch signal a move towards greater centralization of agency purchasing efforts. In March 2025, an executive order was issued to further streamline agency buying processes, with the goal of eliminating waste and allowing agencies to concentrate on their core responsibilities. Following this, in July 2025, OMB provided guidance instructing agencies to consolidate their spending through GSA-managed contracts, adhering to category management principles. This guidance also suggests centralizing agency procurement functions within GSA where appropriate. Despite these efforts, OMB has noted that less than 20 percent of common federal spending is currently channeled through GSA.

GAO’s research indicates that leading private sector companies utilize category management to oversee up to 90 percent of their procurement, achieving savings ranging from 10 to 20 percent of their total purchasing costs. The agency has observed that federal agencies have encountered obstacles in fully implementing category management, resulting in potentially billions of dollars in unrealized savings. To maximize these savings, GAO has made recommendations in several critical areas.

Accountability has been identified as a crucial factor in achieving successful outcomes. Previous GAO work in October 2016 revealed that missed savings opportunities were linked to agencies underutilizing preferred contracts and a lack of OMB monitoring and accountability. In response, OMB established specific goals related to the amount of spending managed through category management, the use of preferred contracts, achievable savings, and small business participation. Subsequently, in 2019, OMB issued overarching guidance directing agencies to implement annual plans for managing more spending via category management, while also balancing small business objectives. Further analysis in November 2020 showed that while small businesses had consistently received at least 30 percent of annual category management obligations since 2016, the number of small business vendors providing common products and services had been declining. OMB has since introduced new training programs to identify small business opportunities and refined its reporting metrics. In September 2025, a GAO report on the Department of Veterans Affairs (VA) found that while the department had established relevant policies, category managers were not consistently fulfilling their responsibilities. GAO recommended that the VA implement performance requirements and other measures to ensure accountability for these managers.

Improvements in data collection, analysis, and sharing are also seen as vital for future savings. GAO’s work has consistently pointed to agency limitations in these areas as a barrier to effective category management. A September 2020 assessment found that several agencies did not regularly review their IT contract spending to identify potential redundancies or share crucial contract data, such as prices paid. In November 2020, agencies reported various data challenges, but OMB had not yet implemented government-wide solutions. GAO recommended that OMB develop a strategic plan to address these data issues, and by January 2025, OMB reported that an initiative to improve access to centralized data was in progress.

A focused approach on clearly defining requirements is another essential step. Agencies need to thoroughly understand their needs before determining the most efficient procurement methods. In October 2016, GAO reported on OMB’s efforts to standardize computer configurations for common needs. An interagency group found that agencies were purchasing hundreds of different computer types, yet nearly 80 percent of requirements could be met by just five standard configurations, prompting OMB to develop a strategy for standardization and consolidated purchasing. By November 2020, GAO noted that OMB’s guidance primarily focused on contracting mechanisms rather than emphasizing how agencies could better define their requirements. GAO recommended that OMB increase its focus on requirements definition and offer more targeted training. OMB has since updated its guidance and developed training to underscore the importance of engaging stakeholders who define these requirements.

Current efforts led by OMB and GSA present an opportunity to enhance category management by providing necessary tools, training, and expertise. This push aims to drive more spending through government-wide contracts, ensure agencies meet their small business contracting goals, address data limitations, and improve requirements definition. The centralization of procurement functions will require close collaboration and clear agreements to ensure GSA meets agency expectations and mission needs while achieving cost savings and reducing procurement timelines. OMB’s July 2025 guidance acknowledges the need for GSA to increase its capacity, manage risks, and monitor performance effectively. Congressional oversight, coupled with a sustained focus on accountability, data utilization, and precise requirements, is expected to help federal agencies operate more efficiently, achieve significant savings, and better manage taxpayer resources.

Article by Mel Anara, based upon information from the U.S. Government Accountability Office

---