Washington (CNN) - The Federal government is the world's largest purchaser but taxpayers don't get the most value for their buck as Uncle Sam isn't saving the way Aunt Thelma does with her regular trips to Costco-by buying in bulk.
The government's top purchaser is trying to change exactly that.
Federal agencies usually rely on hundreds of separate contracts for commonly used office supplies that vary in price, White House Budget Director Peter R. Orszag's said in a blog post Wednesday. Purchasing supplies through separate contracts does not leverage the government's buying power across all agencies, providing the cheapest prices, said Orszag.
While the federal government is the world's largest purchaser, its spending is traditionally fragmented across many agencies, Orszag added.
The government spends billions of dollars on office supplies each year, according to Dan Gordon, the Administrator for Federal Procurement Policy in testimony Wednesday before the Senate Subcommittee on Contracting Oversight.
Gordon said the government intends to save money by making purchases through blanket purchase agreements (BPA's). The U.S. General Services Administration (GSA) awarded the first set of BPA's for office supplies earlier this month.
GSA has written commitments that BPA's will lead to lower prices. The Office of Management and Budget and GSA worked with buying agencies to secure commitments that hundreds of millions of dollars would be used more efficiently.
"Of course, the office supplies BPA's provide only a small glimpse into the vast benefits that strategic sourcing offers and we need to share these experiences so that we can replicate success," said Gordon.
Rounds of "reverse auctions" were conducted by GSA in order to drive down prices. Vendors participating in these auctions, were presented the lowest overall price received and had a short amount of time to come up with a lower price, said Gordon.
Gordon said BPA's will cut procurement costs on office supplies by about $200 million over the next four years. Every federal employee who purchases supplies from the winning contractors is guaranteed to buy supplies at the price negotiated by GSA.
"We are working with agencies to change these inefficient practices. Effective strategic sourcing begins with good acquisition planning," said Gordon.
Orszag echoed Gordon's sentiment. "After all, we owe it to the American people to spend their taxpayer dollars wisely and carefully," the OMB director said in his blog post.