President Donald Trump has ordered that US government tech procurement should be consolidated under the General Services Administration.
The move is likely to cause further discomfort for major suppliers to the government. The administration has already set out plans to dramatically reduce its reliance on the major tech consulting firms, while uncertainty over tariffs is hitting suppliers like HPE.
Last week’s order noted that the Federal government spends “$490bn per year on Federal contracts for common goods and services” and was the largest buyer of goods and services in the world.
“As a matter of sound management, these standardized procurement functions should be carried out in the most efficient and effective manner possible for the American taxpayer,” it continued.
So, “Consolidating domestic Federal procurement in the General Services Administration — the agency designed to conduct procurement — will eliminate waste and duplication, while enabling agencies to focus on their core mission of delivering the best possible services for the American people.”
Tech procurement was singled out for some special mention in the order. “The Administrator, in consultation with the Director of OMB, shall defer or decline the executive agent designation for Government-wide acquisition contracts for information technology when necessary to ensure continuity of service or as otherwise appropriate.”
But the main thrust is that “The Administrator shall further, on an ongoing basis and consistent with applicable law, rationalize Government-wide indefinite delivery contract vehicles for information technology for agencies across the Government, including as part of identifying and eliminating contract duplication, redundancy, and other inefficiencies.”
And tech procurement is notorious for potential redundancy and inefficiency. A fact sheet released with the announcement claimed that the cost of a Microsoft Office 365 license can vary by $200 across government departments, and a consolidated approach could save more than $100m a year.
It also said that decentralised purchasing of services like ID protection and data breach services led to inconsistent proving and underutilization.
And, the statement added, “President Trump’s Department of Government Efficiency (DOGE) has already identified more than $100bn in estimated savings.”
Some of those savings appear to have emerged at the GSA itself. Politico reported earlier this month that an inhouse GSA tech agency, 18F, had been shuttered by DOGE.
And while centralized purchasing makes sense, without the appropriate resources and procedures, the GSA could simply become a centralised bottleneck in government procurement.
Still, the efficiency drive is already showing up in company results. The GSA has told government agencies to review their contacts with the ten biggest consulting firms and terminate those deemed not mission critical.
Last week Accenture CEO Julie Sweet confirmed slowing US government procurement, “Which is negatively impacting our sales and revenue.” But she also saw “major opportunities over time” to help the government operate more efficiently.
Meanwhile, the GSA last week also launched an “early stage” AI tool to help its staff. The tool “features a chat function and application programming interface (API)”.
The development of the tool “was driven by staff feedback and concerns about the risks of using commercially available AI tools that may not meet the security and privacy requirements necessary for government use.”
