Transcript Part 1

U.S. General Services Administration
Federal Acquisition Service
Acquisition Reform
Using Strategic Sourcing as a Tool
May 6, 2010
Agenda
 Introduction to Acquisition Reform
 Strategic Sourcing Overview
 Case Studies: Strategic Sourcing Driving Acquisition Reform
Page 1
Spending on Federal contracts has more than doubled since 2002
CONTRACT SPENDING AND ACQUISITION WORKFORCE
FY2002 - 2008
SOURCE: Office of Management & Budget
Page 2
Reforming the government’s $500B+ annual contract spend is a key priority
of President Obama’s administration
“The Federal Government has an
overriding obligation to American
taxpayers. It should perform its
functions efficiently and effectively
while ensuring that its actions
result in the best value for the
taxpayers.”
President Barack Obama
March 4, 2009
PRESIDENTIAL CHALLENGE
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Save $40 billion annually by FY2011
Terminate unnecessary contracts
Strengthen acquisition management
End the overreliance on contractors
Reduce the use of high-risk contracts
across government
Page 3
Many agencies already have implemented reforms, resulting in increased
efficiencies and real savings for the American taxpayer
SOURCE: Office of Management & Budget
Page 4
Agenda
 Introduction to Acquisition Reform
 Strategic Sourcing Overview
 Case Studies: Strategic Sourcing Driving Acquisition Reform
Page 5
Strategic Sourcing is an identified and proven way to drive acquisition reform
OMB Director Peter Orszag identified ways for agencies to drive savings…
Strengthen Acquisition Practices
Develop More Strategic Acquisitions
… which can implemented through the use of Strategic Sourcing
Strategic Sourcing is an analytical process for optimizing the government’s supply
base while reducing Total Cost of Ownership and improving mission delivery
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Opportunity
Analysis
2
Profile
Profile
Commodit
Commodity
y
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Conduct
Market
Analysis
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Develop
Commodity
Strategy
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Select
Sources of
Supply
Implement &
Manage
Performance
Page 6
The benefits of Strategic Sourcing go far beyond leveraging the government’s
spend to negotiate lower prices
PRIMARY BENEFITS OF STRATEGIC SOURCING
Reduction in Cost
Per Unit
Change in
Consumption/
Volume
Pricing Improvements
Demand Management
• Lower unit price
• Volume rebates
• Payment term discounts
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Eliminate demand
Reduce consumption
Encourage substitution
Change product mix
Supply Chain Savings
• Cost of capital
• Warehousing costs
• Shipping costs
Reduced Lifecycle Costs
• Maintenance costs
• Operating costs
• Disposition costs
Specification Review
• Eliminate “gold-plating”
• Simplify specifications
• Alternative products
Improved Operating
Efficiency
Reduced ProcurementRelated Operating Expense
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PO Processing
Accounts Payable
Receipt/Warehousing
Standardized procurement
process
Reduced Non-Procurement
Related Operating Expense
• Other operating efficiencies
Performance Monitoring
Improved Supply
Management
Socio-economic Goals
• Structured analysis of
small/disadvantaged
business opportunities
Optimized Supplier
Relationships
• Improved joint
understanding of needs
and capabilities
• Increased efficiencies
across the entire supply
chain
• Structured metrics and periodic
review of contractor
performance
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Strategic Sourcing promotes an effective acquisition system that meets
government needs and ensures the prudent use of taxpayer dollars
DRIVES EFFICIENT
GOVERNMENT
OPERATIONS
IMPROVES
VENDOR
PERFORMANCE
SUPPORTS
ADMINISTRATION
GOALS
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Provides visibility into spending habits
Lowers Total Cost of Ownership through data analysis
Creates commodity expertise
Enables better and more informed decisions by employees
Minimizes complexity for end-users
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Increases clarity of requirements
Optimizes supplier relationships
Improves competition & contract structures
Holds vendors accountable for meeting performance goals
• Helps agencies achieve the President’s savings target of
$40B
• Enables right sizing of the acquisition workforce by
minimizing redundant contracts & activities
• Uses Federal acquisitions to drive sustainable and socioeconomic goals
• Increases transparency & accountability
Page 8
The Federal Strategic Sourcing Initiative (FSSI) is a cross-agency program
created to drive use of Strategic Sourcing throughout the government
FSSI VISION & GOALS
 Develop commodity expertise and use best practices to generate governmentwide
requirements and drive business process improvements
 Aggregate requirements, streamline processes and coordinate purchases
 Increase total cost savings, value, socio-economic participation, and sustainability
 Create commodity teams and share knowledge with all government purchasers
 Collaborate with industry to develop optimal solutions
FSSI OPERATING APPROACH
 Focuses on most promising government-wide opportunities to strategically source commonly
purchased goods and services
 Develops solutions through collaborative cross-agency “Commodity Teams”
 Works under the purview of the Chief Acquisition Officer’s Council (CAOC) Strategic
Sourcing Working Group (SSWG), and is monitored by the Office of Federal Procurement
Policy (OFPP) within OMB
 Leads the Strategic Sourcing Community of Practice with representatives from 18 federal
agencies
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Agenda
 Introduction to Acquisition Reform
 Strategic Sourcing Overview
 Case Studies: Strategic Sourcing Driving Acquisition Reform
Page 10
Second Generation Domestic Delivery Services Program
OVERVIEW
One year (plus 4 option years) award to UPS
based on efforts of a 15 agency Strategic
Sourcing team focused on:
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Ensuring high quality service
Maintaining DDS1 savings
Lowering surcharge costs
Improving reporting & analysis capabilities
SOLUTION BENEFITS
• Savings over 16% compared to Multiple Award
Schedule rates and 7% below DDS1
• Elimination of fuel surcharges
• Streamlined acquisition processes and
minimized redundant contracts across
government
• Robust savings and usage reports
Est. Annual Total
Government Spend
$373M
Solution
Implementation
Timing
• 1st Generation: FY07
• 2nd Generation: FY10
INNOVATIONS
• Collection & analysis of business intelligence
data “evened the playing field” and eliminated
incumbent advantage, resulting in highly
competitive bidding
• Agencies have increased visibility into total cost
of ownership for shipments, resulting in improved
employee decisions
• Mode optimization and more efficient operations
Page 11
Second Generation Office Supplies Program
OVERVIEW
Second generation acquisition is in process,
with the goals of:
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Improving agency ability to procure
competitively priced products while
meeting socio-economic goals
Lowering delivery and other “hidden”
costs
PROJECTED SOLUTION BENEFITS
• Over $40 savings over lifetime of solution
• Easy access to qualified and competitive small
and disadvantaged businesses
Est. Annual Total
Government Spend
$800M
Solution
Implementation
Timing
• 1st Generation: FY07
• 2nd Generation: FY10
INNOVATIONS
• Focus on driving competitive pricing for those
core items which government users purchase
most
• Minimized redundant contracting and program
management activities
• Incorporation of point-of-sale terms to reduce
price variability, increase ease-of-use, and
improve compliance with mandates
• Understanding government spending behaviors
leading to further acquisition and usage
improvements
• Collection & analysis of business intelligence data
will allow agencies to better manage spend
Page 12
Wireless Programs
OVERVIEW
A team is in the process of implementing a
solution which will:
• Improve demand management
• Leverage government volume to develop
governmentwide contracts
• Enable agencies to optimize selection &
utilization of plans
PROJECTED SOLUTION BENEFITS
• Deeply discounted rates
• Standardized services and plan types
• Reduced inventory costs and billing errors
• Minimized redundant contracting activities
• Spend data to drive improved decision making
and lead to improved efficiencies and acquisition
practices
Est. Annual Total
Government Spend
$815M
Solution
Implementation
Timing
• TEMS: FY08
• Rate Plans &
Devices: Est. FY10
INNOVATIONS
• Collaboration between IT and Acquisition
communities
• Development of a full service suite of solutions to
address agency wireless lifecycle needs
Page 13
Printers, Copiers, Multi-Function Devices Program
OVERVIEW
A team is in the process of implementing
a solution which will:
• Lower both equipment and consumable
costs
•Provide new services on the Multiple Award
Schedule 36
PROJECTED SOLUTION BENEFITS
• Multiple buy and lease options to meet specific
agency requirements
• Designed to minimize agency spend on paper
and toner
• Robust usage reports which will identify
opportunities for additional savings
Est. Annual Total
Government Spend
$1B+
Solution
Implementation Timing
Est. FY11
(includes consumables)
INNOVATIONS
• Enables agencies to lower costs and increase
environmental performance by:
• Utilizing the most efficient equipment
• Making “green” print options the default
• Optimizes equipment deployment and usage
through sophisticated Managed Print Services
Page 14