Transcript ASDPS Update to Minister Collins

Joint Solution Procurement
A New Way to Work with the Private Sector
Kirsten Tisdale, Senior Advisor Corporate Initiatives, ASD Secretariat
February 1, 2005
Transforming Service Delivery
• Through its “New Era Commitments,” the
Government of BC articulated a transformation in
the way services are delivered to British
Columbians.
• Alternative Service Delivery (ASD) is a key step to
realizing the Government’s vision. Its primary
focus is to provide cost effective and efficient
delivery of services to the taxpayers by:
– Maintaining or enhancing service levels
– Increasing private sector involvement in the delivery
of services, thereby allowing Government to focus
on core businesses
– Reducing costs, increasing revenue, or maximizing
cost avoidance
– Supporting general economic development and
growth
January 2005 Page 2
ASD - a Range of Ways to Deliver Services
•
ASD encompasses a range of service delivery options, from the Government’s direct delivery of
programs and services, through to outsourcing and privatization.
•
Each deal structure is driven both by commercial deal elements and each parties’ unique, projectspecific deal drivers. Government carefully considers all delivery options when deciding the optimal
way to deliver services to British Columbians.
100%
government
owned and
delivered
Direct
Delivery
Government
delivers programs
and services
through its
ministries
100% private
sector
owned and
delivered
Service Delivery Continuum
Devolution
Government
transfers delivery
(and payment) to
another
government
e.g. federal
government
collects income
tax on behalf of
the province
Shared
Services
Government consolidates
“like” programs and services
from across government into
a single operating unit which
serves the needs of multiple
ministries.
e.g Common Information
Technology Services
Agencies
Outsourcing
Programs and
services are
delegated to a
third-party serving
on behalf of the
government.
e.g. Consumer
Protection
Agency, ICBC,
BC Transit
Government programs
and services are
provided by private
sector companies under
long-term contractual
arrangements.
e.g. Payroll Operations
and Information
Management and
Payroll Services
January 2005 Page 3
Privatization
Government sells
its assets or
interest in a
program or
service to the
private sector, but
may protect
public interest
through
legislation and/or
regulation.
e.g. BC Ferries
ASD Secretariat
• As the single point of contact for large-scale IT and business process
outsourcing ASD initiatives, the ASD Secretariat supports Government
transformation by:
– Driving current ASD projects in the short term; and
– Creating a foundation to support ASD in the longer term by building new skills and
capabilities.
• More specifically, the Secretariat team provides:
– Specialized expertise and coaching (Deal Architects, Financial Modellers, Negotiation
Coaches);
– Results management (track overall benefits; progress reporting);
– Knowledge management (build resources to support future ASD initiatives – tools, templates,
documenting best practices, research, advice on JSP process);
– Overall ASD governance (steering committee participation); and
– Regular reporting to Treasury Board.
ASD projects focus on solving complex IT and business process problems to improve
back office functions and IT systems for government.
January 2005 Page 4
Why Partner with the Private Sector?
• Improve service to British Columbians and get better value for taxpayer dollars.
• Revitalize aging infrastructure through private sector investment.
• Stay competitive in a global economy by sharing results of best practices
developed by the private sector.
• Free up government resources to focus on core strategic services.
• Support economic development and growth
– Four large-scale Service Centres are being created to expand service delivery to
other public sector organizations. This means benefits for government, the rest
of the public sector, and creates jobs in our communities.
– Service Centres will help attract and keep high-value work in the province.
– BC companies are getting the opportunity to participate as part of global
consortiums
• Leverage the expertise of our private sector service providers, who are chosen
through a competitive procurement process as the very best at delivering the
specific services needed by government.
• Share some of the risk traditionally borne entirely by government with the private
sector.
January 2005 Page 5
The ASD Secretariat Project Portfolio
Current Project Involvement
Revenue Management
Health Benefit Operations
Payroll Operations and Information Management & Payroll Services
Workplace Support Services
Strategic Sourcing
Residential Tenancy Office
Enquiry BC
BC HealthGuide Services
In addition to driving current projects, the ASD Secretariat also provides support to
emerging ASD projects and future priorities.
January 2005 Page 6
Recently Signed Deals
Project
Description
Benefits
Revenue
Management
Project
Amalgamate and streamline government
revenue management processes to improve
service and collection of receivables through
transformation and outsourcing of the function.
• Reduce outstanding receivables and
Health Benefits
Operations
Outsource and automate majority of MSP and
Pharmacare operations to improve service to
public and avoid large capital expenditure.
Private sector finances new system. (RunBuild-Run deal structure).
• Improved service to public
• Maintain or enhance service to health care
Payroll
Operations &
Information
Management
and Payroll
Services
Outsource application maintenance and
development functions for payroll (IT
infrastructure & application outsource).
• Significant cost savings for government
•Growth to Broader Public Sector has
Workplace
Support
Services
Transform & outsource management and
operations of workstations and desk-top
support functions.
Outsource payroll transaction processing
(business process outsourcing).
increase revenue collected
• Improved service levels to public
• Consolidated financial view
• Reduced technology risk
Status
Contract signed with EDS
Advanced Solutions Inc.
Contract signed with
MAXIMUS Inc.
providers
• Capital cost avoidance
significant potential for savings
• Transform HR processes (self service
through investment in new technology and
processes)
•Drive toward standardization and predictable
pricing
• Enhanced service levels to client ministries
(enforceable levels)
• Transfer operational risks
• Significant cost savings
Contract signed with
TELUS Communications
Inc. and TELUS Sourcing
Solutions Inc.
Contract signed with IBM
Canada.
The contract value for these for large-scale projects is approximately $1B, with
nearly $500M in benefits expected over the next ten years. Summaries of the
contracts are available at http://www.saip.gov.bc.ca/ASD_projects.htm
January 2005 Page 7
Joint Solution Procurement (JSP)
The JSP Process is the procurement process used to select Service
Providers in many of the ASD initiatives
Joint Solution Procurement is a structured, collaborative procurement process that:
 Is used to solve complex business problems when there is not a clear “off the shelf”
solution;
 Levers the combined capability and creativity of the Government and the private
sector to create a solution that optimizes total value (and both parties stakes);
 Shares risks and rewards of the solution between the third party and the
Government;
 Is based on developing long term relationships with third parties that allows for
flexibility and evolution over time (is “adaptive”); and
 Provides a fair, competitive and open procurement process.
JSP is a innovative process that can lead to better solutions and services for
customers of Government. Many other governments – both Canadian and
international – have expressed interest in the JSP process.
January 2005 Page 8
Joint Solution Procurement or Traditional Approach?
Defined Requirements
Complex Business Problem
Purchase
Standardized or simple services
Service / technology bundles and / or
transformation
Selection
Low price and feature set
Overall value and relationship
Limited
Broader, defined, but flexible, evolving
environment
Scope
Defined up-front
Measures
Prescriptive Government-defined, cost
focus
Jointly developed, ability to evolve,
business-outcome focus
Timeframe
Fixed contracts (shorter term)
Long term (5 plus years)
Frequency
Majority of deals / year (90%)
Small number of deals / year (10%)
Traditional RFP
Joint Solution Procurement
• Prescriptive requirements
• Business problem definition
• Limited communications with vendors
• Jointly develop solution
• Fixed scope contract
• Scalable relationship
Approach
January 2005 Page 9
JSP Process
WHY
WHO
Overall Timeframe
# of
Partners: 8-20
2
Preliminary
Vendor
Qualification
JSP
Qualification
Duration:
4-7 weeks
3
0
Project Management
Duration:
9-14 Weeks
1+1
1+1
2
Duration:
10-15 Weeks
• Issues Management
• Risk Management
• Cost Controls
1
Due Diligence/
Negotiation
Solution Definition
1
WHEN
HOW
WHAT
Duration:
Depends on Model
• Research and Quick Response
• Meeting/Workshop Logistics
Implementation
Finalize Deal
3
4
Duration:
Depends on Model
Duration: “n”
weeks
• Information Control Office

Phase 0 – Assess suitability of potential ASD opportunities for
Joint Solution Procurement.

Phase 3 – Conduct rigorous due diligence in preparation for
contractual partnership.

Phase 1 – Select two vendors based on Capability, Capacity
and Commitment for Dual-track Solution Design.

Phase 4 – Negotiate Master Service Agreement, Statement of
Work Contracts

Phase 2 – Jointly develop proposed Solution frameworks
through iterative design cycles. Select ASD partner.

Implementation – Transition to agreed deal structure.
Decision “Gates”
January 2005 Page 10
JSP Success Factors
Experience has shown that there are a number things that are critical to the
success of Joint Solution Procurement:
• Unwavering executive sponsorship to break through roadblocks and keep momentum;
• Applying a “pure” JSP process, meaning one without constraints in the solution
development workshops. This leads to real innovation and the best possible solution for
everyone.
• Consistency and continuity on the deal / vendor management team which leads to greater
efficiency and the avoidance of confusion.
• Clearly defined selection criteria and supporting measures, increasing the likelihood of an
optimal JSP process;
• Strictly managed communications with the vendors, so that conflicts of interest (or the
perception of conflicts) are avoided.
• Carefully selected deal decision makers (e.g. not choosing executives from the department
being outsourced), which increases the likelihood of optimal decision-making; and
• Strict confidentiality in the JSP process to ensure process integrity and maintain credibility
with our private sector partners.
January 2005 Page 11
Making it Work
• Matching talent with talent
– DM/ADM sponsorship and specialized skills
• Privacy & Security
– Ensure that personal information is protected when contracting with the private sector
– Privacy solutions tailored to each individual project with privacy protection measures baked
into contracts with service providers.
– Freedom of Information and Protection of Privacy Act recently amended
– Other jurisdictions are actively watching the way B.C. addresses this national issue.
• Maintaining credibility with the vendor community:
– Rigorous, transparent process;
– Contract and relationship management talent; and
– Can’t blink and must stay the course.
• Impact on the enterprise
– There is an impact when operations are moved off the Shared Services backbone
– Need to manage the cost base by finding new revenue sources and/or reducing costs (both
fixed and variable)
– Accounting treatment can have a significant effect on the business case
January 2005 Page 12
Making it Work (continued)
• Breaking down traditional barriers
– Sharing risk and reward with the private sector represents a massive cultural shift for
Government
– Need to incent private sector service provider to exceed targets – this means sharing
benefits as well as risks
– So that the private sector can drive benefits for Government (e.g. flexible contract terms,
asset transfer, shared risk/reward - penalties/bonuses)
– Appropriate treatment of intellectual property (rights to use vs ownership)
• Change management
– Increased focus on alliance management vs. direct service delivery
– Requires new skill set and mindset
– Changing policy and transforming business processes will have a big impact on Ministries
January 2005 Page 13
In Conclusion – What We Have Learned
A few of the things we’d keep
• Outstanding Executive Sponsorship, Cabinet and Treasury Board
as well as Ministries
• Rigorous business cases for each initiative
• Joint Solution Procurement Process
– Better solutions and greater benefits than forecasted
– Positive vendor reception – positive feedback and continued
What we’ll do differently
• Lower our expectations on
the maturity and experience
of our outsourcing
partners…in many cases
these projects are a first for
them
support
– Significant international and multi-jurisdictional interest
• 100% of impacted staff have received exciting job offers from world
class organizations – who are setting up centres of excellence right
here in Victoria
• Access to expert resources – specialized expertise and coaching -
• Insist on greater level of
transparency and detail on
subcontract
relationships…these have
been an Achilles heel
to drive the deals
• Central integration and governance – has driven cross
government issue resolution, reduced duplication of effort, and
ensured consistency
• Skill transfer to public sector – developing expertise in
government and establishing repository of tools, templates,
white papers to support future ASD initiative
January 2005 Page 14
• Expect resistance right up
to signing date…it’s not
over until its over
Contact Information
For more information, please contact:
Kirsten Tisdale
Senior Advisor Corporate Initiatives
Ministry of Management Services
Government of British Columbia
T: (250) 387-2506
email: [email protected]
January 2005 Page 15