David P. Gragan, Director, CGI Spend Management Solutions Date: Tuesday, April 11, 2006 Time: 1:30 p.m.

2. Procurement Reform in Public Acquisition David P. Gragan, Director, CGI Spend Management Solutions Date: Tuesday, April 11, 2006 Time: 1:30 p.m. NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

3. Overview of Presentation • Themes of Professional Public Acquisition • Continuous Procurement Reform – A Leadership Responsibility • Procurement Transformation – From Vision to Reality NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

4. Themes in Government Acquisition • Acquisition is not an administrative function • It can and should contribute to the operational effectiveness of your organization • Public purchasing faces a dilemma… • Make it easy for requisitioners to get the goods and services they need to do their jobs, and… • Exercise control over expenditures on goods and services • Process review and improvement is always in order NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

5. The Dilemma of Public Purchasing • Facilitation • Making it simple, painless, and efficient for requisitioners to acquire needed goods and services • Control • The higher calling • Required by the special trust and confidence that the taxpayer or the shareholder has placed in the procurement executive NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

6. Procurement Reform • What is the vision of your procurement process in the future? • Do you have executive support for that vision? • Do you have agency or departmental support? • Do you have staff support? • Do you have an outreach or communications plan? • Do you have the right resources? • Where is your procurement process and organization today? A continuous responsibility of procurement leaders NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

7. Procurement Reform Excellent procurement professionals recognize that reform is necessary, continuous and focused. • Procurement process evaluation • Conduct a comprehensive review of directives • Insert process automation, where appropriate • Gain support from Human Resources • Put a good communications plan in place • Establish and manage delegation levels properly • Seek reporting enhancements • Implement sourcing improvements • Pursue training program enhancements • Improve supplier management NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

8. Process Evaluation and Improvement • Process evaluation (business process review must precede business process reengineering) • Should include a comprehensive review of the procurement process • Elimination of non-value added steps or procedures • Reengineer remaining parts to increase efficiency and visibility • Business process review can best be conducted by operators within the system (not outsiders) • Requires dedicated resources • Treat it like a program, with appropriate assignments and support • This is an investment fundamental to the success of procurement reform NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

9. Comprehensive Directives Review • Review the regulatory environment with an eye toward moving as much as possible to administrative code where it is more flexible • Eliminate non-value added requirements • Develop supporting policy with input from customers • Publish ongoing reports (in your procurement newsletter) to all organizations you serve • Make this a finite project, e.g. a 12 month effort, but include annual review NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

10. Process Automation • Don’t automate the old process (streamline, then automate) • Don’t ‘pave the cow path’ • Must follow a process review of the procurement function • Automate only steps that are substantively improved by automation • Likely automation targets: • External: e.g. Solicitation and Offer • Enterprise: e.g. eForms (requisition, change request, etc.) • Internal: e.g. Workflow, logging and assignment functions NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

11. Human Resources Support • Carefully review position descriptions • Establish baseline requirements • (e.g. certifications, degrees, experience) • Work with your personnel office • (strong alliance must be formed) NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

12. Communications and Outreach • Have an understanding of your customers • Remember quasi-governmental organizations (they can help at little or no cost) • Procurement Technical Assistance Centers • Chambers of Commerce • Small and Minority Business Development Centers • Business incubators • Television and Radio • PSAs • Community-based broadcasts • Supplier Advisory Panel • Diverse, Objective, Representative, Appointed • Requisitioner Advisory Panel • Diverse, Objective, Representative, Appointed NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

13. Delegation Levels Delegation levels can safely be increased if: • Each authority for delegation is based on sound understanding of risks • Training and testing of the recipient is made part of the delegation protocol • Rescinding such authority is done in cases where needed • An audit program must be part of delegation program NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

14. Reporting Enhancements • Allow for ad hoc query and reply • Databases and reporting tools should offer controlled access for use by: • Agencies and departments • Subdivisions of your organization or political subdivisions • Suppliers • Appropriate reporting tools support audit and delegation goals • Make your reports meaningful NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

15. Sourcing Improvements • Sourcing is the core responsibility of the procurement process • Know the seller’s environment • Use acquisition planning • Turn personnel to highest value tasks • Encourage innovation • Sourcing protocol should be clearly articulated • Inventory • Directed or mandatory sources (state use, correctional industries) • Term contracts • Open market, using an approved procurement method • Automated tools should support the sourcing routine without burdening the requisitioner NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

16. Training Program Enhancements • Should be available to all interested parties • Mandatory requirement prior to granting authority to commit funds • Coherent, responsive, and dynamic training programs require dedicated resources • Rely on existing and “industry standard” curricula • NIGP and other professional organizations • Be innovative • Required customer visits as part of annual training • Problem resolution at customer level rather than central purchasing NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

17. Improved Supplier Management • Sound supplier relationships encourage competition • Recognize your status as the customer • Communicate with the seller community • Be open to new ideas • Offer supplier training • Do not fail to correct bad supplier performance NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

18. Questions? NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management