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U.S. General Services Administration. Federal Acquisition Service. Strategic Sourcing Fundamentals Michel Kareis, GSA

U.S. General Services Administration. Federal Acquisition Service. Strategic Sourcing Fundamentals Michel Kareis, GSA Jack Kelly, OMB/OFPP May 10, 2011. Session Objectives. Introduce the basic concepts and principles of strategic sourcing and the Federal Strategic Sourcing Initiative (FSSI)

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U.S. General Services Administration. Federal Acquisition Service. Strategic Sourcing Fundamentals Michel Kareis, GSA

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  1. U.S. General Services Administration. Federal Acquisition Service.Strategic Sourcing Fundamentals Michel Kareis, GSAJack Kelly, OMB/OFPPMay 10, 2011

  2. Session Objectives • Introduce the basic concepts and principles of strategic sourcing and the Federal Strategic Sourcing Initiative (FSSI) • Share the benefits that can be achieved by incorporating strategic sourcing into the procurement process • Demonstrate the value of utilizing spend analysis to drive strategic acquisitions

  3. Agenda • Strategic Sourcing Overview • Introduction to Federal Strategic Sourcing Initiative • Utilizing Spend Analysis to Drive Strategic Acquisitions • Conclusions & Questions 3

  4. Acquisition Reform Key Administration Priority “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 • Cut agency spend by $33 billion in 2012 • Terminate unnecessary contracts • Strengthen acquisition management • End overreliance on contractors • Reduce use of high-risk contracts 4

  5. What is Strategic Sourcing? Strategic sourcing is the collaborative and structured process of critically analyzing an organization’s spending and using this information to make business decisions about acquiring commodities and services more effectively and efficiently 5

  6. Benefits of Strategic Sourcing 6

  7. Strategic Sourcing utilizes a fact based and analytical process to optimize the supply base while reducing Total Cost of Ownership PHASE 1: STRATEGY DEVELOPMENT PHASE 2: STRATEGY IMPLMENTATION PHASE 3: COMMODITY MANAGEMENT OPPORTUNITY SELECTION Assess and prioritize opportunities based on a thorough organization-wide spend analysis Conduct market analysis to identify supply & demand levers, new suppliers, buyer leverage Develop and issue RFx based on sourcing strategy, conduct negotiations, evaluate proposals, and award contract(s) Develop detailed profile of commodity including spend profile & specifications Develop sourcing strategy based on Commodity Profile & Supply Market Analysis Implement contract and establish process to track and manage performance 7

  8. Strategic Sourcing Process – Opportunity Selection Opportunity Selection Overview • Broad Analysis of quantitative and qualitative factors • Qualitative analysis includes an assessment of spend, marketshare, and general buying patterns • Qualitative analysis includes stakeholder interviews and an assessment of commercial & supply market trends • Synthesis of findings leads to potential list of opportunities Opportunity Selection Outputs • High level spend profile for commodity group or organization • Filtered and prioritized list of commodities based on • Savings potential • Strategic alignment • Implementation feasibility • Other criteria 8

  9. Strategic Sourcing Process – Phase 1 • PHASE 1: STRATEGY DEVELOPMENT OVERVIEW • Deep analysis of agency spending patterns • Consensus based development of government requirements with cross agency Commodity Teams • Collaborative development of strategy for lowering Total Cost of Ownership by leveraging market capabilities • PHASE 1: STRATEGY DEVELOPMENT OUTPUTS • Commodity Profile or a “fact base” derived from a comprehensive spend, usage, cost and requirements analysis • Supply Market Analysis based on primary and secondary research gathered from industry sources • Commodity Strategy and tactics to be implemented and the business case supporting the proposed strategies 9

  10. Strategic Sourcing Process – Phase 2 PHASE 2: STRATEGY IMPLEMENTATION OVERVIEW • Commodity Team members responsible for gaining active support of respective agency Senior Procurement Executives • Program engagement with agency policy makers and decision makers through governance structure • Explicit support from leadership for driving customer adoption PHASE 2: STRATEGY IMPLEMENTATION OUTPUTS • Conduct Acquisition • Develop and gain approval of the Implementation Plan for government-wide rollout of the new vehicle(s) 10

  11. Strategic Sourcing Process – Phase 3 PHASE 3: COMMODITY MANAGEMENT OVERVIEW • Engagement with community of interest throughout solution life • Collection and analysis of detailed customer usage data • Identification of opportunities for improvement for subsequent solution generations PHASE 3: COMMODITY MANAGEMENT OVERVIEW • Commodity Management Plan including detailed Performance Metrics • Performance Measurement Reports, data consolidation and review • Communication Plan to market vehicle/solution • Contract Maintenance/Customer Management 11

  12. Agenda • Strategic Sourcing Overview • Introduction of Federal Strategic Sourcing Initiative • Utilizing Spend Analysis to Drive Strategic Acquisition • Conclusions & Questions 12

  13. History of FSSI • Strategic Sourcing successful in commercial space • Agencies purchasing independently • OMB memo requires agencies to use strategic sourcing • FSSI Program Management Office formed • Launch Commodity Teams: • Launch Office Supplies I Commodity Team • Establish Community of Practice • Write FSSI ConOps • Launch Commodity Teams: • Launch of Strategic Sourcing Knowledge Management Portal • Launch SmartBUY Commodity Team • Identify and launch additional Solutions • Print Management • Wireless Rate Plans & Devices • Domestic Delivery 2 • Office Supplies 2 • Wireless TEMS • Domestic Delivery 1 13

  14. FSSI Operates Through an Established Governance Structure • FSSI GOVERNANCE STRUCTURE • AS ESTABLISHED MAY 2008 14

  15. FSSI Program Overview FSSI works collaboratively with Federal agencies to: Benefits of FSSI align with the overarching benefits of strategic sourcing: • Aggregate requirements • Streamline processes • Coordinate acquisitions for commonly purchased goods and services 15

  16. In 2011, FSSI programs are projected to save the government over $XM annually Place holder FSSI GOVERNMENT-WIDE SOLUTIONS ESTIMATED 4-YR CUMULATIVE SAVINGS 16

  17. FSSI is currently overseeing three innovative solutions, and is preparing to implement three additional IT-focused programs in FY11 Launched Solutions Solutions to be Implemented in FY11 17

  18. FSSI Solutions- 2nd Generation Domestic Delivery Services SOLUTION OVERVIEW • Full service solution for delivery of small packages and urgent letters • Single award to UPS • Website: http://www.gsa.gov/dds SOLUTION BENEFITS • Savings over 16% compared to Multiple Award Schedule rates and 7% below previous solution • Elimination of fuel surcharges • Robust savings and usage reports • Streamlined acquisition processes • Mode optimization and more efficient operations 18

  19. FSSI Solutions- SmartBUY SOLUTION OVERVIEW • Leveraged buying of Commercial off-the-shelf software licenses • 44 total agreements • Website: http://www.gsa.gov/smartbuy SOLUTION BENEFITS • $195M in total annual cost avoidance (benchmarked against GSA Schedule 70 prices) • Solutions covering multiple software categories • Database Management • Enterprise Content Management • Enterprise Resource Planning • Geospatial Information System • Information Assurance (including 4 sub-categories) • Network Management 19

  20. FSSI Solutions in Development WIRELESS RATE PLANS & DEVICES • Strategic sourcing of rate plans & wireless devices • Potential 20% savings • Solution planned to be launched in mid 2011 PRINT MANAGEMENT • Strategy designed to reduce the number of print devices in use and minimize agency spend on paper and toner • Government-wide savings of up to $1.1B • Solution planned to be launched in mid 2011 20

  21. Agenda • Strategic Sourcing Overview • Introduction of Federal Strategic Sourcing Initiative • Utilizing Spend Analysis to Drive Strategic Acquisitions • Conclusions & Questions 21

  22. FSSI solutions are developed collaboratively across government agencies and offer customers a number of potential benefits • Realizes significant savings with competitive pricing • Reduce contracting and program management requirements through consolidated acquisition efforts • Improve understanding and management of spend with access to detailed spend data • Achieve socio-economic goals with direct access to small and disadvantaged providers 22

  23. The FSSI process uses rigorous spend analysis to help customers identify and capture increased value Resulting FSSI solutions promote the on-going management of spend and performance to achieve sustained cost savings and drive value for customers • Duplicative contracts • Similar supply bases used for like contracts • Indication of key stakeholders to engage • Past pricing comparison • Price analysis • Vendor comparisons • TCO studies • Acquisition cost analysis • Market basket pricing • Situational analysis • Historical spend data • Current prices • FPDS data • Agency data • Purchase Card data 23

  24. Agenda • Strategic Sourcing Overview • Introduction of Federal Strategic Sourcing Initiative • Utilizing Spend Analysis to Drive Strategic Acquisitions • Conclusion & Questions 24

  25. Key Take-Aways • Strategic sourcing is an important business tool used to generate savings, drive process efficiencies, and improve vendor performance • FSSI solutions are developed collaboratively across government agencies • Participation in FSSI solutions helps agencies understand and manage spend, meet savings targets, and achieve socio-economic goals • FSSI PMO and Commodity Teams are here to help support customer agencies 25

  26. Questions? 26

  27. Points of Contact • GSA FAS – FSSI Program Management Office Michel Kareis, PMP FSSI Program Manager michel.kareis@gsa.gov (703) 605-3669 FSSI website: http://www.gsa.gov/fssi FSSI email address: fssi@gsa.gov • Office of Federal Procurement Policy (OFPP) Jack Kelly john_kelly@omb.eop.gov (202) 395-6105 27

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