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Federal Strategic Sourcing Initiative

U.S. General Services Administration

FSSI: Fundamentals of Strategic Sourcing

Presentation for SBTDC MarketPlace

Bruce Osborne, GSA

May 29, 2013


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The Federal STRATEGIC SOURCING Initiative (FSSI)

Strategic sourcing is the structured and collaborative process

of critically analyzing an organization’s spending patterns to

better leverage its purchasing power, reduce cost and improve

overall performance………..

FSSI GOALS:

Strategically source across federal agencies;

Establish mechanisms to increase total cost savings, value,

and socioeconomic participation;

Collaborate with Industry to develop optimal solutions;

Share best practices; and,

Create a strategic sourcing community of practice (COP)


FSSI Operates through an Established Governance Structure

FSSI GOVERNANCE STRUCTURE AS ESTABLISHED MAY 2008

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COLLABORATION FSSI solutions are developed collaboratively across government

agencies and offer customers a number of potential benefits

Realize significant savings with competitive

pricing

Decrease administrative redundancy

Improve business intelligence

Achieve socio-economic and sustainability

goals Strategy developed to

maximize socio-economic

participation

All FSSI programs collect

detailed business

intelligence data

Minimizes administrative

overhead and duplication

of effort

Average Savings from

9%-30%

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DRIVING STRATEGIC CHANGES IN THE

SUPPLY CHAIN REQUIRES CROSS-

GOVERNMENT COORDINATION

GSA & FSSI

FSSI’s cross- government approach has the potential to

further the Administration’s strategic priorities and improve

the Federal supply chain by….

>Improving competition for Federal contracts

>Greening the Federal government (a GSA Presidential

mandate)

>Improving transparency and accountability

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Current FSSI Solutions

Office

Supplies

(OS2)

Print

Domestic

Delivery

Services

(DDS2)

Office Supply purchasing by way of several purchasing channels

Pools created to increase small business participation

Limited to Federal agencies (“Anyone with a GSA SmartPay card, who works

for either the federal government or the Department of Defense, can use the

BPAs”)

Domestic ground and express small package delivery

Incorporates data analyze to drive additional savings (e.g. overnight shipping)

No limit on which agencies can use the solution

Addresses new purchases and fleet management of in-house printers,

copiers, toners

‘Printwise’ – a campaign that addresses changing behavior to achieve greater

savings (e.g. printing double sided, B&W, etc.)

Limited to Federal agencies (“Any warranted Federal or Department of

Defense (DOD) Contracting Officer is permitted to place orders or otherwise

make use of this BPA.”)


FSSI Lessons Learned

Implementing FSSI solutions took an average 18+ months

each

Active stakeholder engagement and commitment required

FSSI is management and acquisition

Obtaining business intelligence is laborious

GSA is the logical lead for many of the FSSI

categories

FSSI for mission-specific strategic sourcing categories

could be led by other agencies

Best-in-class solutions are the result of customer and

industry engagement

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What’s next for FSSI

GSA is facilitating the development of new FSSI solutions for

completion in FY13 and another 2 solutions for FY14

The FY13 categories are:

• Wireless – AWARDED

• JanSan Supplies – soon to be released & RFQ

• MRO Supplies – soon to be released & RFQ

• Plus 2 additional solutions in development

These next generation efforts are expected to…..

*leverage the growing FSSI infrastructure and past lessons learned

*rapidly establish innovative solutions that capture savings

*improve the management of the target categories


Join the Conversation

We have developed GSA Interact, a collaborative tool

for Federal, Military, State & Local acquisition

professionals along with GSA partners. To join the

conversation register at interact.gsa.gov and join the

Multiple Award Schedule Group.

Here you can also find an excellent webinar titled :

Federal Strategic Sourcing – An Overview which

provides additional information on the subject from

GSA’s perspective.

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THANK YOU!

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Thomas Suher

FedLinx, Inc.

May 29, 2013

MARKETPLACE SEMINAR

STRATEGIC SOURCING

STARTEGIC SOURCING ALTERNATIVE VANTAGE POINT

FIRMS TRYING TO BECOME A SUPPLIER TO USG Commodity oriented

Difficulty in obtaining a contract vehicle

Schedule contract compliance and audit concerns Price reduction clause

FCA risk

FIRMS TRYING TO INCREASE USG ACTIVITY High tech commercial technology companies

Limited USG contract vehicles

Unsatisfactory alternatives – sub to higher tier Possible competitor – competitive sensitivity

Intellectual property and contract risk concerns

SUBSTANTIAL PLAYERS TRYING TO HANG IN Impact of BPAs, GWACs and large IDIQ solicitations

Substantial proposal cost and resource investment

Protest calculation is frequently favorable

STRATEGIC SOURCING POSITIVE ATTRIBUTES

SPEND ANALYSIS AND DATA AVAILABILITY

CENTRALIZE PROCUREMENT KNOWLEDGE

DEDICATE RESOURCES AND BUILD EXPERTISE

PROCUREMENT METRICS AND GOALS

DEVELOP CATEGORY STRATEGIES

DEPLOY BEST PRACTICE BUYING TACTICS Leverage buying power and consolidate purchase

Standardize requirements

Performance benchmarks

STRATEGIC SOURCING AREAS OF CONCERN

REDUCTION OF SUPPLIER BASE Concerns with use of sole source awards

Concerns with unduly restrictive requirements

Concern with increasing favorable position of incumbents

ONE AND DONE PROCESS/LIMITED CHANCES TO

BREAK IN AT LATER TIME

LONGER PROCUREMENT CYCLES

EMPHASIS ON FIRST COST / REDUCED MARGINS

GREATER APPLICABILITY OF FAR CLAUSES

BASED ON PROCUREMENT VALUE

STRATEGIC SOURCING COMPETITIVE LANDSCAPE

CONSOLIDATED PURCHASES LEAD TO HIGHER

PROPOSAL INVESTMENT Concern with only having the one shot

Concern with unfavorable selection criteria and evaluation

LIKELIHOOD OF PROTESTS – BPA EXPERIENCE Best value criteria

Technical/price trade-off

GAO application of Part 15 standard to award decision

IMPETUS TO PROTEST Cost/benefit analysis

Recent favorable track record on BPA protests

STRATEGIC SOURCING CONSIDER CAREFULLY

OPPORTUNITY FOR EXPANDED SUPPLIER BASE Pfizer – unbundle contracts for greater transparency and to

increase suppliers and later leverage purchases

Walmart – focus on reduction of total cost of ownership

PROCESS TO PERIODICALLY REVIEW VENDOR

PERFORMANCE TO ALLOW NEW PLAYERS Allow for evolution of supplier base

Opportunities for new suppliers

IMPORTANCE OF ACQUISITION PLANNING Business cases

Independent review of process

Compliance is Complex. We Make it Simple.

Thomas R. Suher, J.D. Senior Consultant

1401 Sunset Drive, Suite B 336.379.0442

[email protected]

Kelly Loughery

Commercial Counsel, Motorola Solutions, Inc.

The views presented herein are those of the

author and do not represent the official

position of Motorola Solutions, Inc. or any of

its affiliates.

Bottom line: USG will make strategic choices based on COST

Small businesses often cannot compete with large multi-nationals’ efficiencies

Small businesses need to create new

go-to-market strategies

Develop relationships with large prime contractors, add value, thrive

Small business status

Restricted contracts ◦ E.g. GWACs, IDIQs

GSA contracts ◦ Letters of Supply

Cost-effective offering

Complementary product/service suites ◦ Large corporations stay close to their core business

◦ Identify opportunities to complement the large business offering close to the core

Contractor Teaming Arrangements (CTAs) vs. traditional teaming agreements

CTAs- two or more GSA Schedule contractors work together to meet ordering activity needs ◦ Equal footing, both GSA holders, both have privity

TA (FAR 9.601)- “A potential prime contractor agrees with one or more other companies to have them act as its subcontractors under a specified contract or acquisition program.”

Prime vs. Sub ◦ Prime maintains privity with USG

◦ Prime is customer-facing

◦ Prime carries risk (and reward if profitable)

Exclusive (reciprocal or not) vs. Non-exclusive

Good faith negotiations post-award ◦ Sub-contract agreement

◦ Terms and conditions can be addressed in TA or tabled until sub-contract negotiations

Well defined roles – prime vs. sub

Comprehensive Scope of Work/division of responsibility

Firm commitment to work together post-award (binding and exclusive)

Strong provisions for intellectual property and proprietary information protection ◦ NDA prior to TA strongly recommended

Questions?

Department of Health and Human Services

Strategic Supply Chain

Management

Marketplace 2013

Presenter: Antoinette Bridges

HHS/NIH/NIEHS

May 29, 2013

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Strategic Sourcing Defined

Why the Strategic Process Works and the Opportunities:

•Provides a fresh perspective. Through identifying the friction points of a typically

good/service procurement process by utilizing a structured, analytical – evidence based,

and collaborative methodology.

•Adds a sense of urgency. By facilitating stakeholder discussion of issues that are often

tabled due to other day-to-day priorities.

•Identifies superstitions within organization. Bringing great people from different

sections together to address what the process really is.

To identify opportunities that bring operational efficiencies as well as cost savings

and cost avoidances throughout the organization and value chain.

In May 2005, the Office of Management and Budget (OMB) announced a government-wide Strategic

Sourcing directive, requiring all Federal agencies to implement Strategic Sourcing programs by

early FY06.

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Supply Chain Management Defined

Strategic Supply Chain Management

Focus on:

• Has the responsibility for the supply chain function, the organization’s customers, their customers and their suppliers; thus the term strategic supply chain management.

• Minimizing costs

• Minimizing lead times to benefit the final customer

• Long term supplier relations

• Commodity planning to take advantage of

• Cost reductions

• Technology advancements

• Supply market trends

To identify opportunities that bring operational efficiencies as well as cost savings

and cost avoidances throughout the organization, suppliers, and customers.

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Seven Steps to Strategic Supply

Chain Management

2. Generate

Supplier Portfolio

3. Develop Sourcing

Strategy

4. Select

Implementation

Path

5. Negotiate and

Select Suppliers

6. Operationalize

New Agreements

1. Develop Category

Profile

Strategic Sourcing Process

7. Sustain the

Results

•Supplier Performance

•Market Conditions

•New Technology


Chain Management

1. Develop Category Profile

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•Confirm user requirements •Develop category definition

•Understand industry and supply markets


Chain Management

2. Generate Supplier Portfolio

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•Identify qualified suppliers •Determine supplier value-

added capabilities •Develop supplier “short list”


Chain Management

3. Develop Sourcing Strategy

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•Assess bargaining position •Evaluate alternative strategies •Select appropriate approaches

and techniques


Chain Management

4. Select Implementation

Path

• Select competitive or relationship approach

• Verify and adjust sourcing strategy

• Develop implementation plan

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Chain Management

5. Negotiate and Select Suppliers

• Evaluate supplier proposals

• Plan negotiation strategy

• Conduct negotiations with suppliers

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Chain Management

6. Operationalize New Agreements

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•Plan and implement transition to new suppliers

•Implement new pricing on databases

•Conduct joint process improvement activities


Chain Management

7. Sustain the Results

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•Monitor market conditions •Assess new technology and best

practices impact •Determine opportunities to

reexamine category and trends •Strengthen supplier relationships

•Standardize process and procedures

Supply Management – Key Goals

Get more value out of business relationships

Provide better response and visibility for stakeholders,

including suppliers

Monitor and manage compliance and performance

Electronic interaction with suppliers

Integration into overall supply chain management strategy

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Create more favorable terms and conditions

Ensure Supplier is partnering to drive

down cost and create value

Create a Contract Management Repository

Achieve pricing equivalency with

common suppliers used across the

industry

Leverage eCommerce

e-Catalogs e-Software e-Technology

Create Payment Tool

Purchase Card – allows for dynamic

discounting Positive cash flow

Gaining operational efficiency as cutting

down cycle time.

Partner in Stockless

Programs / Store Fronts with Key

Suppliers

Low UOM discounts – means customers do not have to buy large amounts to achieve

discounts

Decreases or eliminates freight

costs

Better product availability for

customers

Create Partnership

Sourcing Teams

Sourcing opportunities. Where

best to focus efforts to respond to Request

for Proposal/Information.

Initial point of review for product and

alternative products

Communicate successful awards

throughout community and with partners

Supply Chain Management

Best Practices

Supply Chain Management Summary

Assess the needs of the potential buyers

Assess suppliers and their capabilities, performance &

risk

Collaborate with suppliers to ensure clear expectation

and understanding of buyers needs

Know the history (your reputation is on

the line as well)

Research the needs, often, know the

market

Negotiate, negotiate with your suppliers for the best terms and

conditions, pricing & extras

Assess the best possible

arrangement – you may only get one

opportunity

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Overall improved efficiency and reduced costs through better supply chain management as a result of adopting contract

management best practices

Track and manage supplier compliance and performance

federal strategic sourcing initiative - nc sbtdc | your ...*improve the management of the target...

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