Strategic Sourcing Leveraging Buying Power Joe Taylor Procurement Policy Division USDA Office of Procurement & Property Management April 19, 2005
Context GAO Report Draft “Agencies Can Achieve Significant Savings on Purchase Card Buys” March 2004 Agencies could save $300 million if discounts of 10% were received from major vendors Agencies reviewed: USDA, VA, DOD, DOI, DOJ
Why aren’t agencies seeking discounts?
GAO cited “Lack of Management Focus” as the reason agencies were not aggressively pursuing savings
Context (Cont) GAO report, “Use of Spend Analysis, ” discusses the need to institutionalize continuous spend analysis to achieve savings
USDA e-Alliance Partnership with USDA agencies and GSA to leverage buying power
USDA Strategy 1. Conduct ongoing spend analysis 2. Select FSS supplies/services to 3. 4. 5. 6. compete Conduct market research Compete, and negotiate discounted blanket purchase agreements Host BPAs, e-catalogs & ordering on USDA Advantage (partnership with GSA) Implement and manage BPAs
1. Conduct Spend Analysis Identify data sources – Purchase Card Management System – Payment Systems – FPDS NG – Vendors – VISA
Spend Analysis (Cont. ) Analyze available data: – – – – Merchant Dollar amount MCC NAICS Code Product Codes Budget Object Code Level 3 data, if available
Spend Analysis (Cont. ) Segment spend: Supplies, e. g. , – – – Office supplies Hardware Scientific supplies and equipment Services, e. g. , – Domestic delivery – Telecommunications
2. Select best opportunities for savings and other goals Items used by all or most agencies High dollar amount & transaction volume Federal Supply Schedule items P-card acceptance
– Buyers Review 3. Conduct Market Research – Trade publications – GSA Schedules – Similar agreements
4. Compete and Negotiate BPAs Use E-Buy Keep process simple Make a single award if possible
4. Why make a single award? Compete and Negotiate BPAs • Intensify the competition to get a better deal • Maximize what contractors have to lose and what they have to gain
Use Standard RFQ Template (One or Two Pages) USDA BPA RFQ for ____________ • GSA Schedule No. and SINS covered • Description of the work • Extent of obligation of the government • Delivery or performance requirements including reporting • Substitution of JWOD items for like products if applicable • Acceptance of credit card • Team arrangements • Statement that GSA schedule conditions apply • Evaluation and award criteria • How many BPA’s to be awarded
5. Host BPAs and on-line ordering on USDA Advantage Utilize existing GSA technology Customize to focus on USDA BPAs Fast to implement Vendors already pass FSS catalog data to GSA electronically Users don’t have to be trained on each vendor’s ordering website or register at multiple sites
Only USDA BPAs
Implementation plan for each BPA – Loading catalog data – BPA use promotion 6. Implement and Manage BPAs Quarterly reports including sales and discounts Annual management meetings with vendor
Office Supplies – – – Single award to Boise Cascade Overnight desktop delivery Increased JWOD sales $28 million in FY 04 10% Discount saved $2. 8 million USDA BPA Examples Domestic Delivery Services – – Single award to Fed. Ex $14 million annually 18% discount $. 5 million saved 1 st half FY 05
Hardware – Over 100, 000 items – 750 JWOD items – BPA Ready for award USDA BPA Examples (Cont) Business Cards – Seattle Lighthouse for the Blind – Formats pre-approved by OC – On-line business card set-up and ordering – BPA ready for award
USDA BPA Examples (Cont) Custom Products – Delaware Industries for the Blind – Ready for award BPAs in process – – – Scientific supplies and equipment Wireless Procurement Training
Savings through reduced prices compared to GSA Schedule prices or to what agencies could negotiate with smaller buying power. Increased rebates through increased purchase card use Improved vendor performance such as faster delivery than standard industry practice. Reduced training costs compared to using multiple vendor ordering sites. Reduced purchasing processing costs compared to using purchase orders, multiple vendor ordering sites, or other mechanisms. Performance Goals
Joe Taylor Procurement Policy Division Office of Procurement and Property Management 202 -401 -0787 joe. taylor@usda. gov
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