Business Process OutsourcingVillanova University

Presenter: Mary Johnson,

CPCM, C.P.M., NCMA Fellow

Villanova University

December 2, 2014

Outsourcing -1

• Business Process Outsourcing (BPO)

• Third Party

• Consider depth, extent of agreement

• E.g. insurance claims, accounting or IT

• Call service center

Outsourcing -2

• Many businesses choose to keep

• CORE functions only

• Outsource– IT– Payroll– Accounting– Manufacturing, etc

Outsourcing -3

• May hire trained, certified outsourcing professional to supervise

• May use internal staff to guide

Work Types

• Transactional

• Enhanced

• Collaborative

• Partnership

Characteristics

• Products/Services

• Process Integration

• Joint Planning Management

• Expected Benefits

• Transformation Requirement

Government vs. Commercial

• Government Competition Advocate

• Government Spec Writer Can’t do follow-on– Conflict of interest issue– Open market competition

• Commercial Spec Writer Can do follow-on

Government Outsourcing

• A-76 dates to 1955

• Competitive Sourcing

• Federal Activities Inventory Reform Act (FAIR Act) in 1998– Inventory commercial activities– As opposed to “inherently governmental”– Employees can challenge

• OMB grades progress towards targets

Commercial Outsourcing-1

• Make or buy

• Cost considerations

• Specialty of outsourcing partners

• Save investments in equipment

Commercial Outsourcing - 2

• Availability of overseas labor markets

• Way to gather capital inflow

Countries Preferred

• IT – India

• Claims, accounting – India or Phillippines

• Call Center – Phillippines

• New challengers: Eastern Europe, Ireland, South Africa, Honduras

Public Private Competitions

• Government workers form MEO

• Most Effective Organization

• Prepare cost and price proposal

• Compete with private companies

• May hire contractor support

Issues in Government Outsourcing

• Facilities Management– Connotation: entire military base support

• Base construction

• Soldiers support

• Training

Federal Acquisition Institute (FAI)

• Training for government

• Management of Acquisition Workforce

• For federal government

• Does surveys, provides leadership

Key to Competitive Sourcing

• “Inherently governmental”

• Examples: facilities base management– Construction – Davis Bacon Act question– Housing, Dining Halls, Technology

management, Family support functions– Case of Guam

• Mailroom for Government

• Contract Specialist Support

Role of Courts

• Federal Employee Labor Unions can challenge awards to private sector

• Judicial interprets “inherently governmental”

• Both sides need legal representation

MEO’s Win Several Awards

• Build in new efficiencies

• Improve pricing

• Soft landing for employee reduction - NPR

• Currently, offers to entice federal retirees to join workforce w/out penalty

New Trend

• “Insourcing” certain Defense areas

• Designating some departments as

• “inherently governmental”

• Allows to hire personnel on government staff

• Some “linked in” group discussions claim money saving