Technology Procurement Structure,

Technology Procurement Structure, Process & A Look Forward

Presented by:

Office of Administration/Office for Information Technology&

Department of General ServicesDecember 7, 2004

John M. Troxel, C.P.M. Curt TopperChief Procurement Officer Director, Strategic DevelopmentDGS Bureau of Procurement DGS Bureau of Procurement

Strategic Sourcing& Reorganization

Why Strategic Sourcing and Reorganization?

• De-centralized approach to purchasing results in inconsistent buying practices

– Agencies are delegated most “services” procurements

– Sourcing decisions occur at the requisition level causing over-specification

• Commonwealth does not take full advantage of its buying power in the marketplace

– Minimal spend leverage and coordination across agencies

– Suppliers treat each agency as a small customer

– Multiple-award contracts dilute leverage due to a “Share the Wealth” philosophy

• Current contracting process does not support “best value”

– Majority of contracts are renewed each year

– Minimal use of tender vehicles (RFP) that support further negotiation opportunity

– Suppliers take advantage of loose pricing guidelines

• Purchasing decisions are made with minimal analytics and lack of understanding of Total Cost of Ownership (TCO)

– Current structure inhibits the development and application of industry expertise

– Available data and reporting tools are not leveraged to make sound sourcing decisions

– In some cases buyers are unfamiliar with the products they are actually buying

Payments To

SuppliersClassified

Suppliers Spend

SourceableCycle 2 &

Future

Cycle 1

Transfers

$3.1B

Unclassified$408MM

$2.6B

Not Sourceable

$1.1B

$1.5B

$820MM

$1.1B

Total

Spend

$3.9B

$428MM

$408MMUnclassified

Spend Analysis to Determine Sourceable Spend

Cycle 1 Strategic Sourcing Savings Summary (in $M)Commodity Status (Time to

Completion)Previous Annual Spend

Annual Savings

M/WBE Spend Awarded Supplier

Software Complete $43.7 $4.0 (9%) $0.0 ASAP

Highway Mat’l (Plant Mix) Complete $45.1 $2.4 (5%) $0.0 Multiple (73)

Highway Mat’l (Liquid Bit.)

Complete $13.8 $0.4 (14%) $0.0 Multiple (13)

Highway Mat’l (Aggregate)

Complete $11.8 $0.0 (0%) $0.0 Multiple (53)

IT Hardware Maintenance Complete $7.1 $4.2 (59%) $0.3 Pomeroy

Office Supplies Complete $22.5 $9.6 (43%) $5.8 Boise Office Products

Copiers Complete $ 18.9 $11.0 (58%) $0.2 Imagistics

IT Hardware – PCs Complete $56.6 $19.1 (34%) $1.4 Dell

IT Hardware – Peripherals Complete $23.5 $8.5 (36%) $4.6 ePlus

IT Hardware – Servers Complete $40.0 $13.4 (34%) $7.3 Multiple (9); IBM, Pierson, best value awards

Office Furniture Complete $18.1 $7.0 (39%) $7.9 Multiple (7); Supply Source best value

Cleaning Supplies (4 lots) Complete $11.1 $3.5 (32%) $2.4 XPEDX, Sanolite, Ecolab

Fleet ½ (Pass Vehicles) Complete $16.0 $2.4 (15%) $0.0 Northeast Auto, Hertrich

Fleet (Med. Duty Trucks) Complete $4.6 $0.2 (4%) $0.0 Apple Ford/Phillips Ford

Food Complete $65.2 $13.8 (21%) $4.9 WS Lee

Cycle 2 Strategic Sourcing Savings Summary (in $M)

Commodity/

Service

Status (Time to Completion)

Previous Annual Spend

Annual Savings

M/WBE Spend Awarded Supplier

IT Contracted Services

Complete $65.0 $19.8 $22.3 CAI

Fleet Tires November $2.9 TBD TBD TBD

Fleet Auto Parts November $7.0 TBD TBD TBD

Fleet Outside Shops

November $9.5 TBD TBD TBD

MRO Supplies November $18.3 TBD TBD TBD

Print November $25.2 TBD TBD TBD

Medical Services November $87.0 TBD TBD TBD

Advertising – Media


Advertising – Creative


Heavy Duty Dump Trucks


Economic & Business Development• Minority-owned and Women-owned Business participation

increased from less than 2% to 27.7% for sourced contracts

• $78.2M to PA Minority-owned and Women-owned Businesses as prime or sub-contractors

• PA-based primes were awarded the food ($51.4M), staff augmentation ($45.2M), furniture ($11.1M) and media ($19.6M) contracts

• Non-PA primes have made significant investments in PA:– Boise (office supplies) adding 100 jobs– Imagistics (copiers) adding 60 jobs– Pomeroy (computer maintenance) adding 50 jobs

Commodity Director - Goods

CommodityTeams

Commodities

Commodity Executives

= Commodity

= Service

Commodity Director - Services

Temporary Labor

Professional

Legal

Medical

Professional Development

Marketing

Advertising

Travel

Building Maintenance &

Services

Custodial Services

Equipment & Operation Services

Equipment Rental & Repair

HVAC

Landscaping

Freight

Operational

Road Maintenance

Vehicles

Construction Vehicles

Fleet Maintenance

Equipment & Fleet

Highway Safety

Materials

Appliances

Roadway Equipment

Machinery

Furniture & Fixtures

Raw Materials

Anti-Skid

Road Patch/ Aggregate

Fuel

Heating Fuel

Natural Gas

Electricity

IT & Communications

Hardware & Peripherals

Software

IT Services

Telecom

Network Equipment

Office Equipment

Supplies & Consumables

MRO Supplies

Cleaning Supplies

Lab/Medical Supplies

Wearing Apparel

Office Supplies

Food

Pharma Print IT Consulting

Consulting – Non-IT

IT Programming

Police & Fire

Highway Metals

Future Bureau of Procurement

House Bill 1996

• Requires the Commonwealth to establish parallel, multi-award contracts when:– A newly sourced Commonwealth-wide contract reduces the current

number of suppliers on contract by more than 50%

– A newly sourced Commonwealth-wide contract is single sourced

• New contracts to be put in place that only benefit the COSTARS participants

COSTARS Contracts

Paul BluhmDivision ChiefInvitation to Qualify (ITQ) Program OfficeOA/OIT/Bureau of IT Planning & Administration

New Master IT Services ITQ Contract ME # 481350

• Effective - 7/01/04

• Expires 6/30/09

• No renewal periods

• $5 million project cap

ITQ Contract ME # 481350

• No hardware or software products

• Work limited to projects – start/end dates and work based on deliverables

• Fixed-price projects only

• No cost items on web site

• No separate reimbursement for travel


• Initial maintenance required for software development projects

• $25,000 competition threshold

• Minimum of 5 solicitations; 1 MBE and 1 WBE

• Agencies must receive a minimum of 2 proposals to have a competitive procurement


• Multiple consulting service categories consolidated under 1 contract

• 10 original service categories under the contract

• On-going (operational) types of service categories are no longer covered

• Several new service categories/subcategories are now on the ITQ contract

ITQ Contract ME # 481350 Service Categories

• Consulting Services – CRM, EDMS, eGov’t, Fin., Ops., Org., Planning, and Research

• Biometrics Services – no change

• Consulting Services – LANs/WANs (includes LAN wireless) - no cabling installation or purchasing of materials

• Consulting Services - Wireless Networking – Radio only


• Continuity of Government (Consulting Services) – New (facilitating development of plans or specific elements such as: evacuation plans, leadership succession, assessment of risks/vulnerabilities, etc.)

• GIS Services (Consulting/Programming)

• Independent Verification & Validation (Consulting Services) – New (3rd -party quality assurance, defect investigation, requirements validation and tracing, vendor analysis and selection, defect investigation, etc.)


• IT Training – Classroom – On-site, off-site instructor led commercially available IT courses

• IT Training – Non-Classroom – distance learning, instruction on client developed systems, CBT, etc.

• Software Development Services – Programming/Systems Analysis (i.e., EDMS, eGovernment [web-based], SAP programming)


• COTS Software Services – Planning, workflow analysis, data migration, systems and integration testing, installation, configuration, performance tuning, quality assurance, customization and documentation, etc.

New Service Category for ITQ Contract ME # 481350

• Internal Premise Voice Wiring – Planned DGS cabling contract

• Internal Premise Residential Voice and Data Wiring Services – Planned DGS cabling contract

• Telecommunications Consulting Services – Not covered under new contract– Action underway to add service category to the

contract.– Will likely cover CRM, Financial, Operational,

Organizational, Planning and Research services

Prior Service Categories Not on New ITQ Contract

• Data Capture Services – DGS IT Staff Augmentation Contract

• Temporary IT Staffing – DGS IT Staff Augmentation contract

• DGS IT Staff Augmentation contract questions can be addressed to Mike Richart at 717-783-8578, or via email at: [email protected]


• Help Desk – Planned DGS contract

• Wireless Antenna Support Services – No longer needed


Contract ME # 481350 QualifiedService Provider Statistics

Qualified/SDB Service Category2/1 Biometrics

38/9 LANs/WANs

13/1 Wireless Networking

78/15 Consulting Services

7/1 Continuity of Government

30/3 GIS Services

13/5 IV & V

21/3 IT Training – Classroom

18/6 IT Training – Non-Classroom

91/26 Software Development Services

For more Informationregarding the ITQ process,visit the ITQ Web site at:

www.itq.state.pa.us

Brenda BobbEnterprise IT Strategic Planning ChiefOA/OIT/Bureau of IT Planning & Administration

IT ProcurementReview Process

Procurement

• Executive Order 2004-8 broadens the role of the Office of Administration/Office for Information Technology (OA/OIT) by requiring agencies to receive approval from the OA/OIT prior to the issuance of all IT procurement documents (e.g., Requests for Quote (RFQ), Request for Proposal (RFP), Sole Source, HW/SW purchases, Change Orders and Invitations to Bid, etc.) totaling more than $100,000.

• ITB A.7 provides direction to agencies for IT procurements in excess of $100,000 and for IT procurements for non-standard purchases under $100,000.

The Agency CIO/IT Manager must e-mail the documentation specified below to the Agency’s OA/OIT Community of Practice (CoP) Planner at least twenty (20) business days prior to issuance to a vendor(s):

RFP – Request for Proposal (RFP)

RFQ – Request for Quote (RFQ), incl. Statement of Work (SOW)

Sole Source – Continue to send Sole Source requests to Department of General Services (DGS). DGS provides the OA/OIT with an opportunity to review/provide feedback. The authority to grant a Sole Source approval continues to reside with DGS.

Software /Software Maintenance Procurement – A copy of the ASAP quote and a business case, and/or other documentation for software not marketed by ASAP.

Hardware/Hardware Maintenance Procurement – A copy of the vendor quote and a business case.

• Non-standard Procurement - Agencies must request a waiver from the OA/OIT, regardless of the $ amount for the procurement for any IT purchases that deviate from standards issued by OA/OIT Information Technology Bulletins (ITBs), OIT memorandum to the agencies, and/or Management Directives.

– If a hardware procurement request is for a server/storage solution other than IBM, the “IBM Server/Storage Best Value Product/Solution Waiver” must be included.

– If a hardware maintenance request is for a solution other than the Pomeroy Hardware Maintenance Contract, the Pomeroy Hardware Maintenance Waiver request form must be included.

• Change Order Against an Existing Contract -- If this involves a change order for the Data PowerHouse (DPH) Contract, the DPH Agency Account Manager (AAM) within the OA/OIT’s Bureau of Solutions & Services will work with the DPH Contractor on behalf of the agency and no review by an OIT Planner is required.

• ITB – The Invitation to Bid document and a business case.

• Granting of Funds to Local Governments When agencies plan to grant funds (e.g., to a local government), if

the funding is for an IT project that impacts state government, then the OA/OIT will review the grant application package prior to issuance. For example, if an agency plans to grant funding to local governments for data development/systems/equipment that will interface with, connect to, or communicate with, systems operated by a Commonwealth agency(ies), the OA/OIT will review the grant instructions to ensure that Commonwealth technology standards are defined within the document.

Agency ITManager or CIO

emails therequired

documentationto the CoP

Plannerassigned to the

agency

CoP Plannerreviews

documentation

CoP Plannerconsolidates

feedback, makes arecommendation

and sends toExecutive

Approver for finalreview.

CoP Planner providesfinal feedback to:

For all but Sole Source:CoP Plannercommunicatesfeedback to:Agency IT Manager orCIO, Agency AccountManager, AgencyComptroller and DGS

For Sole Source:Approval goes to DGSonly

CoP planner also logs allprojects on monthlyspreadsheet

Isdocumentation

complete?

NO, CoP Plannerreturns

documentation toAgency IT

Manager or CIO

YES, CoPPlanner forwardsdocumentation to

SME(s) andnotifies theAgency IT

Manager or CIOthat feedback will

be providedwithin 20

business days. Ifa waiver is

necessary, verifythat it has beengranted prior to

review.

HostingPortal

RemedyChange ManagementAsset Management

ApplicationHardware/Software & Maintenance

GIS/GeospatialHomeland Security

JNETRadio

Project ManagementStaff Augmentation

TelecommunicationsNetwork

EDMS/Scanning/Remittance ProcessingData Power House

Identity ManagementMainframe

Application SecurityTraining

Physical SecurityNetwork Security

IBM Server/Storage Best Value Product/Solution Waivers

Pomeroy Hardware Maint Contract WaiversPrinter solutionsRFPS & RFQsPrimary AAM

SMEs reviewdocumentation

Is additionalinformationrequired?

Yes, SME requestsadditional

information fromAgency IT

Manager or CIO

NO, review iscompeted and

recommendationis sent to CoP

planner

OIT Procurement Review Process

ExecutiveApprover

sends finaldecision to

CoP planner

Questions?

Technology Procurement Structure,

Business

Transcript of Technology Procurement Structure,