Federal Strategic Sourcing Initiative
U.S. General Services Administration
FSSI: Fundamentals of Strategic Sourcing
Presentation for SBTDC MarketPlace
Bruce Osborne, GSA
May 29, 2013
Federal Strategic Sourcing Initiative
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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)
Federal Strategic Sourcing Initiative
FSSI Operates through an Established Governance Structure
FSSI GOVERNANCE STRUCTURE AS ESTABLISHED MAY 2008
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Federal Strategic Sourcing Initiative
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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Federal Strategic Sourcing Initiative
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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Federal Strategic Sourcing Initiative
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Current FSSI Solutions
Office
Supplies
(OS2)
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.”)
Federal Strategic Sourcing Initiative
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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Federal Strategic Sourcing Initiative
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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
Federal Strategic Sourcing Initiative
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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Federal Strategic Sourcing Initiative
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
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
Seven Steps to Strategic Supply
Chain Management
1. Develop Category Profile
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•Confirm user requirements •Develop category definition
•Understand industry and supply markets
Seven Steps to Strategic Supply
Chain Management
2. Generate Supplier Portfolio
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•Identify qualified suppliers •Determine supplier value-
added capabilities •Develop supplier “short list”
Seven Steps to Strategic Supply
Chain Management
3. Develop Sourcing Strategy
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•Assess bargaining position •Evaluate alternative strategies •Select appropriate approaches
and techniques
Seven Steps to Strategic Supply
Chain Management
4. Select Implementation
Path
• Select competitive or relationship approach
• Verify and adjust sourcing strategy
• Develop implementation plan
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Seven Steps to Strategic Supply
Chain Management
5. Negotiate and Select Suppliers
• Evaluate supplier proposals
• Plan negotiation strategy
• Conduct negotiations with suppliers
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Seven Steps to Strategic Supply
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
Seven Steps to Strategic Supply
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
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