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Technology Procurement Structure,

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    • 1. Technology Procurement Structure, Process & A Look Forward Presented by: Office of Administration/Office for Information Technology & Department of General Services December 7, 2004
    • 2. John M. Troxel, C.P.M. Curt Topper Chief Procurement Officer Director, Strategic Development DGS Bureau of Procurement DGS Bureau of Procurement Strategic Sourcing & Reorganization
    • 3. 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
    • 4. Payments To Suppliers Classified Suppliers Spend Sourceable Cycle 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 $408MM Unclassified Spend Analysis to Determine Sourceable Spend
    • 5. Cycle 1 Strategic Sourcing Savings Summary (in $M) WS Lee $4.9 $13.8 (21%) $65.2 Complete Food Apple Ford/Phillips Ford $0.0 $0.2 (4%) $4.6 Complete Fleet (Med. Duty Trucks) Northeast Auto, Hertrich $0.0 $2.4 (15%) $16.0 Complete Fleet ½ (Pass Vehicles) XPEDX, Sanolite, Ecolab $2.4 $3.5 (32%) $11.1 Complete Cleaning Supplies (4 lots) Multiple (7); Supply Source best value $7.9 $7.0 (39%) $18.1 Complete Office Furniture Multiple (9); IBM, Pierson, best value awards $7.3 $13.4 (34%) $40.0 Complete IT Hardware – Servers ePlus $4.6 $8.5 (36%) $23.5 Complete IT Hardware – Peripherals Dell $1.4 $19.1 (34%) $56.6 Complete IT Hardware – PCs Imagistics $0.2 $11.0 (58%) $ 18.9 Complete Copiers Boise Office Products $5.8 $9.6 (43%) $22.5 Complete Office Supplies Pomeroy $0.3 $4.2 (59%) $7.1 Complete IT Hardware Maintenance Multiple (53) $0.0 $0.0 (0%) $11.8 Complete Highway Mat’l (Aggregate) Multiple (13) Multiple (73) ASAP Awarded Supplier $0.0 $0.4 (14%) $13.8 Complete Highway Mat’l (Liquid Bit.) $0.0 $2.4 (5%) $45.1 Complete Highway Mat’l (Plant Mix) $0.0 $4.0 (9%) $43.7 Complete Software M/WBE Spend Annual Savings Previous Annual Spend Status (Time to Completion) Commodity
    • 6. Cycle 2 Strategic Sourcing Savings Summary (in $M) TBD TBD TBD $24.3 November Heavy Duty Dump Trucks TBD TBD TBD $10.5 November Advertising – Creative TBD TBD TBD $20.5 November Advertising – Media TBD TBD TBD $87.0 November Medical Services TBD TBD TBD $25.2 November Print TBD TBD TBD $18.3 November MRO Supplies TBD TBD TBD $9.5 November Fleet Outside Shops TBD TBD CAI Awarded Supplier TBD TBD $7.0 November Fleet Auto Parts TBD TBD $2.9 November Fleet Tires $22.3 $19.8 $65.0 Complete IT Contracted Services M/WBE Spend Annual Savings Previous Annual Spend Status (Time to Completion) Commodity/ Service
    • 7. 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
    • 8. Commodity Director - Goods Commodity Teams Commodities Commodity Executives Commodity Director - Services Print IT Consulting Consulting – Non-IT IT Programming Police & Fire Highway Metals Future Bureau of Procurement = Commodity = Service 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
    • 9. 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
    • 10. Paul Bluhm Division Chief Invitation to Qualify (ITQ) Program Office OA/OIT/Bureau of IT Planning & Administration New Master IT Services ITQ Contract ME # 481350
    • 11.
      • Effective - 7/01/04
      • Expires 6/30/09
      • No renewal periods
      • $5 million project cap
      ITQ Contract ME # 481350
    • 12.
      • 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
      ITQ Contract ME # 481350
    • 13.
      • 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
      ITQ Contract ME # 481350
    • 14.
      • 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
    • 15.
      • 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
      ITQ Contract ME # 481350 Service Categories
    • 16.
      • 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 (3 rd - party quality assurance, defect investigation, requirements validation and tracing, vendor analysis and selection, defect investigation, etc.)
      ITQ Contract ME # 481350 Service Categories
    • 17.
      • 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)
      ITQ Contract ME # 481350 Service Categories
    • 18.
      • 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
    • 19.
      • 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
    • 20.
      • 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_address]
      Prior Service Categories Not on New ITQ Contract
    • 21.
      • Help Desk – Planned DGS contract
      • Wireless Antenna Support Services – No longer needed
      Prior Service Categories Not on New ITQ Contract
    • 22. Contract ME # 481350 Qualified Service Provider Statistics Software Development Services 91/26 IT Training – Non-Classroom 18/6 IT Training – Classroom 21/3 IV & V 13/5 GIS Services 30/3 Continuity of Government 7/1 Consulting Services 78/15 Wireless Networking 13/1 LANs/WANs 38/9 Biometrics 2/1 Service Category Qualified/SDB
    • 23. For more Information regarding the ITQ process, visit the ITQ Web site at: www.itq.state.pa.us
    • 24. Brenda Bobb Enterprise IT Strategic Planning Chief OA/OIT/Bureau of IT Planning & Administration IT Procurement Review Process
    • 25. 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.
    • 26. 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.
    • 27.
      • 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.
    • 28.
      • 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.
    • 29.  
    • 30. Questions?

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