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A Better Procurement Process


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The cost of marine fuel is frequently in the millions of dollars per lift. The time involved in locating and qualifying fuel suppliers, specifying orders, confirming or disputing transaction details, and processing payments represent additional administrative expense. This case study outlines out the U.S. Government identified specific fuel procurement issues and developed an e-procurement system that would both improve access to fuel and decrease marine fuel procurement costs.

Published in: Economy & Finance
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A Better Procurement Process

  1. 1. A Better Procurement Process: The U.S. Government Adoption of an e-Procurement Solution
  2. 2. Marine Fuel and Bunkering are Expensive. <ul><li>the cost of the fuel frequently in the millions of dollars per lift, </li></ul><ul><li>the administrative expense of locating and qualifying fuel suppliers, ordering specifications, confirming or disputing transaction details, and processing payments, </li></ul><ul><li>the logistical costs involved in requesting fuel a week or more in advance of a vessel actually coming into port. </li></ul><ul><li>the volatility of oil price causing budgetary fluctuations </li></ul>
  3. 3. Mitigating Costs. <ul><li>The Defense Energy Support Center (DESC) of the United States Government pre-negotiates long-term contracts linked to industry pricing indexes. </li></ul><ul><li>When there is no contracted merchant available at a port of entry, vessel operators require a method to locate and evaluate the fuel options available to them. Because the DESC is responsible for the procurement of marine fuel across all branches of military service, a way to standardize fuel procurement processes as well as to ensure that appropriate procedures are followed and that the required transaction information is gathered prior to payment was needed: </li></ul><ul><li>Requirements: </li></ul><ul><li>Improved access to fuel and the fuel ordering process, </li></ul><ul><li>Accurate capture of transaction data, </li></ul><ul><li>Simplified matching of orders to authorizations and invoices, and </li></ul><ul><li>Reduced paper flows. </li></ul>
  4. 4. The SEA Card ® Solution. <ul><li>The SEA Card ® Order Management System (SCOMS ® ) was designed as a custom-built web operation, accessible 24/7/365 from any computer with a working Internet connection. This strategy ensured that any registered and authorized (warranted) Ordering Officer would have access to the system when needed. The web-based operation also required no hardware or software investment. </li></ul><ul><li>DoD-SCOMS ® standardizes the ordering process, electronically capturing all transaction details throughout the procurement process including authorization and confirmation that the transaction has taken place. This electronic capture of information expedited the entire transaction and payment process, eliminating the wait time associated with paper transaction processing and speeding up payment to the supplier. DoD-SCOMS ® also creates and maintains a completely auditable trail for each transaction. </li></ul>
  5. 5. A Two-Tiered Approach. <ul><li>Existing, long-term contracts : The first test of DoD-SCOMS ® was to ensure that accurate transaction details could be captured efficiently for existing long-term contracts. The pilot program launched in October 2005 with 13 vessels and all the contract merchants utilizing DoD-SCOMS ® . Post successful completion, participation was later expanded to over 500 vessels. </li></ul><ul><li>Open market transactions : a non-contract network of marine fuel merchants was developed to expand U.S. Government access to marine fuel around the world. DoD-SCOMS ® would provide the U.S. Government with access to multiple merchants within a single port, worldwide. One fuel request could then be submitted to multiple merchants for proposal so that the DESC could accurately determine the lowest-priced, technically acceptable offer. </li></ul>
  6. 6. Measured, Award-Winning Success. <ul><li>77 percent of the non-contract fuel transactions made through DoD-SCOMS ® to date have been purchased at below the U.S. Government fiscal year standard price points. </li></ul><ul><li>0 incidences of fraudulent purchases made within the system </li></ul><ul><li>reduced transaction processing time by 47 + days. </li></ul><ul><li>2007 David Packard Excellence in Acquisition Award. </li></ul>
  7. 7. Multi Service. Innovation Where it Matters. <ul><li>Multi Service was awarded the U.S. Government AIR Card ® and SEA Card ® contract in 2005. Multi Service specializes in the design, implementation and management of custom billing and payment solutions to streamline invoice processing procedures and improve negotiated fuel price savings for U.S. Government marine and aviation fuel procurement. </li></ul><ul><li>Thank you for your interest in Multi Service. We welcome your comments, feedback and suggestions. If would like to contact our Government Payment Programs division directly, you can call 1-913-451-2400 or email [email_address] . </li></ul>