Hide Notes 

Slide 1: Technology Procurement Structure, Process & A Look Forward Presented by: Office of Administration/Office for Information Technology & Department of General Services December 7, 2004
Slide 2: Strategic Sourcing & Reorganization John M. Troxel, C.P.M. Chief Procurement Officer DGS Bureau of Procurement Curt Topper Director, Strategic Development DGS Bureau of Procurement
Slide 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
Slide 4: Spend Analysis to Determine Sourceable Spend Total Spend Transfers $820MM Payments To Suppliers $3.1B Unclassified $408MM Classified Suppliers Spend $2.6B Not Sourceable $1.1B Cycle 1 $428MM Cycle 2 & Future $1.1B Unclassified $408MM $3.9B Sourceable $1.5B
Slide 5: Cycle 1 Strategic Sourcing Savings Summary (in $M) Commodity Software Highway Mat’l (Plant Mix) Highway Mat’l (Liquid Bit.) Highway Mat’l (Aggregate) IT Hardware Maintenance Office Supplies Copiers IT Hardware – PCs IT Hardware – Peripherals IT Hardware – Servers Office Furniture Cleaning Supplies (4 lots) Fleet ½ (Pass Vehicles) Fleet (Med. Duty Trucks) Food Status (Time to Completion) Complete Complete Complete Complete Complete Complete Complete Complete Complete Complete Complete Complete Complete Complete Complete Previous Annual Spend $43.7 $45.1 $13.8 $11.8 $7.1 $22.5 $ 18.9 $56.6 $23.5 $40.0 $18.1 $11.1 $16.0 $4.6 $65.2 Annual Savings $4.0 (9%) $2.4 (5%) $0.4 (14%) $0.0 (0%) $4.2 (59%) $9.6 (43%) $11.0 (58%) $19.1 (34%) $8.5 (36%) $13.4 (34%) $7.0 (39%) $3.5 (32%) $2.4 (15%) $0.2 (4%) $13.8 (21%) M/WBE Spend $0.0 $0.0 $0.0 $0.0 $0.3 $5.8 $0.2 $1.4 $4.6 $7.3 $7.9 $2.4 $0.0 $0.0 $4.9 Awarded Supplier ASAP Multiple (73) Multiple (13) Multiple (53) Pomeroy Boise Office Products Imagistics Dell ePlus Multiple (9); IBM, Pierson, best value awards Multiple (7); Supply Source best value XPEDX, Sanolite, Ecolab Northeast Auto, Hertrich Apple Ford/Phillips Ford WS Lee
Slide 6: Cycle 2 Strategic Sourcing Savings Summary (in $M) Commodity/ Service IT Contracted Services Fleet Tires Fleet Auto Parts Fleet Outside Shops MRO Supplies Print Medical Services Advertising – Media Advertising – Creative Heavy Duty Dump Trucks Status (Time to Completion) Complete November November November November November November November November November Previous Annual Spend $65.0 $2.9 $7.0 $9.5 $18.3 $25.2 $87.0 $20.5 $10.5 $24.3 Annual Savings $19.8 TBD TBD TBD TBD TBD TBD TBD TBD TBD M/WBE Spend $22.3 TBD TBD TBD TBD TBD TBD TBD TBD TBD Awarded Supplier CAI TBD TBD TBD TBD TBD TBD TBD TBD TBD
Slide 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
Slide 8: Future Bureau of Procurement Commodity Executives Commodity Teams Commodities Commodity Director - Goods Commodity Director Services IT & Communications Raw Materials Supplies & Consumables Equipment & Fleet Highway Safety Materials Appliances Roadway Equipment Machinery Furniture & Fixtures Vehicles Construction Vehicles Fleet Maintenance Professional Operational Anti-Skid Road Patch/ Aggregate Fuel MRO Supplies Cleaning Supplies Lab/Medical Supplies Wearing Apparel Office Supplies Food Hardware & Peripherals Software Legal HVAC Medical Professional Development Temporary Labor Landscaping IT Services Freight Building Maintenance & Services Custodial Services Equipment & Operation Services Equipment Rental & Repair Travel Heating Fuel Telecom Network Equipment Office Equipment Natural Gas Marketing Electricity Highway Metals Advertising Pharma Print IT Consulting Consulting – Non-IT IT Programming Police & Fire = Commodity = Service Road Maintenance
Slide 9: COSTARS Contracts 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
Slide 10: New Master IT Services ITQ Contract ME # 481350 Paul Bluhm Division Chief Invitation to Qualify (ITQ) Program Office OA/OIT/Bureau of IT Planning & Administration
Slide 11: ITQ Contract ME # 481350 • Effective - 7/01/04 • Expires 6/30/09 • No renewal periods • $5 million project cap
Slide 12: 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
Slide 13: ITQ Contract ME # 481350 • 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
Slide 14: ITQ Contract ME # 481350 Service Categories • 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
Slide 15: 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
Slide 16: ITQ Contract ME # 481350 Service Categories • 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.)
Slide 17: ITQ Contract ME # 481350 Service Categories • 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)
Slide 18: New Service Category for ITQ Contract ME # 481350 • COTS Software Services – Planning, workflow analysis, data migration, systems and integration testing, installation, configuration, performance tuning, quality assurance, customization and documentation, etc.
Slide 19: Prior Service Categories Not on New ITQ Contract • 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
Slide 20: 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: mrichart@state.pa.us
Slide 21: Prior Service Categories Not on New ITQ Contract • Help Desk – Planned DGS contract • Wireless Antenna Support Services – No longer needed
Slide 22: Contract ME # 481350 Qualified Service Provider Statistics Qualified/SDB 2/1 38/9 13/1 78/15 7/1 30/3 13/5 21/3 18/6 91/26 Biometrics LANs/WANs Wireless Networking Consulting Services Continuity of Government GIS Services IV & V IT Training – Classroom IT Training – Non-Classroom Software Development Services Service Category
Slide 23: For more Information regarding the ITQ process, visit the ITQ Web site at: www.itq.state.pa.us
Slide 24: IT Procurement Review Process Brenda Bobb Enterprise IT Strategic Planning Chief OA/OIT/Bureau of IT Planning & Administration
Slide 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.
Slide 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.
Slide 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.
Slide 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.
Slide 29: OIT Procurement Review Process Agency IT Manager or CIO emails the required documentation to the CoP Planner assigned to the agency CoP Planner reviews documentation NO, CoP Planner returns documentation to Agency IT Manager or CIO CoP Planner consolidates feedback, makes a recommendation and sends to Executive Approver for final review. Is documentation complete? YES, CoP Planner forwards documentation to SME(s) and notifies the Agency IT Manager or CIO that feedback will be provided within 20 business days. If a waiver is necessary, verify that it has been granted prior to review. Hosting Portal Remedy Change Management Asset Managemen t Application Hardware/Softw are & Maintenance GIS/Geospatia l Homeland Security JNET Radio Project Management Staff Augmentation Telecommunications Network EDMS/Scanning/Remittance Processing Data Power House Identity Management Mainframe Application Security Training Physical Security Network Security IBM Server/Storage Best Value Product/ Solution Waivers Pomeroy Hardware Maint Contract Waivers Printer solutions RFPS & RFQs Primary AAM Executive Approver sends final decision to CoP planner CoP Planner provides final feedback to: For all but Sole Source: CoP Planner communicates feedback to: Agency IT Manager or CIO, Agency Account Manager, Agency Comptroller and DGS For Sole Source: Approval goes to DGS only CoP planner also logs all projects on monthly spreadsheet SMEs review documentation Is additional information required? Yes, SME requests additional information from Agency IT Manager or CIO NO, review is competed and recommendation is sent to CoP planner
Slide 30: Questions?