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Description Revised 04/17/2012 SPD-PS007 Office Supplies FY11 Projected Spend $27,625,086 Local Governments $ 6,918,868 25% USG $9,932,322 36% State Agencies.

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Presentation on theme: "Description Revised 04/17/2012 SPD-PS007 Office Supplies FY11 Projected Spend $27,625,086 Local Governments $ 6,918,868 25% USG $9,932,322 36% State Agencies."— Presentation transcript:

1 Description Revised 04/17/2012 SPD-PS007 Office Supplies FY11 Projected Spend $27,625,086 Local Governments $ 6,918,868 25% USG $9,932,322 36% State Agencies $ 10,773,895 39% Current Sourcing Strategy and Purchasing Practices Background Jul SPD entered into convenience contract with Staples thru NJPA Master Consortia Agreement in final year of their 5 year contract Aug NJPA awarded rebid Master Consortia Agreement to Staples (effective thru Aug 2015); SPD executed convenience SWC with Staples, expires 15 Aug 2011 Prior to Jul 09, Mandatory SWC with Office Depot terminated (default), resulted in lapse of coverage while SPD sourced; multiple protest delayed award, meanwhile comparison of responses from 12 suppliers (large & small) to existing NJPA (consortia) contract- Staples disclosed consortia had more competitive pricing; SPD solicitation canx, entered into negotiated contract (below NJPA contract prices) with Staples based on customized spend profile of the State. Spend FY10 - $23,528,907 / State Agencies (42%) / USG (41%) / Local Govt (17%) FY11- Spend growth 17% (projected); Top Categories: Paper/Toner/Office Supplies Top Spenders  State Agencies: DOL- $1.6M (15%) / DHS (DFCS)- $743K (7%)  USG: UGA $1.1M (11%) / Ga Tech- $795K (8%) / GHSU, MGC- $583K (6%)  Locals: Richmond Board of Ed- $1.1M (16%) / Dekalb Schools- $730K (11%) Pricing Strategy Core List: Approx 800 line items- Fixed unit price Non-Core: Approx 30,000 line items– Fixed unit price Admin Fee: 1.5% plus 5% Rebate (Top tier >$750K spend/Qtr; State qtrly spend $6M+ Contract Expiration: 15 Aug 11; exercise 12 month renewal, early termination allowed Supply Market Characteristics Top 3 Suppliers: Staples, Office Depot, OfficeMax (account for 86.4% market share of $24.3B industry); Average revenue declined 3.3% between Annual profit anticipated to rise by 4.5% from 2011 – 2016 Office and school supplies account for 45% of sales Off SWC Spend Top 5 suppliers- Pcard (Georgia): Cajun (sm), Office Depot (lg), OfficeMax (lg), Advantage Laser Product (sm), A & K Office Products (sm) Potential Sourcing Strategies/Areas of Opportunity Sourcing Strategy: Convenience; RFP 70% price / 30% technical; Single or Multiple Award by category Potential Technical Factors- (1) Electronic Ordering System, (2) Marketing/Customer Service Staffing, (3) Implementation Plan, (4) Customer Training, (5) Product Return Program, (6) Small Business Utilization Plan, (7) Spend analysis & customized core pricing profiles for large users Pricing: Core & Non-Core by major category: Paper, Toner, General Office Supplies  Core- approx 800 line items; fixed unit price  Non-Core- over 30,000 line items; percent (%) discount off catalog list price Price Evaluation (by category) For Evaluation Purposes Only  Core (80%): Unit Price x Annual Usage = Total Proposed Price  Non-Core (20%): (Catalog Price x % Category Discount) x Annual Usage = Total Proposed Price **Based on a sample market basket of preselected, representative items from each category** Other Strategies  No rebate program- convert rebates into line item price reductions  To facilitate verification of “or equal”- Suppliers select established/verifiable catalog of manufacturer items by wholesaler (i.e. SP Richard, United Stationers, etc), utilizing standard manufacturer’s (1) identification number, (2) item description, and (3) unit of measure  Period of performance: 1 year base plus 4 annual renewals  Annual price escalation methodology: o All prices held firm for base year of contract o Supplier may submit a written request for increase 45 days prior to the annual expiration –Evaluated based Consumer Price Index series by category (Paper/Toner/Office Supplies) Administrative Fee = 1.5% Quarterly Business Review Meetings emphasize marketing and customer service Unconventional Potential Offerors: Consortia, Small Business Joint Ventures Sourcing Team Participants Accepted- GHSU Pending- Ga Tech, GSU, UGA, Ga Southern Univ, Forestry, DOL, DJJ, DOC, KSU Declined- DHR MILESTONES SWC Review Council: Jun 16, 2011 RFP Release: July 15, 2011 Offeror’s Conference: July 22, 2011 Proposals Due: September 1, 2011 NOA: November 28, 2011 Small Business Considerations Region Awards: not optimal or advisable- degrades buying leverage & historical spend/use not available Multiple Award by Category: breaks award opportunities into smaller segments; increases ability of smaller supplier participation by limiting scope of product offerings required to receive a contract award Small Business Utilization Plan (large business offerors only): Additional Scored technical factor provides incentive for large business offerors to seek out small business partners

2  Degree of Fragmentation – Of the identified entities, is the good/service/opportunity that is being considered easy or difficult to discern as related to the strategy; is the opportunity centralized/consolidated or fragmented within each organization or business unit (e.g. DHR – 6 business units within a division). This is a level of complexity question.  Business Criticality – How critical is this initiative, does it have a big/small impact; who’s really got the biggest need, what is the sense of urgency, what are the contingencies/impact if this doesn’t get put in place?  Spend – Where is this buried, who else have you considered outside of PS, Spend Cube, and etc., why/why not? What is the market telling you for “like-sized” organizations in both private/public sector.  Risk vs. Reward – Is your initiative risky to both SPD and the end customer(s)? After assessing the gaps (participating state entities and etc.)/issues/market intel.; does this have a high/low probability of success as related to efforts required vs. the outcome?  Unique vs. Standard – Looking at your strategy, does this initiative come with “unique” criteria that requires a specific discipline or area of concentration? If so, the level of complexity should correlate to a higher degree of risk and implementation (Hospital Privatization effort vs. toothpaste?).  NIGP Codes – What are the primary and identified NIGP codes for this category/commodity at the 5 digit level. Revised 01/26/11 SPD-PS007


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