1. ADVANCING ONE FLORIDA IN THE AGE OF STRATEGIC SOURCING Windell Paige, Director, Office of Supplier Diversity (OSD) Russ Rothman, CPPO, FCPM, Chief Purchasing Operations Officer Florida Government Conference, Sept. 22, 2004

2. Advancing One Florida in the Age of Strategic Sourcing The Associated General Contractors Case Strategic Sourcing of State Term Contracts Pre-sourcing steps related to diversity Sourcing steps Post award contractor submittals Review, discussion, and contracting steps

3. The Associated General Contractors Case Background Outcome Impact on promoting diversity

4. Background Associated General Contractors and South Florida Chapter of AGC brought suit in Federal District Court in 2003 contending that the CMBE numeric goals in s.287.09451 FS were a violation of the Equal Protection Clause of the Fourteenth Amendment of the Constitution, instituting race and gender preferences.

5. Outcome The Court declared s. 287.09451 Florida Statutes to be unconstitutional. The parties entered into a settlement agreement.

6. Impact on promoting diversity The settlement addressed construction The State may conduct outreach to small & minority businesses The State may conduct programs to educate business owners on State processes The State may not require contractors to enter into any contract or subcontract on the basis of race or gender The State may continue to require information on minority and women owned contractor participation

7. Strategic Sourcing of State Term Contracts  What it is  CMBE Participation

8. Strategic Sourcing of State Term Contracts State Term Contracts share of state purchasing dollars Strategic sourcing defined Experience with Certified Minority Business Enterprises

9. State Term Contracts (STCs) Share of State Purchasing Dollars Last year, State Term Contracts accounted for $417 million of the total $1.2 billion in purchase orders issued, which is one third of total purchase order spending.

10. Strategic sourcing defined THE OBJECTIVE: DRIVE DOWN THE COST OF PURCHASED COMMODITIES AND SERVICES AS A STRATEGY FOR IMPROVING THE FINANCIAL HEALTH OF THE STATE, AND FREEING RESOURCES TO BE APPLIED TOWARD ACHIEVING THE GOVERNOR’S OBJECTIVES. SOMETIMES REFERRED TO AS “SPEND MANAGEMENT.”

11. Experience with Certified Minority Business Enterprises (MBEs) Most larger state term contracts have gone to larger suppliers with better pricing Some STCs have gone to MBEs, e.g. some IT Consulting, Maintenance Repair and Operating Items (MRO), Law Enforcement and Medical Supplies Some non-W/MBE firms use W/MBE suppliers and subs

12. Steps in Strategic Sourcing Identify the largest expenditures for commodities and services. Collect data from the state accounting and purchasing systems.

13. Steps in Strategic Sourcing Establish an order for moving forward on the various spending categories based upon estimates of potential savings and ease of achievement. First strategic sourcings launched, office supplies and MRO.

14. Steps in Strategic Sourcing E nhance competition & achieve economies of scale a) Combine, consolidate, aggregate for volume pricing b) Reduce supplier base c) Where appropriate, establish longer term contracts.

15. Steps in Strategic Sourcing Establish a team of purchasing experts and large users of the items of contract for each strategic sourcing effort. Perform “internal profile,” i.e. Analyze needs based on past experience and discussion of plans and trends. Use data bases, surveys, discussions.

16. Steps in Strategic Sourcing Perform “external profile,” i.e. analyze market forces, trends and players based on past experience, market information from the web & other sources, and surveys of and discussions with current vendors.

17. Steps in Strategic Sourcing Develop sourcing strategy. Items and grouping Possible number of awards Contract length Price re-determination policy Type of solicitation (RFI, ITB, RFP, ITN, reverse auction) Basis of award, e.g. weights, non-price factors, points.

18. Steps in Strategic Sourcing  Conduct the competitive solicitation  Evaluate the responses  Award the contract  Estimate savings.

19. Steps in Strategic Sourcing  Communicate results to the contract users.  Manage use of contract to minimize “maverick” spending  Measure savings through life of contract

20. Steps in Strategic Sourcing Collect usage data through life of contract for use in next round of strategic sourcing (data to be used in next round of spend analysis and internal & external profiles)

21. Pre-sourcing Steps Related to Diversity Add solicitation language related to supplier diversity and other state objectives Provide draft solicitation to OSD for suggestions and/or identification of potential W/MBE suppliers

22. Solicitation Language Following award, contractors are to submit plans addressing five state objectives: 1. One Florida 2. Environmental Considerations 3. Drug Free Workplace 4. Purchases from a nonprofit agency for the blind or for the severely handicapped 5. The use of prison industries in offering the items of bid.

23. One Florida The Contractor shall submit documentation addressing the Governor’s One Florida Initiative and describing the efforts being made to encourage the participation of small and minority and women-owned businesses

24. One Florida Equity in Contracting documentation should identify any participation by diverse contractors and suppliers as prime contractors, sub-contractors, vendors, resellers, distributors, or such other participation as the parties may agree.

25. One Florida Contractor shall report spending with certified and other minority business enterprises quarterly and include the amount paid to each minority vendor on behalf of each purchasing agency

26. Sourcing Steps Advertise the solicitation Directly notify W/MBEs when the solicitation is launched Conduct vendor training Provide a question period Conduct a pre-proposal conference

27. Post Award Contractor Submittals Following contract award, the State Purchasing contract manager will contact the awarded vendors to solicit their State Objectives plans Awarded contractors will submit plans within 30 days.

28. Reviewing Contractor Proposals Review and become familiar with the plans submitted Consider the goals/intent in the referenced statute or other referenced source document. Consider past experience in the same type of procurement. Consider the Contractor’s representations. Resources: Purchasing systems, Office of Supplier Diversity Determine reasonableness of the proposed plan

29. Review, Discussion, and Contracting Steps State Purchasing contract managers will review plans on Drug Free Workplace, PRIDE, RESPECT and Recycling issues, and contact vendors as appropriate to discuss State Purchasing contract managers will forward contractor One Florida plans to OSD

30. Review, discussion, and contracting steps OSD will review market conditions and establish One Florida goals/expectations OSD will contact contractor to discuss One Florida plan and provide assistance OSD will forward final One Florida plans to State Purchasing

31. Review, discussion, and contracting steps State Purchasing will amend state term contracts as appropriate to incorporate contractor plans on State Objectives

32. Monitoring performance State Purchasing contract managers will collect quarterly contractor performance reports related to the One Florida Initiative, and submit them to OSD for collection of W/MBE spending data.