Copyright 2015

 Purchasing Mega-Trends  Federal Strategic Sourcing Initiative (FSSI)  FSSI Impact on Small Businesses  Supplier Assessment Process  Small Business FSSI Success Strategies DISCUSSION TOPICS 2

STRATEGIC SOURCING OVERVIEW Traditional (Tactical) Purchasing Strategic (Integrated) Purchasing Focus in on:  Lowest Price  Leveraging Volume  Supplier Agreements  Goals for Price, Quality, and Delivery  Supplier Reduction  Single Buyer Focus in on:  Life Cycle Cost (LCC) / Total Cost of Ownership (TCO)  Strategic Suppliers  Optimizing Supply Base  Supplier Development  Aligning Purchasing with Business Strategies  Developing organizational strategies to meet future needs  Developing commodity and supplier strategies  Participating in long-range business planning  Buying / Sourcing Teams 3

KEY DEFINITION Strategic Supplier 1.A supplier that provides key supplies and/or services in a particular commodity area. 2.Strategic suppliers add a high degree of value to the supply chain management process by reducing costs, aggregating demand, etc. NOTE: Typically top 5% of supply chain. 4

Federal Strategic Sourcing Initiative FSSI Started in 2005 Being Implemented Gradually Starting with GSA Schedules Uses similar private sector practices Key Part of GSA Strategic Plan “Buy Smarter and Save Act” Implements FSSI on a Broad Scale Proposed Legislation 5

REASONS for FSSI 6 1.Save Money $111 Million (FY 2014) $144 Million (FY 2015) 2.Adopt Best Practices 3.Use Common Contract Vehicles 4.Process Simplification 5.Get Additional Discounts

FSSI Implementation 7 GSA Schedules (Done / In Work) 1.Express and Ground Domestic Delivery Services 2.Maintenance, Repair & Operations (MRO) Supplies 3.Office Supplies (GSA Schedule 75) 4.Print Management 5.Telecommunications Expense Management Services 6.Wireless FSSI Areas in Progress Building Maintenance Operations (BMO) Consolidated Furniture Management

FSSI Implementation 8 GSA Schedule 00CORP Bundles: 1. Schedule 520 (Financial Services) 2. Schedule 541 (Advertising & Marketing) 3. Schedule 738II (Language) 4. Schedule 871 (Professional Engineering) 5. Schedule 874 (Management Consulting) 6. Schedule 874V (Logistics) 7. Schedule 899 (Environmental) Effective: 29 April 2015

Supplier Assessment 9 Replaceability Strategic Value Hard Easy HighLow Strategic Supplier Capacity Technology Long-Term Contracts Brand Power I IIII IV 9

10 Supplier Assessment 10 Replaceability Strategic Value Hard Easy HighLow Strategic Supplier I IIII IV 10 Vendor “Commodity Hell” II

11 Supplier Assessment 11 Replaceability Strategic Value Hard Easy HighLow Strategic Supplier I IIII IV 11 Vendor “Commodity Hell” Brand / Niche Capacity Mentor-Protégé Growth Plan Contract Vehicles Proactive

FSSI Impact to Small Businesses 12 IMPACT AREADESCRIPTION Contract BundlingSmaller contracts being combined Reduces set-aside opportunities Favors large businesses GSA Schedule Contracts Schedule Holders being targeted For FSSI contracts CapacityNeed more capacity to handle larger scale contracts Increased need for Federal partners Period of Performance FSSI contracts can be long-term (More than 5 years)

FSSI Impact to Small Businesses 13 IMPACT AREADESCRIPTION MentorIncreased need for mentors to build capacity 8(a) / WOSB / SDVOSB Marketing Need to target niche areas of the FSSI supply chain for set-asides Standard Specifications Can potentially limit the ability small firms to offer innovative solutions ComplexityFSSI contracts can be more complex making them harder to price and proposals more expensive to prepare

Small Business FSSI Success Strategies 14 1.Niche. Develop your “brand” as a leader in your niche. Find “Pain Points” in supply chain Look for emerging opportunity areas Develop a strong brand for your company 2.Partners. Find partners who can provide you with additional capacity to meet FSSI-type contracts. 3.Federal “Universal” Mentoring Program. Seek a mentor under the to help with: 8(a) HUBZone Woman Owned Small Businesses Service Disabled Veteran Owned Small Businesses

Small Business FSSI Success Strategi es 15 4.Change. Review your business model annually to ensure it is still effective. 5.Contract Vehicles. Find the right contract vehicles to work in FSSI environment GSA Schedules ID-IQ contracts 8(a) and EDWOSB / WOSB Sole Source Set-Asides HUBZone and SDVOSB Set-Asides Subcontracts, etc. 6. Feedback. Provide inputs to the Feds on how to implement FSSI in your industry without harming small businesses.

IMPORTANCE of BRANDING with FSSI 16 Makes it easier to get set-aside contracts 8(a) Sole Source WOSB – SBA 8(m) Program HUBZone SDVOSB Helps Identify FSSI Niche Area(s) Reduces marketing / sales time Encourages repeat business (loyalty) Generates referrals Lower marketing expenses Able to charge higher prices

Summary 17 FSSI is a major change to Federal procurement Consolidation (bundling) of supply chain will make it harder to find 8(a), WOSB, HUBZone, etc. set-aside contracts unless specifically targeted by FSSI Large businesses tend to win FSSI contracts Small businesses can be successful with FSSI in niche areas Recommend Federal partners and/or mentor to help small business be successful with FSSI FSSI is evolving so expect more changes

18 Former U.S. Air Force Contracting Officer (PCO) Certified Professional Contracts Manager (CPCM) Co-Author of book: “8(a) Survival Guide ” (Phone) Richard J. Hernandez, CPCM