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					Department of the Treasury

    Strategic Sourcing
     FY2007 Results




      May 12, 2008
                                  Department of the Treasury Strategic Sourcing FY2007 Results



                           Department of the Treasury
                              Strategic Sourcing
                                FY2007 Results

     Table of Contents

1.   Results of FY2007 Strategic Sourcing Initiatives .............................................................. 1
  1.1. Copiers / Printers........................................................................................................ 2
  1.2. IT Hardware ............................................................................................................... 3
  1.3. Personal Wireless ....................................................................................................... 4
  1.4. Overnight Delivery .................................................................................................... 4
  1.5. Office Supplies........................................................................................................... 5
  1.6. Software / licensed services ....................................................................................... 6
2. FY2008 Strategic Sourcing Goals ..................................................................................... 8
  2.1. Governance ................................................................................................................ 8
  2.2. Results ........................................................................................................................ 8
     2.2.1.    Price and Cost .................................................................................................... 8
     2.2.2.    Socio-Economic goals ....................................................................................... 8
     2.2.3.    Performance (including improved management information) ........................... 8
3. Performance Measures ....................................................................................................... 9
  3.1. Savings methodology ................................................................................................. 9
  3.2. Small business methodology...................................................................................... 9
  3.3. Performance (including customer satisfaction) ....................................................... 10
  3.4. Training Measures ................................................................................................... 10
4. Participation in the Federal Strategic Sourcing Initiative (FSSI) .................................... 13
  4.1. FSSI as Treasury Strategy ........................................................................................ 13
  4.2. Personal Wireless ..................................................................................................... 13
  4.3. Overnight Delivery .................................................................................................. 13
  4.4. Office Supplies......................................................................................................... 13
  4.5. Standard Labor Category Definitions for Information Technology Services .......... 14




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                       Department of the Treasury Strategic Sourcing FY2007 Results



1. Results of FY2007 Strategic Sourcing Initiatives
The Department of the Treasury met or exceeded most of its Strategic Sourcing goals for FY07.
The goals were approved by the Treasury Acquisition Council (TAC) on December 8, 2005.


Treasury Strategic Sourcing                                               FY07         FY07
Goals, Objectives & Measures                                              PLAN        ACTUAL


•Governance
     Charter Treasury Acquisition Council
     Charter Commodity Management Teams                                      7            6

•Sourcing Results
     Savings (process & price) ($ millions)                               $5.60        $10.35
     Socio-economic goal deltas                                           +5.0%        +0.2%

•Communications Strategy
     Communications Plan progress v. milestones                              G            G

     Acquisition staff have sourcing or small business goals
     in their annual performance plans

•Training Strategy
     Build training curriculum
     # people formally trained                                              50            92
     # people on Commodity Management Teams                                 49           50+

The Department of the Treasury exceeded its savings goal for FY2007 while also improving
small business spending. In FY07, Treasury achieved hard savings of over $10.35 million
against a goal of $5.60 million. The other major focus of Treasury‟s strategic sourcing initiative
is to support improvement in achievement of socio-economic goals. Strategic sourcing
contributed an additional 0.2% to our overall socio-economic spending. Although it did not fully
meet our aggressive goal, it was progress in the right direction. More detailed information as to
the sources of savings by team follows below.

In FY07, Treasury maintained the five chartered teams in place during FY06, and added an IRS
Hardware Team.

The communications plan was executed with regular briefings at Treasury Council meetings
(CFO, CIO and TAC) as well as regular updates through management channels to other key
executives. Small business goals were in most acquisition staff performance plans and are again
required in FY08.


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                        Department of the Treasury Strategic Sourcing FY2007 Results



Treasury maintained its training curriculum and moved almost two times as many staff through
strategic sourcing training than planned.


Summary of Treasury FY2006 and FY2007 Strategic Sourcing Savings


Spending
Category          FY06 Savings                          FY07 Savings
Copiers           $1,660K     IRS                       $2,200K    IRS
                  $     27K   OCC                       $ 35K      OCC
                                                        $--        Reviewing Federal
Personal Wireless $ 495K      IRS
                                                                   Strategic Sourcing
                                                                   Initiative (FSSI) TEM
                  $     23K   OCC                                  contract for use in FY08
Overnight         $      9K   Treasury-wide tender
Delivery                      agreements                $ 335K     FSSI
                                                        $ 15K      Savings on incremental
Office Supplies   $     33K   TTB                                  spending to E-Mall
                  $      9K   Treasury-wide Gartner
Software                      licenses (FMS)            $ 269K
IRS Hardware      $--                                   $7,500K

Total Treasury
Savings        $2,256K                                  $10,354K
                  FY06 Savings Goal: $1,500K            FY07 Savings Goal: $5,800K


   1.1.        Copiers / Printers

In FY 2005, the Internal Revenue Service (IRS) implemented a nation-wide strategy for copiers.
This resulted in the award of IRS National Copier Contracts. Subsequently, Treasury performed
market analysis that demonstrated the value of the IRS solution for copiers or multifunctional
devices (MFD). MFD are essentially copiers with print and other functionality when networked.
The IRS National Copier Contracts were opened to other Treasury bureaus and one bureau, the
Office of the Comptroller of the Currency (OCC), began to use them while other bureaus began
to examine the option.

The IRS MFD strategy adopted by Treasury derives its value from several key features. First,
the IRS fleet of approximately 4,000 copiers provided excellent economies of scale from which
to drive competitive pricing during the full and open competition. Second, extensive market


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                           Department of the Treasury Strategic Sourcing FY2007 Results


research was employed to develop functional specifications for different bands of MFD and
related functional specifications to provide commonality of requirements and to maximize
competition. Third, it was determined that it was most economical to lease copiers with
consumables and service included to drive down the total cost of ownership. The insight is that
the life cycle costs of a MFD have much more to do with the costs of replacing toner and other
consumables and servicing machines than the initial purchase price. Leasing avoids major asset
management and disposal costs, the avoidance of which are not included in the savings due to
difficulty of estimating them.

The results speak for themselves. In performing the spend analysis and market research in
FY04, IRS identified price variability for the same models and was able to negotiate a $314,000
refund from one vendor. In the second quarter of FY05, IRS began to replace its existing copier
fleet with new strategically sourced machines, ultimately installing by end FY05 about 816 new
machines and saving $265,000 (about 15%). By the end of FY06, IRS had replaced almost
2,600 machines in total, and achieved FY06 savings of $2,043,000 (about 20%).1 By the end of
FY07, IRS had replaced almost 2,900 machines in total, and achieved FY07 savings of
$2,059,000 (about 20%). For FY08 the installed base is expected to grow around 10%-15% as
more of the total fleet of MFDs is replaced. For FY08/FY09 the IRS will look to right size the
current fleet saving by re-banding MFDs using usage reports. This will increase year over year
savings and aid in preparation for a new sourcing strategy to be executed in FY09.

Even more encouraging is the fact that other bureaus have begun to appreciate the value of
shared strategic sourcing solutions. The OCC participated fully in the Treasury Copier
Commodity Management Team and after performing an analysis, determined that the Treasury
strategy would save OCC money. In FY06, OCC obtained delegated authority to place up to 50
orders on the National Copier Contracts at IRS, and proceeded to use them to replace 37
machines. This shift will generate approximately $134,000 in savings over 5 years, most of
which actually accrued in FY06 because of the shift from purchase to lease. In FY07, OCC
utilized the IRS contracts for the remaining 13 copiers on its original authorization for 50
machines, with total FY2007 savings of $34,945 for all 50 copiers.

For FY08, OCC has obtained a new authorization for 50 more copiers and have ordered 28 so
far. Total FY2008 savings will be $61,772 (for all 78 copiers). OCC continues to be very
pleased with the IRS contracts. Not only is OCC saving significant hard funds, but has also
realized administrative savings, although these have not been calculated or documented.


    1.2.         IT Hardware
In FY07, the IRS conducted extensive market and internal research to understand and define the
requirements for x86 distributed and enterprise hardware. A commodity team was chartered to
develop a sourcing strategy to consolidate and leverage all requirements across the IRS
enterprise and establish on-going management for this category.

1
 The FY06 savings have been restated from those reported last year due to improved baseline analysis performed in
FY07 in preparation for the upcoming copier strategy refresh and planned FY09 competition.


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                        Department of the Treasury Strategic Sourcing FY2007 Results



The IRS strategy had two phases. First, an internal price baseline provided the IRS with current
price points for all personal computers (PCs), servers, and storage (disk and tape). With this
data, the IRS was able to renegotiate current PC prices for a $28 million acquisition and reduced
costs by about 27% or $7.5 million.

Second, the IRS developed a sourcing strategy using leading commercial practices and issued a
solicitation. The first year results of the second phase of the sourcing initiative will be presented
at the end of FY08. In addition to the up-front cost savings, the IRS also put a strong focus on
demand management and process improvement as a part of the overall initiative.

   1.3.        Personal Wireless
After a great deal of productive effort in FY05 and FY06, the Treasury personal wireless team
adopted the Federal Strategic Sourcing Initiative (FSSI) as its next step strategy. Several
Treasury personnel participated in requirements discussions with a cross-federal team led by
GSA in late FY07 / early FY07. The FSSI Telecom Expense Management (TEM) contract was
awarded after many delays in FY08. Accordingly, there were no FY07 savings in telecom from
Treasury initiatives. Treasury has met with some FSSI TEM vendors as part of market research
and will examine the TEM contract for application in the Department or some of its bureaus.

   1.4.        Overnight Delivery
In 2001, IRS had negotiated a tender of service (TOS) with UPS that was available to all of
Treasury. However, most Treasury bureaus utilize FedEx for their shipping needs, and were not
realizing cost savings from the UPS TOS. Additionally, only air service rates had been
negotiated, leaving many bureaus unable to utilize ground shipping, as this was not on GSA
schedule for either UPS or FedEx nor was it an offer extended through the UPS TOS.

After extensive negotiation in FY05, UPS extended both air and ground IRS administrative
pricing to all Treasury bureaus. In late January 2006, FedEx followed suit and offered discount
air and ground pricing through a Treasury-wide TOS. This offering was made mandatory (with a
waiver process) by the Treasury Acquisition Council. The use of FedEx TOS Treasury-wide
resulted in a quick 1.8% savings ($9,000 or the equivalent of over 1,700 free overnight letters)
for those non-Mint bureaus utilizing FedEx for their shipping needs. These savings have been a
welcome relief to smaller bureaus that could not, without combined forces, have achieved any
transportation savings.

Equally important, the information gathering and profiling of shipping patterns across Treasury
was a critical input to the spend analysis and market research that propelled the FSSI. The FSSI
award was made in FY06 and has already saved the federal government over $16 million.
Treasury has moved all of its existing FedEx accounts to the FSSI contract, except for those of
the US Mint, which as a non-FAR bureau cannot use some of the FSSI terms and conditions.
FedEx has, so far, been unwilling to substitute non-FAR clauses for the US Mint.




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                        Department of the Treasury Strategic Sourcing FY2007 Results


The FSSI usage data have now been delivered and indicate that Treasury saved over $335,000 in
FY07 on FedEx services. These data were delivered as part of the contract. There have been no
complaints about service or transition to the new contract, although there were some initial
difficulty and confusion related to the transition.

Finally, the outcome from participation in FSSI benefited IRS in its dealings with its incumbent
vendor, resulting in updated tender pricing with only a small price increase. This means that IRS
has essentially preserved for an additional five years pricing that has already remained stable or
decreased over the past five years in real (inflation adjusted) terms. This is a remarkable
outcome under market conditions where the price of fuel has increased dramatically, labor
negotiations have increased our vendors' cost of doing business, and IRS had already negotiated
highly competitive rates that remained unchanged for the previous five years. These real
benefits have not been captured due to the difficulty of ascribing direct cause or magnitude to the
sourcing effort.

   1.5.        Office Supplies
In FY2005, Treasury approved three office supplies strategies supplied by its Office Supply
Commodity Management Team.

   1. The preferred strategy was to use DoD E-Mall for office supplies purchases.
   2. Departmental Offices was encouraged to continue and build on its relationship with the
      Paperclips store located in the Treasury Annex building. Paperclips is managed by a
      JWOD (now AbilityOne) vendor, which is a mandatory source for Treasury headquarters.
   3. IRS and OCC had developed a business model of secured delivery of supplies, in which
      supply delivery is treated as a service in which vendors have cleared access to facilities to
      deliver orders within 24 hours. The IRS recompete, a multi-year buy with an estimated
      value of over $100 million, is expected to result in discounted prices, and was made
      available to interested bureaus, including Financial Management Service (FMS) and the
      Financial Crimes Enforcement Network (FinCEN). The implementation of this strategy
      is on hold pending resolution of a bid protest.

Alcohol and Tobacco Tax and Trade (TTB) became the pilot program in August 2005 for using
the DoD E-Mall for all general supplies to determine what monies could be saved and if Small
Business could be used for these purchases.

In FY06, total TTB spending on general supplies was $261,385, approximately 70% of which
was purchased on the DoD E-Mall. The remaining 30% were for buys made for specialized
items not found on the E-Mall or authorized emergency buys. FY06 savings from previous years
were approximately $32,900 (18%) when using the DoD E-Mall and Small Business purchases
jumped from approximately 10% to 65% of spending as card holders moved from large vendors
such as Staples and Office Depot to Small Business vendors with excellent past performance as
recommended by the TTB procurement office. This increased the incremental dollars to small
businesses by $100,000 in FY06, almost one quarter of Treasury‟s small business strategic
sourcing goal of 2%, or $422,000.



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                        Department of the Treasury Strategic Sourcing FY2007 Results


In FY07, TTB‟s purchase card spending on office and general supplies was $244,823, down
approximately $16,439 from FY06. Spending with AbilityOne and small business, however,
was up to approximately 82% of spending, a year over year increase of over $42,000.
Emergency and specialized buys amounted to less than $400. Overall dollars spent with
AbiltyOne and small business was up over $100,000 compared with FY06, and is up by over
$176,000 compared with the pre-sourcing strategy small business percentage of 10%.

During FY07, TTB found that DoD E-Mall had many problems and errors that added
significantly to the time it took to order and receive goods, particularly involving E-Mall system
upgrades. Customer service also decreased. After research and discussion with the Director of
Acquisition and Facilities Management, TTB determined that the E-Mall was not necessarily
meeting the needs of TTB card holders. Therefore, TTB has now given purchasers the option to
use GSA Advantage, which seems to have a more user-friendly system and to have more checks
and balances for vendors listing on their site. TTB still requires that AbilityOne and small
business is used unless prior approval is obtained, except for the Library which uses specialized
items on a regular basis that are not yet available on either E-Mall or Advantage.

   1.6.        Software / licensed services
The main results in this category of spending resulted from the ongoing benefits of the Gartner
contract awarded in FY06. The Gartner contract takes advantage of deep quantity discounts in
pricing based on the total number of “seats” purchased. To obtain these discounts, Treasury
needed to place a single order, and so established FMS as its executive agent to aggregate
purchases for all Treasury bureaus. The arrangement aggregates Treasury‟s buying power and,
at contract signing, involved expected five-year savings of $516,914, a net present value of over
$4.3 million. The blanket purchase agreement (BPA) contract also includes a 3% discount for
Gartner consulting services and a requirement for quarterly reporting on usage and leakage from
this mandatory use contract.

The actual savings achieved by the Gartner contract in FY07 are reported in accordance with the
contract terms, and were $269,290 – higher than expected due to overall price increases in the
base contract and a higher than anticipated number of seats purchased.




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                                Department of the Treasury Strategic Sourcing FY2007 Results



                                                                                           Pricing
                                                                                            Level
                                                                                Current    without
                                                             Period of          Pricing   Treasury    *Savings    *Savings
          Bureau               Quantity      Seat Type      Performance          Level      BPA      from 2006   from 2007
FMS                              12       Core Advisor        4/1/07-3/31/08      50        10           $0       $25,520
FMS                              12       Core Reference      4/1/07-3/31/08      50        10           $0       $38,040
FMS (Judy Weilmuenster)           1       Core Advisor       9/1/07 - 3/31/08     50        10          N/A       $10,075
OCC                              11       Core Advisor        4/1/07-3/31/08      50        10         $3,645     $25,520
OCC (Bajinder Paul)               1       EXP Signature    12/1/07 - 11/30/08     NA        NA          N/A          $0
BEP                               3       Core Reference      4/1/07-3/31/08      50         1        $10,305     $16,830
Mint                              5       Core Advisor        4/1/07-3/31/08      50        10         $6,075     $11,600
Mint                              5       Core Reference      4/1/07-3/31/08      50        10         $9,975     $15,850
Mint (Jerry Horton)               1       EXP Premier        10/1/07-9/30/08      NA        NA          N/A          $0
IRS                              15       Core Advisor        4/1/07-3/31/08      50        10        $23,085     $34,800
FinCEN (Ken O'Brien)              1       Core Advisor        4/1/07-3/31/08      50         1         $7,865      $9,635
FinCEN (Amy Taylor)               1       EXP Premier         4/1/07-3/31/08      NA        NA         $6,000        $0
Treasury-DO (Gayle Bracy)         1       GITL Reference      4/1/07-3/31/08      2+        2+         $6,000      $6,000
Treasury-DO (Terry Bartlett)      1       GITL Advisor        4/1/07-3/31/08      2+        2+          N/A        $6,000
Treasury-DO (David Dutton)        1       Core Advisor        4/1/07-3/31/08      50         1          N/A        $9,635
Treasury-DO (Larry Gross)         1       EXP Premier         3/1/07-2/29/08      NA         1          N/A          $0
Treasury-DO (Razon & Ojeda)       2       Core Advisor      12/1/07-11/30/08      NA         1           NA       $19,270
TIGTA                             1       EXP Signature      5/1/07 - 4/30/08     NA        NA          N/A          $0
OTS (Jim Vercellone)              1       GITL Advisor      12/1/07-11/30/08      2+         1         $6,000      $6,000
OTS                               1       Core Advisor        4/1/07-3/31/08      50         1          N/A        $9,635
OTS                               1       Core Advisor       12/1/07-3/31/08      50         1           NA        $9,635
BPD                               1       Core Reference      4/1/07-3/31/08      50         1          N/A        $5,610
BPD                               1       Core Advisor        4/1/07-3/31/08      50         1          N/A        $9,635
                                 80                                                                   $78,950    $269,290




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                         Department of the Treasury Strategic Sourcing FY2007 Results



2. FY2008 Strategic Sourcing Goals
In December 2005, the Treasury Acquisition Council (TAC) established three year, Department-
wide performance goals and measures in order to monitor and continuously improve the strategic
sourcing program. FY08 is the final year for which goals have been set.

Treasury Strategic Sourcing                                        FY08       FY08
Goals, Objectives & Measures                                       PLAN      ACTUAL


•Governance
    Charter Treasury Acquisition Council
    Update Treasury Strategic Sourcing Policy
    Chartered Commodity Management Teams                             7

•Sourcing Results
    Savings (process & price) ($ millions)                        $7.80
    Socio-economic goal improvements                              +5.0%
 Figure 1: The Treasury Acquisition Council (TAC) approved these goals formally at its
 December 8, 2005 meeting.


   2.1.        Governance
The main goal of the governance lane is to update governance documents to reflect the lessons
learned since FY05. These lessons learned have been incorporated into the draft Department of
the Treasury Acquisition Regulations (DTAR) and Department of the Treasury Acquisition
Procedures (DTAP). Additionally, the TAC Charter was revisited in FY07 in keeping with these
policy changes to better integrate strategic sourcing into the standard business processes.

   2.2.        Results
         2.2.1. Price and Cost
Treasury will seek to reduce prices and/or transaction costs by at least $7.8 million in FY08. It
will do this in the current teams, and with new initiatives planned.

         2.2.2. Socio-Economic goals
Treasury will attempt to improve the overall dollars spent with small businesses by at least $1
million in FY07 with particular focus on HUBZone and Service Disabled Veteran Owned Small
Business.

         2.2.3. Performance (including improved management information)
As discussed, Treasury plans to build performance expectations clearly into each sourcing
decision. In addition, we plan to develop a Treasury-wide customer satisfaction metric as part of
a balanced set of metrics to support ongoing performance improvements.


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                        Department of the Treasury Strategic Sourcing FY2007 Results



3. Performance Measures
   3.1.        Savings methodology
Treasury declares strategic sourcing savings using project finance rules against a „status quo‟
baseline of spending patterns, processes, and prices that occurred before the strategic sourcing
initiative. Using a stream of benefits and costs approach, Treasury can capture savings accrued
during a given time period. For example, we can look at savings during Fiscal Year 2006 or for
a contract‟s period of performance. We may also describe savings in terms of net present value.
Treasury only includes incremental benefits that can be clearly demonstrated to be a result of the
strategic sourcing initiative, and that can be reasonably measured. At some point, these might
include transaction cost savings, but in no case are they currently considered. When appropriate,
incremental costs are also calculated. A critical question to enable this methodology is to be able
to define when savings “expire” or, put another way, when baselines reset.

Baselines reset in different ways. The most common answer currently is for the savings to be
considered over the period of performance of a strategically sourced contract. For example, in
our copier program, the baseline spending for the machine, toner, and service was established,
and an enterprise agreement negotiated over a five year period of performance. The savings are
calculated as the difference between the total five year baseline cost and the total five year
strategic sourcing cost, divided by five years in the period of performance. Our next copier
strategy will use the strategic sourcing costs as the new baseline. For our cell phone program,
the contracts are usually one year, so price discounts received this year will not be carried
forward into next year – additional savings will need to be generated through new initiatives.

A baseline may also change when a new initiative begins. Not all strategic sourcing efforts
involve new pricing; some may include developing a policy that changes usage patterns to save
money. For example, if the copier program uses information about high and low usage copiers
to develop a new initiative to „right size‟ machines, savings would be calculated using the status
quo usage baselines – in this case using the pricing of the strategically sourced machines – but
developing savings as the result of different demand management or cost avoidance.

   3.2.        Small business methodology
The small business improvement metric is calculated as incremental dollars sourced from small
businesses compared with baseline small business spending. The incremental dollars are the
numerator and the denominator is the total estimated spending in the categories being sourced.

We estimate $72 million of total spending is being affected by Treasury‟s six strategic sourcing
teams. Using our overall approved small business goal of 29.4%, we can infer that $21.3 million
would need to be awarded to small business in order to meet our goal. Improving those
categories by 5% would mean adding $1 million to our small business spending. Our actual
increase in FY07 was $42,000, an increase of approximately 0.2%. Our target of 5% for 2008
implies the need to increase small business spending by another $1 million.




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                        Department of the Treasury Strategic Sourcing FY2007 Results


   3.3.        Performance (including customer satisfaction)
Treasury develops performance metrics, as appropriate, into the requirements of each
strategically sourced contract. For example, the FSSI overnight delivery contract includes
performance standards for timely delivery based on federal requirements and commercial best
practices. In general, a great deal of thought goes into assuring that the customer experience will
improve or remain neutral while examining strategic sourcing approaches. In some cases,
decisions are made with the full agreement of customer representatives as part of the Commodity
Management Team to incur process risk. For example, the negotiation with one vendor required
that all Treasury orders be on a single purchase order, which requires the use of Interagency
Agreements and the Economy Act. This ungainly ordering process was necessary to allow
Treasury to appear as a single customer to the vendor, and would necessitate some learning how
to work together as a single entity. The team agreed to incur the process cost (and realized there
may be some dissatisfied customers) to learn from this experience to improve the process of
working together to enable future strategic sourcing across bureaus.

As the program matures, it may become important to find savings through reducing customer
demand and/or service level expectations, where doing so makes good business sense. This
would likely put customer satisfaction more often in direct tension with the savings and other
goals. The Office of the Procurement Executive is in the process of developing a Treasury-wide
customer service metric and program to enable this balanced metric to be captured as part of
normal operations.

   3.4.        Training Measures
Treasury‟s FY05 Strategic Sourcing Plan called for three things:
   1. Building a training curriculum for strategic sourcing
   2. Formally training 30 people
   3. Getting at least 49 people on the job training through participation in Commodity
       Management Teams

These goals were met. During FY07, the commodity management teams throughout
Treasury involved, at various times, well over 49 people.

The Treasury Acquisition Institute developed a curriculum of three strategic sourcing courses
offered several times per year. Completion of all three courses will earn a certificate of
completion. The three courses, described more fully below, are:
            Strategic Sourcing Overview
            Commodity Strategy Development
            Supply/Market/Industry Analysis

92 students attended Strategic Sourcing Training in FY 2007. 33 took Commodity Strategy
Development, 26 took Strategic Sourcing Overview and 33 took Supply/Market/Industry
Analysis.




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                        Department of the Treasury Strategic Sourcing FY2007 Results


Strategic Sourcing Overview

      Provides participants a broad understanding of the entire strategic sourcing program
      Provides examples of successful strategic sourcing programs in the government
      Enables participants to obtain hands-on experience in a structured, classroom setting

Course Description:

With the recent OMB mandate for agencies to implement strategic sourcing programs, the
government acquisition community is expected to undergo a transformational change that will
shift its focus from tactical purchasing practices towards a more strategic process. Strategic
Sourcing, defined as “the collaborative and structured process of critically analyzing spending
and using this information to make business decisions efficiently,” is expected to save agencies
millions of taxpayer dollars while allowing them to still meet critical mission requirements.

Strategic Sourcing Overview provides a comprehensive review of Strategic Sourcing, from
beginning to end. This course provides an overview of the entire strategic sourcing process, with
an in depth look at each of the steps in strategic sourcing, from Spend and Industry Analysis to
Commodity strategy development. The course will consist of lecture, case study and hands-on
experience collecting and analyzing data.

Commodity Strategy Development

      Provides participants an understanding of a comprehensive commodity strategy and the
       steps required to develop one
      Provides examples of commodity strategies that have been implemented successfully
      Enables participants to obtain hands-on experience in a structured, classroom setting

Course Description:

Strategic sourcing is not just about leveraging spend and negotiating with suppliers. It‟s about
determining the “levers” that can lead to most benefit and reduction in total costs (not just price).
These levers can either be related to demand (e.g. specifications, policies, substitutes) process,
or supply. A commodity strategy takes into account all the sourcing levers available for a
specific commodity and developing a comprehensive strategy that allows overall objectives to be
met.

Commodity Strategy Development, one of the first three courses in the Strategic Sourcing
curriculum, is designed to provide participants the ability to develop comprehensive commodity
strategies that go beyond just acquisition strategies, commodity strategies address business
objectives for a commodity, opportunities and options for managing demand and securing
supply, cost/benefits (business case) of using different options, and a comprehensive strategy
(including acquisition strategy) that provides a “to be” model for meeting the identified business
objectives. The first two steps of the strategic sourcing process, Commodity Profiling and
Market/Industry Analysis, serve as key inputs that drive commodity strategies.


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                        Department of the Treasury Strategic Sourcing FY2007 Results


Supply/Market/Industry Analysis

      Provides participants the skills necessary to begin conducting market/industry analyses
      Enables participants to obtain hands-on experience in a structured, classroom setting
      Provides an experience that will enable participants to return to their organizations and
       conduct market analysis

Course Description:

With increased competition and globalization, industries are constantly changing. Keeping up
with these changes is critical to understand implications on acquisition. An integral part of the
strategic sourcing process, a market/industry analysis is aimed at developing deep knowledge of
a market and using this information to drive sourcing decisions.

Supply/Market/Industry Analysis, part of the Strategic Sourcing curriculum, is designed to
provide participants a deep dive into the process and tools required to conduct a thorough market
analysis. The course provides a step-by-step guide for conducting market research,
understanding basic facts of a market including cost structure and competitive dynamics, and
developing a deeper understanding of supplier capabilities. The course will consist of lecture,
case study and hands-on experience collecting and analyzing data.




Page 12                                                                          May 12, 2008
                        Department of the Treasury Strategic Sourcing FY2007 Results



4. Participation in the Federal Strategic Sourcing Initiative
   (FSSI)
   4.1.        FSSI as Treasury Strategy
Treasury is a founding member of FSSI and continues to support it in many ways, including
through leadership of the Strategic Sourcing Working Group of the Chief Acquisition Officers‟
Council, through direct participation by representatives to team meetings, and through ongoing
development of governance strategies in conjunction with OFPP and the Strategic Sourcing
Community of Practice. Treasury, as a matter of policy, attempts to maximize value to the
Department and the federal government through leverage of federal buying power and best
practices. Treasury pursued FSSI as the main vehicle through which to accomplish these goals
in FY07.

For all of the FSSI initiatives, Kevin Youel Page may be contacted for information or referral to
other strategic sourcing points of contact within Treasury. Kevin Youel Page can be reached at
202-622-0651, Kevin.youel-page@do.treas.gov. He remains the Treasury Strategic Sourcing
Point of Contact (POC) who would coordinate the Department‟s sourcing decisions through the
Treasury Acquisition Council.

   4.2.        Personal Wireless
There are no mandatory contracts for use at this time. Treasury participated in reviewing and
inputting to the FSSI plans for adopting a Telecom Expense Management solution for wireless
devises. The IRS POC for the Wireless Services FSSI team is Adam Kravitz, 202-283-4444,
Adam.R.Kravitz@irs.gov.

   4.3.        Overnight Delivery
Treasury fully participated in the requirements development, proposal evaluation, and award of
the FSSI contract. The Treasury Commodity Management Team carefully evaluated the FSSI
contract for use by all bureaus and, with the approval of the Treasury Acquisition Council, has
moved all of its FedEx accounts to the FSSI contract, except for the US Mint due to legal issues.
Treasury‟s POC for the FSSI initiative is Kevin Youel Page, Office of the Procurement
Executive, 202-622-0651. He is supported by the IRS subject matter expert for Domestic
Delivery Services, Brenda Jackson, 972-308-7074, Brenda.S.Jackson2@irs.gov.

   4.4.        Office Supplies
Treasury supports its next day delivery office supplies strategy through three enterprise
contracts, two managed by IRS (TIRNO-01-Z-00006, TIRNO-01-Z-00008) and one by OCC
(TCC-04-HQ-G-0105). For the IRS contracts, the POC is Rose Zeigler, 202-283-1419,
Rose.M.Zeigler@irs.gov. For the OCC contract, the POC is Frank Sutherland, Office of the
Comptroller of the Currency, 202-874-4987, Frank.Sutherland@occ.treas.gov.




Page 13                                                                         May 12, 2008
                       Department of the Treasury Strategic Sourcing FY2007 Results


The Alcohol and Tobacco Tax and Trade Bureau (TTB) has mandated (with waiver) the use of
the DoD E-Mall. Treasury‟s POC for FSSI and DoD E-Mall strategies is Ellen Mickey, TTB,
202-927-8199, Ellen.Mickey@ttb.gov.

Treasury‟s Departmental Offices have a mandatory requirement to use the Paperclips store
owned and managed by Winston Salem Industries for the Blind.

No other bureaus have mandatory sources.

Treasury participation in FSSI is pending results of benefit baseline. SSWG requested that GSA
follow FSSI concept of operations and document FSSI office supplies sourcing strategy/contracts
outlook of price savings and improved socio-economic benefits based on a market basket
baseline. Moreover, GSA was asked to perform this analysis by establishing the market basket
based on high volume GSA Schedule line items/SKUs and create a file that compares the prices
for each of the high volume items/SKUs to each FSSI office supply contract that can then also be
used for potential FSSI customers to compare their current prices. GSA is engaging a vendor to
do the analysis and expects to have the analysis complete within 60-90 days.

   4.5.    Standard Labor Category Definitions for Information
       Technology Services
The Strategic Sourcing Working Group (SSWG), chaired by the Treasury Senior Procurement
Executive, is leading the OFPP initiative around strategic sourcing of IT skills. The SSWG has
developed the needed case for change supporting the value of common IT skill descriptions. The
next steps are to understand the interested stakeholder through this reporting cycle and develop a
pilot.




Page 14                                                                         May 12, 2008

				
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