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Testimony on Agency Performance in Fiscal Years 2012 and 2013 To Date - March 14, 2013

Thursday, March 14, 2013

Good afternoon, Chairman Mendelson and members of the Committee of the Whole. I am James D. Staton, Jr., Chief Procurement Officer and Director of the Office of Contracting and Procurement. I am joined by my Chief of Staff, Sanya Cade and OCP’s Integrity and Compliance Officer, Yinka Alao and Nancy Hapeman, our General Counsel. Today, I am pleased to provide testimony regarding my agency’s performance in fiscal years 2012 and 2013 to date and our goals for the remainder of this year.

OCP’s mission is to partner with vendors and District agencies to purchase quality goods and services in a timely manner and at a reasonable cost while ensuring that all purchasing actions are conducted fairly and impartially. Each year we process approximately 10,000 purchase orders totaling approximately $1.2 billion.

The agency’s approved budget for FY12 was $8.4 million with an approved staffing level of 84 FTEs. In FY13, our approved budget is $8.9 million with an approved staffing level of 85 FTEs.
In fiscal year 2012, my priority for the agency was to improve accountability, collaboration and efficiency in the agency’s operation. I, along with my senior staff, examined the agency’s current operations to identify opportunities for improvement. We evaluated our people, processes and technology along with feedback from our agency customers to determine priorities and use our existing resources to improve our operation. Through that process, we were able to accomplish the following:

Procurement

  • RFP, IFB, Small Purchase -- In fiscal year 2012, OCP issued 1,260 Requests for Proposals (RFPs) and 433 Invitations for Bids (IFBs). In fiscal year 2013, we have processed 777 RFPs and 186 IFBs, to date. In addition to large-scale procurements, OCP also processed over 3700 simplified acquisitions or small purchases valued at $100,000 or less. In fiscal year 2012, I created a simplified acquisition team responsible for handling all small purchases across commodities. This shift allowed us to better meet our agency customer needs in a timely and efficient manner and reduce the number of days between agency request and contract award from approximately 45 days in fiscal year 2011 to just six days by the end of 2012.
  • Procurement Review Committee -- In FY12, we reinstituted the Procurement Review Committee to review all complex and large-scale procurements. I lead the PRC with support from our legal staff, senior contracting officers and other expert resources as needed. For large RFPs, we review critical elements of the procurement as they are completed rather than waiting until the legal sufficiency review. This added review allows us to identify issues during the procurement process, take immediate corrective action, and identify recurring issues that may require additional training.
  • Procurement Checklists – We developed detailed checklists for RFPs, IFBs, Sole Source and Exercise of Contract Options to outline each step and the required documentation to accompany each step. The checklist ensures consistency in the procurement process across commodities and ensures that proper documentation is included with every proposed contract. Contracting Officers must submit the completed checklist with all packages that require my signature to certify that all necessary steps and documentation requirements have been completed.
  • Enhancements to the PASS System – In fiscal year 2012, our IT division thoroughly reviewed and addressed all issues with eSourcing, the module of the Procurement Automated Support System, PASS, which allows contracting staff to issue solicitations and receive responses, electronically. OCP’s IT team also worked with contracting staff to automate the procurement checklists in the Ariba Category Management (ACM) module. The ACM module tracks each step in the procurement process electronically and requires that proper documentation is loaded into the system at each stage of the procurement before moving forward.
  • Acquisition Planning—For too long, OCP and our customer agencies have worked in silos, failing to properly communicate about procurement needs before they become an issue. In fiscal year 2012, we promoted collaboration and planning by requiring agencies to complete an acquisition plan in accordance with the Procurement Practices Reform Act of 2010. The acquisition plan requires that agencies plan their procurements against their budget for the upcoming fiscal year. The completed plan allows my staff to properly allocate resources and develop timelines and milestone plans to fulfill customer agency’s needs in a timely manner. We are currently working with our customer agencies to develop their acquisition plans for fiscal year 2014.
  • Procurement Clinics – In addition to the acquisition planning effort, OCP also promoted collaboration through a series of Procurement Clinics, “Diagnose and Procure,” with 15 of our customer agencies’ contracting officers and program staff. The half-day clinics, were led by a team from OCP’s central office including contracting officers, training specialists, and customer contact specialists, who discussed key elements of the procurement process, clarified misunderstandings and misconceptions, identified training needs, answered questions from agency staff, and offered in-person support to process requisitions and resolve issues on the spot. We received very positive feedback from our agency customers and expect to offer another series of procurement clinics in the coming months.
  • Special Projects – In fiscal year 2012, the OCP emergency response procurement team provided 24-hour coverage to the Emergency Operations Center during two declared emergencies, the Derecho of June 2012 and Hurricane Sandy in October 2012. Our support to EOC streamlined the reimbursement process allowing District agencies to use one purchasing vehicle to acquire emergency goods and services faster and at a lower cost. The consolidated purchasing effort led by OCP allowed the District to complete the reimbursement process with FEMA faster than many other jurisdictions impacted by the storms.

OCP Contracting Officers provided support to the Executive Office of the Mayor and Councilmember Vincent Orange in celebration of Emancipation Day 2012. The Office of the Secretary commended the OCP team for our swift response to their procurement needs during the planning process.

Additionally, in fiscal year 2013, OCP facilitated all procurement activity for the District of Columbia 2013 Presidential Inauguration Committee. We negotiated contracts for hotels, flights, food, and support staff for MPD and the National Guard for the additional police officers and National Guardsmen needed to secure the perimeter during the presidential inauguration.

Training -- In FY12, we created a blueprint for the Procurement Training Institute as required by the Procurement Practices Reform Act of 2010. The institute will offer a tiered certification program for procurement professionals including those at the central procurement organization and agency contracting officers who have procurement authority delegated from the Chief Procurement Officer. Over the last nine months, we have worked closely with DCHR to ensure that the courses for the first tier of certification meet the DCHR training requirements and guidelines.

We currently offer a series of courses designed to provide the foundation for procurement professionals who are new to District procurement and our agency contracting officers. The series covers a variety of topics including: Procurement basics, Contract Administration, Statement of Work, Review and Documentation. Our training team also works closely with the OAG attorneys assigned to OCP to offer workshops that address issues identified in the Procurement Review Committee and decisions from the Contract Appeals Board to include million dollar packages, contracting officer’s independent assessments, ethics, evaluation panels, and avoiding most commonly made procedural errors, among others.

Customer Contact Center – In the summer of 2012, we officially opened the OCP Customer Contact Center for business. At last year’s performance hearing, I discussed the competing priorities of contracting staff to balance the demands of their workload and respond to the numerous calls and inquiries from agencies, potential bidders and existing contractors. The Customer Contact Center was established to alleviate that burden and ensure that our customers were receiving the attention they need. With a team of five operators, we are now able to provide timely responses and support to our key stakeholders. Vendor relations and outreach are also handled by the Customer Contact Center staff, which includes training vendors on how to do business with the District and presenting to small business groups across the District. In fiscal year 2012, we trained over 300 vendors at our bimonthly sessions.

Surplus Property Division For FY12, the Surplus Property Division conducted nearly 3000 auctions that produced over $3.79 million of online sales revenue through its online auction platform. Besides managing the main surplus property account for the District, the division has established online auction accounts with DPW for abandoned vehicles, DC Water for its fleet and other property, and MPD for its fleet, evidence and property forfeitures. Additionally, the division supported Mayor Gray’s vision of a greener DC through the expansion of scrap metal and electronics recycling programs. In FY12, the Surplus Property Division managed the recycling of 750,000 pounds of scrap metal recycle and 271,000 pounds of electronics, thereby creating additional revenue for the District. In FY13, the division will continue to collaborate with District and federal agencies to provide District entities with sustainable disposal solutions that yield maximal revenue creation and provide relief to the environment.

OPIC

In FY12, OCP’s Office of Procurement Integrity and Compliance set and met several ambitious goals in realizing my vision for stronger monitoring and oversight of procurement actions, before and after a contract is awarded. OPIC audited procurement actions worth over $700M at 34 agencies under OCP’s authority. The OPIC team also managed the ongoing Comprehensive Annual Financial Report remediation efforts at OCP, resulting in significant declines in the total number of CAFR deficiencies attributed to OCP and our agency customers. In fiscal year 2010, 68 percent of deficiencies in the audit findings were attributable to OCP, while in 2013, OCP’s deficiencies decreased to 26 percent. Additionally, OPIC led the remediation efforts for the Comprehensive Annual Financial Report, or CAFR, at eight agencies that are independent of OCP.

Earlier this week, OCP hosted a mandatory meeting for OCP staff, agency contracting officers, and invited representatives from the Office of the Inspector General, the Office of the Chief Financial Officer, and our external auditor, KPMG, to present the CAFR 2011 findings and plans for remediation.

The Integrity and Compliance team continued efforts to strengthen Contract Administration in the District in fiscal year 2012. OCP’s priority is to maintain a sustainable contract administration process focused on proper execution of contracts, vendor performance, and timely payment for receipt of goods and services. However, contract administration in the District is only as effective as the program and agency is engaged. We performed a series of extensive audits at a select group of agencies to gauge compliance with new requirements in the PPRA. We also offered a District-wide Contract Administration refresher course that all active and prospective Contract Administrators were required to complete by January 11, 2012. Every agency is also required to identify a qualified Contract Administrator before a solicitation is issued. The identified contract administrator is required to submit regular vendor performance evaluations through OCP’s eVal system. OCP now provides the strong oversight necessary to make sure that goods and services are properly delivered; however, it is incumbent upon the Contract Administrator to immediately report any issues with the vendor to OCP so that corrective action can be taken.

In FY13, OCP-OPIC will continue to evolve its risk based methodology to address deficiencies reported in the District’s bellwether audits, namely, the CAFR and the Single Audit.

Procurement Transformation

In the Mayor’s 2013 State of the District Address, he announced that procurement reform is a top priority for the District. I am working closely with the Offices of the Mayor and the City Administrator to develop an action plan to identify issues with the procurement process and real, concrete solutions to fix them. Our priority is to provide faster, higher-quality and more coordinated procurement services to District agencies. To accomplish this goal, we will:

  • Solicit feedback from our agency customers regarding their concerns with the procurement process;
  • Examine existing regulations, policies, procedures, and requirements to identify unnecessary steps that if removed, will streamline the process;
  • Assess our existing personnel to determine baseline skill levels required for procurement professionals and identify any necessary training improvements;

The information from our assessments will allow us to develop an action plan to implement the proposed changes in a pilot program. By the end of this process, we will streamline our purchasing and contracting practices, eliminate confusing and outdated rules, increase faith in the process while minimizing meritless protests, and reduce the time it takes to complete procurements.

In closing I want to thank the contracting staff in the central procurement office and agency contracting officers for their hard work and support in fiscal year 2012. I also want to thank Mayor Gray, City Administrator Lew and their staffs for their support of the procurement transformation initiative. Thank you, Chairman Mendelson, for the opportunity to testify today. This concludes my prepared testimony and I am happy to answer any questions you may have.