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 (OCP). Today, I am pleased to provide testimony about Mayor Gray’s proposed fiscal year 2015 budget for OCP. I am joined by my Chief of Staff, Yinka Alao, and other members of my senior staff who are here to answer any questions you may have.
The agency’s approved budget for fiscal year 2013 was $8.9 million dollars, with an approved staffing level of 85 Full Time Equivalents (FTEs). OCP’s approved budget for fiscal year 2014 has increased from $11.7 million to $13.7 million, which includes the allocation of funds to absorb prorated costs associated with an in-year increase in OCP’s approved staffing level – 105 FTEs to 146 FTEs – and $187,000 dollars allocated to fund the Green Purchasing component of the Mayor’s Sustainable DC initiative that is underway.
Increases to OCP’s operating budget have been used to fund the hiring of additional FTEs as part of the Mayor’s procurement reform initiative. Under the Mayor’s proposed fiscal year 2015 budget, OCP will have an approved staffing level of 146 FTEs, and an operating budget of $18.1 million dollars. The increase in budget will allow OCP to build capacity as we expand the Delegated Procurement Authority model (DPA).
The results of the initiatives that we have implemented and completed over the last 12 months through procurement reform is reflected in the fiscal year 2015 budget. Our strategy for implementing recommendations from the reform initiative are focused on the following areas:
- Ensuring that OCP and its delegated customer agencies have sufficient numbers of procurement and support personnel to timely process and administer contracts.
- Establishing and administering, per Section 206 of the PPRA, a procurement training institute to facilitate a system of training continuing education, and certification for District contracting personnel with curriculum tailored to the specific needs of procurement professionals and affected stakeholders.
- Realigning OCP’s procurement division and operational support functions to increase accountability, to become more efficient, to improve customer servicing, and to enhance the central office’s ability to identify, to troubleshoot, and to avoid problems in the course of doing business.
- Assuming lead responsibility in developing a communications plan and an integrated reporting platform to keep government officials regularly apprised of the operating effectiveness of procurement operations across the city.
- Linking OCP-led acquisition planning processes to budgetary and contract monitoring activities to improve workload planning, execution, expectations management, and institutionalizing sustainable practices to enable continuous, collaborative, and systematic adjustments to the District’s procurement management system.
Taken together, these efforts along with lessons learned from the Integrated Procurement Team (IPT) approach facilitated by our external consultant have informed our policy decision to expand, to certain agencies, the operational responsibilities associated with maintaining delegated contracting authority.
Delegated Procurement Authority Model (DPA)
Over several months, OCP, the Office of the City Administrator (OCA), and the Mayor’s senior staff have defined operational priorities for procurement services. The policy objective is to transform the District’s procurement management system to improve efficiency and better address the needs of OCP client agencies – specifically, the timely implementation of responsive purchasing. The Delegated Procurement Authority structure enables agencies to plan, process, and manage procurements in house. The procurement staff will be available to work directly with agency program and technical staff to develop the service-delivery and purchasing specifications; select the appropriate procurement methodology; design solicitation materials; organize and manage bid evaluation and negotiation; finalize contract agreements; and set-up contract administration and post-award systems. This approach will reduce the inter-agency lag time and processing steps that can hinder efficiency.
- Strategy and Expected Outcomes
The underpinning of this transformation strategy is to, through CPO delegation, streamline the processing of acquisitions by authorizing agencies to manage the procurement of the goods and services that are needed to perform agency functions. This strategy recognizes that many of the District’s purchasing needs are “business” specific, with success dependent on the specialized knowledge of agency personnel.
Furthermore, efficiency and consistency in procurement management will also ensure that the District continues to attract high caliber businesses to participate in the competitive bid process, which is essential to the delivery of quality goods and services.
The proposed FY15 budget makes a major investment of $4.9 million, which is comprised of 41 FTEs allocated to OCP. While the majority of OCP procurement staff will be assigned to District agencies, receiving day-to-day direction from agency Directors or their designees, the Chief Procurement Officer (CPO) retains responsibility for the quality of the procurements processed by assigned personnel. As the central procurement and contracting officer for the District, the CPO is responsible for the successful execution of procurement services. Through procurement reform, the Chief Procurement Officer will delegate contracting authority to agencies under CPO authority, as defined by the PPRA. OCP’s central operations will be strengthened by providing additional resources for policy direction, regulatory oversight, quality assurance, compliance monitoring, training, and capacity-building. The central organization will maintain a smaller staff to directly provide purchasing services to some strategic units, special projects, and District-wide acquisition of universal goods and services. Management of Purchase card services and the DC Supply Schedule will remain with OCP.
- Assessment of Processing Capacity Across DPA Agencies
My staff performed an analysis to determine the actual processing capacity dedicated to contracting by persons with CPO delegated authority and identify any potential shortfalls. Under the proposed budget, procurement processing capacity will increase to 120 FTEs with the addition of 24 new hires comprised of 13 contracting officers and 11 contract specialists. These additional hires will help to not only create procurement capability at select DPA agencies, for instance, the experience required to process complex, million dollar procurements, but will also compensate for unrealized productivity from the agency delegation model currently in place.
- Enhancements to Procurement and Operational Support Functions
In addition to new hires deployed to DPA agencies, OCP anticipates hiring 17 additional staff to support its agency based procurement operations. The Procurement Technology Division will hire 2 experienced IT professionals to meet expanded responsibilities for systems maintenance/enhancement and help-desk support to agencies, including periodic deployments to delegated agencies (mobile support).
Our Customer Contact Center (Vendor Relations) will add 3 specialists, including a supervisor, to provide timely and substantive customer service information on procurement opportunities and action status, as well as, dispatch inquiries to appropriate procurement staff.
OCP’s Office of Procurement Integrity and Compliance (OPIC) will onboard 6 certified auditors to administer on-going pre-audits and expand internal audit schedules to ensure standard operating procedures and processes are working properly.
Our Training Division will add 2 “Certified” trainers with expertise in training program design, curriculum development, and training delivery for procurement professionals.
Finally, and in recognition of the value added of the piloted Integrated Procurement Team (IPT) approach, our Procurement Division will hire 4 Business Operations Managers who will serve as key members of OCP’s procurement management staff, making substantial contributions to overall planning and evaluation of DPA agency operations, operating policy, and internal and external coordination. Notably, the Business Operations Manager is responsible for identifying operational breakdowns, developing corrective action plans before major problems occur, and will assume responsibility for monitoring the implementation of these corrective plans.
- DPA Roles and Responsibilities (Agency vs. OCP)
As previously noted, OCP will retain responsibility for the quality of procurement actions. This is achieved by assuming responsibility for hiring, training, certifying, and assigning procurement specialists, as well as regularly reviewing the work of assigned resources on a pre and post award basis. Agencies will assume ‘operational’ responsibility for assigned resources, specifically, identifying special services and purchasing needs to help OCP determine the appropriate staffing configuration for the agency, direct staff assignments and work schedules, and in coordination with OCP, perform primary staff evaluations based on assigned resource achievement of procurement assignments.
- Transitioning to DPA
OCP has examined existing staffing for the 31 DPA agencies to better understand agency capacity and capability, and to devise an appropriate staffing configuration based, in part, on the volume, frequency, and mix of procurement. This information was also used for cost estimating and budget planning.
I have convened meetings with the operations, public safety, and health and human services clusters to discuss the DPA strategy and general implementation plan. Individual agency meetings are underway. These agency meetings focus on the core transition requirements: in-house procurement system operations, staff planning (including new hires), coordination with OCP, scheduling, and logistics. Sixteen (16) agency meetings have been conducted so far this month; the remaining agency meetings will be completed by the end of April.
We will pursue a phased transition of OCP personnel to agencies based on operational readiness. As previously noted, my Office has received additional operating funds that will enable us to onboard 41 new hires for a period of 4.5 months beginning mid-May. My senior staff, in collaboration with several agency partners, has developed a multifaceted plan that will enable us to ramp up hiring, training, and field deployment in stages.
In FY15, our training team will continue to educate the procurement and program staff at agencies under my authority in accordance with the Procurement Practices Reform Act of 2010. Our goal for the fiscal year is to deliver the curriculum that George Washington University (GWU) is currently working to develop. OCP awarded a contract to GWU on March 14th, to provide a customized certification and staff development program for District procurement personnel under my authority. We expect George Washington to complete the three phases of the work based on the following schedule:
- training curriculum design by the end of April;
- develop the certification program –including curriculum materials and teaching plan – by the end of May,
- and finalize the training delivery and implementation strategy by the end of June.
Once onboard, we expect the Chief Learning Officer to work with GWU to meet this deadline and fully execute the program in fiscal year 2015. We have identified a candidate for the Chief Learning Officer and expect that person to be onboard no later than May 1.
Thank you for this opportunity to offer testimony on OCP’s fiscal year 2014 and proposed fiscal year 2015 budget and for your continued support and oversight over the last year. I want to thank all my staff for their continued support and dedication to improving operations at OCP. Also, many thanks to Mayor Gray and his staff, the City Administrator and his staff, and members of the Mayor’s cabinet for their continued support throughout this procurement reform process.
Thank you and I am happy to answer any questions you may have.