Good morning 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. Today, I am pleased to share testimony about the agency’s achievements in fiscal year 2013, and fiscal year 2014 to date. I am joined today by my Chief of Staff, Yinka Alao, and General Counsel, Nancy Hapeman. I am also joined by members of my senior staff who are here to answer any questions you may have.
The mission of the Office of Contracting and Procurement (OCP) 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 8000 purchase orders, totaling approximately 1.2 billion dollars.
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). In fiscal year 2014, our approved budget is $11.7 million dollars, with an approved staffing level of 105 FTEs.
In fiscal year 2013, my priority for this agency was to evaluate operational efficiency and determine, through the procurement reform initiative and internal assessments by my senior staff, how we can better serve our client agencies’ needs. With the help and support of our consultant, the Office of the City Administrator, the Executive Office of the Mayor, and all OCP staff, we made significant progress towards improving performance in the following areas:
In fiscal year 2013, we transitioned from a commodity to a cluster-based operating model in an effort to better serve our customer agencies. The cluster-based model dedicates the processing capacity of procurement teams to a specific group of agencies, thereby enabling procurement staff to develop intimate knowledge of customer agency missions.
The shift to the cluster-based model was eased by the addition of 15 contracting staff. Several of these new hires have been immersed in learning agency business models and processing procurements through the Integrated Procurement Team (IPT) pilot that was launched at the beginning of this year. With the timely investments in building up the capacity of the procurement operation, we expect sustainable improvements for the remainder of this fiscal year.
In fiscal year 2013, there was also a marked improvement in the quality of work performed by contracting personnel. The addition of the procurement checklists to the Procurement Automated Support System (PASS), and the reinstitution of the Procurement Review Committee (PRC) to ensure that the quality of award decisions, reduces the number of successful protests and provides training to contracting officers and contract specialists. PRC review is required for all procurements greater than $100,000 that are conducted by means of competitive sealed proposals. Since calendar year 2013 to date, a total of 18 protests have been decided by the Contract Appeals Board, of which 16 were ruled in favor of OCP (two with corrective action), as compared to 32 protests in calendar year 2012 alone, in which 7 protests were sustained.
Our goal to produce high-quality work also extends to those procurement operations to which I have delegated unlimited contracting authority. While there is still much to accomplish, since fiscal year 2013 to date, several protests filed against DDOT procurements were either withdrawn, dismissed, or denied. The success in defending these protests is due, in part, to several initiatives designed to improve operations and build capacity in DDOT’s procurement organization. Recently, the agency filled a critical Chief Contracting Officer position, added two additional staff, and increased delegations for two tenured employees to help balance workload. Further, as part of its restructuring, DDOT’s procurement office has established a ‘mega-projects’ division, delineating complex procurements which require a differing set of skills to effectively process and manage. Further, I have been meeting regularly with OAG Counsel, DDOT management, and procurement staff to ensure the continuity of information sharing on the status of open projects. I am encouraged by the progress at DDOT, and look forward to supporting the agency’s management team in strengthening their procurement organization.
The Office of Contracting and Procurement was awarded a grant from the Mayor’s Sustainable DC Initiative to develop a Sustainable Purchasing program for the District of Columbia. The program aims to embed sustainable considerations into the purchasing process, so that the approximately $1.2 billion in products and services that OCP procures annually aligns with the District’s sustainability goals. In fiscal year 2014, we are working with our agency partners and the vendor community to:
- Develop clear sustainable specification language for high-value product categories, which should be informed by input from established best practices, the local vendor community, and programmatic end users;
- Revise procurement policies and procedures so that all stakeholders are prompted to consider the purchase of Environmentally Preferable Products; and
- Enhance sustainable purchasing resources and training opportunities for all procurement stakeholders.
In fiscal year 2013, we delivered 138 procurement classes for 1,502 DC government employees. This includes 26 procurement staff trained on, Tier I, Simplified Procurements, through the OCP Training Institute. These courses are taught by in-house OCP trainers, with the majority of the courses delivered through DCHR’s Workforce Development Administration to program staff, and those interested in learning more about the procurement process in the District. In fiscal year 2014, to date, we have offered 28 sessions to 299 employees, which included Tier I courses and our first pilot of Tier II courses.
Our team of trainers worked with OCP’s General Counsel to develop the core content for tier two curriculum. We also worked with an outside vendor to pilot two advanced skills courses, namely, Analytical and Critical Thinking, and Technical Writing and Reviewing Statements of work. Both courses are part of the Tier two curriculum that covers more complex procurement methods required for advanced contracting specialists, contracting officers, and our associate procurement officers (formerly known as Commodity Managers.) The first pilot session for tier two was held in January, and we will complete our second pilot this week.
Through our partnership with DCHR, which was formalized in November 2013, we have consulted with The George Washington University (GW) on our need for a full review and validation of our proposed tiered certification program, and as appropriate, the development of competency-based courses required at each tier. We received an initial proposal from GW on February 10th, met to discuss the proposal on February 14th, refined timelines and deliverables on February 19th, and are now working with the university and DCHR to move the development and implementation of the program forward. We anticipate the completion of training curriculum design by the end of April, the development of the certification program –including curriculum materials and teaching plan – by the end of May, and the training delivery and implementation strategy by the end of June. Our search for a suitable Chief Learning Officer continues. We have interviewed several candidates and have received referrals from public and private sector sources, as well as contacts in academia. As we continue our search for the right candidate, we remain on target to meet our commitment of having final recommendations for the structure of the institute by the time the Chief Learning Officer is hired.
Procurement Integrity and Compliance
As I mentioned earlier, we have noticed an improvement in the quality of the contract packages received by management, with fewer mistakes. This improvement is due, in part, to efforts at standardizing training for contracting professionals, proactive remediation of deficiencies, PRC sessions, and the full support and follow through on the part of contracting staff. OCP completed all planned CAFR remediation actions for fiscal year 2013, which included baseline audits of OCP contracting officers and customer agencies with delegated procurement authority.
- OCP strengthened controls around its records management program;
- Updated outdated policies and procedures (specifically as this pertains to file maintenance and pre-award reviews);
- Automated the maintenance and distribution of policy and procedural guidance;
- Worked with OCP IT, procurement, and training staff in the development of automated checklists in the Procurement Automated Support System (PASS); and
- Met with affected contracting officers and their supervisors to review the results of the fiscal year 2012 CAFR audit.
Although remediation began at the mid-point of fiscal year 2013, corrective actions have yielded positive results as evidenced in the CAFR Auditor’s Notice of Findings and Recommendations (NFRs).
- OCP and its customer agencies recorded fewer deficiencies in the fiscal year 2013 CAFR, recording a 31 percent reduction as compared to fiscal year 2012 (46 vs. 67);
- As compared to fiscal year 2012, the number of findings attributed to ‘missing documentation’ dropped by 42 percent (30 vs. 52);
- For the first time since at least fiscal year 2008, OCP was able to produce every contract identified in the CAFR audit sample; and
- As compared to fiscal year 2012, Purchase Card related deficiencies were halved (10 vs. 22).
Property Disposal and Reutilization
OCP’s property disposal operations generated $4.6 million in gross sales to the District from over three thousand auctions, as compared to $3.7 million grossed from approximately the same number of auctions in fiscal year 2012. Our Surplus Property team continued to find new and viable ways to realize cost savings on behalf of the District, and in support of Mayor Gray’s Sustainable DC Initiative. One of the ways this was accomplished was by strengthening our relationship with the Federal Surplus Property Program which provides District government agencies access to a larger inventory of surplus property. This relationship has proven especially beneficial for the special projects handled in fiscal year 2013, most notably, providing 370 laptop computers to equip computer labs at Tyler Elementary School, Wilson High School, Washington Metropolitan High School, and several DC government agencies including DCHR, OSSE, OCTO, DOES, and DC Office on Aging at no cost to the District. Our Surplus Property team also provided 72 laptops to local non-profit organizations.
In fiscal year 2014, our team has been working diligently to continue the success of this program through outreach efforts to agencies and potential bidders. Already, this fiscal year, we have established a partnership with the Not-For-Profit Hospital that will enable this organization to request equipment needs that we can fulfill through the federal surplus property program. To date, we have earned $1.9 million in gross revenue toward our fiscal year goal of $3.8 million.
Procurement Reform – Integrated Procurement Teams (IPTs)
In fiscal year 2013, Mayor Gray emphasized the need for reforms that would increase faith in the District's procurement system by streamlining contracting processes, eliminating outdated rules, limiting the occurrence of meritless protests, and reducing processing times. Accordingly, reforming procurement has been, and remains, the top priority for this agency.
As addressed in prior testimony, we have been working with our consultant to identify gaps in service delivery. The capstone to this effort is the launch of Integrated Procurement Teams (IPTs) at seven pilot agencies, namely, Department of Corrections (DOC), Department of Health (DOH), Department of Human Services (DHS), Department of HealthCare Finance (DHCF), Office of the State Superintendent of Education (OSSE), Department of Employment Services (DOES), and the District Department of Transportation (DDOT). IPTs are in progress at six agencies, with the seventh, DDOT, scheduled to begin the first week in March.
IPTs are comprised of agency procurement and program personnel, OCP procurement personnel, OAG counsel as assigned by OCP's General Counsel; and the consultant, serving as facilitators. The IPT identifies the procurements that require priority and focused attention, discusses the challenges presented by the identified solicitations, and develops a plan of action to resolve the challenges and move forward to solicit and procure the goods, services or construction identified.
At each meeting, previously assigned action items are discussed, additional issues, if any, are raised, and a timetable for completion of each action item is agreed upon. The IPTs have been useful in identifying and resolving issues. Through IPT, procurement management problems are diagnosed, a resolution strategy is defined for each component, personnel is assigned action items and delivery schedules, and proactive monitoring is used to bring procurements through successful execution.
While the pilots are still in progress, the initial reporting on process and results indicates that working collaboratively as a team and with all critical operating functions is productive and improves efficiency. The IPT strategy will be further developed to determine how to best integrate it into the District’s overall procurement management system.
Procurement Reform - Strategic Priorities
Concurrent with OCP led efforts to improve its operations, Mayor Gray directed the Office of the City Administrator (OCA) to work with OCP leadership in defining the strategic priorities for reform. Through this evaluation, it has been determined that greater operating efficiencies will be realized when agencies – with OCP providing adequate technical assistance, policy guidance, and oversight – are given full responsibility for planning, processing, and managing their procurements in-house. OCP contracting professionals will be available to work directly with agency staff to develop the service-delivery and purchasing specifications, select the appropriate procurement methodology, design solicitation materials, organize and manage bid evaluations and negotiations, finalize contract agreements, and set up contract administration and post-award monitoring activities.
Planning is in progress to authorize agencies to take on the full responsibility for procuring their own goods and services. This approach is an acknowledgement that many of the District’s purchasing needs are business-specific; that specialized knowledge of the business is needed to execute high quality procurements, and often times, the requisite knowledge and skills to efficiently and effectively process and administer acquisitions resides in the agency.
This plan will delegate contracting authority to agencies through OCP, with procurement actions remaining subject to all applicable provisions of the Procurement Practices Reform Act, and Title 27 of the DC Municipal Regulations.
Also, OCP will retain its responsibility for quality assurance, establish standard operating procedures for procurement management that will guide the agencies’ performance; train and certify procurement staff; and monitor performance of procurement professionals who are delegated contracting authority. Further, OCP will continue to review and approve contract packages valued at over one million dollars.
Thank you for this opportunity to offer testimony about the performance of the Office of Contracting and Procurement in fiscal year 2013, and fiscal year 2014 to date. I would like to take this opportunity to thank my staff for their continued support and dedication to improving operations at OCP. Also, I want to thank Mayor Gray and his staff and the City Administrator and his staff for their continued support throughout this procurement reform process.
Thank you and I am happy to answer any questions you may have.