Office of Contracting and Procurement Fiscal Year 2009 Budget Request
Government of the District of Columbia
Office of Contracting and Procurement
Testimony of David P. Gragan
Chief Procurement Officer
“Office of Contracting and Procurement Fiscal Year 2009 Budget Request”
Committee Workforce Development and Government Operations
Carol Schwartz, Chair
Council of the District of Columbia
Monday, April 7, 2008
John A. Wilson Building
1350 Pennsylvania Avenue, NW
Washington, DC 20004
INTRODUCTION
Good morning Chairperson Schwartz and members of the Committee on Workforce Development and Government Operations. I am David P. Gragan, Chief Procurement Officer for the District. Thank you for this opportunity to appear before you to discuss the Mayor’s Fiscal Year (FY) 2009 proposed budget.
As you are very aware, the mission of my agency is to provide quality goods and services for District agencies through a coherent and streamlined procurement process that is responsive to the needs of its customers and suppliers. We support the contracting needs of nearly all District agencies and acquire roughly $1.5 billion in goods and services annually.
FY 2009 Budget
Here are some highlights of my FY 2009 budget:
Reduction of FTE level for 152 to 142;
Increase of $1,619,531 in the operating budget;
Total Non-personal services increase $995,394;
$68,158 increase in fixed costs;
$134,148 increase in office supplies and materials;
$294,523 increase in services and charges (training, language access, organizational memberships, business outreach, etc);
$135,600 increase in contractual services to include a $100,000 policy initiative for government wide analysis of the procurement business process; and
$362,966 for the upgrade of all OCP computers (the computers are all 5 years old)
I have made the decision to reduce the number of personnel within OCP by 10 (from 152 to 142), and I believe we will be processing more complex procurements with fewer employees. I will go into detail on this matter a little later. However, at the same time, I have requested and received an increase of $624,137 in my personnel line. That increase includes step and pay increases, but is generally more a result of my agency realignment. There were no programmatic changes to the budget, nor is there a capital budget at OCP.
Agency Assessments
OCP is one of several government agencies that broadly serves all others, and as such, my office levies an assessment on other agencies to assure accountability - basically a fee for the service my office provides. In determining the FY 2009 assessments, OCP reviewed the FY 2007 year end numbers for purchase orders and ratifications; the agencies were assessed a flat fee rate of $500 per purchase order and a fee of $10,000 per ratification. The proposed fee was then analyzed and a final determination was made based on a more thorough review of OCP’s workload for each agency, balancing that estimate with the total budget need to support my operating expenses.
FY 2009 Goals
Managing Delegated Authority. In FY 2009, our delegation of procurement authority will be well underway. Agencies will be permitted to exercise a level of procurement authority up to $25,000, thereby placing some level of procurement directly in the hands of the agencies that need it. To support that process, OCP is currently establishing a warranting process for Agency Contracting Officers (ACOs) who will require training and certification by OCP to qualify for that delegated authority. A warrant will be the visible symbol that I have granted authority to a specific individual, who is then authorized to procure goods and services on behalf of the District while they are still closely monitored by OCP. This delegated authority will allow my office to manage a procurement process that streamlines our business functions and provides capacity for greater oversight. Delegated authority will only be granted after the ACO has received the required training. Agencies’ procurement activity will be constantly monitored and any individual with delegated authority will undergo an annual audit to maintain that authority; any deviations from my requirements will result in a loss of that authority. The CPO remains the responsible party for all District procurement, but I am satisfied that with proper training on the front end, and both annual and ad hoc audits of procurement activity, that this system of delegation will greatly benefit the District.
In FY 2007, 78% or approximately 13,000 of the purchase orders completed were on transactions $25,000 or less which translates to 6.2% of the total dollars spent on procurement. With the agencies being granted some low level of authority - if they qualify – just that little change will allow OCP to perform the monitoring, contract administration and become more innovative in our procurement practices. Training and guidance and constant monitoring – those are the hallmarks of any good delegation program.
Increase the Number of Term Contracts. Hand in hand with delegation, OCP is now putting in place term contracts for those goods and services we buy most frequently, and that activity will continue in FY 2009. OCP will establish these contracts on behalf of agencies through the normal competitive process, thereby ensuring that the District gets the best product for its money based on our true annual city-wide volume. Agencies will be required to purchase goods from the established contracts.
This effort:
reduces cost to the District by aggregating volume;
allows agencies to order against established contract vehicles where the price and the contract terms are already clear; and
allows OCP to concentrate on more complex contracting activities.
The District currently has a city-wide term contract in place for copier paper. The contract terms and conditions have already been determined, and the price established by full and open competition. This is the first time we have initiated a contract like this and we intend to use lessons learned from that program to improve and expand upon other term contracts.
Refining the Procurement Process. A procurement professional has the constant responsibility to reform this necessarily control-oriented process. Government contracting is filled with safeguards against wrong-doing; many of them contribute to the length of time it takes to procure goods and services. In the past doing it “right” was analogous with “taking too long.” In FY 2009, OCP is redefining the procurement process, maintaining the integrity of the system while elevating customer service by improving contracting functions in the District. Slated for completion and preparation for Council approval in FY2009, OCP is reviewing the Procurement Practices Act and identifying critical changes needed to improve and update the District’s procurement law. OCP requested and received a policy initiative of $100,000 for this task to further simplify and streamline our processes.
Agency Training. Historically, OCP has only trained internal staff on contracting and procurement. Training and communication is the missing link in many procurement mistakes. In FY2009, we intend to perform regular District government training for everyone involved in contracting and procurement. We will establish very clear standards and set expectations. The education of our customers greatly increases our chances of cooperation and cohesion among the agencies. Vendors will continue to be educated through a series of workshops and roundtables on ways to do business with the District. Expectations and outcomes will be clearly defined.
Chairman Schwartz, we at OCP take very seriously public integrity, the fact that we are entrusted to wisely and carefully expend public funds on the goods, services and construction needed by our government to deliver service to citizens. Within my agency we have instituted cost savings measures, such as moving from many to a few network printers, reducing the number of personnel in the agency, and subsequently opening discussions with OPM on how the reduction in agency size can translate to savings, buying in bulk where possible, and others. But even more importantly, we are in a unique position to save every agency money, and thereby reduce costs for the government as a whole. The establishment of city-wide contracts, taking full value of the fact that the District is a very big customer and deserves the absolute best pricing, is an example of how we will deliver savings to others. Better training of agency personnel and annual procurement planning enhancements will also save the entire city money by allowing us all to get it right the first time.
Conclusion
Madam Chair and members of this Committee, I sincerely thank you for the support you have shown OCP, and your leadership of this tremendously important committee. In a number of discussions that you and I have had in my time here, you have always been supportive of positive change and open to my implementing best practices in contracting operations here in our City. I believe we have positioned resources where they can do the most good, thereby improving the quality of service provided to our customers. With the help of the mayor and my partners in the executive branch, this Committee and the Council, and of course our trading partners, we will continue to make enhancements and further refine how we conduct the District’s business. I am happy to answer any questions.