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 2010 Budget Request
Mary M. Cheh, Chair
Committee on Government Operations and the Environment
Council of the District of Columbia
Monday, April 6, 2009
John A. Wilson Building
1350 Pennsylvania Avenue, NW
Washington, DC 20004
INTRODUCTION
Good morning Chairperson Cheh and members of the Committee on Government Operations and the Environment. I am David P. Gragan, the District’s Chief Procurement Officer (CPO). Thank you for this opportunity to appear before you to discuss the Mayor’s Fiscal Year (FY) 2010 proposed budget. Within 24 hours after this hearing my testimony will be posted on the OCP website.
As you are 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 2010 Budget
Here are some highlights of my FY 2010 budget:
- Reduction of FTE level from 142 to 118;
- Net decrease of $2,360,232 in the operating budget;
- Total Non-personal services net decrease of $223,095;
-$199,486 net decrease in fixed costs
-$38,332 net increase in office supplies and materials
-$185,163 net increase in services and charges (training, language access, organizational memberships, business outreach, etc)
-$84,340 net increase in contractual services; and a
-$331,445 net decrease in equipment & equipment rental.
There are no programmatic changes to the budget, nor are there new capital allocations for OCP in FY 2010.
OCP’s Local Fund budget reduction in FY 2010 is 40.5 percent and includes 24 FTEs. We are committed to reducing our costs without reducing our level of service. Over time, the number of staff functions that were not core to our mission began to creep up. Now is the time to eliminate those positions.
We also looked more closely at our non-personnel expenditures and reduced costs wherever we could. We are extending the lifecycle of our computers and replacing them more slowly, we are replacing color printers with black and white printers, and desktop printers with network printers. We are turning in two of our five vehicles this fiscal year and will participate in the District’s new car sharing program.
We do plan to make strategic investments in FY2010, to ensure our reform efforts will progress. These investments include:
- increasing our training budget by $130,000 to allow 100 percent of our contracting staff to participate in our certification program.
- investing approximately $50,000 in warehouse equipment and $100,000 in consulting services in FY 2010 to establish an automated bar-coded inventory system at the Personal Property Division (PPD) warehouse using Special Purpose Revenue Funds.
Agency Assessments
OCP provides procurement support for the majority of District agencies and levies an assessment on agencies as a fee for the services provided. These fees, totaling $8.6 million in both FY 2009 and FY 2010, make up the Intra-District Funds portion of our budget. The Intra-District Funds will consist of approximately 67 percent of our FY 2010 budget. In addition to the specific purchase orders we process for each agency, our support includes establishing term contracts on behalf of the entire enterprise, providing access to Dun and Bradstreet reports for vendor information, monitoring vendor performance, training, and supporting our procurement automated system - PASS. In determining the FY 2010 assessments, OCP reviewed FY 2008 year end purchase order activity levels. Agencies were assessed a fee for each type of purchase order processed (small purchases, competitive sealed bids and competitive sealed proposals). The fee for each type of purchase order was weighted based on complexity. This is a slight variation from prior years when agencies were assessed a flat fee per purchase order, regardless of the work involved. Those agencies that submitted ratification requests after our “cut off” period were also assessed a punitive fee of $10,000 per ratification. Other slight modifications were made, depending on whether an agency had independent procurement authority or was newly created during FY 2008. The assessment methodology still evolving as we attempt to charge agencies a fee commensurate with the level of support they receive from us.
Budget Support Act Proposed Changes
In FY 2010 the Budget Support Act includes language expanding the DC Supply Schedule Sales Discount and Operating Fund to incorporate rebates from the Purchase Card program and other future revenues generated by OCP. This Special Purpose Revenue Fund source currently includes only fees generated through the DC Supply Schedule which are used to offset the personnel costs associated with that program. The expansion will allow more staff costs to be offset by rebates earned and provides an additional incentive for procurement staff to identify opportunities to incorporate revenue-increasing or cost-reducing elements into contract negotiations.
FY 2010 Goals
We will continue to implement our reform initiatives as they ultimately support our broader effort to run more efficiently and to contain costs.
Increasing the Number of Term Contracts. As you know, we are consolidating common needs across the enterprise and establishing term contracts for those goods and services. OCP establishes these contracts through a full and open competitive process. Agencies will be required to purchase goods from established term contracts. The use of term contracts is a standard procurement practice and:
- reduces costs to the District by aggregating volume;
- accelerates delivery time by allowing agencies to simply order against the established contracts; and
- reduces OCP’s workload by dramatically cutting the number of individual solicitations conducted.
Although we are not currently reducing core procurement positions, we will be able to maintain a much leaner staff size once these term contracts are more widely established.
Providing Training to Expand the Number of Certified Staff and Agency Delegations. Last year I promulgated a policy allowing individuals in agencies to receive delegated procurement authority. These individuals, referred to as Agency Contracting Officers (ACOs), must be certified in order to qualify for delegated authority. Later this year OCP will roll out a series of training courses to support potential ACOs in their efforts to become certified. As part of this effort, I will also invest resources to ensure that 100 percent of my staff receive this certification. This will ensure all procurement activity – whether conducted by my staff or ACOs, is performed consistently and appropriately.
Automating Inventory Control at the PPD Warehouse. OCP’s PPD facilitates the reuse, sale, or disposal of excess and surplus DC government personal property. This Division also helps acquire excess personal property from the Federal government for reuse by District entities and eligible nonprofit organizations. The financial and environmental benefits of forgoing a purchase by reusing surplus inventory are significant. We currently do not have an automated inventory control system in the warehouse, which makes it difficult for agencies to search for items they need prior to making a purchase. The inventory control bar coding equipment and consulting services that we are purchasing in FY 2010 will greatly facilitate our ability to track and market these items to agencies.
Automating and Streamlining the Procurement Process. In late FY 2009, we plan to implement two new modules for PASS. These modules will help us automate solicitation activities as well as improve our ability to manage contracts within PASS. During FY 2010, we plan to refine our processes so we can best leverage our new automation, modify our written procedures, and train procurement staff accordingly. We will also use this as an opportunity to revisit our controls to ensure that we have appropriate checks embedded throughout the procurement process.
Conclusion
Madam Chair and members of this Committee, I sincerely thank you for the support you have shown OCP, and your leadership of this important committee. I believe our FY 2010 budget makes strategic investments to improve the quality of service provided to our customers and reduces costs both incurred across the enterprise as well as within non-mission critical areas in OCP’s budget. With the help of my colleagues in the Executive branch, this Committee, and our trading partners, we will continue to make enhancements and further refine how we conduct business. I am happy to answer any questions you might have.