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NEW YORK STATE PROCUREMENT TRANSFORMATION PROJECT: STRATEGIC SOURCING
NEW YORK STATE PROCUREMENT
A Message from RoAnn Destito, OGS Commissioner
RoAnn Since taking office, Governor Cuomo has committed his administration to implementing enterprise-wide changes that will utilize modern business practices in running New York State government. New Yorkers need a government in which they can take pride, and this comprehensive overhaul of operations will help accomplish that goal. One cornerstone of this bold new direction is strategic sourcing, which harnesses the buying power of the state in a way that has never been done before. Sourcing work is well underway and it is clear that the changes will benefit the bottom line, those who do business with the state, and our citizens. To sustain the benefits of strategic sourcing, we are now embarking on the second phase of the procurement transformation initiative. Here we are reviewing and modernizing transforming procurement operations, including our procurement processes, technology tools and training resources.

As part of this transformation, we have changed our name. Formerly Procurement Services Group, we are now New York State Procurement (NYSPro). By changing our name, we are formalizing our vision to be a world-class procurement organization, and embracing our role as leaders in the effort to improve public purchasing and procurement. NYSPro seeks to achieve the highest standards in procurement services and is guided by the following principles: Service, Accountability, Value, and Efficiency.

To learn more about the Procurement Transformation Project, please review the frequently asked questions below.
FREQUENTLY ASKED QUESTIONS
Why is the State undertaking procurement transformation?
Governor Cuomo is working to lower the cost of government and increase efficiencies throughout state operations. An important part of this initiative is making sure the state gets the best value for the goods and services it buys and manages its spending more efficiently. This will not only benefit the State, but also the local governments and others who buy from state contracts. In addition to reducing procurement costs, the transformation effort will deliver improved services to our customers, including:

  • Increased, specialized training for procurement professionals
  • Simplified / standardized procurement processes and resources
  • Reduced, simplified purchasing timelines
  • Improved communication and better access to information for our customers
  • Increased guidance and assistance to agencies
  • Enhanced collaboration with our agency partners and strategic vendors
  • Strategies that support inclusive economic development

What is strategic sourcing?
Strategic sourcing is a procurement approach that utilizes a structured, market-based process to gather data, conduct quantitative analysis and apply expert qualitative judgments to secure the best value in purchasing. Each sourcing project is unique, depending on the good or service and while the primary goal is to achieve cost savings, a total cost of ownership (TCO) methodology is applied which takes costs over the term of ownership, in addition to initial purchase. Savings are achieved by identifying and establishing the best ways to use goods or services, and by leveraging the State's substantial buying power.

To date, NYSPro has made significant progress in reviewing the State's procurement function and benchmarking it against leading industry practices. Additionally, working with our consulting partner, Accenture, we have analyzed 12 months of State spending on goods and services. Over the next 12 to 24 months, the procurement team will be working closely with a team of State staff to implement strategic sourcing projects. Each sourcing project will focus on a specific category of goods or services.

How is strategic sourcing different from conventional purchasing?
Strategic sourcing and the TCO methodology expand on traditional sourcing by taking into account additional cost and quality factors in order to secure contracts which best fit the particular needs of the State. A strategic sourcing project includes the development of a category strategy to identify usage patterns and needs, including best practices. The category is then sourced with the intent of best meeting the needs identified. The TCO methodology examines a broad spectrum of cost drivers, including, but not limited to: useful life, transportation and maintenance costs, energy efficiencies, etc. which may be incorporated in the evaluation of the good or service being procured.

The TCO model looks at all the costs for a product or service from the time it is delivered until the time it is replaced. NYSPro's recent contracts for printers and multifunction printers (MFPs) that copy, print, scan, and fax are good examples. In addition to providing access to printers and MFPs, these contracts allow for the purchase of consumables, such as toner and extended warranties at significantly reduced pricing. This structure will generate significant savings for users of these items.

How has strategic sourcing made a difference in other states?
A number of state governments have recently undergone similar strategic sourcing programs, including Pennsylvania, Florida and Iowa. For example, using strategic sourcing, Pennsylvania has saved $370 million (source: 2009-2010 Report on State Performance, published by Pennsylvania, page 145). Additionally, Pennsylvania-based firms did better under strategic sourcing, with 35 percent of all strategically sourced vendors being Pennsylvania-based businesses, compared to 29 percent pre-strategic sourcing. Minority and Women Business Enterprises also fared well under the strategic sourcing initiative; with 20 percent of the annual spend for the initial strategically sourced contracts going to MWBE firms, compared to less than 10 percent for non-strategically sourced contracts. While the number of small business vendors under contract with the Commonwealth has decreased under strategic sourcing, many of these vendors did relatively little business (under $1,000 annually) with the Commonwealth, and therefore may not have been substantially impacted by this change.

What purchasing categories are in scope for the strategic sourcing project?
In order to fully examine all potential savings and spend management opportunities, NYSPro, in partnership with the Executive Chamber, the Division of the Budget and State agency staff, will continue to review and analyze our spending. Through this analysis, this spending will continue to be categorized and prioritized for inclusion in the strategic sourcing effort. Work has already been completed in several categories such as Hourly-based IT Services, printers and copiers, and cars.

Who will be working on the strategic sourcing project?
A team of NYSPro staff will work side-by-side with Accenture to execute each strategic sourcing project. Accenture will transfer knowledge to staff to ensure that our employees have the necessary knowledge and expertise to use the strategic sourcing methodology long after the Accenture engagement concludes.

Who will oversee the strategic sourcing team?
The State and Accenture strategic sourcing team members will report to the Executive Chamber and Division of the Budget, and be managed by NYSPro.

Is input from the supplier community being gathered?
NYSPro has contacted high-spend suppliers who currently contract with the State to gather their impressions and feedback on doing business with the State. The project will continue to engage the supplier community throughout the process.

How will suppliers be chosen under strategic sourcing?
All suppliers will be chosen through procurement processes permissible by State Finance Law and other relevant statutes.

How are Minority, Women-Owned Business Enterprises (MWBE) and small businesses being considered?
Strategic sourcing and increased MWBE and small business participation are not mutually exclusive activities. In fact, MWBE and other small business strategies will be key considerations in this initiative. The project will work with participating State agencies to help them increase MWBE and small business participation in line with the current State goals, while achieving savings through strategic sourcing efforts.

How are Preferred Sources being considered or affected?
Preferred Sources will continue to be given preference in the procurement process as defined within State Finance Law.

What will happen to existing contracts?
For goods and services that are targeted for strategic sourcing, existing contracts will be allowed to expire. This will be done in a way as to not lose coverage for State agencies and other users, but option years and long-term renewals will not be exercised during this process. Each sourcing project will be sourced competitively, and the new awarded supplier(s) will become required sources. During the sourcing process, however, agencies may continue to buy from existing suppliers as necessary.

How will State agency staff purchase goods and services during the strategic sourcing effort?
Purchases that are necessary for the mission of the agency will continue. However, for goods and services that are targeted for strategic sourcing, any purchases that can be delayed until a new agreement is in place should be postponed until that time.

How is Accenture getting paid?
After conducting a competitive procurement, the Division of the Budget contracted with Accenture to assist the State in identifying and adopting leading procurement practices to achieve savings. The agreement between DOB and Accenture is a deliverable-based contract that requires payment to Accenture based on work completed and accepted by the State. Payment is calculated using Accenture hours worked and hourly rates, up to a capped payment level. Accenture's payment is not based on a percentage of savings achieved.

I have a business and would like to sell my goods and services to New York State. What should I do?
All suppliers will be chosen through procurement processes permissible by State Finance Law and other relevant statutes. Companies interested in becoming Contractors should register for the Bidder Notification Service https://online.ogs.ny.gov/vendorregnet/Default.aspx in order to receive notification about upcoming procurement opportunities. Companies are also encouraged to register with the New York State Contractor Reporter http://www.nyscr.org/Public/Index.aspx

Who can I contact if I have questions about Procurement Transformation or to learn more about buying goods and services on state contract?
All other questions or comments should be directed to NYSPro Customer Services, Phone: (518) 474-6717 Email: customer.services@ogs.ny.gov