Government Procurement Strategies. May 24, 2011

Transcription

1 Government Procurement Strategies May 24, 2011

2 Agenda HP Overview State and Local Enterprise Services Solution Based Procurement CA SOMS example Procurement Do s and Don ts Through the eyes of a former State procurement official Tips and Recommendations Why do Companies No-Bid 2

3 TODAY HP IS THE LARGEST TECHNOLOGY COMPANY IN THE WORLD COMMITTED TO USING OUR PRODUCTS AND SERVICES TO UNLEASH NEW POSSIBILITIES AND HAVE A MEANINGFUL IMPACT ON BUSINESS AND LIFE Fortune 10 U.S. Fortune 26 Global Doing business in approximately170 countries 304,000 employees 145,000 sales partners 210,000 service partners 88,000 retail locations 3

4 SOMS California, HP and Marquis Records Management 185M images Comprehensive Offender Management Intake, Movements, Counts - deployed March 28 th Women s Institutions, Men s go live August 2011 Custody, medical and dental scheduling began deployment May 18 th (Women s Institutions) 4 Want more details? Attend SOMS Update with Leisa Rackelmann at 10:30!

5 Solution Based Procurement - Elements Define the business problems to solve General technical guidelines (standards) No detailed technical specifications Conceptual proposal Confidential discussions Initial final proposal More confidential discussions Contract negotiations 5

6 Solution Based Procurement - Benefits Discussions are more open Requirements are refined through the interactive process Best solution to meet the business needs Encourages competition Reduces the chance of protest 6

7 Solution Based Procurement - CA SOMS Found partners that focus on the business Negotiated a solid contract Completed the process in 9 months Solution that met the business issues not just IT Fair competition No protest Set a standard for IT procurements in California 7

8 Procurement Do s and Don ts Through the eyes of a former State procurement official Tips and Recommendations 8

9 Bidder Conferences Bidders Conferences that don t provide any more details than are in the RFP are often a waste of time/money Most vendors don t want to share their strategy with competitors so won t ask questions in an open meeting Give enough time between issuance date and bidder conference for vendors to read/digest the RFP and submit questions that you can answer in the conference 9

10 Leveraging Another Jurisdiction s RFP Not Necessarily the Best Idea Don t just copy/paste assess each requirement and understand its impact Know what you need vs. what the other jurisdiction needed Too easy to end up with conflicting or mutuallyexclusive requirements Understand the technology advancements that may have occurred since the original RFP was written 10

11 Inability to Answer Questions in a Timely & Comprehensive Manner Hurts the State Answer questions as soon as possible Don t just point the vendors back to the requirement that they questioned in the first place Avoid answering vendor questions with unknown or we ll provide that information to the winning vendor Consider two Q/A periods initial Q/A period and then an opportunity for follow-up Q/A 11

12 Ambiguity & Assumptions = Risk = Avoid using the infamous The new system must do everything the old system does requirement Provide details that would help the vendors scope the effort As much as possible, commit the state to tasks that should really be or make sense to be the state s responsibilities dedicated project team members data cleansing responsibilities business process training timely deliverable reviews 12

13 Hidden or Unsuspecting Cost Drivers Terms and Conditions Unlimited Liability Payment Hold Back Performance Bond Liquidated Damages Most Favored Nation Free warranty for two years after project complete Excessive MBE Requirements On-site Resource Requirements Ambiguity creates assumptions and increased cost 13

14 Why do companies No-Bid? 1. Lack of Communication - No end user discussion, no bidders library 2. Existing incumbent advantage - analyze closely to determine if it is open and competitive (perception) 3. Surprise RFP, with short timeline to respond (<30 days) 4. Past performance requirements that are too specific to what the incumbent is performing 5. Little or no transition time allowed or excessive weight on score for risk of transition 14

15 Bryan Gillgrass - KPMG

16 Corrections Technology Association Procuring Technologies in the Cloud Bryan Gillgrass CTA May 24, 2001

17 CTA Procuring in the Cloud Agenda Overview of KPMG Technology Vision & Innovation Introducing the Cloud Procuring in the Cloud Procurement Challenges in Public Sector 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 1 The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.

18 KPMG 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International. 2 2

19 KPMG Advisory We leverage our global reach to serve our clients U.S. Advisory Approx 7,000 dedicated professionals 490 Partners / MDs 10 Service lines 35 Service networks Approx $1.37B in revenues (5.7M hours) Americas Over 7,000 dedicated professionals Approx $1.7B in revenues EMEA Over 20,000 dedicated professionals Approx $3.8B in revenues AsiaPacific Over 5,000 dedicated professionals Approx $830M in revenues 154. More than 30,000 talented professionals across a worldwide network wherever our clients need us global methods and toolkits to bring knowledge of the firm to each client. And we offer clients the benefit of working with a Big Four global professional services firm, drawing from the skills and experience of 138,000 audit, tax, and business advisory colleagues across 150 countries KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 3 The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.

20 KPMG Advisory Services Infrastructure IT Enabled Transformation Forensic Technology Financial Risk Management Shared Services & Outsourcing Regulatory Compliance Financial Management Management Consulting offered to Public Sector People & Change Business Intelligence Restructuring IT Strategy & Performance Sustainability Transaction Accounting Services Business Effectiveness 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 4 The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.

21 Current KPMG Advisory Services Advisory Services in Support of CTA Membership IT Strategy & Performance IT-Enabled Transformation Strategic Sourcing, Acquisition Support through Vendor Selection Project Management & Contract Compliance Independent Verification & Validation Business Effectiveness People and Change 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 5 The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.

22 Our Justice & Safety clients face complex issues How can I Keep up with a constantly changing regulatory environment? Leverage new technology effectively? Structure operations to maximize efficiency? Focus on the right technology opportunities? How do I improve services with reduced resources? 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.

23 Technology Vision & Innovation to Leverage the Cloud

24 Planning for a new IT Capabilities Model To adapt its operating model and understand the key competencies needed for an enterprise technology IT services integration function, IT must understand the impact cloud computing can have on various IT capabilities. IT Strategy and Planning IT Investment Management IT Demand Management IT Risk Management Performance, Quality and Value Management Supplier/Vendor Management Policies and Standards Lifecycle IT Strategic Alignment IT Governance Service Design Service Provisioning Service Delivery Service Support Infrastructure Operations IT Services Management & Operations IT Capabilities IT Architecture Technology Architecture and Roadmap Integration Architecture Application and Technology Portfolio Management Program & Project Portfolio Management Application SDLC Infrastructure Engineering IT Solution Delivery Information Management Information Lifecycle Management Metadata Management Information Security, Integrity and Quality 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.

25 Introducing the Cloud

26 Understanding Cloud Computing There are several definitions of Cloud Computing. The National Institute of Standards and Technology (NIST) provides the following definition: Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. Cloud computing has five essential characteristics: On-demand self-service: Get it when you need it Measured service: Pay for what you use Rapid elasticity: Increase and decrease capacity quickly Broad network access: Access it from any Internet connection Resource pooling: Share fixed costs, which lowers individual costs 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International. (Source: NIST 2009) 10

27 Cloud Understanding the Cloud What is Cloud? Internet-based data access and exchange Internet-based access to low-cost computing and business applications An IT capability delivered via the Internet (services, data, software, or hardware) A platform shift from self provisioned and maintained to virtualized utility consumption How will Cloud impact businesses? Cloud is about Business Transformation: Changes the way people work and how companies operate Provides new options for virtualized business models with significant benefits: Increased speed to market Improve working capital Reduce capital expenditures, cost of goods sold, and SG&A Importance to CTA Cloud will likely drive significant business transformation over the next decade. Cloud will provide a new set of challenges: Security, Privacy, Data Integration, Business Transformation, Human Factor, Regulations, Taxation, etc. Cloud Strategy and PMO should be established 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 11 The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.

28 Understanding Cloud Computing Cloud Computing = Internet-based data access & exchange + Internet-based access to low cost computing & applications Cloud Computing Characteristics: SaaS PaaS IaaS 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 12 The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.

29 Procuring in the Cloud

30 Potential Public Sector Investment Priorities Health Information Exchanges Electronic Health Records Core System Modernizations Unemployment Eligibility Systems Administration and Finance Reporting Grants Management Procurement Centralization Fraud Detection Performance and Analytics Intelligent Transportation Systems Communications/Mobility Legacy Modernization Public Safety Data Sharing Case Management Communication Systems Surveillance/Monitoring Justice Offender Management Systems Prison and Jail Information Management Systems Data Analytics Data Sharing Identity & Access Management Education Student Information Systems Data Management Classroom Technologies Professional Development Source: Center for Digital Government, KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.

31 Cloud Procurements Architecture will focus on: Assurance of privacy and security compliance Technical Architecture and Cloud Operating Model Data Classification, Integration, Management & Ownership Desired Business Outcomes KPI s s & Performance Tracking Mechanisms Regulatory & Policy Requirements Service level Agreements Change Management Contract & Service Level Management Vendor Selection Price Structure for Services 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 15 The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.

32 Cloud Procurements Architecture will focus on (con t): Required Internal Controls Identity & Access Management Periodic IT Compliance & Performance Audits Business Continuity & Disaster Recovery Escrowing of Cloud Technologies Decommissioning of Cloud Services 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 16 The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.

33 Cloud Procurements Trends Collaborative/Consortium or Shared Contracts Performance based Contracts Incentive based Contracts Activity or Usage based Contracts or Subscriptions Strategic Sourcing Vertical Purchasing Private/Public Partnerships Once these items are addressed and organizations gain trust, is Cloud service providers, the rate of adoption will dramatically increase resulting in a wave of cloud-enabled business transformation 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 17 The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.

34 Procurement Challenges in the Public Sector

35 Procurements Challenges in the Public Sector Long Procurement Life Cycles Unduly Restrictive Business & Technical Requirements Increase in Government Mandates Government Terms & Conditions that do not Facilitate Innovation & Competition 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 19 The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.

36 Cloud Procurements Architecture will focus on: Problematic Terms & Conditions No Limitation of Liability Broad Indemnification Intellectual Property Ownership Warranty Durations Retention of Performance Bonds Mutuality 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 20 The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.

37 Q & A 2011 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. 21 The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.

38 Bryan Gillgrass Managing Director, KPMG KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. 22

39 CTA Procurement Strategies May 24, 2011

40 Agenda An Introduction to Public Consulting Group (PCG) Procurement Overview What, Why, Who? Limiting the field Financing Options Getting the right Solution Evaluation Considerations Procurement Reform A vendors dream! Contacts Page 2

41 An Introduction to PCG About PCG 850 Consultants 25 years in business Government focused 49 States, Canada & Poland Types of Service Overall Services Technology Consulting (TC), Health & Human Services, Education PCG TC Services BPA, Requirements Definition IT Strategy and Architecture FSR, RFP and Procurement Support Project Management QA, IV&V IT Security Page 3

42 Procurement Overview What, Why, Who? Procurement is Huge! Top 20 FY 2010 federal contracts estimated at a combined $180 Billion State and local government procurement is hundreds of billions annually Why does Government Run Formal Procurements? To ensure transparency when spending tax dollars To obtain the best possible solution and value (not necessarily lowest cost) Who are the stake-holders? Government Fed/State/Control Agencies/County/City/Muni/Consortia/etc. Primary Vendors Secondary Vendors Tax Payers Executives & Politicians Page 4

43 Procurement Overview- Limiting the field / Managing the Procurement Sole-Source Pros Quick and select proven vendor partner, can be cost and time effective (at least the procurement) Cons Difficult to get approved as open to fraud and abuse, can be costly, can generate unwelcome scrutiny Closed Procurement Required Pre-Bid Master Agreement / Blanket Pros Limits competition to pre-qualified vendors, can be more efficient (time/cost), fewer protests, well understood T s and C s, may be lower risk Cons No Blanket/No Bid, investment in bidding the master agreement Typically smaller contract value Open Procurement No Required Master Agreement / Blanket Pros Everyone is open to bid, no up front master agreement expense Cons Unknown bidder pool, typically less efficient (time/cost), may be higher risk Typically larger contract value Page 5

44 Procurement Overview- Financing Options Time and Materials Pros Low risk, consistent payment stream for vendor so no risk factor in pricing Cons First on the budget chopping block, difficult to manage to a budget, cost over-runs Fixed Price / Deliverables Based Pros Pre-determined cost Cons Vague or changing requirements lead to change orders Page 6

45 Procurement Overview- Getting the right solution Traditional Pros Designed to be time and cost effective, straight forward evaluation of proposals Cons Need to define complete requirements, constrain potential solutions Solutions Based Pros Designed to be time and cost effective, potential for use of proven approach or innovative approach, obtain industry ideas and innovative solutions Cons May need business process re-design, may require non-standard approach, potential for vendor lock-in Bake-Off Pros Increased likelihood of project success / business alignment Cons Higher cost, extended timeline Page 7

46 Procurement Reform- A vendors dream! Open Communication Be clear about any hard constraints especially budget Communicate unknowns Be open about incumbent other vendors may still bid Scope the procurement process and documents to the engagements Use the experience of an outside vendor Consider additional vendor support, PM, IV&V, QA will require separate procurements Avoid being prescriptive on solution but do be specific on requirements where possible. Avoid future requirements that are vague Iterative communication with vendors throughout procurement allows vendors and customer to narrow in on best solution Evaluation scoring as simple as possible Page 8

47 Procurement Reform- A vendors dream! Evaluation criteria have to be tailored to the type of engagement and weighted / prioritizes according to organizations key success factors. The Solution Fit to the organization / acceptance Feasibility and risks The Company Reputation, viability, stability and track record Experience with similar projects (scope, subject area / domain, technologies and culture) The People Methodology Cost Page 9

48 Procurement Reform- A vendors dream! Request for Information (RFI) Host a Vendor fair Work with own State procurement to ensure timeliness of RFP Publish procurement time-table in advance Publish standard Ts and Cs in advance Consideration of due dates Please not December 26 th!!!! Allow detailed debriefs Over communicate before during after Please be realistic Page 10

49 Contact Tim Walker Vice President Business Development Public Consulting Group Technology Consulting Page 11