Federal Strategic Sourcing Initiative (FSSI)
Impact on 8(a) Companies
National 8(a) Association 2014 Summer Conference
By Richard J. Hernandez, CPCM
E-MBE.net
Copyright 2014
OVERVIEW
 Purchasing Mega-Trends
 Federal Strategic Sourcing Initiative
(FSSI)
 FSSI Impact on 8(a) Program
 Supplier Assessment Process
 How to Confront FSSI Changes
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OVERVIEW
Tactical (“Best Price”) Purchasing
Focus in on:
 Leverage volume
 Company agreements
 Goals for price, quality, and
delivery
 Supplier reduction programs
 Supplier meetings
 Intelligence gathering
 Supplier cost estimating
 Technical planning for
negotiations
 Conducting negotiations
 Functional skill development
SOURCE: Alan R. Raedels,
The Supply Management Process, NAPM, 2000
Strategic (Integrated) Purchasing
Focus in on:
 Total life cycle cost
 Strategic suppliers
 Optimizing supply base
 Supplier development
 Aligning with business strategies
 Developing organizational
strategies to meet future
needs
 Developing commodity and
supplier strategies
 Participating in long-range
business planning
 Supply performance and
relationship management
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KEY DEFINITIONS
Strategic Sourcing
• Re-Engineering. Changing purchasing from a
transaction-orientated process, (i.e., three bids
and a buy) to an integrated supply chain
management process.)
• Integrated Procurement. Includes planning,
sourcing, and management.
• Cross Functional Sourcing Teams. Used to
select suppliers.
• Total Cost of Ownership (TCO). New focus.
• Supplier Diversity. Part of the strategic
sourcing process.
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KEY DEFINITIONS
Strategic Supplier
1. A supplier that provides key supplies and/or
services in a particular commodity area.
2. Strategic suppliers add a high degree of value
to the supply chain management process by
reducing costs, aggregating demand, etc.
NOTE: Typically top 5% of supply chain.
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Federal Strategic Sourcing Initiative
FSSI
• Started in 2005
• Being Implemented Gradually
• Starting with GSA Schedules
• Uses similar private sector practices
“Buy Smarter and Save Act”
• Implements FSSI on a Broad Scale
• Proposed Legislation
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REASONS for FSSI
1. Strategically source across Federal
agencies
2. Establish mechanisms to increase total
cost savings, value, and socioeconomic
participation
3. Collaborate with industry to develop
optimal solutions
4. Share best practices
5. Create a strategic sourcing community
of practice
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FSSI Implementation
FSSI
• Being implemented gradually
• Program to “modernize” Federal
procurement
• Starting with GSA Schedules
• Part of GSA FY2014-2018 strategic plan
Proposed New Law “Buy Smarter and
Save Act”
• Implements FSSI on a broad scale
• Pending
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FSSI Implementation
GSA Schedules (Done / In Work)
1. Express and Ground Domestic Delivery
Services
2. Maintenance, Repair & Operations (MRO)
Supplies
3. Office Supplies (GSA Schedule 75)
4. Print Management
5. Telecommunications Expense Management
Services
6. Wireless
Proposed New FSSI Areas
• Building Maintenance Operations (BMO)
• Consolidated Furniture Management
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Supplier Assessment
Hard
I
Replaceability
Strategic Supplier
• Capacity
• Technology
• Long-Term
Contracts
• Brand Power
IIII
IV
Easy
Low
Strategic Value
High
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Supplier Assessment
Hard
II
I
Replaceability
Strategic Supplier
IIII
IV
Easy
Vendor
“Commodity Hell”
Low
Strategic Value
High
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Supplier Assessment
Hard
I
Strategic Supplier
Replaceability
IIII
IV
Easy
Vendor
“Commodity Hell”
Low
Strategic Value
High
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FSSI Impact to 8(a) Companies
IMPACT AREA
Contract Bundling
DESCRIPTION
Smaller contracts being combined
Reduces 8(a) set-aside opportunities
GSA Schedule
Contracts
Schedule Holders being targeted
For FSSI contracts
Capacity
Need more capacity to handle larger
scale contracts
Increased need for Federal partners
Period of
Performance
FSSI contracts can be long-term
(More than 5 years)
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FSSI Impact to 8(a) Companies
IMPACT AREA
Mentor
DESCRIPTION
Increased need for 8(a) mentors to
build capacity
8(a) Marketing
Need to target niche areas of the
FSSI supply chain
Standard
Specifications
Can potentially limit the ability of 8(a)
firms to offer innovative solutions
Complexity
FSSI contracts can be more complex
making them harder to price and
proposals more expensive to prepare
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How to Confront FSSI Changes
1. Pain. Look for new and/or underserved niche market
areas in your industry. Target the ones where you are
strong. Avoid challenging a strategic supplier directly.
2. Niche. Develop your “brand” as a leader in your niche.
3. Partners. Find partners who can provide you with
additional capacity to meet FSSI-type contracts.
4. Change. Review your business model annually to ensure
it is still effective.
5. Contracts. Find the right contract vehicles to work in
FSSI environment, e.g., GSA Schedules, ID-IQ contracts,
8(a) / WOSB / HUBZone set-asides, subcontracts, etc.
6. Communicate. Provide inputs to the Feds on how to
implement FSSI in your area without harming small firms.
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IMPORTANCE of BRANDING
•
Makes it easier to get set-aside contracts
• 8(a) Sole Source
• WOSB – SBA 8(m) Program
• HUBZone
• SDVOSB
•
Helps Identify FSSI Niche Area(s)
•
Reduces marketing / sales time
•
Encourages repeat business (loyalty)
•
Generates referrals
•
Lower marketing expenses
•
Able to charge higher prices
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Summary
•
•
•
•
•
•
FSSI is a major change to Federal procurement
Consolidation (bundling) of supply chain will
make it harder to find 8(a), WOSB, HUBZone,
etc. set-aside contracts unless specifically
targeted by FSSI
Large businesses tend to win FSSI contracts
Small businesses can be successful with FSSI
in niche areas
Recommend Federal partners and/or mentor to
help small business be successful with FSSI
FSSI evolving so expect more changes
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Richard J. Hernandez, CPCM
•
•
•
Former U.S. Air Force
Contracting Officer
(PCO)
Certified Professional
Contracts Manager
(CPCM)
Co-Author of book:
“8(a) Survival Guide”
312-404-2224 (Phone)
www.E-MBE.net
e-mbe@msn.com
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