U.S. General Services Administration
Federal Acquisition Service
Federal Strategic Sourcing Initiative
Second Generation Domestic Delivery
Services (DDS2)
GSA Expo Presentation
4 May, 2010
"Leveraging spending via governmentwide strategic sourcing for Domestic Delivery Services"
Agenda
DDS Background & General Information – John Blanchard, GSA FAS
Shipping Smarter
• Maureen Baer, UPS Strategic Account Director
• Tom Dames, UPS Strategic Account Director
DDS Rate Details & Best Practices
• John Blanchard, GSA FAS
Conclusion & Questions
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Page 1
GSA Mission Statement
“GSA’s mission is to use expertise to provide
innovative solutions for our customers in support of
their missions and by so doing foster an effective,
sustainable, and transparent government for the
American people.”
Martha Johnson
Administrator, GSA
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FSSI Governance
FSSI is governed by OFPP and the SSWG under the CAOC. The FSSI PMO supports the SSWG and leads the
federal government’s Strategic Sourcing Community of Practice which is comprised of the strategic sourcing
leads for the individual Federal agencies
3
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The team followed the Strategic Sourcing process to ensure the DDS2 solution
lowered government Total Cost of Ownership
STRATEGIC SOURCING PROCESS – HIGH LEVEL OVERVIEW
1
2
Profile
Profile
Commodity
Commodity
Develop detailed
profile of
commodity
including spend
profile &
specifications
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3
Conduct
Market
Analysis
Conduct market
analysis to
identify industry
trends, supply &
demand levers,
potential new
suppliers,
negotiation
levers, and
available contract
vehicles
4
Develop
Commodity
Strategy
5
Select
Sources of
Supply
Implement &
Manage
Performance
Identify and
select sources
of supply
available
internally or
externally
Develop
strategy to meet
government
needs, lower
TCO, and
ensure high
contractor
performance
Pre-Decisional Document for internal use only
Implement contract,
process and policy
changes; continually
measure, track and
manage
performance
Page 4
The DDS2 program is the result of a year-long collaboration among dozens of
government experts
REQUIREMENTS DEFINITION & ACQUISITION STRATEGY TEAM
• Kesa Russell,
DHHS
• Steve Schneider,
DHHS-NIH
• Valerie Hood,
DHHS-NIH
• Ames Owens, DOT
• Becky Koses, GSA
• Steve Hopkins, DOTFAA
• Blaine Jacobs, GSA
• James Burns, DOTFMCSA
• Ed Kelliher, GSA
• Ernie Stevens, GSA
CONTRACTING OFFICER
• Jason Holloway, GSA
TECHNICAL EVALUATION
TEAM
• Brian Dennis, NTSB
• John Blanchard, GSA
• Diane Kanauka, IRS
• Jack Kelly, OMB
• Kristina Nelson, GSA
• Bill Bardwell, VA
• Rosalind Wright, OPM
• Lynn Ju, GSA
• Brenda Jackson,
Treasury-IRS
• Marquita Washington,
GSA
• Diane Kanuka,
Treasury-IRS
• Mary Anne Sykes,
GSA
• Christin Lawlor, USDA
• Mary Davie, GSA
• Tim Jackson, DOE
• Todd Repass, USDA
• Michel Kareis, GSA
• Sondra White, DOI
• Victor Jefferson, USDA
• Romerio Moreno,
DOL
• Bill Bardwell, VA
• Tauna Delmonico,
GSA
• Kathryn Calderone,
DHS
• Acia (John) Parker,
DHS-USCG
• Gerri Tzul, DOC
• Al Majors, DOE
• Anthony Nellums,
DOE
• Nelson Gonzalez, VA
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Pre-Decisional Document for internal use only
• Ernie Stevens, GSA
• Valerie Bagby, GSA
• Tim Burke, GSA
Page 5
The Domestic Delivery Services program has been a true success story for
the government, saving over $100M since it was introduced in 2006
– Awarded to FedEx in 2006 as a pilot, and will expire
May 23, 2010
– $50M of spend in FY07; $100M in FY08; $130M in
FY09
– Estimated to have saved agencies a total of $113M off
of MAS rates since the program’s inception
– Business intelligence reports provided to agencies on
a quarterly basis
– Although the government has achieved significant
savings through DDS1, surcharge costs remained an
issue
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DDS2 provides the government both exceptional value and strategic benefits
AGENCY BENEFITS OFTHE DDS2 PROGRAM
Benefit
Pricing
GOVERNMENT-WIDE BENEFITS
OF THE DDS2 PROGRAM
Description
 Savings of 25% vs. MAS rates, and 7% vs.
first generation DDS
 No fuel surcharges on small parcel
shipments
Improved
Transparency
 Aggressively negotiated discounts on
common surcharges
Operational
Efficiencies
 Minimized administrative overhead through
use of a dedicated customer service team
 Efficient management of inbound, outbound,
and intra-agency shipments
Improved
Business
Intelligence
 Robust savings reports which can be used
to demonstrate progress towards meeting
OMB’s savings targets
 Data and reporting to help agencies
implement commercial best practices for
additional cost reductions
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• Strengthens the government’s
bargaining position for future
contracts
• Improves the government’s
ability to understand its overall
shipping patterns
• Demonstrates that the
government is willing to make
the changes necessary to lower
long-term costs
• Exemplifies the benefits of
government-wide strategic
sourcing
Page 7
Agencies representing $126M in estimated annual spend are taking
advantage of DDS2’s deep discounts
DDS2 VS. DDS1
$150M
$135M
$126M
• DDS2 is projected to save the
government approximately 7%, or
$9M annually compared to DDS1
rates
100
50
0
Current DDS2
Estimated Annual Spend
Estimated Annual Spend
Using DDS1 Rates
DDS2 VS. MAS
$200M
150
COMMENTARY
$168M
$126M
100
50
0
COMMENTARY
Current DDS2
Estimated Annual Spend
Estimated Annual Spend
Using MAS Rates
• DDS2 is projected to save the
government approximately 25%, or
$42M annually compared to MAS
rates
• DDS2 waives fuel surcharges for
small partial shipments while MAS
fuel surcharges can be up to 23.25%
Source: Agency spend estimates; DDS1 & UPS MAS rates; Censeo Analysis
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DDS2’s aggressive shipping rates, coupled with reduced surcharges, leads to
significant savings for agencies, the government and taxpayers
SAMPLE SHIPMENT
1LB MID-MORNING DELIVERY TO NON-METRO AREA
Cost Type
Delivery Rate
DDS2
Competitor
MAS
$4.56
$5.16
Delivery Area Surcharge
$1.00
$1.50
Fuel Surcharge
$0.00
$0.57*
$5.56
$7.23
TOTAL SHIPMENT COST
DDS2 PRICING APPROACH
• Delivery rates deeply discounted off
MAS across service types, zones,
and weights
• Aggressively negotiated surcharge
and accessorial costs
• Waiver of fuel surcharges for small
packages (compared to MAS costs of
up to 23.25%)
DDS2 offers 23%
savings for this
package
* Current MAS fuel surcharge costs = 8.5% of shipment costs
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"Leveraging spending via governmentwide strategic sourcing for Domestic Delivery Services"
Agenda
DDS Background & General Information – John Blanchard, GSA FAS
Shipping Smarter – Maureen Baer, Tom Dames, UPS
DDS Rate Details & Best Practices – John Blanchard, GSA FAS
Conclusion & Questions
Censeo Consulting Group, Inc. ; All rights reserved. 2010
Pre-Decisional Document for internal use only
Page 10
GSA and UPS……..
Turn our advantage into yours.
Discover the unique ways UPS delivers
our customers a competitive
advantage.
We Deliver More.
UPS offers more service choices so you can balance
cost and customer service. And we back you with
the world’s premier network.
We Make Doing Business Easier.
UPS technology tools and support make it easier
for you to serve your customers and can accelerate
your own business processes.
The Ground Alternative Savings.
See how UPS is providing our customers significant savings with
our fast, reliable, guaranteed Ground Service.
Brown® Can Make You Greener.
UPS is a leader in sustainability, which can help
us both work more responsibly and efficiently.
12
DDS2 - UPS guaranteed domestic package
service options*
Multiple options to meet your many demands
Same-Day
UPS Express CriticalSM
Typically same-day delivery, next flight out, 24/7/365
1 Day
- To More Businesses and ZIP Codes
UPS Next Day Air® Early A.M.®
Guaranteed overnight by 8:00 a.m.
UPS Next Day Air®
Guaranteed overnight by 10:30 a.m.
UPS Next Day Air Saver®
Guaranteed overnight by 3:00 p.m.
2 Days
UPS 2nd Day Air A.M.®
Guaranteed two-day by 10:30 a.m.
UPS 2nd Day Air®
Guaranteed two-day by end of day
3 Days
UPS 3 Day SelectSM
Guaranteed three-day by end of day
By Date Scheduled
UPS Ground
Guaranteed day-definite one to five days
UPS Hundredweight Service®
Guaranteed day-definite contractual service for Less-Than-PalletloadSM (LPL) shipments
*Visit ups.com® or call 1-800-Pick-UPS® for guarantee details, service availability, delivery-time commitments or to request a pickup. Excludes UPS Express Critical.
13
International express package
delivery options with a difference
UPS provides international services utilizing the same network.


Delivery worldwide is typically in one to three days, depending on destination.
Same UPS Driver at pick-up and delivery as for your ground and domestic air shipments
UPS provides WWX pricing to all Federal Agencies.


For both Export and Import Services
Rates Automatically Attached to all FSSI/DDS2 Users.
UPS International shipments can be processed on the same systems as
domestic shipments

Paperless Invoice provided
UPS delivers more guaranteed packages on time
around the world than any other carrier.
14
A single driver for ground, air and
Int’l means more personalized
service
One UPS driver picks up your ground, air
and international packages.

Customers trust UPS drivers to know and understand their business,
and that’s a real advantage when managing complex shipping
operations
UPS delivers more ground packages than any other carrier.

More than 10 million ground packages
delivered on time every day
Customers recognize UPS drivers as the industry’s best in
customer service surveys.

Our drivers are the face of reliability, making sure your pickups
and deliveries are consistently right on time.
Our integrated package network creates better efficiency
and flow in your dock operations.
15
We Make Doing Business Easier.
16
Advantage UPS :
One technology platform works
for many transportation modes
UPS is the only major carrier with a single automated
system that supports both package
and freight shipments.

That makes it easier for you to ship, track, train your personnel,
and integrate our information into your systems.
Advanced technology tools that support package and
freight services (domestic and international
air, domestic heavyweight) include:
UPS WorldShip® 2009 version 11.0
 UPS Billing Data and Billing Analysis Tool
 UPS CampusShip
 Quantum View® Manage

17
Shipping Solutions

UPS CampusShip
–
–
–
–

Web-based shipping solution
Setup forms will need to be filled out by the agency
Must identify agency CampusShip Administrator who will manage the program
Setup time, once the setup forms are filled out with all the necessary information, is five
days
UPS WorldShip
– WorldShip 12 is a Windows based solution and can be used on XP, Vista and 7
– Software is downloadable from www.ups.com or can be installed from a CD
– Installation can be instantaneous if the agency is going to use their own computer
(software needs admin rights to run on the workstation)
– UPS-provided hardware has a lead time of two weeks
–UPS Sales Team will submit the necessary paperwork for the appropriation of the equipment and
installation
UPS CampusShip is a Browser-Based Solution
19
Domestic Shipping Label
• Follow the instructions on
the label to complete the
shipment
• Take your package to
the UPS drop-off within your
company
• Or, to find a drop-off location
near you, go to UPS.com
• Select the Shipping tab
• Then select the Find
Drop-off Locations link
20
Quantum View is browser based and provides information
which helps our customers “see” their inbound and outbound
shipments
Outbound View
Inbound View
Vendor
Vendor
Field
location
Hqtrs.
Component
Site
Hdqtrs.
Region, Hdqtrs.
This
Region
information is available twenty-four hours a day, seven days a week.
21
UPS Billing Options

UPS Paper Bill
– Paper invoice delivered in a hard copy to shipper or billing site
– Setup is done automatically when account is created

UPS P-Card
– Procurement card payment using departments P-Card. Setup is completed after the first
week of shipping
– The UPS Project Manager will manage the process for setting up agencies on P-Card
billing

UPS Billing Data File
– Electronic flat or XML file used for auditing the weekly invoice. Delivered via an email link
or downloaded from the person’s myups.com ID on the web. Customer can self-register
or UPS can set it up on the backend
– Setup time is less than two days depending on how the agency enrolls

UPS Billing Center
– Billing portal on UPS.com for customers who need to view their invoices online
– Setup time is less than five business days
The Ground Alternative Savings.
23
Sample of a Ground Conversion Strategy
All field sites within 300 mile radius of the St Louis, Missouri DC
are evaluating shifting from air to ground services
 Substantial savings are available, typically exceeding $25
per box shipped
 Full inbound Quantum View Visibility is now available for these
former Air shipments
 UPS Ground Shipments have a Time in Transit money-back
guarantee, with 98%+ reliability on time

24
Business days in transit to: St Louis, MO
25
Brown® Can Make You Greener.
26
UPS - Taking a leadership position on FLEEEP
President Obama issued an Executive Order on October 5, 2009:
Federal Leadership in Environmental, Energy, and Economic Performance (FLEEEP)
 “It is therefore the policy of the United States that Federal agencies shall increase energy efficiency;
measure, report and reduce their greenhouse gas emissions from direct and indirect
activities…”
 The Order defines scope 3 as “greenhouse gas emissions from sources
not owned or directly controlled by a Federal agency but related to agency activities such as vendor
supply chains, delivery services…”
95% of new contract actions, including delivery services, must comply with new performance
requirements
Important Milestones
– April 3, 2010: Recommendations due regarding tracking and reducing scope 3 emissions from vendors
– July 31, 2010: Carbon reduction goal due for agency-wide scope 3 emissions
– January 5, 2011: Carbon footprint due for scope 1, 2 and specified scope 3 emissions
UPS — Uniquely qualified to help
UPS is in a unique position to help agencies get up to speed quickly when implementing
carbon reduction initiatives with respect to shipping, transportation and logistics:

Network Efficiency. We’ve done many things to address our own
carbon footprint, because our emissions impact your scope 3 emissions.

Measurement. We can calculate the carbon footprint associated with your
UPS shipments with precision.

Mitigation. We can help you offset the climate impact of your shipping.

Transparency. We include our company scope 3 emissions in your carbon footprint calculation for a
complete calculation.

Credibility. We have verified our calculation and offsetting methods
with third parties (including SGS, the world’s leading verification and certification company).

Accountability. UPS participates in many U.S. Environmental Protection Agency programs, such as
Climate Leaders and SmartWay.
UPS helps you move ahead

UPS delivers and picks-up from every address in the U.S.

UPS maintains the largest service portfolio and network
in the world, with one combined network for all small
package shipments.
UPS provides solutions that enhance overall value.



UPS solutions focus on process improvement.
UPS’ innovative technology creates - or enhances
current - efficiencies to bring additional value.

Partnering with UPS aligns GSA with the industry leader.
Our goal is to produce increased efficiencies, improved
reliability, and long-term cost savings.

Transitioning to UPS is easy.

Turn our advantage into yours.
29
Shipping Smarter through UPS ….
A Consultative Approach
The Cornerstone is Business Process Improvement
Through:
 Shipment Preparation Technology
– UPS WorldShip, UPS CampusShip, UPS InternetShip
 Visibility
Technology
– UPS Quantum View Manage Suite of Tools
 Cost
Allocation
– Mode Optimization
–
–
Ground versus Air
Hundredweight versus LTL
–
–
GSA Portal
Billing Data Tool
– Reporting

Getting Greener
30
Some Best Practices

Convert from Waybills to electronic shipment
processing

Utilize Visibility Tools

Better Cost Allocation through mandatory reference
field

Electronic Billing

Reduction of account numbers

Move Air to ground where possible
Thank you …..Q & A
"Leveraging spending via governmentwide strategic sourcing for Domestic Delivery Services"
Agenda
DDS Background & General Information – John Blanchard, GSA FAS
Shipping Smarter – Maureen Baer, Tom Dames, UPS
DDS Rate Details & Best Practices – John Blanchard, GSA FAS
Conclusion & Questions
Censeo Consulting Group, Inc. ; All rights reserved. 2010
Pre-Decisional Document for internal use only
Page 33
Aggressive UPS pricing for commonly used services creates an opportunity
for the government to receive faster delivery at lower prices
SIGNIFICANT DISCOUNTING HAS CREATED UNIQUE
PRICING STRUCTURES…
 Next Day Mid-Morning and Two-Day shipping are now
less expensive than Next Day Afternoon and Three-Day
services
…BUT THE GOVERNMENT CAN USE
THESE DIFFERENCES TO ITS ADVANTAGE
 Shippers can use the “upgraded”
services to maximize the value of their
shipping spend
Service
Sample 1 LB
Package
Next Day Mid-Morning
$4.56
$4.76
Mid-morning
shipments are 4%
less expensive than
afternoon delivery
 Account Managers can use UPS’
shipping tools to “turn off” Afternoon,
Second Day A.M.* and 3-Day service to
minimize confusion and eliminate
unnecessary costs
$3.43
$3.59
2 Day shipments are
between 1% and 9%
less expensive than 3
Day, depending on
package weight and
shipment zone
 Account Managers and Shipment
Experts can use pricing differences as
an opportunity to educate shippers on
the value of utilizing more cost effective
services (such as using Ground service
when shipping within a metro area)
Next Day Afternoon
Two Day
Three Day
* Second Day A.M. service is offered for convenience, yet carries
non-DDS, commercial rates
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Page 34
Agencies can further reduce costs by helping users select the optimal service
for their small packages
UPS Ground service typically delivers packages
traveling less than 200-300 miles in 1 day…
… at costs less than half of Next Day Mid-Morning
service
APPROXIMATE TRANSIT TIME FOR GROUND
SHIPMENTS FROM THE DC AREA
SAMPLE 1 LB ZONE 1 PACKAGE
Next Day
Mid-Morning
$4.56
54%
Savings
$3.43
Two Day
39%
Savings
Ground
0
$2.10
1
2
3
4
$5
Shipping Rate
Source: UPS.com
Censeo Consulting Group, Inc. ; All rights reserved. 2010
Source: UPS DDS rate chart
Pre-Decisional Document for internal use only
Page 35
"Leveraging spending via governmentwide strategic sourcing for Domestic Delivery Services"
Agenda
DDS Background & General Information – John Blanchard, GSA FAS
Shipping Smarter – Maureen Baer, Tom Dames, UPS
DDS Rate Details & Best Practices – John Blanchard, GSA FAS
Conclusion & Questions
Censeo Consulting Group, Inc. ; All rights reserved. 2010
Pre-Decisional Document for internal use only
Page 36
All are welcome to attend the monthly DDS “Town-Hall” meetings
DDS “TOWN-HALL” MEETINGS
Who?
- Representatives from over 60 participating agencies
- GSA Program Managers
- UPS transition & account representatives
What?
- DDS Program Updates
- Shipping Best Practices
- Q&A with UPS Representatives
When?
-
Where?
- Dial: (714) 551-0020; Access Code: 199-273-224
1st Thursday of every month at 9AM EDT
For more information, please visit the DDS website at www.gsa.gov/dds
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Page 37
Let GSA help you decide if DDS is the right solution for you!
To learn more about DDS or to join the program:
1
Visit the DDS website at
www.gsa.gov/dds
• Facts
• Press Releases
• FAQ’s
• Contact Information
• Presentations
• BPA Information
• UPS Tutorials
• DDS Signup Letter
• Ordering & Funding
Procedures
• “Town-Hall” Meeting
Schedule
Censeo Consulting Group, Inc. ; All rights reserved. 2010
2
Request a Business
Case
• Upon request, GSA will
create a business case
based on your agency’s
specific shipping profile
• Analysis will show the
expected savings from the
DDS2 program compared to
your benchmark rates
• To request a business case,
please contact Blaine Jacobs
at (703) 605-2892 or
blaine.jacobs@gsa.gov
Pre-Decisional Document for internal use only
3
Join the Program
• If DDS is right for you, submit
a letter indicating your
intention to join the program
• The signup letter is available
for download at
www.gsa.gov/dds
• UPS will work with your
agency to set-up shipping
accounts and train
employees
Page 38
Questions?
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Page 39