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Federal Acquisition Service
U.S. General Services Administration
2011 Government Transportation Forum
April 20-21, 2011
Federal Strategic Sourcing InitiativeSecond Generation Domestic Delivery
Services (DDS2)
Agenda: "Leveraging spending via governmentwide strategic sourcing for Domestic Delivery Services"
Page 2
• FSSI DDS1&2 Background – Blaine Jacobs, GSA
• DDS2 Update and Insights – Stevie Graham, GSA
• Managing Domestic Delivery Services – Bill Bardwell, VA
• Sustainability – Tom Dames, UPS
Agenda
Page 3
What is Strategic Sourcing?
“Strategic sourcing is the collaborative and structured process of critically analyzing an organization’s
spending and using this information to make business decisions about acquiring commodities and
services more effectively and efficiently”
Clay Johnson
Former Deputy Director for Management, OMB
Definition of Strategic Sourcing
Page 4
Background
Strategic Sourcing is a structured, analytical, and collaborative process
Here’s a look at the high-level process the interagency commodity team used for DDS2
Page 5
Page 6
The DDS2 program is the result of a year-long collaboration between dozens of government experts
TECHNICAL TECHNICAL EVALUATION TEAMEVALUATION TEAM
TECHNICAL TECHNICAL EVALUATION TEAMEVALUATION TEAM
• Diane Kanauka, IRS
• Bill Bardwell, VA
• Ernie Stevens, GSA
REQUIREMENTS DEFINITION & ACQUISITION STRATEGY TEAMREQUIREMENTS DEFINITION & ACQUISITION STRATEGY TEAMREQUIREMENTS DEFINITION & ACQUISITION STRATEGY TEAMREQUIREMENTS DEFINITION & ACQUISITION STRATEGY TEAM CONTRACTING OFFICERCONTRACTING OFFICERCONTRACTING OFFICERCONTRACTING OFFICER
• Jason Holloway, GSA• Kesa Russell, DHHS
• Steve Schneider, DHHS-NIH
• Valerie Hood, DHHS-NIH
• Kathryn Calderone, DHS
• Acia (John) Parker, DHS-USCG
• Gerri Tzul, DOC
• Al Majors, DOE
• Anthony Nellums, DOE
• Tim Jackson, DOE
• Sondra White, DOI
• Romerio Moreno, DOL
• Becky Koses, GSA
• Blaine Jacobs, GSA
• Ed Kelliher, GSA
• Ernie Stevens, GSA
• John Blanchard, GSA
• Kristina Nelson, GSA
• Lynn Ju, GSA
• Marquita Washington, GSA
• Mary Anne Sykes, GSA
• Mary Davie, GSA
• Michel Kareis, GSA
• Tauna Delmonico, GSA
• Valerie Bagby, GSA
• Tim Burke, GSA
• Ames Owens, DOT
• Steve Hopkins, DOT-FAA
• James Burns, DOT-FMCSA
• Brian Dennis, NTSB
• Jack Kelly, OMB
• Rosalind Wright, OPM
• Brenda Jackson, Treasury-IRS
• Diane Kanuka, Treasury-IRS
• Christin Lawlor, USDA
• Todd Repass, USDA
• Victor Jefferson, USDA
• Bill Bardwell, VA
• Nelson Gonzalez, VA
Agenda"Leveraging spending via governmentwide strategic sourcing for Domestic Delivery Services"
Page 7
• FSSI DDS1&2 Background – Blaine Jacobs, GSA
• DDS2 Update and Insights – Stevie Graham, GSA
• Managing Domestic Delivery Services – Bill Bardwell, VA
• Sustainability – Tom Dames, UPS
Agenda
Page 8
DDS2DDS2
UPS Oct 2009 – Sep 2010 + four options
Over $1B savings forecasted
Lower discounted common accessorials
Continue with no FSCs for parcels
Monthly enhanced shipping reports
Over 80 participating agencies
36% ground shipments
DDS2DDS2
UPS Oct 2009 – Sep 2010 + four options
Over $1B savings forecasted
Lower discounted common accessorials
Continue with no FSCs for parcels
Monthly enhanced shipping reports
Over 80 participating agencies
36% ground shipments
DDS1 DDS1
FedEx Oct 2006 – Sep 2010
Over $676M savings
Discounted accessorials
No fuel surcharges (FSCs)
Quarterly shipping reports
61 participating agencies
9% ground shipments
DDS1 DDS1
FedEx Oct 2006 – Sep 2010
Over $676M savings
Discounted accessorials
No fuel surcharges (FSCs)
Quarterly shipping reports
61 participating agencies
9% ground shipments
Comparison of DDS1 to DDS2
"Leveraging spending via governmentwide strategic sourcing for Domestic Delivery Services"
Regular town hall meetings to share best practices UPS reviews to help agencies achieve their DDS2 goals First year statistics
Over 17,000 new UPS accounts created $88.3M spend and $216.4M savings 12.9M packages shipped 7.6 LBS average package weight $6.84 average cost per package 98.8% on-time performance 64% air express and 36% ground
Page 9
Using USPS First Class Mail for letters is still the best deal in town! Do you really need to send letters via express service?
Service Upgrades and Pricing Anomalies Next Day Air is less expensive than Next Day Air Saver Second Day Air is less expensive than 3-Day Select
Avoiding or minimizing pickup fees Consolidate packages to a central pickup point, use a Drop Box, take
packages to an authorized UPS facility, hand them to a UPS courier
Realize optimal savings without degradation of service Use UPS Ground vs. Air services to the extent possible
Why You Should Use
Agencies can further reduce costs by helping users select the optimal service for their domestic packages
11
Ground $3.29
Two Day
Next DayMid-A.M.
Total Cost to Ship(excludes surcharges)
$0.84
$4.13
$7.78
$10.35
Shipping RateEst. Package cost
47% Savings
60% Savings
SAMPLE 10 LB ZONE 1 PACKAGESAMPLE 10 LB ZONE 1 PACKAGEAPPROXIMATE TRANSIT TIME FOR GROUND APPROXIMATE TRANSIT TIME FOR GROUND SHIPMENTS FROM THE DC AREASHIPMENTS FROM THE DC AREA
Source: UPS.com
… at significantly lower costs than Next Day Mid-A.M. and even Two Day Express Service!
UPS Ground service typically delivers packages traveling less than 200-300 miles in 1 day…
Source: UPS DDS rate chart; GSAAdvantage shipment box prices
TOTAL COST TO SHIP BY PACKAGE WEIGHTTOTAL COST TO SHIP BY PACKAGE WEIGHT(ZONE 1 SHIPMENT RATES)(ZONE 1 SHIPMENT RATES)
TOTAL COST TO SHIP BY PACKAGE WEIGHTTOTAL COST TO SHIP BY PACKAGE WEIGHT(ZONE 1 SHIPMENT RATES)(ZONE 1 SHIPMENT RATES)
The savings potential by substituting for Ground Service varies by weight
Page 12
0
10
20
30
40
$50
1 5 10 15 20 25 30 35 40 45 50
Package Weight (Lbs)
TotalCost
toShip
(excludessurcharges)
Ground(incl.
packagecosts)
Next DayMid-A.M.
NOTESNOTESNOTESNOTES
Source: UPS DDS rate chart; GSAAdvantage shipment box prices
$2.05 Savings
$6.22 Savings
$14.57 Savings
$27.69 Savings
$41.07 Savings
• UPS does not provide shipping boxes for Ground shipments
• Total Cost to Ship includes DDS2 shipping rates plus estimated packaging costs for Ground shipments
• The dollar differential between Ground and Next Day Mid-Morning is relatively low for packages under 5 lbs but widens as package weight increases
• Shipping a 50 lb. package via Ground Service saves 82% over Next Day Mid-Morning
"Leveraging spending via governmentwide strategic sourcing for Domestic Delivery Services"
Page 13
• FSSI DDS1&2 Background – Blaine Jacobs, GSA
• DDS2 Update and Insights – Stevie Graham, GSA
• Managing Domestic Delivery Services – Bill Bardwell, VA
• Sustainability – Tom Dames, UPS
Agenda
Opportunities with FOB Origin shipments – What is agency policy? Product contract terms may restrict competition Small companies cannot access lowest package rates Eliminate vendor “Handling” charges – Separate shipping charges
Managing government accounts for inbound shipments – Not without reports! Separate or shared government accounts for vendors? Have a plan to manage the account(s) - abuse, claims
Working together vs. independently to maximize effectiveness Within your agency and between agency and vendor
Avoid costly communications and training shortfalls Establish subject matter expert email groups Distribute “How To” messages regularly – weekly, monthly Establish regular training & refresher training events – award certificates
Managing Domestic Delivery Services
"Leveraging spending via governmentwide strategic sourcing for Domestic Delivery Services"
Page 15
• FSSI DDS1&2 Background – Blaine Jacobs, GSA
• DDS2 Update and Insights – Stevie Graham, GSA
• Managing Domestic Delivery Services – Bill Bardwell, VA
• Sustainability – Tom Dames, UPS
Agenda
Federal Government Taking leadership with FLEEEP
President Obama issued an Executive Order (Order) on October 5, 2009: Federal Leadership in Environmental, Energy, and Economic Performance (FLEEEP)
Federal agencies are now required to report, inventory and reduce their own
greenhouse gas (GHG) emissions, as well as that of their contractors (Scope 3 emissions) 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
“The head of each agency shall designate from among the agency’s senior management
officials a Senior Sustainability Officer who shall be accountable for agency performance
with the requirements of the order.”
Six Greenhouse Gases - Convert to CO2 Equivalents
17
Environmental Footprint
What Impacts the Carbon Intensity of the Transport Sector
What mode of transport is used
Scale and density of the network
Efficiencies of the network
Efficiencies of most energy intensive mode (air fleet)
Efficiencies of the ground fleet
Carbon Avoidance – strategies and results
Low carbon fuels
Advanced Technology Vehicles
Capturing all carbon from origin to destination (Scope 1, 2, 3)
Rel
ativ
e C
arb
on
Imp
act
Network Efficiency
CO2 / Available Ton MileCO2 / Available Ton Mile Gallons / ATMGallons / ATM Emissions / Payload CapacityEmissions / Payload Capacity
% of Fleet Meeting Stage IV% of Fleet Meeting Stage IV
• Early acquisition of efficient aircraft• Average age of fleet is 12.3 years• In flight aircraft visibility• Surface Management Systems • Innovative routing technology• Continuous Descent Approach • Single engine taxi / Optimize fuel on-board
Aircraft Network Fuel Efficiency
Alternate Fuels and Technology
Hybrid Electric:P70H (US) = 25P100H (US) = 225
Electric:P100E (US) = 2P50E (International) = 26
Liquid Petroleum Gas:LPG Vehicles (Korea) = 6
Compressed Natural Gas: 1,076 CNG Vehicles (US)71 CNG Vehicles (International)
Liquid Natural Gas:11 LNG Tractors (US)
Propane: 464 Propane Vehicles (International Package Cars & Shifters)
8 Propane Shifters (US)
Total Alternative Fuel Vehicles (US & International) = 1,914Total Alternative Fuel Vehicles (US & International) = 1,914Total Alternative Fuel Vehicles (US & International) = 1,914Total Alternative Fuel Vehicles (US & International) = 1,914
Updated: 01/03/2011
UPS Clearing the Air with New LNG TractorsAtlanta, February 22, 2011Purchase Is Step Toward U.S. Energy Security
UPS Clearing the Air with New LNG TractorsAtlanta, February 22, 2011Purchase Is Step Toward U.S. Energy Security
UPS calculates carbon emissions for all these shipments, then purchases and retires offsets equaling that amount A nominal fee covers the offset cost plus carbon calculation
Cost is $.05 for Ground and $0.20 for Air
UPS purchases only certified offsets that fund projects with positive environmental impact
An Easy Way to Offset Carbon Emissions
UPS : EPA Presentation: October, 4, 2010
Details of Request
Data Detail / Output
General Methodology
Third Party Verification Stamp
Carbon Footprint Analysis Report
