University of Florida Purchasing Services Budget Request March 12, 2013 Lisa Deal, Purchasing Director

Purchasing Services Mission Acquire quality goods and services at competitive prices Identify opportunities for cost savings through strategic sourcing Create efficient purchasing systems and mechanisms for use by faculty and staff Promote fair and open competition Mitigate risk and ensure compliance Execute agreements and contracts for the recurring needs of the University Provide quality customer service, training and information related to University Directives and Procedures

Services of Purchasing Buying – requisitions/PO’s – contract review Public Solicitations – ITB, RFP, ITN Strategic Sourcing – Print Metrics PCard Supplier Management Conducting business reviews with contract vendors is key to realizing best value.

Savings FY 2010 $2,973,062 FY 2011 $4,334,038 FY 2012 $3,111,826 Revenue: Contract Compliance $ 34,000 PCard incentive$ 1,252,201 Contract Revenue $ 228,221 1,514,422

Why Purchasing is asking for $ An essential component in supporting the campus is missing from Purchasing Currently there are no employees dedicated to contract management. Without personnel dedicated to this effort Purchasing Services is unable to adequately monitor existing contracts for vendor compliance. Nor can campus effectively identify which contracts to use, so they go off-contract – “maverick spend” Off contract purchases typically cost the institution 5%-10% more than contract prices The Education Advisory Board review recommended

6 Make contracts more visible to campus Maintain database of existing contracts and track vendor compliance Will help alleviate buyer overload, one factor that is currently hampering strategic sourcing initiatives. Will improve procurements ability to drive (and track) vendor performance Places procurement in better negotiating position Facilitates tracking of milestones, tiers of spend and possible contract overpayments Create Contract Management Positions & Acquire Tools

Contract Management Managing contracts for? –Leased space, equipment leases, software licenses, maintenance agreements, independent contractors, service contracts Why is it important? –Contract terms include milestones, remedies, termination, disclosures, renewals, records requests –Business continuity

Lack of Contract Management Function Exacerbating Buyer Overload 8 Number of Buyers and Contract Administrators (Peer Schools)

Purchasing Budget myUF Market/SciQuest $326, implementation, static thru’ 3/27/2018 –Includes current functionality – 30 catalogs Expenses $56,555 - $60,000 Staff $1,404,731 - $1,354,561

How much? 2014 Optimal Budget Request Two Contract Managers$134,500 Software$ 80,000 Total request$214,500

What’s it worth? Goldman Sachs estimates 40 basis points savings in hard and soft costs Price Waterhouse Coopers estimates 2% of all annual costs Making contracts visible and compliant is estimated to save 2 – 5%

Potential Savings ~$144,842,870 spend with contracts ~$ 11,457,833 of which is addressable spend 5% = $572,891 Purchasing request: $214,500

Questions? Thank you