Leveraging Reverse Auctions for Procurement Savings Success at Tarrant County College District September 24, 2015

© 2015 – E&I Cooperative Services. All Rights Reserved. 2 The Sourcing Strategy The process utilized to identify the institution’s requirements, evaluate market availability, and formally select a supplier to provide commodities or services to the institution. Developed with specific defined expectations and goals; continuously re-evaluated and improved. Should utilize best-in-class solicitation methods (tools) to plan and execute the acquisition of commodities and services for the institution.

© 2015 – E&I Cooperative Services. All Rights Reserved. 3 Tools in the Sourcing Toolbox Group Purchasing Organization Agreements Inter Local Cooperative Agreements Institution’s E-Sourcing Catalogs Competitive Solicitation Processes  Request For Quotes (RFQ)  Invitation To Negotiate (ITN)  Invitation To Bid (ITB)  Request For Proposals (RFP)  Reverse Auctions

© 2015 – E&I Cooperative Services. All Rights Reserved. 4 What is a Reverse Auction? Reverse Auctions are an innovative tool that should be in the toolbox of every strategic procurement professional. A strategic alternative to traditional bidding, reverse auctions are scheduled “real time bidding events” utilized to help secure the best available market price for commodities, services, and energy-related requirements.

© 2015 – E&I Cooperative Services. All Rights Reserved. 5 Reverse Auction Process 1.Determine the following: the commodity and/or service to be solicited institution’s requirements such as specifications, timing, terms and conditions market trends, potential suppliers the solicitation method appropriateness of utilizing a reverse auction event institution’s willingness to move spend clear, understandable specifications adequate supplier base 2.Develop and communicate the specifications to the suppliers 3.Open solicitation responses 4.Evaluate submittals – those that qualify are then invited to participate in the reverse auction event 5.Schedule and host the reverse auction event

© 2015 – E&I Cooperative Services. All Rights Reserved. 6 The Event Event Day: Invited suppliers login at the appointed time, and may submit bids during the allotted bid timeframe. Provide “real time” viewing Provide “real time” reporting Provide supplier assistance if needed Bid timeframe may be extended based on pre-set conditions Bidding ends when the time elapses and no additional bids are received Post-event: Once the event is complete, the results may be used as the deciding factor in an award or as one of several components being weighted in the award decision as previously determined. Communication: Communicate award, provide reverse auction platform partner event feedback as to awarded supplier, event success, etc.

© 2015 – E&I Cooperative Services. All Rights Reserved. 7 Tarrant County College District Comprehensive two-year institution established in 1965 More than 50,000 students are enrolled in TCCD's associate degree and technical programs Seventh-largest among Texas colleges and universities Five major campuses in the cities of Hurst (Northeast), Fort Worth (Northwest, South, Trinity River) and Arlington (Southeast), with administrative offices in downtown Fort Worth Current Full-time Faculty and Staff 2,917 Adjunct Faculty 1, /2016 Technology Budget $11,763,596

© 2015 – E&I Cooperative Services. All Rights Reserved. 8 Tarrant County College District: The TCCD process: Identified a need to replace a large number of Desktop and Laptop computers over the next few years. Developed specifications for standard configurations (3 Desktop Configurations, 1 Laptop, and 1 Monitor) Issued RFQ to pre-qualify vendors and equipment (Required vendors to deliver 1 of each configuration for testing by IT Department) Evaluated submissions and approved vendors who met requirements to participate in auction. Scheduled auction through Procurex. Had Procurex demo and train vendors in preparation for live auction. Set date and time for auction. Watched the prices go down !

© 2015 – E&I Cooperative Services. All Rights Reserved. 9 Tarrant County College District: RFQ

© 2015 – E&I Cooperative Services. All Rights Reserved. 10 The Reverse Auction Event The reverse auction event is an online, real-time auction in which approved suppliers are given the opportunity to compete for the institutions business. They do this by reducing their pricing by multiples of the bid decrement value, over the specified bidding period.

© 2015 – E&I Cooperative Services. All Rights Reserved. 11 Tarrant County College District Results: DescriptionQuantity Unit Price Auction Extended Price Auction Unit Price Extended Price Savings/ Increase Tier 1 Desktop2,100$ $1,421,616.00$ $1,751,505.00$329, Tier 2 Desktop349$ $ 265,686.72$ $ 340,690.31$ 75, Tier 3 Desktop15$ 2,015.61$ 30,234.15$ 1,770.12$ 26,551.80$ 3, * Laptops300$ $ 243,903.00$ 1,322.92$ 396,876.00$ 152, ” Monitor250$ $ 38,560.00$ $ 45,000.00$ 6, * Increase due primarily to an increase in performance specifications on Tier 3 Units $1,999, $2,560,623.11$ 560,623.24

© 2015 – E&I Cooperative Services. All Rights Reserved. 12 Tarrant County College District Some Background Over time, personal computers have become a commodity item, with not much differentiation between the major vendors (Dell, HP, Lenovo). As the capability differences of the vendors blurs, more emphasis is placed on the services around the equipment (warranties, setup, disposal, imaging, etc.). These activities were defined in the RFQ process, and the pricing for preparation with TCC software, warehousing, delivery, setup, and extended warranties were included in the costs. Vendor we had used for years (SHI Government Solutions) was the successful vendor.

© 2015 – E&I Cooperative Services. All Rights Reserved. 13 The Value Proposition Value Proposition of Reverse Auctions BuyersSuppliers Dynamic negotiationsCommitted volume and timing Increased effectiveness in solicitation processProcess transparency Transparency of the procurement cycle Equal opportunity for all vendors regardless of geographic location Minimal process costMarket intelligence Greater accuracy in price determination Real-time feedback on competitiveness of pricing Cost savingsShortened time to product delivery

© 2015 – E&I Cooperative Services. All Rights Reserved. 14 Success Stories 1. Software Licenses for a Major Private University: saved approximately $45k (3.4%), 33 bids received from 5 suppliers 2. Natural Gas cooperative auction with Independent Colleges and Ivy Tech of Indiana: institutions leveraged group purchase to realize average savings of 20 basis points 3. Waste Hauling for a Major North-Eastern Institution: saved approximately $60k (8%), 33 bids received from 5 suppliers 4. Computers for a Ivy League University: saved approximately $1.1M (25%), 25 bids received from 2 suppliers 5. Bus Replenishment for a Major Public University in TX: saved over $200K (>10%) combined with better process and supplier engagement

© 2015 – E&I Cooperative Services. All Rights Reserved. 15 Potential Reverse Auction Opportunities

© 2015 – E&I Cooperative Services. All Rights Reserved. 16 E&I Reverse Auction Survey: Key Statistics Audience: More than two hundred U.S. schools and universities responded to the survey - typically these were institutional members of E&I, APPA, or both. 50% Procurement 44% Facilities 6% Other All institution types 2 Year and 4 Year Public and Private K-12 Method: invitation to participate in a Web-based survey Findings: Final Report was published in late 2013 Available here or at

© 2015 – E&I Cooperative Services. All Rights Reserved. 17 Survey Results Institution type 1.Public 4yr…………………………………………….….………..…………...……45.1% 2.Private 4yr………………………………………………………………………… % 3.Public 2 yr………………………………………….…………………….…………….9.8% 4.Private 2 yr………………………….…………..……………..……..………………1.4% 5.K-12 Districts……………………………………………………………………………7.4%

© 2015 – E&I Cooperative Services. All Rights Reserved. 18 Survey Results Satisfaction rate of institutions having used at least one Reverse Auction event 1.Very satisfied……………………………………………….….………..…….……45.1% 2.Somewhat satisfied……………………………………………………………….43.1% 3.Somewhat dissatisfied……………………………….…………………….….….9.8% 4.Very dissatisfied………………………….…………..……………..……..………..2.0%

© 2015 – E&I Cooperative Services. All Rights Reserved. 19 Survey Results Top Five Benefits 1.Cost savings………………………………………………….….…………….…….62% 2.Streamlines RFP process…………………………………………………………9% 3.Reduces administrative effort & paperwork……………………….….7% 4.Attracts high volume of quality suppliers…...…………………….……4% 5.Empowers buyer……………………………………..……………..……..….….4%

© 2015 – E&I Cooperative Services. All Rights Reserved. 20 Questions & Answers

© 2015 – E&I Cooperative Services. All Rights Reserved. 21 Thank You for your Participation and Support! Gary Wilson Vice President of Market Development | E&I Cooperative Services | | Sue Peters Market Development Executive | E&I Cooperative Services | | Mike Herndon Director of Procurement | Tarrant County College District | |