1. 2012 Government Transportation Forum March 20-22, 2012
Federal Strategic Sourcing Initiative Second Generation Domestic Delivery Services (DDS2)
2012 Government Transportation Forum
March 20-22, 2012

2. FSSI DDS1&2 Background – Blaine Jacobs, GSA
"Leveraging spending via governmentwide strategic sourcing for Domestic Delivery Services"
Agenda
FSSI DDS1&2 Background – Blaine Jacobs, GSA
DDS2 Update and Insights – Stevie Graham, GSA
Good afternoon,
This is our agenda for today.
I will give a brief overview of the FSSI DDS program, an update on where we are today, and insights on DDS shipping trends and how to realize additional savings under DDS2.
Steve Graham, GSA’s DDS2 PMO point of contact, will give you an update on DDS2 and share some insights on how to realize additional savings
Bill Bardwell, Traffic Manager and principal point of contact for DDS at the Department of Veterans Affairs, will offer his perspective on effectively managing DDS.

3. Definition of Strategic Sourcing
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
In May of 2005, the Office of Management and Budget (OMB) implemented strategic sourcing, encouraging agencies to leverage spending to the maximum extent possible through strategic sourcing.
Using information from the agency reports and other data sources, OFPP identified several commodities that could be strategically sourced governmentwide, and established an interagency structure for managing the acquisition of these commodities.
There are 3 governmentwide contracts for office supplies, wireless telecommunications expense management, and domestic delivery services.

4. Leveraging spending via governmentwide strategic sourcing for Domestic Delivery Services
OFPP, within OMB, is the ultimate Executive-level office responsible for providing oversight and guidance as well as ensuring overall effectiveness of FSSI.
CAOC is focused on promoting the aspects of the President’s Management Agenda related to acquisition. Strategic sourcing is a high priority under the current Administration.
SSWG is the primary body for vetting and approving sourcing strategies, as well as for establishing the standards, processes and policies governing FSSI.
FSSI PMO acts as the Executive Agency for OMB, OFPP in implementing strategic sourcing across government and also serves as Executive Agent for commodity solutions under FSSI. This role of the PMO is to ensure that FSSI commodities are being managed to drive maximum value for the government as a whole.
The Strategic Sourcing Community of Practice is the government-wide operational level body engaged in institutionalizing strategic sourcing across the Federal government.
An Executive Agency, working on behalf of the entire government (or interested agencies) is selected by the CAOC and SSWG to manage all aspects of the sourcing process.
Commodity Teams are the key component for developing and executing sourcing strategies. The CAOC designates each commodity team with a lead Executive Agency (for example, GSA, for the first four teams – Office Supplies, Wireless Telecommunications Expense Management, Printers and Copiers, and Domestic Delivery Services).

5. 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
Step 1: Profile Commodity - Develop a detailed commodity profile based on a robust requirements process, total cost of ownership, and spend analysis. Leads to the identification of key findings and sourcing opportunities.
Step 2: Conduct Supply Market Analysis - Conduct market analysis to understand industry structure and market segments, trends, cost structure, competitive dynamics, and available sourcing levers.
Step 3 - Develop Commodity Strategy - Develop an organization-wide sourcing strategy to exploit the sourcing levers identified as part of the Commodity Profile and Supply Market Analysis processes.
Step 4 - Issue RFx and/or Negotiate - Engage the supply community in order to award contract vehicle(s), if identified as part of the Commodity Strategy. Includes developing and issuing RFx based on the sourcing strategy developed in Step 3, conducting negotiations, developing proposals, and awarding contract(s).
Step 5 - Implement and Manage Performance - Implement contract processes and policy changes necessary to ensure the successful implementation of the commodity sourcing strategy. Continually measure, track, and manage performance.
Link to Censeo Consulting Group’s two courses on strategic sourcing at the Defense Acquisition University: CLC108 Strategic Sourcing Overview and CLC110 Spend Analysis Strategies at
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6. REQUIREMENTS DEFINITION & ACQUISITION STRATEGY TEAM
The DDS2 program is the result of a year-long collaboration between dozens of government experts
REQUIREMENTS DEFINITION & ACQUISITION STRATEGY TEAM
CONTRACTING 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
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
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
TECHNICAL EVALUATION TEAM
Diane Kanauka, IRS
Bill Bardwell, VA
Ernie Stevens, GSA
Here is a list of the interagency team members who met regularly for several months to go through the strategic sourcing process for DDS2.
Even the technical evaluation board was an interagency effort.
I’d like to ask those who served on the DDS2 commodity team to please stand so we can recognize you for your dedicated effort on behalf of all government agencies. THANK YOU VERY MUCH.
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7. FSSI DDS1&2 Background – Blaine Jacobs, GSA
"Leveraging spending via governmentwide strategic sourcing for Domestic Delivery Services"
Agenda
FSSI DDS1&2 Background – Blaine Jacobs, GSA
DDS2 Update and Insights – Stevie Graham, GSA
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8. Discounted accessorials No fuel surcharges (FSCs)
"Leveraging spending via governmentwide strategic sourcing for Domestic Delivery Services"
DDS1
FedEx Oct 2006 – Sep 2010
Over $676M savings
Discounted accessorials
No fuel surcharges (FSCs)
Quarterly shipping reports
61 participating customers
9% ground shipments
DDS2
UPS Oct 2009 – Sep four options
Over $1B savings forecasted
Lower discounted common accessorials
Continue with no FSCs for parcels
Monthly enhanced shipping reports
Over 129 participating customers
49% ground shipments
DDS2 builds on DDS1’s success to continue to provide quality service and significant savings.
FSSI helps agencies streamline acquisitions & reduce redundant contracts across government
61 agencies under DDS1. 81 agencies under DDS2 so far.
DDS2, like DDS1, is a best value Blanket Purchase Agreement and Task Order award under the MAS. GSA adds agencies to DDS2 via a task order modification after receiving signup letters.
For DDS2, we achieved lower discounts for accessorial services the Government uses most such as residential delivery and delivery area surcharge.
As with DDS1, there are no fuel surcharges for parcel shipments under DDS2. Exceptions are same day and express heavyweight shipments.
GSA provided quarterly shipment reports under DDS1 which included high level information on spend, surcharge usage, savings, and on-time performance. Under DDS2, reports are available to agency principal points of contact on a monthly basis at the national account, subgroup, and account level which is a major improvement over DDS1. This level of business intelligence will help agencies better manage DDS2 by monitoring shipping patterns and to spot opportunities to realize additional savings.
Moving from shipping by ground vs. air from 9% under DDS1 to 36% under DDS2 is a great success story. This change in shipping behavior means the government is realizing additional significant savings and helping to meet sustainability goals by reducing gas emissions.

9. Regular town hall meetings to share best practices
"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
Second year statistics
Over 19,000 new UPS accounts created
$109.3M spend and $216.4M savings
15.7M packages shipped
7.6 LBS average package weight
$6.93 average cost per package
98.8% on-time performance
51% air express and 49% ground

10. Do you really need to send letters via express service?
"Leveraging spending via governmentwide strategic sourcing for Domestic Delivery Services"
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 Upgrade
$9 weekly pick up charge waived
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
Using USPS First Class Mail for letters is still the best deal in town. We need to ask ourselves if we really need to send letter documents via express service. Are the letters we send considered extremely urgent or can they be sent via and if the original document is needed, sent via first class mail?
Avoid or minimize pickup fees:
Consolidate packages to a central pickup location to minimize pickup costs or use Drop Boxes and UPS authorized facilities to avoid costs altogether.
[Give the Crystal City example]

11. APPROXIMATE TRANSIT TIME FOR GROUND SHIPMENTS FROM THE DC AREA
Agencies can further reduce costs by helping users select the optimal service for their domestic packages
UPS Ground service typically delivers packages traveling less than miles in 1 day…
… at significantly lower costs than Next Day Mid-A.M. and even Two Day Express Service!
APPROXIMATE TRANSIT TIME FOR GROUND SHIPMENTS FROM THE DC AREA
SAMPLE 10 LB ZONE 1 PACKAGE
60% Savings
47% Savings
Source: UPS.com
Source: UPS DDS rate chart; GSAAdvantage shipment box prices

12. TOTAL COST TO SHIP BY PACKAGE WEIGHT
The savings potential by substituting for Ground Service varies by weight
TOTAL COST TO SHIP BY PACKAGE WEIGHT
(ZONE 1 SHIPMENT RATES)
NOTES
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
$41.07 Savings
By switching from express to ground, agencies can realize additional 30-80% savings or more depending on the package weight and destination. This includes the cost of packaging since UPS and FedEx do not provide free packaging for ground shipments; just express.
$27.69 Savings
$6.22 Savings
$14.57 Savings
$2.05 Savings
Source: UPS DDS rate chart; GSAAdvantage shipment box prices

13. www.gsa.gov/dds Stevie Graham (703) 605-5569 or stevie.graham@gsa.gov
"Leveraging spending via government wide strategic sourcing for Domestic Delivery Services"
For more information
Stevie Graham (703) or
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