1. Measuring Contractor Performance September 22, 2004 Charles W. Covington-DMS State Purchasing Richard E. Chatel-Dept. of Children & Families

2. 2 Agenda What is Contractor Performance Management? Why Measure Contractor Performance? What Do Best in Class Do? What Can We Start Doing NOW? The Future Department of Children & Families-SMORES System Questions

3. 3 Definition of Contractor Performance Management Contractor Performance Management is the process of measuring, analyzing and managing suppliers’ performance for the purpose of reducing costs, improving service mitigating risks and driving continuous improvement in value and services. “You can’t improve what you don’t measure”. Dr. Michael Hammer

4. 4 Agenda What is Contractor Performance Management? Why Measure Contractor Performance? What Do Best in Class Do? What Can We Start Doing NOW? The Future Department of Children & Families-SMORES System Questions

5. 5 Reasons to Measure Contractor Performance Ensures the State gets best value for the goods and services that are purchased with public funds. This step is an important component of “Roadmap to Excellence in Contracting”. Reference: State of Florida Audit Report “Road Map to Excellence in Contracting”-Derry Harper, Chief Inspector General, June, 2003 This is a fundamental step in the contract management process.

6. 6 Benchmark Studies Contractor Performance Management is a critical activity that is sub-optimally managed in public and private sectors. 70% of those surveyed rated this as a critical activity in contract management. Yet, only 54% have implemented a contractor management program and only measure performance of 33% of their vendors. 60% of those that have contractor management programs are less than satisfied with their program.

7. 7 Benchmark Studies-Performance Performance is 27% better on average in the rated categories for those companies that have a Contractor Performance Program versus those that do not.

8. 8 Roadmap to Excellence in Contracting 1.Improve legislative and regulatory changes 2.DMS to take leadership role in all procurement and contracting matters 3.Develop and implement a professional development program for purchasing 4.Share best practices across eligible users 5.Implement standard contract formats 6.Implement a uniform vendor monitoring and rating system

9. 9 Results of 494 Audit Findings 45%-Performance Monitoring 20%-Procurement Methodology 17%-Contract Writing 10%-Payment 7%-Needs Assessment 1%-Contract Closure

10. 10 NIGP-Contract Management Cycle 1.Specify Need 2.Identify Contract Risks and Establish Contract Goals to Manage Risks 3.Select General Contract Type and Clauses 4.Performance Monitoring 5.Analysis

11. 11 Fast Track to Value Validate & Profile Category Conduct Industry Analysis Build Total Cost of Ownership Model Develop Category Strategy Conduct Supplier Analysis Build Supplier Selection Decision Matrix Conduct Auctions Complete Prepare Fact- Based Negotiation “Packages” Negotiate Value Propositions Category Profile Industry Profile TCO Model Category Strategy Value Propositions Benefits Realization Develop Measure Results & Trends High-Level Data Collection & Analysis Fast Track to Value Segment Purchases Validate & Profile Category Conduct Industry Analysis Build Total Cost of Ownership Model Develop Category Strategy Conduct Supplier Analysis Build Supplier Selection Decision Matrix Conduct Auctions Complete Prepare Fact- Based Negotiation “Packages” Negotiate Value Propositions Auctions Form Cross- Functional Sourcing Teams Develop Results & Trend High- Data Collection & Analysis Fast Track to Value Segment Purchases Validate & Profile Category Conduct Industry Analysis Build Total Cost of Ownership Model Develop Category Strategy Conduct Vendor Analysis Build Vendor Selection Decision Matrix Conduct Auctions Complete ITB/ITN/ RFQ/RFP Develop Value Proposition Around Options Make Award Decision In-Scope Categories CFSTs (Cross-Functional Sourcing Teams) Selection Decision Matrix ITB/ITN/RFQ/RFP Continual Vendor Improvement Profile Internally & Externally Develop Strategy Screen Suppliers & Selection Factors Conduct Auctions & Shape & Negotiate Value Propositions Implement Agreements Assess Opportunities Profile Internally & Externally Develop Strategy Screen Suppliers & Selection Factors Conduct Auctions & Shape & Negotiate Value Propositions Kick-Off & Profile Internally & Externally Develop Strategy Develop Selection Factors & Screen Vendors Conduct Competitive Event Prepare Value Proposition & Award Implement Agreements Kick-Off & Assess Opportunities - Form Cross- Functional Sourcing Teams Develop Vendors Award Decision (ITA) Typical Deliverables Key Worksteps - and / or - Strategic Sourcing Model Steps 1 2 3 4 5 6 7

12. 12 Agenda What is Contractor Performance Management? Why Measure Contractor Performance? What Do Best in Class Do? What Can We Start Doing NOW? The Future Department of Children & Families-SMORES System Questions

13. 13 Benchmark-Best in Class 1.Track the performance of a broader portion of the supply base 2.Standardize supplier performance measurement procedures across the enterprise 3.Collaborate with suppliers on performance metrics, reporting, and improvements 4.Automate key supplier performance measurement activities

14. 14 Typical Measurements Quality On-time delivery Service Price Total Cost of Ownership Contract Compliance Lead Time Responsiveness Technical support Innovation Added value Price variance Invoicing Customer support Accuracy of Quote Most Measure These:Other:

15. 15 Immediate Action Needed  What is Contractor Performance Measurement?  Why Measure Contractor Performance?  What Do Best in Class Do  What Can We Do NOW  Department of Children & Families-SMORES System  The Future  Questions

16. 16 What Can We Do Now? Hold periodic meetings with vendors and key users to assess performance. Frequency of meetings depend on contractor performance and strategic importance of goods or services. Send complaint to vendor-PUR 7017 form Request SP assistance-PUR 7029 form Complete periodic surveys using link on State Term Contracts and DOCUMENT DOCUMENT DOCUMENT!

17. 17 State Purchasing Forms DMS Home Page

18. 18 Vendor Complaint-Pur Form 7017

19. 19 Vendor Complaint-PUR Form 7017

20. 20 Vendor Complaint-PUR Form 7029

21. 21 Request SP Assistance-PUR Form 7029

22. 22 State Term Contract Performance Input

23. 23 The Survey

24. 24 The Survey

25. 25 The Survey

26. 26 The Survey

27. 27 The Survey

28. 28 Survey Results

29. 29 Survey Results

30. 30 Survey Results

31. 31 Survey Results

32. 32 Survey Results-Multiple Vendors

33. 33 Immediate Action Needed  What is Contractor Performance Measurement?  Why Measure Contractor Performance?  What Do Best in Class Do`  What Can We Do NOW  The Future  Department of Children & Families-SMORES System  Questions

34. 34 Improvements are a Work in Progress Leverage MFMP eProcurement System Develop Standardized Processes Leverage Current Robust Systems –Department of Revenue –Department of Children and Families –Department of Transportation –Federal PPIRS-www.ppirs.gov. Develop an electronic file for contract management to include contract performance

35. 35 Some Systems are Now in Place  What is Contractor Performance Measurement?  Why Measure Contractor Performance?  What Do Best in Class Do`  What Can We Do NOW  The Future  Department of Children & Families-SMORES System  Questions

36. Statewide Monitoring Reporting System (SMORES) Presented By Richard Chatel, Assistant Staff Director The Office of Contracted Client Services September 22, 2004

38. 38

39. 39 … The Situation

40. 40 Contract Performance Units  Decentralized  Hundreds of Contracts  Multiple Report Formats  Limited Resources

41. 41 …And What They Needed  A Single Database  Standard Report Formats  Common Terminology  Ability to Analyze Data  Reduce Admin Overhead  Improved Turn Around

42. 42 The Solution…

43. 43 Data Review and Analysis Ad Hoc Data Queries CAP Process Corrective Action by Provider CPU Review of Provider OUR FOCUS

44. 44 Statewide DCF Intranet

45. 45

46. 46 The Application…

47. 47 SMORES Data Entry  User is Assisted by Prompts  Monitoring Report Data is Entered in the Central Database Following each Performance Review of the Provider

48. 48 Starting a Report  Create a NEW Report or Work on An Existing Report.

49. 49 Six Reporting Components

50. 50 Detailed Findings  The six reporting components have detailed Findings Categories

51. 51 Automatic Data Validation  Numerous Checks on Entries  Validation Against Other Data  Automatic Error Correction

52. 52 Viewing Data…

53. 53 Viewing Monitoring Reports  The monitoring report results may be viewed immediately after data entry is completed

54. 54 Searching For Data

55. 55 Viewing the Results  Immediate Access to All Reports  Complete Findings  Links to Provider Info

56. 56 Analysis…

57. 57 Performing Queries on Data  Immediate Access to All Reports  “User Friendly” Query Capability

58. 58 Major Findings by Component 344 119 58 90 67 22

59. 59 Major Findings by District 26 6 13 6 5 3 4

60. 60 Improvements…

61. 61 Corrective Action Plan (CAP)  Improved Access for Contract Mgrs  Better Turn Around Time for CAP

62. 62 Generating the CAP Form  Corrective Action Plan (CAP)  Contract Manager’s Task

63. 63 An Improved Process... EXIT CONF CPU has 30 days to generate the Monitoring Report, but MAY decide to complete report earlier. NOW 3 days from actual report completion will be allowed for data entry in SMORES SMORES Contract Manager has more timely access to SMORES Contract Manager has 7 days to notify the provider of CAP requirements, AND has earlier access to SMORES. 30 DAYS 3 DAYS 4 DAYS 3 DAYS

64. 64 Training…

65. 65 SMORES Training Opportunities  Complete On-line Training Site

66. 66 Answers to Questions  Instructions & Tutorials On-line  Expert Help Available

67. 67 Summary...  Statewide Contract Monitoring Database  Accessible Web-based Format  CAP Processing Capability

69. 69 Bob Fierro Suncom 291-8852 Dick Chatel Suncom 293-7479 Karen Stanford Suncom 293-7479 Call Us...

70. 70 Agenda  What is Contractor Performance Measurement?  Why Measure Contractor Performance?  What Do Best in Class Do`  What Can We Do NOW  The Future  Department of Children & Families-SMORES System  Questions

71. 71 Thanks for Participating in this Session Your Questions and Comments are Important! ?