FDIC's Procurement of Administrative Goods and Services
January 13, 2005
Audit Report 05-005
To: Stephen M. Beard, Assistant Inspector General for Audits
Deputy Assistant Inspector General for Audits
From:Arleas Upton Kea, Director
Division of Administration
Subject: Draft Report Entitled FDIC's Procurement of Administrative Goods and Services (Assignment Number 2004-031)
The Division of Administration (DOA) has completed its review of the subject Office of Inspector General (OIG) report. In the report, the OIG made three recommendations directed at improving the economy and efficiency for the procurement of administrative goods and services. We have evaluated the OIG's recommendations and have provided a detailed response to each recommendation made.
MANAGEMENT DECISION
Finding 1: Use of a Strategic Procurement Approach
Condition 1: DOA has not established a formal strategic approach for its procurement of administrative goods and services. Instead, DOA has focused on improving certain aspects of the contracting process. Without an enterprise-wide approach, the FDIC does not have a good understanding of its expenses for these procurements and may not be taking full advantage of opportunities to leverage its buying power, reduce costs, and thereby more efficiently manage its contracts.
Recommendation 1: We recommend that the Director, DOA, establish a strategic approach for improving the procurement process and incorporate spend analysis techniques to identify opportunities for cost savings.
Management Response: DOA partially concurs with this recommendation. Although the DOA Acquisition Services Branch (ASB) has not developed a written, formal strategic plan, ASB has taken a number of steps in this regard. ASB has partnered with FDIC stakeholders, to identify, plan, implement and manage a streamlined and efficient procurement approach to purchasing goods and services.
For example, ASB has utilized spend analysis concepts to initiate contract consolidation activities in the DOA Corporate Services Branch for supply type requirements nationwide. ASB has also initiated contract consolidation efforts with DIRM under the FEDSIM Infrastructure and the Information Technology Application Support (ITAS) requirements.
Another area ASB has undertaken is in the Procurement Card arena. After a number of comprehensive studies and analysis of our purchase order activity, ASB has determined that greater utilization of the P-card would reduce the cost of issuing a purchase order by $109 per transaction. Therefore, ASB is finalizing plans to increase the dollar limit for certain high-volume P-card holders to realize the overall administrative efficiencies and cost savings to the Corporation.
DOA is committed to continuous improvement and innovation that generates potential long-term benefits to the FDIC and will continue to identify opportunities to streamline and improve ASB business practices.
Finding 2: Measurement of Procurement Performance
Condition 2: DOA could do more to define goals for and measure the results of procurement processes and initiatives in achieving overall purchasing objectives. Specifically, DOA does not use a performance measurement framework to monitor overall procurement performance. Without established performance targets; benchmarks; and consistent, periodic measurement and reporting of performance results, DOA management may not be able to adequately evaluate ongoing performance or the impact of procurement initiatives in reaching overall corporate cost-saving goals. DOA could develop performance measures for administrative goods and services procurements; however, a broader application that includes all procurements would present a balanced perspective of the procurement process.
Recommendation 2: We recommend that the Director, DOA, develop a performance measurement framework to consistently monitor and periodically report on the procurement process and progress toward achieving goals to improve procurement economy and efficiency.
Management Response: ASB concurs with this recommendation. ASB is in the midst of benchmarking current procurement practices and measuring them against current federal acquisition leading practices. ASB has initiated a Business Process Re-Engineering effort with an independent consultant to analyze ASB business processes that have potential to be streamlined and improved to maximize customer service delivery.
In addition, ASB is serving on a DOA Task Force that is conducting research to develop customer service standards aimed at improving DOA response and support to all FDIC customers. This Task Force will be benchmarking DOA against other organizations to identify a performance measurement framework from a DOA wide perspective.
Finding 3: Purchases From Federal Prison Industries, Inc.
Condition 3: FDIC procurement policies do not require the ASB to consider the Federal Prison Industries, Inc. (FPI), as a preferred source for acquiring goods and services. FDIC management was not aware of the requirement to use FPI. As a result, ASB generally did not include FPI as a solicited source for administrative goods and services.
Recommendation 3: We recommend that the Director, DOA, establish policies and procedures to address federal requirements to purchase products from FPI.
Management Response: DOA concurred with the OIG recommendation. However, while preparing an Interim Acquisition memorandum to implement this recommendation, ASB has learned from FDIC Legal that a recent legislative change issued by Congress removed the mandate that federal agencies seek the Federal Prison Industries as an initial source. As a result, ASB will not establish an Interim Policy Acquisition memorandum to address FPI procurements.
If you have any questions regarding the response, our point of contact for this matter is Andrew Nickle, Audit Liaison for the Division of Administration. Mr. Nickle can be reached at (202) 942-3190.
cc: James H. Angel Jr., OERM
Glen Bjorklund, DOA
Ann Bridges Steely, DOA ASB