OFPP sees millions in taming cell phone contracts

Most agencies do not have an accurate inventory of how many devices they are paying for or how much those devices are being used. Officials estimate the governm...

By Jason Miller
Executive Editor
Federal News Radio

The Office of Federal Procurement Policy is reinvigorating a working group to recover hundreds of millions of dollars agencies are wasting on cell phones and other wireless devices.

Jack Kelly, a policy analyst with OFPP, said Thursday the Federal Strategic Sourcing Initiative wireless telecommunications working group will decide the next steps to get agencies to improve how they manage and optimize wireless telecommunications plans.

“We’ve reached out to folks who have proven themselves as leaders within the agency strategic sourcing communities, folks from Veterans Affairs, from Health and Human Services and folks from Homeland Security and we’ve invited their senior procurement executives to be members of a strategic sourcing working group,” Kelly said after his panel on wireless communications contracts during the FedScoop conference on lowering the costs of government in Washington. “We’ve gotten Mike Howell, who is the [federal] deputy chief information officer, to co-chair that group to give us a tighter link to the IT community. We think that not only the IT community has already pioneered a lot of strategic sourcing-like initiatives, SmartBuy is a good example, but it’s also with $80 billion of annual spending it’s a very ripe area for additional savings from strategic sourcing approaches.”

Kelly said the wireless working group is one of three phase-2 strategic sourcing efforts. OFPP already launched a second generation effort around office supplies. The General Services Administration awarded 12 blanket purchase agreements for office supplies in June that will make it easier and cheaper for agencies to purchase this equipment. GSA estimates the BPAs will save the government $48 million a year for four years.

The second area OFPP is looking at is delivery services, such as UPS or FedEx.

Kelly says wireless communications is the third initiative that will enter phase 2. GSA awarded the Telecommunications Expense Management Services (TEMS) in 2008, but only three agencies have purchased assistance off the contract.

“The thing that is striking is when you look at the success of the three agencies, it’s dramatic,” Kelly said. “The question that naturally comes to mind is ‘why aren’t more people using these tools or tools like them?’ Now I suspect what is actually happening is that some agencies have developed in-house approaches or other contract approaches to this issue because we know of other agencies who are addressing this.”

Kelly said one thing OFPP is considering is using the data from the IT Line of Business to make their case further that the government is overpaying for wireless services.

“Where we have been successful with second generation is being able to get people, agency folks, to the table who have done a lot of good work,” he said. “We stand on the shoulders of the folks who have done the best work so far.”

Russ Peery, GSA’s Wireless Telecommunications Expense Management contracting officer technical representative, said it’s pretty clear that agencies are overspending.

He said few agencies have an accurate inventory of what devices they have, how much the devices are being used and how much they are paying for them.

“Some agencies see between 17 percent and 35 percent decrease in their spend for cell phones and wireless devices when they improve the management of these plans,” Peery said. “The government could save between $150 million and $200 million a year if agencies did a better job managing these devices.”

Additionally, Peery said agencies could save money by applying more strict oversight to their billing processes. He said the Gartner Group found in a 2008 study that most organizations have an invoicing error rate of 33 percent.

Peery said the TEMS contract is set up to help agencies get their wireless spending under control

Jin Kang, president of iSYS, a TEMS contractor, said his company will create the agency’s inventory and reconcile any problems at no cost. Then iSYS, like all of the TEMS providers, will help monitor spending and apply management and process efficiencies.

Kang said because few agencies have accurate inventories, between 9-and-12 percent of all wireless lines are not being used by anyone.

Rebel McFertridge, the Wireless Program Manager for the Customs and Border Protection at DHS, said her agency has 22,000 wireless lines and had little insight into who was using what until recently. She said CBP does not have centralized oversight and each office is responsible for buying and managing their wireless needs.

But after six months of focused effort, CBP not only has its telecommunications under better control, but is issuing a new policy in the coming months, McFertridge said.

“It’s a little harsher than it is today,” she said. “It limits the type of plan they can use, no more than 600 minutes. They still manage it locally, I’m not going to be police of 22,000 lines of services, but they know how it works and how it operates, and how the device really needs to be used. One thing we did do is we mandated all devices and services need to be approved by my office prior to purchasing.”

CBP offices must re-evaluate their inventory annually because it changes often between new technology and new hires.

McFertridge said CBP also wants to add an online ordering capability under a managed service provider. The agency currently has 11 different carriers so the provider will help ensure the services meet a minimum level of technical requirements and standards, as well as having standard processes to manage the accounts.

Sandy Hall, the wireless program manager for the Center for Disease Control and Prevention, said her experience was very similar to McFertridge’s.

CDC, at one point, had 500 authorized purchasers of wireless telecommunication services and that created an unmanageable inventory.

Hall said CDC mandated the improved oversight of these contracts as far back as 2005 because even with inaccurate data, officials saw the potential savings.

Now CDC is taking several steps to manage their inventory and it’s starting to pay off.

“The ability to have total wireless equipment property accountability and the option to have those types of equipment bar coded, which we have just begun doing,” she said. “Of course, the shared minutes savings is a no brainer. It’s so substantial every month the amount of money you can save by being able to pool and share your minutes is amazing.”

CDC also has saved money thanks to its online ordering system. Hall said the portal lets employees see what deals the vendors are offering on new phones. She said it also lets employees or the help desk check the device’s warranty when something happens to see if it’s still covered.

Both Hall and McFertridge said having top level buy-in as well as continued attention is extremely important for success.

“This is not as hard as many people think,” McFertridge said. “A lot of it is very simple management and having a dedicate individual to work for a return on investment that we’ve shown…and make a lot of people’s jobs easier.”

McFertridge added that by having a good inventory today, it will be easier when the agency starts issuing smartphones such as Apple’s iPhone, Google’s Droid or Research in Motion’s BlackBerry touch.

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