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Once the RFP was published, the state held a preproposal conference with the vendor community. The meeting was different than the kind of bidders conference that was once typical in Texas, where the state read aloud instructions from the RFP and did not engage the audience. Instead, the state openly solicited feedback from the vendors in attendance. "We're going to give you an opportunity to comment and help make the RFP better," said Amajor at the conference. "And we'll incorporate the feedback."

True to their word, the state did incorporate a number of suggestions from the vendor community into the RFP. For example, at the pre-proposal conference, Sam Pack's Five Star Ford, Carrollton, Texas, suggested that the state remove a clause in the RFP that prohibited towing of vehicles from the factory to the dealer. Keeping that clause, the Ford dealer argued, would require each vehicle to be driven individually and would clearly be more expensive than towing. The state agreed and elected to drop the requirement.

After receiving responses from the vendor community, Amajor and Perez decided to hold a round of Best and Final Offers (BAFOs). Whereas in the RFP, the dealers were asked to submit pricing on hundreds of options, in BAFOs, the state told the dealers which options would be purchased in very high volumes — and were de facto standards for some agencies — and asked them to lower their prices for those high-volume options.

"We weren't doing a BAFO for the sake of doing a BAFO," says Amajor. "We weren't just pounding our fists on the table and saying, 'Give us better prices with nothing in it for you.' Our team takes the approach that there always has to be some kind of carrot in a BAFO round, some reason for the bidder to be able to say, 'I can do better in price than the first round.'"

By most accounts and measures, the state's strategically sourced contract for fleet vehicles has been a significant success. It has saved state taxpayers some $5.7 million, or 6.7 percent, compared to the previous aggregated price. It has been adopted by the user community in Texas with very few complaints. And the vehicle dealers — normally a fairly cantankerous group in government contracting — have embraced the contract.

Steve Hancock of Fort Worth Freightliner, a dealership that has historically been one of the largest vendors selling trucks to the state, commended Combs and her team for the changes they made to state procurement.

Hancock says that the standardization effort was key to driving down cost: "The state used to say, 'We want a specific series of truck.' Now, they just say the weight of the truck and the description they want. They don't restrict it to a certain manufacturer. This benefits the state because it opens the door so more dealers can bid on that item. With more vendors able to bid on it, all of us have to be more aggressive with our pricing if we want to have a chance to win."

Hancock also describes the use of TCO as a "sophisticated" procurement practice. "It's the first time we have seen governments in this area take life cycle costs into account. I think the other governments around here should consider doing what the state has done. [Manuel Perez] is very innovative at modernizing," adds Hancock. "It was a pleasure to work on this RFP, and we love how easy the state has made it for our customers to be able to buy the vehicles they need at a competitive price from this contract."

With the strategic sourcing of fleet vehicles, Amajor, Perez and the state purchasing office have proven that principles like standardization, volume aggregation and TCO factoring can yield dramatic savings without sacrificing quality. By implementing strategic sourcing, albeit in a nontraditional way, Comptroller Susan Combs and her team are indeed being good stewards of the public's money.

About the author

David Yarkin, former deputy secretary for procurement in Pennsylvania's Department of General Services, is president of Government Sourcing Solutions, headquartered in Washington, D.C. Contact Yarkin via e-mail at dyarkin@govsourcing.com.