Wednesday, July 27, 2005

More on procurement costs

From the LANL NewsBulletin:

July 25, 2005

More on procurement costs

I'm glad to hear that Albert Jiron is in favor of reducing procurement costs and delays. I think that we all are.

However, Supply Chain Management (SUP) has no record of reducing costs. For a number of years the Department of Energy has required all contractors to report costs by "Functional Categories." Procurement costs are contained within "General Support" costs. These reports can be found at online. Since fiscal year 2000, the cost of running the Lab's procurement system has increased by $9.5 million (84 percent) from $11.3 million to $20.8 million. By contrast, the costs of running the procurement systems at Lawrence Livermore National Laboratory, Sandia National Laboratories and Lawrence Berkeley National Laboratory - systems operating under similar conditions - have increased by 22.9, 21.7 and 49.6 percent, respectively.

I don't think that this increase occurred on Albert's watch. Hopefully, under Albert's direction these costs will be reduced. Assuming that DOE continues to publish these reports, we'll see what the fiscal year 2006 numbers look like.

As an aside, what are "institutionally imposed requirements?" They sound like self-imposed requirements.

--Bruce McReynolds

Bruce McReynolds has most of this correct. But, I do not see that the present SUP management has any intention to reduce procurement costs. For one thing, SUP needs to get some procurement professionals into the Division Office.
But working efficiently might cost some of them their jobs! Job security is "job one."
A re-organization of SUP about 9 months ago created a number of new groups with additional Group Leaders, Deputies, and Office Administrators. The GLs and DGLs came from the ranks of the senior buyers, of course, leaving less buyers to do the work. The response to complaints was that this new organizational structure would streamline things and more would be done with less buyers. Now, we see that TSMs are going to have to take procurement training. What a mess.

I memory server, there was a posting (or comment) a while back that stated that requestors were not permitted to enter the procurement office area to discuss procurements with the respective buyers.

Has this changed?

This is a clear example of the arrogance of the SUP management.
There was a rumor going around that a couple of knowledgable individuals in SUP who knew how to navigate the purchasing system were charging employees ten bucks a pop to enter their paperwork for safety glasses. Now that's free enterprise!
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