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GPO - A model for controlling procurement costs

Tuesday, November 16, 2010

Press release from the issuing company

Voters spoke on November 2, and elected officials both in Washington, D. C., and in state capitals received a wakeup call or, at least, they should have.  The electorate is fed up with wasteful government spending.

However, painting all government agencies with the same brush is not constructive.  It would be better to highlight programs that are working and encourage other governmental agencies to follow their example.  One that consistently receives high marks is the procurement program of the United States Government Printing Office (GPO), according to Deborah Snider, senior vice president of e-LYNXX Corporation and division president of the company's Government Print Management division.

GPO was founded in 1813 to support the print needs of all three branches - executive, legislative and judicial - of the federal government.  GPO is required by Title 44 of the U.S. Code to be the centralized resource for gathering, cataloging, producing, providing, authenticating and preserving published information. That's just about everything printed for the federal government.  Further, as specified by Title 44, all federal agencies are required to use GPO to procure their print.

Centralization provides GPO with buying power, quality control and economy of scale values. It also positions GPO so it can pre-qualify and be selective about print suppliers that want to do GPO printing, Snider explained.

First, a printer must register with GPO.  There are some 10,000 that are registered, but only a fraction of that number are active suppliers.  Once registered, a printer must be qualified in one or more of five print category levels, ranging from museum quality work to functional quality work.  The rigorous qualification process is a detailed review of work samples and, at the highest quality levels, on-site inspections of the supplier's print plant.  A printer can only bid on GPO jobs for the quality levels for which it is pre-qualified. This ensures that regardless of pricing, GPO will receive quality work on time.

The bidding system that GPO has established for printers is unique in that it encourages suppliers to check their production schedules and determine if they have production gaps or downtime.  Printers typically have 30% downtime or more through any given year.  When work does not materialize, the printer must scramble to fill the gaps.  Otherwise, there is no work, no revenue and idle staff and equipment.

GPO is the perfect client for filling downtime, Snider said.  Its jobs usually are in the $2,000 to $5,000 range, and they can be easily scheduled to keep the winning printer busy, productive and profitable.   GPO does award million dollar plus jobs for which there can be less competition than for jobs priced below $10,000.

While GPO does put a heavy emphasis on low bids, GPO work does not always go to the lowest bidder.  As a general rule, Snider said GPO jobs are awarded to the lowest responsive and responsible bidder as a way for GPO to control federal print costs but not at the expense of quality. GPO is a stickler for detail, regulations, reports, follow up and confirmation.

For the GPO printer, filling downtime maximizes production utilization, increasing it from a print industry average of 70% to full utilization of 90% to 95%.  Before GPO work, a print supplier can average 2.5% profitability on 70% production utilization.  Add GPO work and Snider said the bottom line grows to about 14%.

GPO provides the incentive for private sector printers to compete for work, but to develop GPO as a solid secondary market printers must be well schooled in GPO practices, procedures and protocols.  Elected leaders should encourage local, state and federal agencies to follow GPO's lead and adopt competitive procurement practices that benefit the government buyer, taxpayers and suppliers.  That is a reasonable step toward bringing government spending under control -- a step that does not require investment.


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