Balanced Scorecard - U.S. Department of Energy

Department of EnergyCONTRACTOR PURCHASING SYSTEMBALANCED SCORECARDPERFORMANCE MANAGEMENT PROGRAMCore Performance MeasuresFY 2012ISSUED: Sep 14, 2011

BALANCED SCORECARDPERSPECTIVES AND OBJECTIVES2FINANCIAL- Optimum Cost Efficiency ofPurchasing Operations- Financial Contributions ofProcurement via Cost SavingsCUSTOMER- Customer SatisfactionMISSIONVISIONSTRATEGYLEARNINGANDGROWTH- Employee Satisfaction- Employee AlignmentINTERNAL BUSINESSPROCESSES- Effective Internal Controls- Effective Supplier Management- Use of Effective Competition- Effective Utilization of AlternateProcurement Approaches- Acquisition Process- Good Corporate Citizenshipthrough Purchasing

3MISSIONTo provide acquisition and assistance services tosupport accomplishment of the Department’sprogrammatic goals and objectives.VISIONTo deliver on a timely basis the best value productor service to our customers while maintainingthe public’s trust and fulfilling public policyobjectives.STRATEGYTo develop and maintain an organizational culture,management systems, and line processes in theacquisition system that ensure a focus on resultswhile emphasizing integrity, fairness, competition,openness, and efficiency.

4CUSTOMER PERSPECTIVEBALANCED SCORECARDPERSPECTIVES AND OBJECTIVESCUSTOMERCUSTOMERFINANCIALMISSIONVISIONSTRATEGYINTERNAL BUSINESSPROCESSES- Customer SatisfactionLEARNINGANDGROWTH

CUSTOMER PERSPECTIVE5OBJECTIVE MEASURE NATIONAL TARGETCustomer SatisfactionData Source: Annual CustomerClimate Survey or Real-TimeTransactional SurveyData Generation: Accomplished byusing appropriate survey instrument.Data Verification: Purchasing Directorsare responsible for accuracy of surveydata generation, and for retention ofrecords in accordance with recordsmanagement requirements. Recordswill be made available for complianceand/or DOE reviews.Core:Customer Satisfaction Rating% of customer satisfaction with the timeliness,quality, and level of communication providedby the procurement office.The Customer Satisfaction Rating must addressthe following elements:Timeliness: Extent of customersatisfaction with timeliness ofprocurement processing; planningactivities; and on-going communicationsQuality: Extent of customer satisfactionwith the quality of procurement servicesCommunications: Extent to whichprocurement communicates accurateinformation which impacts the workof the customer’s organization92%

CUSTOMER PERSPECTIVE6OBJECTIVE MEASURE NATIONAL TARGETCustomer Satisfaction (Cont .)The Customer Satisfaction Rating is tobe determined by use of one of the followingtwo alternatives (note: use of one or the otheris required):1. Annual Customer Climate Survey2. Real-time Transactional Survey

INTERNAL BUSINESS PROCESSES PERSPECTIVE7BALANCED SCORECARDPERSPECTIVES AND OBJECTIVESFINANCIALCUSTOMERMISSIONVISIONSTRATEGYLEARNINGANDGROWTHINTERNAL BUSINESSPROCESSESINTERNAL BUSINESSPROCESSES-Effective Internal Controls-Effective Supplier Management-Use of Effective Competition-Effective Utilization of AlternateProcurement Approaches-Acquisition Process-Good Corporate Citizenship throughPurchasing

INTERNAL BUSINESS PROCESSES PERSPECTIVE8OBJECTIVE MEASURE NATIONAL TARGETEffective Internal ControlsData Source: Purchasing files, compliancereviews, review boards and LocalPurchasing Information Systems(LPIS)Data Generation: Based uponresults of compliance reviews,transactional review of purchasingfiles, review boards, LPIS, etc.Data Verification: PurchasingDirectors are responsible for theretention of records in accordancewith records management requirements.Records will be made available forcompliance and/or DOE reviews.Core:Assessment of the degree to which thepurchasing system is in compliance withstakeholder requirements includingapplicable laws, regulations, terms andconditions of contracts, ethics, good businesspractices, etc. The assessment result is to beexpressed in percentage form.(Note: In assessing performance under thismeasure, contractors are to rely primarily on theresults of the most recent formal compliancereview, information gained from the periodicreview of purchasing files, formal review boards(IG, GAO, etc.), and other appropriate sources.The cognizant DOE Contracting Officer isrequired to review and approve the contractor’sself-assessment methodology and score underthis measure as part of the CO’s review of thecontractor’s BSC self-assessment activities.)(Appropriate targets will be negotiatedbetween the Cognizant DOE ContractingOfficer and the contractor purchasingorganization.)

INTERNAL BUSINESS PROCESSES PERSPECTIVE9OBJECTIVE MEASURE NATIONAL TARGETEffective Supplier ManagementData Source: LPISData Generation: Data is generated fromthe LPIS.Data Verification: Purchasing Directorsare responsible for the accurate reportingof results and for retention of recordsin accordance with records managementrequirements. Records will be madeavailable for compliance and/or DOEreviews.Core:% Delivery on-time (includes JIT, excludesPurchase Cards)84%

INTERNAL BUSINESS PROCESSES PERSPECTIVE10OBJECTIVE MEASURE NATIONAL TARGETUse of Effective CompetitionData Source: LPISData Generation: Data is generated fromthe LPIS.Data Verification: Purchasing Directorsare responsible for the accurate reportingof results and for retention of recordsin accordance with records managementrequirements. Records will be madeavailable for compliance and/or DOEreviews.Core:% of total dollars obligated on actions over$150,000 that were awarded using effectivecompetition.(Note: This measure applies to any dollars obligatedduring the fiscal year on a subcontract or purchaseorder that was awarded using effective competitionand whose current dollar value exceeds $150,000.Effective competition means, given the size andcomplexity of the requirement, a sufficient number ofpotential sources are solicited with the expectation ofreceiving competitive proposals to support thereasonableness of price or cost. The placement ofdelivery orders, task orders, or releases againstindefinite delivery, indefinite quantity,requirements-type or other similar contracts areconsidered competitive if the underlying contractwas awarded using effective competition.)(Appropriate targets will be negotiatedbetween the Cognizant DOE ContractingOfficer and the contractor purchasingorganization.)

INTERNAL BUSINESS PROCESSES PERSPECTIVE11OBJECTIVE MEASURE NATIONAL TARGETEffective Utilization of AlternateProcurement ApproachesData Source: LPISData Generation: Data is generated fromthe LPIS.Data Verification: Purchasing Directorsare responsible for the accurate reportingof results and for retention of recordsin accordance with records managementrequirements. Records will be madeavailable for compliance and/or DOEreviews.Core:Rapid Purchasing Techniques:1. % of transactions placed by users(number of transactions placed by usersdivided by the sum of total transactions -including JIT, Purchase Card, etc.)2. % of transactions placed through electroniccommerce(number of transactions placed throughe-commerce divided by the sum of totaltransactions. E-commerce means that allcommunication with the vendor(s)throughout the pre-award and award processis done by electronic means (i.e., paperless).E-commerce tools include the internet, useof CDs, e-catalogs, email, etc. Use offax machines is not included unless it is apaperless fax.)(For the two measures, appropriate targetswill be negotiated between the CognizantDOE Contracting Officer and the contractorpurchasing organization)

INTERNAL BUSINESS PROCESSES PERSPECTIVE12OBJECTIVE MEASURE NATIONAL TARGETAcquisition ProcessData Source: LPISData Generation: Data is generated fromthe LPIS.Data Verification: Purchasing Directorsare responsible for the accurate reportingof results and for retention of recordsin accordance with records managementrequirements. Records will be madeavailable for compliance and/or DOEreviews.Good Corporate Citizenship throughPurchasingData Source: LPISData Generation: Data is generated fromthe LPIS.Data Verification: Purchasing Directorsare responsible for the accurate reportingof results and for retention of recordsin accordance with records managementrequirements. Records will be madeavailable for compliance and/or DOEreviews.Core:Average cycle time (exception: PurchaseCard) for each of the following dollar ranges:Average cycle time for $150,000Average cycle time for all actionsCore:% of economic and social diversity andlocal participation program goals achieved,including SB, SDB, Women Owned SB Goals,HubZone and Disabled Veterans.6 to 9 days for $150,0008 to 11 days for all actions100% of established goals

13LEARNING AND GROWTH PERSPECTIVEBALANCED SCORECARDPERSPECTIVES AND OBJECTIVESCUSTOMERFINANCIALMISSIONVISIONSTRATEGYLEARNINGANDGROWTHINTERNAL BUSINESSPROCESSESLEARNING AND GROWTH- Employee Satisfaction- Employee Alignment

LEARNING AND GROWTH PERSPECTIVE14OBJECTIVE MEASURE NATIONAL TARGETEmployee SatisfactionData Source: Employee Climate Survey,focus groups, and other methods asappropriateData Generation: Accomplished byusing appropriate survey instrument andother information sources.Data Verification: Purchasing Directorsare responsible for accuracy of surveydata generation, and other informationsources, and for retention of recordsin accordance with records managementrequirements. Records will be madeavailable for compliance and/or DOEreviews.Core:Employee Satisfaction Rating:% of employees satisfied with the workenvironment, and the organization’sprofessionalism, culture and values.This rating may include data fromemployee survey, focus groups, or othermethods.(Appropriate targets will be negotiatedbetween the Cognizant DOE ContractingOfficer and the contractor purchasingorganization.)

LEARNING AND GROWTH PERSPECTIVE15OBJECTIVE MEASURE NATIONAL TARGETEmployee AlignmentData Source: Employee PerformanceAppraisals and LPIS as appropriateData Generation: Data is generated fromthe LPIS.Data Verification: Purchasing Directorsare responsible for the accurate reportingof results and for retention of recordsin accordance with records managementrequirements. Records will be madeavailable for compliance and/or DOEreviews.Core:Employee Alignment:% of employees whose performanceevaluation plans are aligned withorganizational goals and objectives.98% aligned

FINANCIAL PERSPECTIVE16BALANCED SCORECARDPERSPECTIVES AND OBJECTIVESFINANCIALCUSTOMERFINANCIALMISSIONVISIONSTRATEGYLEARNINGANDGROWTHINTERNAL BUSINESSPROCESSES- Optimum Cost Efficiency ofPurchasing Operations-Financial Contributions of Procurementvia Cost Savings

FINANCIAL PERSPECTIVE17OBJECTIVE MEASURE NATIONAL TARGETOptimum Cost Efficiency ofPurchasing OperationsData Source: LPISData Generation: Data is generated fromthe LPIS.Data Verification: Purchasing Directorsare responsible for the accurate reportingof results and for retention of recordsin accordance with records managementrequirements. Records will be madeavailable for compliance and/or DOEreviews.Core:Cost to Spend RatioPurchasing Operation’s operatingcosts (labor plus overhead) dividedby purchasing obligations.(Appropriate targets will be negotiatedbetween the Cognizant DOE ContractingOfficer and the contractor purchasingorganization)

FINANCIAL PERSPECTIVE18OBJECTIVE MEASURE NATIONAL TARGETFinancial Contributions of Procurementvia Cost SavingsData Source: LPISData Generation: Data is generated fromthe LPIS.Data Verification: Purchasing Directorsare responsible for the accurate reportingof results and for retention of recordsin accordance with records managementrequirements. Records will be madeavailable for compliance and/or DOEreviews.Core:Procurement Cost Improvement:% of procurement cost improvement goalachievedAcceptable measures of procurement costimprovements include, but are not limitedto:• Comparison to previous price paid orproposal received• Independent estimate vs. purchase price• Purchase requisition amount to actualprice• Leveraged cost improvements throughutilization of ICPT agreements• Individual site leveraged buyingopportunities• Additional scope achieved within estimate• Volume discounts/rebates• Transactional savings via ecommerce andother system improvements• P-Card rebates• P-Card transactional savings• “Other” methodologies agreed to by thecognizant DOE Contracting Officer(For FY2012, data will be collected toapproximate a baseline. In subsequentyears, appropriate cost improvementgoals (in terms of dollars) will benegotiated between the Cognizant DOEContracting Officer and the contractorpurchasing organization. The nationaltarget will be 100% of that establishedgoal.)