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UC procurement program exceeds savings goal

A University of California program aimed at improving procurement practices across the system exceeded its financial target last fiscal year, delivering $128 million in savings.

The P200 program ­ part of the university’s Working Smarter Initiative ­ beat its savings goal of $120 million in fiscal year 2013–14, increasing savings by 28 percent over the previous year. This was accomplished thanks to the implementation of new, systemwide sourcing agreements, as well as improvements in procurement sourcing and reporting operating infrastructure.

“The achievements of the P200 program to date have been impressive, and all to the benefit of the university’s core missions of teaching, research and public service,” said Nathan Brostrom, UC executive vice president for business operations and interim chief financial officer. “With continued collaboration among our campuses, labs, medical centers and the Office of the President, we can continue to maximize every university dollar, operate more effectively and improve the quality of our work.”

UC campuses spend more than $7 billion a year for goods and services, representing nearly one-third of the university’s operating budget. P200 was launched in 2012 and aims to deliver $200 million in savings annually by the end of fiscal year 2016–17. To achieve this, UC is implementing strategic procurement processes and state-of-the-art technology that will maximize resources used to purchase goods and services across the system.

In 2013–14, the university achieved savings through a variety of systemwide collaborations, including:

  • UC San Diego, UC Riverside and UC Santa Barbara collaborated on a joint Request for Proposals (RFP) for the supply, warehouse and distribution of fresh produce. The campuses established an agreement that is forecasted to save $2.3 million over the three-year contract term. Following this success, UC Merced and UC Davis also issued a joint RFP and established a similar agreement for Northern California produce purchases, with projected savings of $1.2 million over a three-year contract term.
  • The UC Office of the President and campus procurement teams collaborated to establish a new supplier relationship that is projected to save $2.9 million annually over the next five years on overnight and ground shipping costs.
  • UC San Diego’s procurement team worked with campus plant management to review an extended service agreement for two turbo-generators that supply more than 80 percent of the campus’s energy needs, resulting in an agreement that saved more than $770,000.

To date, the P200 program has delivered on nearly all major components of its five-year roadmap, designed to transform the university’s procurement practices and operational capabilities. In May, the university’s Procurement Leadership Council proposed an update to the program’s strategic plan, including financial targets with a minimum annual benefit increase of 15 percent to meet the program’s overall savings goal.

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