QUESTION
How was the PEG savings of $356k calculated and how is OTI renegotiating contracts?
0:27:50
·
5 min
The PEG savings of $356k was calculated by renegotiating contracts with vendors, leveraging the city's total buying power for better rates and discounts.
- Large contracts were reviewed, and deals with technology and service providers were renegotiated.
- The Office of Technology And Innovation (OTI) identified inefficiencies in how each agency individually approached vendor contracts.
- Significant negotiations with major telecommunication carriers have resulted in reduced wireless service rates, saving millions annually.
- OTI aims to renegotiate across all vendors and is seeking more competitive agreements based on the city's size and volume.
- Best practices include a citywide IT spend review process for procurements over $1 million, to leverage discounts and savings across agencies.
Jennifer Gutiérrez
0:27:50
Still, the preliminary plan includes PEG savings of 300 and 5 6k and FY24 related to OTI contracts that were renegotiated with vendors for better rates and this counts.
0:28:02
Can you share how that peg savings was calculated?
Matthew Fraser
0:28:06
So what we what we basically did was we took a look at our our largest contracts and we looked at the city's volume spend and we went back to the providers of the technology, the providers of the services, and we renegotiated the deal.
0:28:22
One of the things that we looked at as we put the Office of Tech And Innovation together Mhmm.
0:28:26
Was the fact that the city didn't take advantage of its total buying power.
0:28:30
So every agency approached the contract, every agency approach the vendor as an individual entity.
0:28:35
And because of that, there was a large disparity in the number of the the volume of discounts that we're getting as a sitting So when we did simple things like taking a look at our telecommunication savings, we went to the major carriers AT and T and Verizon T Mobile.
0:28:48
And we renegotiated the amount that we're paying on just pure wireless services.
0:28:53
Our average discount across the carriers went down by over $5 a month and those total savings netted us in the tens of 1,000,000 annually.
0:29:02
Right?
0:29:03
So for us, I think when you in terms of how that was accomplished.
0:29:07
It was looking at the years where we spent the most and just going to renegotiate as the city versus as an individual in
Jennifer Gutiérrez
0:29:14
And do you do did you do the same with all your vendors or just with your vendors?
Matthew Fraser
0:29:18
We're we're in the process of doing that across the entire spectrum.
0:29:21
And in addition to that, we're also looking at how we can get more competitive agreements in place.
0:29:28
Services that we know we're going to purchase and services that we purchase and large volume instead of the traditional rates that we see on OGS or GSA rates, getting them become more competitive because of the city's size and volume.
Jennifer Gutiérrez
0:29:41
Yeah.
0:29:41
And from those negotiations, have there been any, like, best practices or lessons learned from the way that the approaches these negotiations.
0:29:49
Obviously, this year and lastly, with the pressure of a peg, but how are you thinking through the longevity of these, like, negotiations moving forward?
Matthew Fraser
0:29:57
So one of the things we put in place across the city was a spend review, a IT spend review.
0:30:02
So any procurement that's going through over, I believe, thresholds a $1,000,000.
0:30:07
The Office of Tech And Innovation gets its eyes on it first.
0:30:10
So it gives us the ability to create a catchall.
0:30:13
So if an agency is looking to do an initiative in in one case, We saw an agency looking to purchase network equipment and we were able just by reviewing the order we need to renegotiate the agreement, we were able to save over $1,000,000 in terms of cost because we saw the volume of discount at a large agency that we were able bring that into a smaller agency.
0:30:35
So in terms of the best practices that we've seen, it's being more mindful of where we're spending and actually reviewing the terms before they go out and and stop the process of every agency just buying on their own, leverage the city's total buying power.
Jennifer Gutiérrez
0:30:52
On the in your opening remarks, you mentioned the successful promotion of MWE contracts.
0:31:03
Can you share if any of those that were in your the 245,000,000 in contracts?
0:31:07
Are these new contracts?
0:31:08
Are these are included in sort of the renegotiation for PEG savings as well?
0:31:12
So
Matthew Fraser
0:31:14
deferred to the deputy commissioner from management budget.
Edwin Pemberton
0:31:19
So as the city's threshold increases, we allow now to bring in more vendors, and we're targeting MWD vendors with with the the mayor's office to make sure that they're gonna fail share.
0:31:34
What happens in our procurement world is even though you're a prime contractor.
0:31:40
We now require prime contractors to sub with MWA.
0:31:45
Mhmm.
0:31:45
So he has to he used to get a 100% of a certain volume of of manufacturing product or services.
0:31:52
We're we're adding in requirements in these contracts that they must sub to MWE's that helps grow the amount of participation in in program, plus we're we're pulling together smaller groups of products to bid only to MWA.
0:32:08
So we're able to take information, data, and target these smaller groups, and now have them to increase the volume for the city.
Jennifer Gutiérrez
0:32:18
So thank you.
0:32:19
And just so that I understand the the sequence, I mean, I I'm certainly supportive of the 300 and T15 MWE procurements.
0:32:28
I think that's really great.
0:32:30
The did that come from the PEG savings assessment specifically where you're okay.
0:32:36
No.
0:32:43
Okay.
0:32:45
And do you have a sense of how many vendors that were assessed under the PEG Savings Program of them.
0:32:51
How many of them were MWD vendors already existing?
0:32:54
Not part of the new procurement?
Edwin Pemberton
0:32:58
On on we'll have to get back to you on the 356?
Jennifer Gutiérrez
0:33:01
No.
0:33:01
No.
0:33:01
So no.
0:33:02
Because the 356 the the 356 seems to me like it's kind of a newer integration, which is great.
0:33:08
I'm asking specifically about the vendors that you were all assessing as part of the PAG savings program.
0:33:12
How many of those that you're now renegotiating with are UBEs.
Matthew Fraser
0:33:17
So we we would definitely have to come back to you with that.
Jennifer Gutiérrez
0:33:20
So as
Matthew Fraser
0:33:20
I said, we don't have that in hand.
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