Georgia to Save Millions on Purchase of Supplies and Services

A.T. Kearney to Overhaul State's Procurement System

ATLANTA - Governor Sonny Perdue announced today that the state of Georgia has contracted a national management firm to save at least $135 million a year on the purchase of thousands of supplies and services.  The Chicago-based firm of A.T. Kearney, Inc. won the $13.7 million contract for the four-year project to overhaul the state's procurement system.

“This is a prime example of how state government operations can be made more efficient, resulting in millions of dollars in taxpayer savings,” said Governor Sonny Perdue. “We're adopting smart business practices, and savings will be immediate, substantial and sustained for years to come.”

The contract requires A.T. Kearney to meet the initial $135 million savings target within three years, then hand over an established system that will continue to accrue these savings and capture millions in new savings annually thereafter.

A.T. Kearney earned the top score in a competitive bidding process, based largely on its successes with similar projects in five states – California, Virginia, Kentucky, Massachusetts and Iowa – and a long list of the nation's largest corporations, including Gillette, ChevronTexaco, Acuity Brands, Bellsouth, UPS and Campbell Soup Co.  The company reports saving clients more than $30 billion in the past 20 years.

The A.T. Kearney team will work closely with state agency heads and legislative leadership to devise a process that will drive identified cost savings to priority program needs.

 A.T. Kearney will work side by side with the Department of Administrative Services (DOAS), the agency that oversees the government's procurement process for bidding and buying items such as office supplies, heavy machinery, contracts for printing, computer software and food services. A.T. Kearney specializes in managing spending on multi-million dollar purchasing and “strategic sourcing,” a process for seeking the best supplier and lowest cost for specified goods and services.

Once the firm begins its work in October, A.T. Kearney predicts a fast start on savings, with the first wave bringing in significant results by May 2006.

“Of the states we've seen, Georgia is the best-prepared to take on a transformation project of this magnitude,” said Joel Goldhammer, vice president of A.T. Kearney and leader of its state government practice.  “Governor Perdue deserves compliments for a solid plan of action that will begin generating significant savings on a short timeline and keep multiplying the results year after year.”

The state's procurement process was the largest potential source of government savings targeted by Governor Perdue's Commission for a New Georgia, a board of business leaders established to recommend ways to increase efficiency, cost savings and customer service in state government.

The Commission's fact-finding task force reported that the current purchasing system is outmoded and impaired by technology gaps, lack of usable data on expenditures and weak compliance by purchasing agents. The Commission recommended that Georgia shift to a system of 21st Century technologies and management techniques that are proving to be “best practices” for the private sector and for other states.

A.T. Kearney backed its confidence in meeting the state's savings target by agreeing to risk 20 percent of its fee if results of the project fall short of $135 million goal. The contract price of $13.7 million includes up to one million in “share-in-savings” incentive payments which would be awarded incrementally for topping the goal. Funding for the procurement project was appropriated by the state legislature in the 2005 session.

A.T. Kearney was one of four finalists in the bidding process. A six-member state agency selection committee factored the decision on a scoring scale weighted heavily on the company's experience and record of success, the quality of the proposed services, and the portion of the fee put at risk for failing to meet the savings target. A.T. Kearney will subcontract with CGI-AMS, an information technology company, to identify the requirements for technical systems.

In addition to its experience and demonstrated success working with state governments, A.T. Kearney scored strongly on its plan to train DOAS and state agency purchasing staff. This knowledge transfer will result in the state's ability to take over at the end of the three years and sustain the savings into the future.