About the PSC
Business
Plan The Road to Tomorrow -
2004
The Provider of Choice for Quality and
Value in Shared Services
Business Plan The Road to Tomorrow
2004
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of the Assistant Secretary for Administration and Management
Table of Contents
1.0 Executive Summary
1.1 Mission
1.2 Vision
1.3 Keys to Success
2.0 Organizational Summary
2.1 Legislative Basis
2.2 Organization History
2.3 Locations and Facilities
3.0 Products and Services
3.1 Service Areas
3.2 Future Product and Service Enhancements
3.3 Technology
4.0 Market Analysis Summary
4.1 Market Segmentation Strategy
4.2 Industry Analysis
4.3 PSC Capabilities Analysis
5.0 Strategy Summary
5.1 PSC Strategy
5.2 Value Proposition
5.3 Marketing Strategy
5.4 Workload and Revenue Forecasting
5.5 Milestones (Planned)
6.0 Management Summary
6.1 Organizational Structure
6.2 Personnel Plan
6.3 FTE Chart
6.4 Change Management
7.0 Financial Plan
7.1 Important Assumptions
7.2 Key Financial Indicators
7.3 Past Performance
7.4 FY03 Financial Statement
Appendix – Glossary of Acronyms
1.0 Executive Summary
1.1 Mission
To provide a full range of program support services to all components
of HHS and other Federal Agencies, primarily in the areas of Human Resources,
Health Resources, Administrative Services, and Financial Management.
1.2 Vision
The PSC strives to be a customer-driven organization that will earn us
a service-delivery reputation that is second to none.
1.3 Keys to Success
The PSC’s guiding principles are an integral aspect of our strategy
for the future and are key to successfully providing quality products
and services as we strive for satisfied customers served by a committed
workforce:
Customer Service
We are committed to building partnerships with our customers that will
enable us to deliver quality products, excellent service and meet their
evolving program support needs.
Workforce Excellence
We are committed to developing a workforce comprised of talented employees
who have the proper tools, clear organizational vision, training, and
incentives to foster a commitment that guarantees outstanding product
and service quality.
Cost Management
We are committed to ensuring the “price is
right” by operating a “fee-for-service” business based upon cost control,
cost transparency, good governance, leading practices, economies of
scale and market-driven prices.
Business Strategy and Innovation
We are committed to exploring new ideas and delivery methods through
collaboration with our customers, ongoing continuous process improvement,
and re-engineering.
Communication
We are committed to engaging in ongoing dialogue with our customers,
seeking honest feedback and constructive criticism to enable us to improve
our product and service quality and reduce costs.
2.0 Organizational Summary
2.1 Legislative Basis
The formation of the PSC was a direct result of the
Reinventing Government (REGO) II Initiative, which reviewed the organization,
financing, and governance of the Department’s common-use administrative
services. The REGO II analysis determined that the most efficient and
effective method of organizing the Department’s administrative and logistical
service providers should be a single organization dedicated to the provision
of cost effective, responsive, and qualitative services. Thus, the PSC
was created to streamline the provision and minimize duplication of traditional
administrative support services.
The activities and services of the PSC are supported
through the HHS Service and Supply Fund (SSF), a working capital, or revolving
fund, whose authority was established by 42 U.S.C. 231. The fund provides
consolidated financing and accounting for business-type operations involved
in providing common services and commodities to customers. The SSF is
a funding mechanism, whereby PSC receives budget authority to earn revenue
for services rendered.
The Fund is governed by a Board of Directors, who approve the PSC’s annual
rate structure for each product/service line. The Board is chaired by
the Deputy Secretary, with the Assistant Secretary for Budget, Technology,
and Finance serving as Vice-Chair. The Board includes representatives
from each HHS Operating Division, the PSC Service Directors and the Inspector
General, ex officio.
2.2 Organization History
The Program Support Center was created in 1995 to provide a wide range
of administrative support within the Department of Health and Human Services,
allowing the Department Operating Divisions to concentrate on their core
functional and operational objectives. As the first true shared service
enterprise at HHS, the PSC provides products and services on a competitive,
“fee-for-service” basis to customers throughout HHS, as well as to approximately
thirteen other Executive Departments and eighteen independent Federal
agencies.
Designed to reduce Government spending and duplication of efforts in
the realm of administrative support services, the PSC is able to capitalize
on its operational expertise to realize significant savings whether through
partnering, standardization, streamlining, prudent acquisition strategies,
reorganization, economies-of-scale, or consolidation and an overall sound
business approach to the delivery of products and services.
Over the past eight years, the PSC has added and eliminated products
and services in order to address customer needs. In addition, market
pressures and opportunities have helped drive the creation or cessation
of various services. For the past two years, the PSC has undergone an
intensive period of workplace modernization, marked by in-depth analysis
of product offerings, reengineering of work processes, changes in business
management practices, and staff restructuring, resulting in a more efficient
and focused organization. Today, the PSC offers more than fifty products
and services to government entities across the nation.
2.3 Locations and Facilities
The PSC headquarters is located in Rockville, MD, with
support staff located in Washington, DC, Silver Spring, MD, Perryville,
MD and Bethesda, MD. Additionally, the Federal Occupational Health Service
is located nationwide with 10 area office locations. In addition, the
Finance Division of Cost Allocation has satellite offices in New York,
NY, Dallas, TX, and San Francisco, CA. Finally, AOS provides contracted
regional support in the following cities:
Atlanta, GA |
Boston, MA |
Chicago, IL |
Dallas, TX |
Denver, CO |
Kansas City, MO |
New York, NY |
Philadelphia, PA |
San Francisco, CA |
Seattle, WA |
|
|
3.0 Products and Services
3.1 Service Areas
The Program Support Center provides a centralized approach to administrative
services and products for the customers, allowing them to focus on their
core missions. This array of services have been grouped into five delivery
organizations – Human Resources, Financial Management, Administrative
Operations, Health Resources, and Strategic Acquisition Services.
Human Resources
The Human Resource Service (HRS) provides an extensive array of personnel
systems administration and management, training, and payroll services
to the Department of Health and Human Services. The mission of HRS is
to provide high quality human resource services at competitive prices
to a multi-customer base of HHS components and other Federal agencies.
These services include automated personnel and payroll systems support,
equal employment opportunity, and workforce development. In addition,
HRS provides compensation and medical benefits to active duty and retired
Commissioned Corps officers. HRS manages the Department’s payroll operations,
providing pay services to all HHS employees, serving more than 63,000
employees every pay period. In addition, the Human Resource Service manages
the HHS University, which provides opportunities for skill development
and common needs training across the Department.
Financial Management
The Financial Management Service (FMS) serves as a major part of the
foundation of the Department’s finance and accounting operations through
the provision of payment management services, accounting and fiscal services,
debt and travel management services, and rate review, negotiation, and
approvals for departmental and other Federal grant and program activities
to HHS and other Federal Departments. Fiscal advice and technical and
policy guidance are also available to assist in implementing new initiatives
towards assuring compliance with regulatory requirements.
Administrative Operations
The Administrative Operations Service (AOS) provides a wide range of
administrative and technical services to customers within the Department
and other Federal agencies. The major service areas include: real property
management, which includes facilities management, leasing and disposition
of surplus Federal property; personal property management including state-of-the-art
warehousing and inventory control; technical support and communications
management which includes telecommunications, visual communications, printing
and publications, reprographics, conference room/training facilities,
and mail and messenger services; and management of regional contracts
for administrative support to HHS customers outside the Washington area.
In FY 2004, AOS will also oversee the business functions of the PSC, to
include cost/pricing guidance, centralized Service Level Agreements, competitive
sourcing, and the agency performance management. AOS will also take on
the management of the Freedom of Information Act and Records Management
Office.
Health Resources
The Federal Occupational Health Service (FOHS) provides comprehensive,
high-quality, customer-focused occupational health services in strategic
partnership with Federal agencies and organizations nation-wide to improve
the health, safety, and productivity of the Federal workforce. Services
include health and wellness programs, employee assistance, work/life,
and environmental health and safety services.
Strategic Acquisition Services
The Strategic Acquisition Service (SAS) is responsible for providing
leadership, policy, guidance and supervision to the procurement operations
of the Program Support Center and improving procurement operations within
DHHS. The SAS Division of Strategic Sourcing investigates innovative
government and industry procurement practices and brings these innovations
into strategic planning, design and implementation. The Division
of Acquisition Management provides direct acquisition services to DHHS
and other federal and non-federal customers. The Supply Service
Center supports DHHS health facilities and other organizations worldwide
by providing pharmaceutical, medical and dental supplies to federal agencies
and other related customers. The Strategic Acquisition Service is part
of the PSC effort to accomplish a part of the Secretary's "One Department"
initiative by consolidating procurement operations in DHHS through activities
such as the elimination of duplicative contracts within DHHS, by leveraging
DHHS' purchasing power through the use of consolidated contracts, and
by fostering the implementation of new procurement practices designed
to provide higher quality procurement services at reduced cost.
3.2 Future Product and Service Enhancements
In FY 2004 the Program Support Center will continue to work with Department
leadership to implement the President’s Management Agenda, the Secretary’s
One-Department Initiative, and the goals of the Assistant Secretary for
Administration and Management. This will be done in concert with individual
goals of the PSC, which include:
- Develop a Marketing Strategy that focuses on core PSC strengths, viable
markets, and on expanding those core services in areas where the PSC
is clearly the leader.
- Identifies areas where the PSC can offer further strengths for Departmental
consolidation such as the Acquisition initiative.
- Support contract awards to small and/or disadvantaged businesses
- Reduce costs through implementation of best business practices
The PSC is constantly looking for ways to improve our product and service
offerings. To that end, we plan to implement the following product and
service enhancements during 2004:
HHS University
HHS University has been established within HRS
to consolidate common training presently being offered throughout the
Department. The purpose of this consolidation is to obtain efficiencies
and improve the effectiveness of training being provided to the Department’s
employees, while reducing costs, achieving economies of scale, and eliminating
redundancies.
HHS University serves as the entryway to open
enrollment training and e-learning opportunities. The mission of HHS University
is to provide consistent and equitable learning opportunities for all
employees, through consolidation of common services, while leveraging
innovation in information technology to achieve a management driven learning
organization.
Asset Management
The Asset Management business line in AOS has
developed a three-phase plan for modernizing the asset management process.
The first phase, already completed, ties asset management software into
the Division of Acquisition Management's procurement software. Records
for those items qualified for asset management tracking are automatically
generated in the asset management system, as a result of an electronic
data file transfer from procurement. With the automatic transfer of data,
errors are virtually eliminated and the multiple keystrokes required to
enter redundant data are no longer required.
The second step, very close to activation, is
an electronic interface into financial management software. This file
transfer, when complete, will enable financial records, changed as a result
of property management actions, to be updated automatically, eliminating
a wide opportunity for critical mistakes.
The third phase of this initiative will require
the development of an electronic HHS property disposal form that is tied
to the asset management system. When an office disposes of surplus or
excess equipment, the Asset Center Representative for that office will
only need to enter the bar code of the item being disposed; every other
field will be populated electronically. The user will then enter the
recommended disposition for the piece of equipment. All records will
be updated electronically, the pick up for the material will be scheduled,
and an email indicating receipt will be sent to the property holder -
all electronically.
This "cradle to grave" approach to
property management will eliminate many hours of entering redundant data
by transferring the data from one file to the next, reduce the time to
reconcile records and will result in customers having to invest less of
their time in this highly documented system. We believe this will add
value to our customer's operations while concurrently adding value to
the PSC.
One Stop Shop
In FY 2003, the AOS Division of Property Management
established a One-Stop Shop service as the single point for developing
space designs, coordinating renovations and moves, assisting with set-up
of phones and computers, and supporting the acquisition of furniture and
carpet. Initially, this service was rolled out within the PSC, while
the processes and procedures were refined and areas for improvement were
determined. Moving into FY 2004, these services will be expanded to include
all customers making the process for moving into a new space less labor-intensive
for them. The One-Stop Shop will assume responsibility for coordinating
all aspects of the move.
In addition, the focus of the One Stop Shop has
been on smaller, less complicated jobs. However, the service is looking
to take on more significant, large-scale projects in the next year. For
example, the One Stop Shop hopes to attract business related to consolidation
efforts, such as the HR Service Centers, as they prepare to relocate to
centralized spaces.
Strategic Sourcing
As part of the Department's efforts to reduce
operational costs and drive efficiencies across all OPDIVs and STAFFDIVs,
the SAS’ Strategic Sourcing Group is conducting a Strategic Sourcing "Center
of Excellence" pilot project for the purchase of office supplies.
The purpose of this pilot is to leverage the purchasing power of HHS and
reduce the purchase costs associated with office supplies.
After an in-depth analysis, the Strategic Sourcing
Group has established Blanket Purchase Agreement's (BPAs) with Corporate
Express and Office Depot for the purchase of office supplies. These competitive
contracts will provide an average savings of 21% to 27% over current HHS
office supplies purchasing vehicles, including GSA schedule. In addition,
each vendor has developed a website that can be used for the purchase
of office supplies online. The contract websites will be available for
HHS use beginning November 13, 2003 and the pilot is expected to last
through March 2004. All HHS Purchase Card Holders and anyone who uses
a Purchase Order (PO) are encouraged to utilize these contracts for their
office supplies purchases. If the pilot is a success, strategic sourcing
deals will be negotiated for other supplies and equipment needed by the
Department.
Telecommunications
The Telecommunications Improvement Project
(TIP) Steering Committee tasked a subcommittee comprised of customer representatives
from NIH, FDA, HRSA, SAMHSA and PSC to fully review the GSA WITS2001 telecommunications
contract for requirements and cost. The Subcommittee spent many hours
meeting with GSA and current WITS customers (including the Department
of Defense) as part of the information gathering, review and analysis
process. In addition, Mitretek Systems performed a comparative analysis
(technical, management, programmatic and cost) of TIP and WITS2001 at
the request of the Steering Committee. Mitretek concluded that the WITS2001
contract could meet HHS requirements and cost with the successful negotiation
of several items.
In December 2002, the subcommittee presented
its findings to the full TIP Steering Committee, and recommended joining
the WITS 2001 contract. A number of factors contributed to the recommendation,
the most significant being budget. It was estimated that by moving to
WITS 2001, a cost avoidance of $5.5 million (cost of recompeting the contract
and a new telecommunications management system) would be achieved.
The TIP Steering Committee members voted
unanimously to accept the recommendation and move to the WITS 2001 contract.
Several months of intense negotiations between GSA and the TIP Project
Office followed. Key negotiated items included:
-
Grandfather existing lines and features
at no cost for those lines fundamental to the HHS Host or Optical
Remote Module (ORM).
-
Eliminate installation charges for those
lines fundamental to the HHS Host or ORM.
-
Minimal transition costs; only for special
customized items.
-
Dedicated service technicians would operate
as they do currently to enable the TIP community to maintain its’
level of service.
-
A reduction of $2 per line from the advertised
WITS prices.
-
TIP Customers would retain their current
voice mail system, minimizing disruption to the end users and saving
current customers over $43,000 monthly.
A memorandum of agreement was signed by PSC
and GSA in March 2003. The actual move to the WITS2001 contract and services
occured December 1, 2003.
Supply Service Center
In FY 2004 the SAS’ Supply Service Center (SSC)
is providing medical supply support to our nation’s warfighter during
a critical period of our nation's history, combating terrorism and supporting
the war effort. This support is being provided through Memoranda of Understanding
with the U.S. Army Medical Materiel Agency (USAMMA) and the Naval Medical
Logistics Command (NAVMEDLOGCOM) in Fort Detrick, MD and the Naval Fleet
Hospital Support Office in Williamsburg, VA. Projects include the Army's
Combat Support Hospital Program, the Army Surgeon General's Medical Nuclear,
Biological and Chemical (NBC) Defense Materiel Program, and their Medical
Assemblage Program. In addition, SSC is procuring the pharmaceutical
and medical supplies needed to build the revised Fleet Hospitals that
each contain four stand-alone modules for NAVMEDLOGCOM and the Fleet Hospital
Program.
SSC's customers in the State Department, Peace
Corps, Department of Homeland Security's Office of Emergency Response,
Metropolitan Medical Response Systems, and Office Of Foreign Disaster
Assistance are also being supported with customized medical, dental and
diagnostic kits as well as pharmaceutical and medical supplies that are
being pre-positioned in the event of a chemical or biological weapons
of mass destruction event. These products and kits are distributed to
Embassies and Peace Corps posts in over 60 countries in addition to Combat
and Medic Units, National Guard and Emergency Relief and Response Programs.
This fiscal year SSC is continuing to serve as
the unit-of-use repackager for pharmaceuticals needed by the Department
of Veterans Affairs (VA) Centralized Mail Out Pharmacies (CMOPs) throughout
the country. Also, the SSC is beginning a new program in FY 2004 with
the VA National Acquisition Center, where SSC will be the sole source
supplier for their annual usage of pharmaceutical items that are their
largest requirements, as well as those on nationwide supply shortages.
The VA's initial estimate is to repackage 3 to 4 million bottles per year
of the first drug, Omeprazole, in various strengths and package sizes.
This program will eventually be offered to other government agencies such
as Department of Defense and Indian Health Service.
Federal Occupational Health
The FOH is expanding its work related to lead
based paint and lead poisoning in children. This work is being performed
in cooperation with the Centers for Disease Control and Prevention at
the request of the U.S. Department of Housing and Urban Development (HUD).
All of these activities are being performed in relation to a specific
mandate of both HUD and DHHS that strives to meet the goals and objectives
of the Secretaries of both Departments. Specifically, these goals and
objectives are identified in the Healthy People 2010 Report, Section 8-11
involving Elimination of Elevated Blood Lead Levels in Children. Both
of the projects have a direct effect on the agenda of the current administration. [1]
FOH began a pilot project with HUD during FY
2003 to perform lead inspections and assessments in HUD subsidized multi-family
housing properties located throughout the country. The purpose of this
work was to identify and establish control mechanisms for all lead based
paint in these HUD subsidized units, thereby eliminating lead poisoning
in children. In conducting this pilot effort, FOH completed inspections
and assessments of 100 properties. As the effort moves into FY 2004,
it is planned that FOH will begin conducting inspections and assessments
on approximately 100 properties per month. This work will continue over
the course of several years, as there are approximately 3,000 properties
in need of evaluation.
3.3 Technology
In the first quarter of FY 2004, the HHS Information Technology Consortium
will begin implementing the first phase of consolidation of services for
the IT needs of the small Operating Divisions (OPDIVS) across the Department.
This first phase involves the implementation of a new organization, referred
to as the Information Technology Service Center (ITSC). The ITSC will
provide infrastructure support for all small OPDIV customers, including
the PSC. As a result, PSC will no longer offer desktop support, email
support, and LAN/WAN services.
The Program Support Center has established the Office for Business Technology
Optimization (BTO), which will provide oversight for information technology
investments and strategic direction for the PSC Services. The BTO’s mission
is to maximize the value of business technology by ensuring new technology
solutions support PSC’s strategic business goals.
In FY 2004, BTO has six primary goals and initiatives. The first is
leading the electronic Official Personnel File (e-OPF) implementation
which will transition 65,000 employee official personnel files from paper
to an electronic medium. The second initiative is to lead Department-wide
implementation of GSA’s e-Travel program. Thirdly, BTO will be participating
in the development of a shared services concept of operations for the
operation and maintenance of the Department’s Unified Financial Management
System (UFMS). The fourth initiative will be working with the Enterprise
Human Resources and Personnel team to develop enhancements to the system.
The fifth program will be working with the HHS University to implement
a learning management system (LMS). Finally, BTO will support the
Commissioned Corps Support Services in replacing the personnel and pay
system for active duty officers, retirees, and annuitants.
BTO will also work closely with the PSC Business Office in reengineering
efforts to ensure that the PSC technology supports the business changes.
4.0 Market Analysis Summary
4.1 Market Segmentation Strategy
All HHS OPDIVS currently use the PSC as a provider of choice for many
products and services. However, some utilize PSC offerings for all of
their needs while others maintain administrative functions in-house, and
come to PSC for their remaining service needs. It is the goal of the
PSC to offer the most attractive products and services at the best price
for all customers within HHS, as well as other Federal agencies, allowing
them to concentrate on their core mission.
HHS customers include:
In addition, the PSC offers an extensive range of administrative support
services and products to the following Executive Branch agencies:
- Department of Agriculture
- Department of Commerce
- Department of Defense
- Department of Energy
- Department of Housing and Urban Development
- Department of the Interior
- Department of Justice
- Department of Labor
- Department of State
- Department of Transportation
- Department of the Treasury
- Department of Veterans Affairs
Other Federal Organizations the PSC supports include:
- Consumer Product Safety Commission
- District of Columbia Government
- Environmental Protection Agency
- Federal Deposit Insurance Corporation
- Federal Emergency Management Agency
- General Accounting Office
- Internal Revenue Services
- National Aeronautics and Space Administration
- Office of Personnel Management
- Peace Corps
- Railroad Retirement Board
- Securities and Exchange Commission
- Small Business Administration
- Social Security Administration
- U.S. Agency for International
Development
- U.S. Postal Service
The expanding list of customers reflects the commitments that the PSC
has made to our customers and the capabilities of our workforce to address
the needs of a diverse customer base. Whether responding to embassies
worldwide, ships at sea, national emergencies, or processing payroll and
grants and contracts payments, the PSC maintains high standards for performance.
4.1.1 Market Needs
The range of products and services that the PSC has developed and cultivated
in response to customers needs has enabled us to begin to expand our core
customer network, while investing in our own workforce and infrastructure.
The PSC has spent the past two years determining what those core services
are. In-depth studies examined where we could expand our customer base,
where we could partner with other organizations in order to gain the strength
of other leaders, whether our costs were correct, and whether our prices
were competitive in the market. All of this was done with our customer
in mind. While our primary focus is on our HHS customers, we realize
that there are benefits to be gained by expanding to include other Federal
agencies, such as economies of scale and lower prices through higher demand.
We have taken steps to ensure that the level of customer satisfaction
increases. The key to our success in meeting our customer’s expectation
is to measure our performance. As a result, in FY 2004 we have implemented
performance standards for each product/service line that provide the customer
with a service expectation of timeliness and quality.
4.2 Industry Analysis
The ability to provide cost effective and quality services to customers
is essential to maintain market leadership as a shared services provider
within HHS. More competition is anticipated as organizations seek to
capitalize on ways to save administrative costs and budgets continue to
decrease
4.2.1 Industry Overview
The PSC operates in the administrative services
industry supporting the Federal Government. Administrative service centers
provide a comprehensive suite of support services to government entities
and typically focus on a wide variety of products in all administrative
areas such as Human Resources, Financial Management, Media Arts, Information
Technology, Facilities, Supply and Logistics, and Acquisition Management.
Although only a handful of true fee-for-service
organizations, franchise funds and CASU’s operate in today’s environment,
shared-services is transforming the very nature of internal staff and
support structures in organizations. Shared services takes the idea of
centralizing functions one step farther. Centralized organizations often
bring together similar types of activities and consolidate them into one
department or group. However, shared services organizations not only
consolidate, but they reengineer their business process, workforce and
culture to create a focus on customer service in the most effective and
efficient manner possible. The PSC is at the forefront in designing this
shared services concept for government.
The environment in which the PSC operates is
constantly evolving and faces many challenges. The intense focus on and
shifting of resources to Homeland Security coupled with the increasing
climate of fiscal constraint in government has forced all federal entities
to “do more with less”. The PSC continues to examine ways to reduce costs
while striving for greater operational efficiency.
Moreover, the PSC, like the entire Federal government,
is faced with the proliferation of retirements, in addition to competition
from private sector companies for talented staff, is dramatically reducing
the workforce pool, especially persons in management/leadership positions.
PSC continues to refine its succession planning methods.
Another aspect of the Federal administrative
services industry is the increased focus on competitive sourcing and A-76
studies. As conducted in the Federal Government, competitive sourcing
is the process by which the cost of an in-house commercial activity is
compared with the cost of having the same activity performed by an outside
source. Competitive sourcing provides the impetus for administrative
service providers to focus on becoming the most efficient and customer-centric
organizations. Though there is constant debate in Congress as to the
future of competitive sourcing targets, it has motivated many agencies
in the Federal Government to look internally to determine whether they
have the most efficient organization (MEO), and if not, what they can
do to get there. PSC, through the integration of a robust business model,
is working toward a continuous process that constantly refines “most efficient”.
Finally, there is a push for organizations, both
in the private and public sectors to embrace the concept of transparency.
This goes beyond disclosure of financial information. More than ever,
organizations need to deliver product and service value, good governance
and consideration for employees. They need to have integrity and abide
by their commitments. Customers need to see value in what they are paying
for and trust in the organization providing the service. They expect
service providers to be transparent and disclose any and all information
before a customer has the opportunity to ask for it. PSC, through the
implementation of automated business systems and published performance
standards, has already implemented methods of providing this information.
4.3 PSC Capabilities Analysis
4.3.1 Strengths and Weaknesses
In order to become the transparent organization demanded in the marketplace,
the PSC must be fully aware of our position and reputation among current
and potential customers. In order to do this, we must understand the
areas where we excel and those where we face challenges.
One of the PSC’s greatest assets is the technical expertise,
experience and dedication of our employees. They provide our customers
with high quality services in our business lines and have specialized
knowledge of their business practices. Many of the staff possess industry
certifications in their various fields of expertise.
Furthermore, the PSC is able to leverage economies
of scale to offer our customers consolidated product and service offerings
at competitive rates. If we are not staffed with a specific capability,
we have the expertise and flexibility to partner or outsource the required
task to meet scalability needs. Through our reengineering efforts, the
PSC intends to focus on streamlining, allocating costs properly, and implementing
best business practices. We will lead where we are the experts and will
outsource or partner those capabilities that are led by others.
Over 75% of the PSC executive team has been with
the PSC less than 2 years and these leadership changes have brought a
renewed focus and energy to the organization. Their past experience,
combined with a strategic vision, has created an environment of innovation
and high performance. The executive team encourages the creation of new
ideas and “out-of-the-box” thinking, which will help the PSC drive forward
to create a fresh culture, focused on quality and cost management.
In addition to these many strengths within the
organization, there are also several potential weaknesses that if addressed,
could propel PSC even further in the pursuit of becoming the leader in
administrative services. One area that must be addressed is that of impending
retirements and successions planning. Like most of government, a large
percentage of our workforce will be eligible for retirement in the next
five years. However, the PSC has made a concerted effort at succession
planning through more strategic hires, better recruiting strategies, standardization,
streamlining and better curriculum packages that include such things as
simulated training in order to provide the employees a comprehensive standardized
path in their jobs and decrease on-the-job training time and methods.
Another potential issue facing the PSC is that
of continuous customer focus which has not always been consistent across
all services. In order for the PSC business lines to continue to be
successful, there must be a focus on providing a positive experience for
the customer 100% of the time. This is not to be at the expense of good
business practices, but rather on a balance between the two. If PSC does
not keep customer satisfaction at high levels, they run the risk of losing
market share, as customer perceptions drive the market. An improved mechanism
for monitoring customer satisfaction levels will be implemented in 2004.
Additionally, as a fee-for-service organization, the PSC is required
to charge full cost for all products and services. However, many of the
PSC’s competitors are appropriated organizations that are not bound by
the same requirements and if selling their services, are only able to
charge the additional direct costs not already covered by their appropriation.
Moreover, the PSC’s prices are not always competitive with private sector
competitors because the PSC has no flexibility in offering discounted
pricing, using loss leaders, or subsidizing services, which are common
practices in the private sector. This presents a weakness for the PSC
that needs to be addressed in creative ways, such as identifying ways
to lower overhead costs, or increasing demand for services, better buying
methods, and better supplier venues which result in lowering cost.
4.3.2 Opportunities
The PSC is positioned to leverage its strengths to create new business
opportunities. For example, the PSC already provides services to many
of the organizations scheduled to transition into the new Department of
Homeland Security (DHS) and has provided administrative advice during
stand-up. Fostering this relationship provides the potential to leverage
our current business within this agency to create new or increased business
with the DHS.
In addition, all Federal agencies are being pressed to reduce spending
and manage costs more tightly. The PSC has the opportunity to reach out
to potential customers and show them the value of utilizing the services
and products of PSC as a method of controlling their expenses and reducing
the amount of administrative overhead across their organization.
Internally, there has been a directive by Department leadership to reduce
the amount of administrative functions in each individual agency. This
has resulted in the PSC being named the shared services provider for the
Department. One initiative currently underway aimed at fulfilling this
vision is the consolidation of acquisition services across the Department
into the PSC’s Strategic Acquisition Service. Additionally, the PSC is
being considered a possible future parent organization for the new IT
Service Center. The PSC is uniquely positioned to play an integral role
in these consolidation efforts due to our leadership role in administrative
services, centralized support structures, and the economies of scale already
garnered.
Finally, as part of the President’s Management Agenda and e-Gov initiatives,
three providers of travel management systems have been selected to support
Federal travel needs. Traditionally, the HHS OPDIVS have maintained their
own systems and travel support organizations, however, HHS has the opportunity
to centralize travel management needs across the Department by selecting
a single vendor to support all HHS agencies. The PSC is also well positioned
to assume this role and BTO is assisting in leading this effort.
4.3.3 Threats and Risks
There are several threats and risks that could
adversely impact business expansion for the PSC. Although not yet demonstrated,
there is concern that there may be decreased funding available in customer
budgets for support services. Competition for limited dollars may lose
out to increased defense and homeland security budgets and consolidation
efforts. To mitigate this risk, it is imperative that the PSC continue
to examine ways to reduce costs and become a scaleable organization that
can easily adapt to changes in the fiscal environment and continue to
meet customer’s needs.
Although competitive sourcing could be considered a
risk, the PSC is continuously aligning itself into the most efficient
organization in order to win competitions, as outlined in Circular A-76.
In addition, the PSC and HHS as a whole have worked
diligently to centralize administrative operations in accordance with
the President’s Management Agenda and Secretary Thompson’s One-HHS initiative.
However, should there be any significant leadership changes or shifts
in the political environment, there is a risk that centralization will
not be well received and a move toward decentralizing functions could
occur.
4.3.4 Benchmarking/Best Business Practices
It is essential that we stay abreast of changes in
the way products and services are being delivered in the marketplace.
Being innovative and researching best practices is a must in today’s environment.
It is critical that we understand what is a fair and reasonable price
for a service or product in the industry – in both the public and private
sectors. With this information the PSC is able to assess where our prices
fall relative to competitors. Traditionally customers have stated that
our prices are too high, however, we have not been diligent in researching
whether or not this is the case. In FY 2004, we will begin to consistently
use benchmarks to ensure that our prices are, in fact, comparable, if
not better, than that of the competition. In turn, we will be able to
educate our customers about what costs contribute to our pricing and where
we stand in relation to the market. These benchmarking results will be
available to our customers.
In addition, research into best business practices
contributes to our continuous improvement efforts in our business lines.
Not only can we realize enhancements to our processes, but we will also
be able to determine where we are a leader in the industry, where we can
improve to become one, and where we may wish to seek a partnership with
other organizations.
5.0 Strategy Summary
5.1 PSC Strategy
As a fee-for-service entity, the PSC is charged
with providing value-added products and services at competitive prices.
In this challenging environment, it is necessary to adopt business practices
that make the organization more efficient while fully leveraging the skills
and talent of the PSC workforce. The PSC strategy focuses on the following
areas: Customer Service, Cost Management, Communication, Business Strategy
and Innovation, and Workforce Excellence.
5.1.1 Customer Service
The PSC strives to provide products and services
that contain inherent value for our customers and are delivered with exemplary
customer service. To that end, the following customer service strategies
have been implemented to further this goal.
Improve customer relationships by understanding and addressing
their concerns, expectations and needs - One way the PSC will
truly be able to provide consistent, exemplary service to our customers
is to have an intimate knowledge of their expectations. The PSC plans
to accomplish this is by forming partnerships with our customers and consistently
requesting feedback, both positive and negative. By fostering relationships,
we can collaborate with our customers to gain a better understanding of
their needs and use this information to enhance our product and service
offerings. This also includes understanding the customer demand, history,
uniqueness and challenges.
Develop and provide customer service training for all employees
– An integral aspect of the PSC’s customer service strategy is to ensure
that all employees receive customer service training. To that end, the
PSC has implemented an enhanced Customer Service Training program for
all new and existing employees.
The PSC solicited input from our customers and
employees in order to develop a program that is specifically tailored
to our business and addresses the specific needs of our customers. The
PSC Customer Service Training Program focuses on the following customer
service key elements:
- Know Your Job
- Know Your Customer
- Communicate
- Be Responsive
- Follow Through and Follow-Up
Following a pilot of the customer service training
program in January 2003, the training was fine-tuned and rolled-out to
every PSC employee. It is expected that PSC employees will receive updated
training on an annual basis. In FY04 PSC will begin an interactive continuous
customer service training approach. Customer service training will occur
quarterly and will be developed and presented by PSC staff. The training
will rotate among services and will require the entire PSC staff to become
involved in developing these sessions. Sessions will include guest speakers,
videos, presentations, skits or interactive audience participation and
will be mandatory. Customer service expectations will also be addressed
as part of the PSC hiring and performance evaluation processes.
Provide responsive, best-value services consistently to our customers
– As the PSC strives to form partnerships with our customers, we will
become more effective in addressing our customers’ needs, which will enable
us to more proactively develop solutions to customer issues. We have
published a comprehensive Directory of Products and Services which is
available in hard copy or on our Internet site to provide up-to-date information
on our offerings. Included are service descriptions and performance standards
that define what our customers can expect with regard to levels and timeliness
of service. We will be measuring our performance and implementing enhancements
to our processes in order to become even more reliable and consistent
in the way we deliver. Customers will be able to hold us accountable
to these standards.
Develop a Customer Relationship Program – The PSC is constantly
redefining our customer relationships to further address customer needs.
As a direct, more meaningful dialogue with senior leadership of customer
organizations, the PSC Executive Team has each taken responsibility for
each one of our OPDIVs. As a customer account representative, the
Executive will be responsible for addressing issues across the PSC and
will be coordinating with their SSF Board counterpart. There will be
a baseline established and a process put in place for continuous dialogue.
These results will be tracked and monitored. In addition, the PSC is designing
several coordinating mechanisms that will help ensure that consistent
customer information is evaluated and addressed and will be moving to
establish a robust Customer Relationship Management Program that will
bring all customer data together for a global view of all customers.
5.1.2 Cost Management
The US
economy has experienced a significant downturn over the past several years.
This, coupled with the government reengineering efforts and the PMA, puts
significant pressure on the Federal Government to manage tighter budgets
and “do more with less." The PSC understands that customers want
products and services that offer the best quality at the lowest cost.
To that end, the PSC has developed the following financial resource management
strategy in order to meet our financial goals:
Effectively and efficiently manage PSC
resources to create the best customer value – As a fee-for-service
entity, the PSC is charged by its stakeholders with managing a cost effective
business while delivering quality products. As a result, the PSC seeks
to set the standard for judicious and prudent use of both financial, capital
and personnel resources in the performance of our mission. The PSC recognizes
that unless we can offer the best value goods and services to our customers,
they have the right and responsibility to go elsewhere – hence we will
continue an unrelenting effort to optimize the quality of our services
and minimize the cost. In FY 2003 we conducted extensive studies of over
80% of our business lines. As a result, we have begun to transition and
implement better business practices with a workforce that is skilled with
relevant competencies at the appropriate grade levels, which helps to
ensure that the best cost structure is in place. We plan to complete
our studies of the remaining business lines in FY 2004.
Meet government-wide and commercial accountability
standards – The PSC provides financial services to the HHS Office of the
Secretary and six of HHS OPDIVs – SAMHSA, HRSA, ACF, AoA, and AHRQ.
One of the PSC’s Key Performance Indicators is to achieve unqualified
(clean) audit opinions for the PSC and its customers and have achieved
this over the last 2 years. This continues the PSC work towards our objective
of improving financial performance and assuring budget and performance
integration. It has been a challenge to produce the accelerated financial
statements on a monthly basis, as opposed to the previous mandate of producing
them quarterly. However, we have been successful in meeting this challenge.
As an enhancement of this process, in FY 2004 the PSC will implement
an internal Management Control Program which ensures that all resources
are well managed and that assets are safeguarded against waste, loss,
unauthorized use, or misappropriation. This program is a proactive, employee
driven internal audit program that identifies and controls those programs
with a high risk for monetary loss, waste of government resources or potential
for high level issues. The Management Control program implements control
techniques designed to reduce the potential risk for fraud or misuse of
government resources. Auditors frequently rely upon this documentation.
Control the cost of operations and overhead expenses and reduce
them when possible – Beginning in fall of 2002, the PSC Business
Office began a project to re-cost and re-price each individual cost center
within the PSC from a zero base making sure that all products carried
their specific allocation of cost. These efforts began with, and continue
to focus on, identifying, justifying, and trimming the organization’s
overhead costs to reduce the burden borne by the PSC’s business lines.
Each cost center was studied and individual costs were subjected to intensive
study and considered for elimination if not identified as a leader and
a core PSC service. The Business Office completed the project in March
2003 and the results formed the baseline for development of the FY 2004
rates prepared for submission to the Service and Supply Fund Board. This
was the first year that the PSC was able to provide the customer a basis
of fully burdened cost at every product line.
Market and expand our services to lower the overall
unit price – The PSC recognizes that we can obtain economies of scale
for our customers by spreading our overhead and fixed costs over a larger
customer base and by fully utilizing any excess capacity through scalability.
In addition to economies of scale, PSC uses a pass-through strategy in
costing. Costs that can be identified as directly attributable to a specific
customer are removed from the unit cost, thereby assessing cost to those
customers who are driving it, rather than burdening the entire customer
base. These practices reduce the unit cost to all our customers and ensure
best value to the taxpayer. While the PSC plans to take advantage of
some business growth opportunities, we will focus more this year on ensuring
we are providing quality services to our existing customers.
5.1.3 Communication
Communication is an integral aspect of a successful business. It is
essential to have effective communication strategies, tools, and channels
both internally within the organization, and externally with customers.
Communication should not exist one-way, but rather as open dialogue between
parties. The PSC is working hard to develop communication plans with
messages and vehicles that are appropriate to the audience.
Develop and implement an internal communication strategy – PSC
initiated a study at the beginning of FY 2004 of the effectiveness of
communication within the organization. The leadership team recognized
that employees were struggling with the amount and the means of communication
across the organization. As a result, an internal communications audit
was conducted in addition to employee surveys, focus groups and interviews,
in order to assess the issues that exist today. Once the study team understood
the issues, and analyzed potential solutions, a communication plan was
developed. This plan outlines messages that need to be delivered, mechanisms
for delivering these messages, frequency of communication, intended audience
groups, and specific activities that the different layers of management
can use to communicate with their staff. The internal communication plan
will be fully executed during FY 2004, to include measuring its effectiveness.
Understand customer expectations by opening channels of communication
through customer feedback programs – The PSC remains committed
to providing quality products and services. As the PSC strives to continuously
improve our service delivery, it is necessary to provide our customers
with various avenues to offer feedback and communicate with us. One such
avenue is the PSC Customer Comment Card Program. Boxes are strategically
located in buildings where PSC offers services and allow customers to
provide anonymous feedback via a customer service survey that rates the
PSC on the following areas:
-
Responsiveness (timeliness of service)
-
Courtesy of PSC employee(s) providing the
service
-
Quality of product/service
-
Cost/value of product/service
-
Overall satisfaction
There is also a section where customers can provide specific suggestions
on ways the PSC can further improve our service offerings. Customers
can also provide similar feedback on the PSC’s product and service offerings
via the PSC website. In addition, employees have included a link to
the online feedback form in their email signature enabling any recipient
to provide comments anytime.
Coordinate and schedule information sharing events for employees
– In order to support our employees in delivering the individual products
and services to our customers, it is essential that they understand the
“big picture” of where the work they do ties into other parts of PSC.
As a result, we will be developing interactive sessions that employees
may attend covering such topics as service-specific information sharing
and an overview of the eGov initiatives and what PSC’ role is in the implementation.
5.1.4 Business Strategy
and Innovation
To stay competitive, the PSC must leverage its talented workforce and
continue to seek technological advances in order to find new, innovative
ways to do business more effectively. The PSC will accomplish this in
the following ways.
Standardize business processes and employ best business practices – PSC
Business Operations is responsible for working with the Service areas
to conduct business process re-engineering activities that focus on identifying
cost savings, operational efficiencies, and, ultimately, a way to offer
PSC products and services more effectively and with greater value. Business
Case Analysis (BCA) studies have been completed for over 80% of the PSC
business lines, which included examination of the current operations/processes,
benchmarking analysis, best business practice research to identify gaps
in the current processes, and presentation of alternatives to successfully
implement recommendations that have ranged from enhanced cost recovery
to the elimination of a product/service line to enhanced delivery methods.
One crucial element included in all analyses
is incorporation of best business practices from both the public and private
sector. This enables the PSC to identify and implement processes that
will enhance service delivery, improve business operations and reduce
costs. Furthermore, the BCA recommendations have fostered the “One HHS”
theme by identifying ways to consolidate operations throughout the Department.
Integrate the budget with performance measures for better decision-making
– As part of the President’s Management Agenda, the PSC is charged with
ensuring that budgetary considerations are an important factor in determining
which performance measures we implement. Moreover, the implementation
of an automated costing model and billing system enables the PSC to ensure
that our budget and performance measures are properly aligned. In FY
2004, the PSC will begin measuring ten Key Performance Indicators, which
we believe will concisely measure the health of our organization. These
metrics will be consistent throughout the organization and will be compiled
from statistics gathered at every product level. Goals were set high
with the realization that while they may not be immediately attained,
they are set at levels that will make us stretch for high achievement.
This will also help us to identify those areas in need of assistance.
Provide leadership for the implementation and transition of a department-wide
financial management system - HHS is implementing a Department-wide
integrated financial management system that will serve as the cornerstone
of the Department's electronic business infrastructure. The Unified Financial
Management System (UFMS) will replace the existing five accounting systems,
and will be web-based, utilizing modern electronic technologies. The
system will be comprised of two primary components – the first for CMS
and its Medicare contractors (the Healthcare Integrated General Ledger
Accounting System - HIGLAS) and the second for the remainder of the Department.
Both components are being designed and implemented based on consistent
technical and functional standards, and will feed into a Departmental
financial reporting system.
UFMS is a critical component of the Department’s efforts to modernize
its financial management systems and information technology infrastructure.
It was initiated during FY 2001 at the direction of Secretary Thompson.
The initiative is a critical element of HHS’ effort to improve its financial
operations and supports the “ improve(d) financial performance” initiative
of the President’s Management Agenda.
During FY 2002, the Department established the
governance and program management structure to guide and manage the initiative.
The UFMS Program Management Office, in conjunction with its systems integrator,
developed and received Departmental approval of the primary planning documents
that are being used to manage the Program and measure performance against
established milestones and parameters.
Representatives from the PSC and all other component
agencies are participating in the UFMS project. The expected completion
date is September 2007.
Optimize e-Government opportunities - The PSC will continue to seek opportunities
to leverage our existing infrastructure, in addition to exploring new
and innovative technologies, to provide value-added, customer-focused
e-government services. The PSC plans to implement the following e-government
initiatives:
- The Human Resource Service is actively participating with the Office
of Personnel Management (OPM) and the Office of Management and Budget
(OMB) on the e-Payroll initiative to transition payroll operations support
to DFAS by September 30, 2004.
- The Building Management Branch plans to implement a self-service Internet
model that will enable customers to enroll visitors over a secure server.
- The Federal Occupational Health Service plans to develop customized
websites on which customers can access reports, marketing information,
health and wellness material and on-line training.
- The Financial Management Service will be working with all OPDIVS to
select one of the three e-Travel systems/providers and manage the contract
from a single point within the Department.
5.1.5 Workforce Excellence
The PSC would not be able to deliver value-added products
and services without the dedication and hard work of our employees. Thus,
it is imperative that the PSC provide programs and services that effectively
meet the collective needs of our employees and the organization while
equipping them with the necessary tools to successfully perform their
jobs. To ensure that our staff is satisfied with their work environment
and continues to perform at an optimal level, the PSC has implemented
an employee development strategy that focuses on the following goals.
Establish an employee feedback program across the organization
- To ensure that the PSC work environment is as productive and supportive
as possible, it is imperative that we provide our employees with a forum
to provide feedback and communicate ideas to enhance the organization.
The PSC has established suggestion boxes in the Parklawn and Humphrey
buildings so that employees can submit anonymous comments and feedback
to the Executive Management Team.
The PSC is has also established a “Recently Asked Questions” email account
where employees can anonymously pose questions directly to the Director
of the PSC. The answers to these questions are periodically posted on
the PSC Intranet site for all employees to view.
Additionally, the PSC has developed the Human Resources Management Index
(HRMI) as one of its Key Performance Indicators in order to baseline specific
issues as they relate to the workforce. The surveys are distributed on
an annual basis in late August/September to coincide with the end of the
fiscal and performance year.
Finally, the PSC has established an employee-run Innovation Council that
provides a forum for employees to percolate good ideas up to the Executive
Team for consideration. To date, the Council has submitted nine proposals
and we are implementing two of these initiatives.
Develop recognition and reward programs for excellence
- The PSC has enhanced its formal awards program to recognize employee
who constantly strive to further the goals and objectives of the PSC.
Some of the highlights include an On-the-Spot Awards, Group or Individual
Special Recognition Awards, Time Off Awards, the Director’s Coin, the
Service Director’s Coin, Quality Step Increases (QSI’s), Customer Superstar’s
Award and non-monetary awards such as plaques, trophies and gift certificates.
Create performance standards that measure how employees achieve
organizational expectations – As the PSC strives to provide value-added
products and services to our customers, it is imperative that we provide
our employees with a roadmap to success. Thus, in FY 2004, the PSC has
developed a Logic Model that clearly defines the ten Key Performance Indicators
that are needed to measure our success in meeting these outcomes. We
have identified initiatives that must be put in place in order to successfully
and consistently reach these goals to include standardized business practices,
communication plan, marketing plan, management control program, blueprint
architecture (process/organization/technology) and top down accountability.
This Logic Model has been cascaded throughout the services so each employee
understands how their role directly correlates to the measures collected
at the summary level.
Ensure our workforce is enabled and empowered to deliver and sustain
customer service excellence – It is important that PSC employees
value our customers and understand their needs. The PSC Customer Service
Training Program will provide our employees with valuable tools to better
serve our customers and to foster valuable customer relationships that
result in a win-win situation.
Moreover, if PSC employees do not have a good
understanding of the PSC’s vision, goals, key success factors and how
their roles and responsibilities fit into the organization, it will be
very difficult for them to feel empowered to consistently perform and
to make the necessary changes when it has been determined that a problem
exists. Thus, the PSC will ensure that these key themes are consistently
communicated from the Executive Management Team down to the line staff.
Assess our talent acquisition and management strategies and practices
– Many government agencies are facing workforce competency challenges.
The PSC is no exception and realizes that one of the keys to its success
is the aptitude of our workforce. Thus, the PSC will regularly conduct
a workforce analysis that includes the following:
- Document attrition rates by series/grade/location
- Project attrition for the next five years
- Provide a gap analysis of the types of skills that will be needed
Based on the results of the analysis, the PSC
will develop a plan to better recruit, retain and develop our workforce
to fill the identified gaps. To be successful, it is necessary that the
succession plan focus on the following:
- Tailor training courses to address gaps in skill sets and develop
standardized curriculum to consistently address gaps
- More effectively align individual competencies with specific jobs/functions
- Provide a variety of training outlets for staff
- Develop recruitment and retention strategies that focus on strategic
job functions and building a “critical mass” of diverse, talented employees
5.2 Value Proposition
The PSC intends to become the leading provider of administrative support
for the Department of Health and Human Services, and potentially for a
large portion of the Federal Government, allowing customers to focus on
their core missions.
The PSC is defining its core architecture, which will serve as the foundation
for achieving the two primary outcomes of excellent service delivery –
improved quality and reduced cost to HHS.
No part of the architecture stands alone; rather, the components are
dependent on one another and a focus must be placed on all parts in order
to fully achieve all goals. The Architecture is comprised of three major
components that address Technology, Workforce, and Business.
The Technology Architecture is a map of how all systems, databases,
networking, and data interact enabling us to create an efficient technical
infrastructure. In turn, it gives the PSC a view across the organization
used to identify opportunities to partner and streamline processes and
technologies. The technical architecture includes maximization of e-Gov
solutions, mapping of our development lifecycle, as well as execution
and operations. The strategy examines our integration points across the
PSC and outlines our communication interfaces, security architecture,
and database architecture and includes the computation of life cycle costs
for all projects.
The Workforce Architecture ensures an integrated approach to human
performance. It includes a comprehensive organization and workforce assessment
to include performance needs assessments, performance requirements, workforce
planning to include skill and competency matrixing, recruitment strategies,
retention, performance management metrics, knowledge management, knowledge
sharing, curriculum planning, and training development that include technical,
business, and common skills.
The Business Architecture is comprised of the following:
- Business Case Analysis which is the process used to study and
evaluate product lines, investments, costs, technology or risks on existing
business lines.
- Customer Relationship Management which is a comprehensive program
that encompasses all aspects of the service provider’s relationship
with the customer, to include collection of customer information from
all feedback sources, definition of customer needs, demand, actual usage,
billing, satisfaction, trouble calls, complaints and compliments. This
allows us to collaborate with the customer using information that provides
a global view.
- Benchmarking is the process used to ensure key business elements
such as prices, processes, service levels, delivery models and organizational
structures are within market and consistent with the best business practices
of industry leaders.
- Key Performance Indicators (KPIs) are metrics that, when tracked
and reported, are an accurate gauge of success or failure in areas that
are directly tied to the organization’s primary goals and objectives.
These measurements assist the organization in finding areas for improvement.
- Capital Investment Planning is the process used to conduct
our long range planning (5 years) to map out which major investments
are needed to remain competitive, ensuring that replacements are a result
of good return on investment and that investments are looked at across
the organization both monetarily and technically.
- Cost Management includes development of fully burdened business
line costing, with proper allocation of costs and equitable distribution
of charges to customers. It also includes management of overhead and
optimization of internal support costs.
- Communication Planning is used to communicate with employees
at all levels through multiple avenues. It contains processes used
to ensure that the organizational goals and strategic direction are
cascaded throughout the organization and employees are kept apprised
of major initiatives.
- Marketing Planning is the strategy used to reach new customers
with product lines that we can ensure will bring a return on investment.
It also includes analyzing our current customer base to see if we can
assist the customers beyond current levels.
The PSC Architecture integrates these three components – workforce, technology,
and business – into one fluid environment, allowing us to achieve our
goals of providing high quality service and efficient cost management.
At the core of all of this is the customer, who ultimately is the reason
we are in business today.
The anticipated results of bringing all of these things together – improved
quality and cost efficiency – stem from our strategy of having the capability
of measuring performance at multiple levels to guarantee the best value
for our customers. The PSC has implemented the Logic Model to enable
us to remain focused on our end outcomes. The Logic Model identifies
resources, outputs, and outcomes in the business management cycle. We
have established two “end outcomes” that the PSC, in essence, exists to
achieve – (1) To improve quality of administrative support, measured by
the percentage of customers expressing satisfaction with services in terms
of timeliness, quality, courtesy, and costs, and (2) To achieve cost savings
to HHS due to reduced costs associated with administrative services, measured
by the total program overhead and PSC’s share of that, and the change
in cost per PSC service to customers. Achieving these end outcomes will
allow HHS to focus on its core mission of health and social welfare.
In order to achieve these end outcomes, we have developed a set of intermediate
outcomes that will allow us to measure how well we are meeting our goals.
For FY 2004, these intermediate measures are:
Intermediate
Outcomes |
Measures |
Improve existing PSC services |
- Timeliness
- Percent of services achieving timeliness targets
- Quality
- Percent of services achieving performance standards
|
Pursue new business opportunities |
- Expanded market share
- Number of new customers acquired
- Number of existing customers obtaining new or expanded services
- Elimination of HHS duplication
- Reduction in FTE/costs in administrative services Department-wide
|
Asset management (people,
capital) |
- Percent reduction in PSC overhead rate
- Percent reduction in revenue consumed by PSC intra-service costs
- Percent of products/services where cost is fully recovered by
revenue
- Number of material weaknesses found in financial and management
audits
- Percent job satisfaction among PSC employees
|
Setting objectives such as the intermediate outcomes listed above is
only part of our Logic Model. We have also identified a set of fourteen
key activities that will allow each business line to contribute to our
overall success in meeting these objectives. Examples of these tasks
include standardizing business processes, establishing baselines, conducting
a workforce capability assessment, collaborating with our customers, and
conducting risk assessments for internal control.
All of these activities and intermediate outcomes roll up and link to
the anticipated end outcomes and with our strategic vision. We are taking
steps to ensure that we are driving down costs so that the Department,
as a whole, can dedicate more funds toward mission-critical business opportunities
and less towards administrative services.
5.3 Marketing Strategy
5.3.1 Pricing Strategy
The PSC constantly strives to ensure the “price is right” and that means
not only ensuring that prices are set at a break-even point, but that
costs are within market and are aggressively controlled to provide best
value for customers. This strategy includes allocating costs properly,
applying marketing strategy by reviewing market price and spreading overhead
and finally, setting the final sales price if adjustments were made.
In addition, the PSC’s goal over the last two years has been to simplify
our costing methodology and rate structure so that the price of services
is transparent and easily understandable to customers. As part of that
effort, the PSC fielded PRICES; a new automated costing and billing system,
in FY 2003. PRICES clearly identifies customer usage to price and cost.
PSC managers use the costing/pricing module of PRICES to develop fully
burdened rates by identifying true costs and ensuring that they are allocated
across the proper business lines. General and Administrative (G&A)
costs, which the PSC controls tightly, are assigned and included in the
sales price. Costs are accessed directly to those cost centers driving
them. The PSC has also performed Business Case Analyses (BCAs) on all
cost centers to ensure that best practices are aligned with best cost.
In FY 2004, the PSC will take this one step further and begin annual benchmarking
with its competitors to ensure we keep abreast of the market. The results
will be available to customers.
5.3.2 Expansion Strategy
The PSC’s expansion strategy is rather simple – we must pose four questions:
- Where do we excel?
- Where do others excel?
- What is the benefit for our customers?
- Does it make good business sense?
There are business lines where PSC is clearly the leader in providing
the service, however there are business lines where other government agencies
or private industry deliver the services faster, better, or cheaper.
In those cases, we have looked to partner with the best providers to ensure
that HHS is receiving the greatest value for the price.
In cases where PSC is clearly at the forefront in the industry, we must
examine whether there are new business opportunities to pursue it is then
essential to determine our return on investment (ROI) of expanding the
service to new and existing customers. If the analysis shows there is
a potential for a viable business line, we develop a solid marketing strategy
to inform potential customers about our offerings. Our key objectives
will be to maximize our pricing, define our benefits and to make it easier
for customers to obtain services.
An essential element in expanding our business is to reflect on the true
opportunities for growth. We are not in the business to grow for the
sake of growing, rather to do so when it makes sense and is in the best
interest of the Department and our customers. We must always keep the
customers’ interests at the forefront of these decisions, analyzing short-term
and long-term needs, determining value, and understanding how the product
or service will allow them to accomplish their mission while keeping costs
at a minimum.
5.4
Workload and Revenue Forecasting
Although PSC has prepared and presented its budget to the SSF Board annually,
this was done parallel to development of the Department budget. For FY
2005/2006 rate setting, the PSC has proposed beginning our costing/pricing
cycle prior to that of the customers. This will allow us to work with
the customer on their true demand, will make our rate setting much more
accurate, and will allow our customers to accurately estimate their demand
early enough to be used in their budget formulation activities. Prior
to FY 2004, PSC Business Operations worked with each customer to educate
them about their actual use of products and services from the previous
year. Using this information, our customers were able to understand their
forecasted usage for the coming year. Based on this forecast, managers
are able to plan staffing needs to handle the volume of work. As a result,
the PSC has been able to create a report of estimated demand compared
to actual usage, which allows for analysis of what is driving the cost.
Customers will be provided these statistics as part of their monthly bills.
The PSC has also developed a centralized Service Level Agreement process
so that all services for customers are combined into one agreement that
contains clear general provisions outlining the billing discrepancy process,
payment expectations, cancellation notification, and cost methodology.
The SLA includes provisions for each product or service that clearly outline
the details of service and expected receiver requirements along with Performance
Standards that clearly provide the service level expectations. This agreement
contains estimated costs, however, billings are based on actual usage.
5.5 Milestones (Planned)
5.5.1 Performance Measures and Targets
The Program Support Center sets its goals in alignment with the goals
of the Department, the Secretary, and the Assistant Secretary for Administration
and Management. From these, PSC sets expectations for its business lines
and employees to carry forward the overall mission of the Department and
its operating divisions and staff divisions.
Just as this top-down relationship exists at the Department to Agency
level, so does the goal setting within the PSC. Accountability across
the organizational units from the Deputy Assistant Secretary down to the
line staff ensures that the PSC is moving toward a common vision.
One of the components of this strategy is setting high performance targets.
We have set the expectation that we deliver services in accordance with
our timeliness standards 100% of the time. In addition, we expect to
increase our customer base by 5%. We have also set a target of reducing
the overhead rate by 10%. These, and other targets, are ambitious and
challenging to meet. We strive to always meet and exceed our targets.
However, if we fall short, we use that as an opportunity to fix the elements
of our organization that are preventing us from being successful.
From these organization-level targets, each business line has performance
measures that have been identified during the Service Level Agreement
process with the customer. Customers can hold the managers and employees
accountable if standards are not met. The individual business lines are
ensuring that methods to track and analyze these measures and metrics
are in place.
6.0 Management Summary
6.1 Organizational Structure
The Program Support Center is comprised of five distinct service areas,
in addition to technology optimization and a customer advocacy program.
The following diagram illustrates the services and divisions within each
service.
6.2 Personnel Plan
style='font-weight:normal;'>Over the past several
years, there has been a significant change in full-time equivalent (FTE)
ceilings for the PSC. For example, between FY 2002 and FY 2004 the number
of administrative FTEs decreased by 195, which resulted in labor savings
of approximately $3M. This was accomplished while still absorbing the
4.1% pay raise, within-grade-increases, and promotions, in addition to
continuing to take on additional workload. Through technology and process
reengineering, efficiencies in providing services have been identified
creating a decrease in personnel requirements. As a result, the PSC has
offered buyouts in FY 2003 and FY 2004 in order to bring the total number
of FTEs down and to begin to address our skill mix. However, even though
there has been an effort to bring the number of employees into alignment
with improved processes, there are a significant number of individuals
who will be eligible to retire in the next five years. As a result, the
PSC plans to use the documented business architecture to define jobs and
roles of the future to ensure that we have an effective succession plan
that identifies the proper skills and grade structures throughout the
organization.
6.3 FTE Chart
The following graph illustrates the number of full-time
employees, part-time employees, and contractors working in each service
area, as well as a summary of the entire PSC.
It is important for us to include contractors when
looking at our workforce numbers, as they are a critical part of our product
delivery model. The PSC attempts to blend the right amount of contract
support based on cost, scalability and expertise.
6.4 Change Management
Change exists in every organization and can be seen in many forms. Regardless
of size, change can be a difficult process to manage and just like most
Federal entities, the PSC must undergo continuous change. The PSC leadership
realizes it must approach change as a constant, ongoing activity rather
than just an ad hoc event or a requirement for a special project.
In order to assist employees in dealing with the changes, the PSC leadership
recognized the need to bring in facilitators to conduct an open dialogue
about what leading change entails. All employees were invited to participate
in these sessions where topics such as the dynamics of change, behavioral
and emotional responses to change, and methods of coping with resistance
were covered.
It is now a part of the PSC culture to be open and honest about the effects
change is having on employees and customers. Being educated about the
change curve has helped employees in working through the change rather
than resisting it. Though this can be a considerable challenge at times,
the PSC Executive Team is working hard to become leaders of change rather
than just managing change.
7.0 Financial Plan
7.1 Important Assumptions
- The PSC will work with customers earlier in the costing cycle to allow
them to budget for actual demand.
- Customers will receive clear costing and pricing information.
- PSC will have cost savings
7.2 Key Financial Indicators
The PSC will use the following financial indicators to measure success:
- Achievement of 100% cost recovery in all business lines.
- A decrease of 17% in the revenue consumed internally through intra-service
costs.
- Reduction of 10% in PSC overhead rates
7.3 Past Performance
For the past three years, the PSC has received a “clean” financial audit
opinion. In addition, we have been able to give back over $16M to our
customers in either credits or price reductions because of good cost management
throughout the year. Finally, in FY 2003, all products and services fully
recovered their costs.
7.4 FY03 Financial Statement
Below is a copy of the PSC Statement of Net Cost for FY03 representing
past performance.
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Program Support Center (PSC)
CONSOLIDATED STATEMENT OF NET COST
For the period ending September 30, 2003
(in thousands) |
|
Gross
Cost |
Less:
Earned Revenues |
Combined
Net Program/
Activity Costs |
Net Program/Activity
Costs |
|
|
|
GPRA Programs: |
|
|
|
Administrative Operations Service
|
203,358 |
188,645 |
14,713 |
Financial Management Service
|
48,438 |
59,275 |
(10,837) |
Human Resources Service
|
58,896 |
68,402 |
(9,506) |
Federal Occupational Health
|
152,735 |
159,616 |
(6,881) |
Net Cost of Operations |
463,427 |
475,938 |
(12,511) |
Appendix
– Glossary of Acronyms |
ACF |
Administration for Children and Families |
AFPS |
Accounting for Pay System |
AHRQ |
Agency for Healthcare Research and Quality |
AoA |
Administration on Aging |
AOS |
Administrative Operations Service |
AUSA |
Assistant Unites States Attorney |
BCA |
Business Case Analysis |
BPA |
Blanket Purchase Agreement |
CAMIS |
Cost Allocation Management Information
System |
CASU |
Cooperative Administrative Support Unit |
DAM |
Division of Acquisition Management |
DCP |
Division of Commissioned Personnel |
DFAS |
Defense Finance and Accounting Service |
DFO |
Division of Financial Operations |
DOC |
Department of Commerce |
DOD |
Department of Defense |
DOL |
Department of Labor |
DOT |
Department of Transportation |
DPM |
Division of Property Management |
DTS |
Division of Technical Support |
EAP |
Employee Assistance Program |
EHRP |
Enterprise Human Resources and Payroll
System |
GSA |
General Services Administration |
HHS |
Department of Health and Human Services |
HRS |
Human Resource Service |
HRSA |
Health Resources and Services Administration |
FARS |
Financial Assistance Reporting System |
FMS |
Financial Management Service |
FOHS |
Federal Occupational Health Service |
FOIA |
Freedom of Information Act |
FTE |
Full Time Equivalent |
FY |
Fiscal Year |
IHS |
Indian Health Service |
IRMS |
lang=EN-CA style='font-size:12.0pt;'>Information
Resource Management Service |
IRIS |
Indirect Cost Rate Information System |
ISS |
Information Systems Security Division |
KPI |
Key Performance Indicator |
LAN |
Local Area Network |
NIH |
National Institutes of Health |
NOR |
Net Operating Results |
OGAM |
Office of Grants and Acquisition Management |
OGC |
Office of the General Council |
OIG |
Office of Inspector General |
OIT |
Office of Information Technology |
OMB |
Office of Management and Budget |
OPDIVs |
Operating Divisions |
OPM |
Office of Personnel Management |
OS |
Office of the Secretary |
PSC |
Program Support Center |
PHS |
Public Health Service |
PMA |
President’s Management Agenda |
PMS |
Payment Management System |
PRICES |
PSC Revenue, Invoicing and Cost Estimation
System |
PRISM |
Purchases Request Information System |
REGO II |
Reinventing Government |
RPM |
Resources Planning and Management Division |
SAMHSA |
Substance Abuse and Mental Health Services
Administration |
SSC |
Supply Service Center |
SSF |
Service and Supply Fund |
TIP |
Telecommunications Improvement Project |
TSS |
Technology Support Services Division |
UFMS |
Unified Financial Management System |
WAN |
Wide Area Network |
_________________
[1] A copy of the report
can be found at http://www.healthypeople.gov/document/HTML/Volume1/08Environmental.htm.
Last
revised:
August 9, 2004
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