PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      7b 
STAFF BRIEFING 
Date of Meeting    September 27, 2016 
DATE:    September 20, 2016 
TO:     Ted Fick, Chief Executive Officer 
FROM:    Nora Huey, Director, Central Procurement Office 
SUBJECT:  Procurement Excellence Project Update 
SYNOPSIS 
On April 26, 2016 we shared with the Commission the results of Phase 1 of Procurement
Excellence (the Diagnostic Phase), and asked for approval to proceed to an extended
Phase 2 (the Implementation Phase) with our consultant, The Boston Consulting Group.
On July 26, 2016, we shared an interim briefing with the Commission at roughly the
halfway point of the consultant-engagement portion of Implementation. 
As a reminder, we are on a journey to transform procurement from a compliance-focused
function to a core value-driver at the Port. With the changes underway and now well into
implementation, procurement should increasingly be looked to as a valuable resource for
our operating units and corporate functions to deliver their financial and Century Agenda
objectives. 
Since our last briefing, progress has continued on the core strategic principles we set out
to address, including but not limited to: 
How procurement can deliver on the Port's Century Agenda goals 
How we can make it easier for others to do business with the Port 
How procurement can become a more collaborative, forward-looking function 
How procurement can drive robust analysis and decision-making 
BACKGROUND 
CPO, part of the Office of Strategic Initiatives, is responsible for procuring all the
contracts related to public works, consulting services, and goods and services.
In order to meet the projected growth rate of aviation and maritime and support our
ambitious economic development agenda, the Port will be making significant investments
in facilities, infrastructure and services to enable increased throughput of passengers and
goods and overall economic activity. Capital expense and op erational expense spending
for 2014 and 2015 was approximately $280 million ($160 million capital and $120
million operating expenses). Looking ahead for the next 5 years and beyond with the
implementation of the Sustainable Airport Master Plan, we anticipate significantly
increased capital spending. Overall spend on 3rd party suppliers is expected to be over

Template revised May 30, 2013.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
September 20, 2016 
Page 2 of 7 
$400M annually for the foreseeable future. At the same time, the Port has set ambitious
goals as part of the Century Agenda to increase our utilization of small businesses in
contracting from roughly 33% to 40%. Finally, feedback from both internal and external
stakeholders has indicated that the Port's procurement process can be overly burdensome. 
Given all of these challenges, the Port retained an external consultant  the Boston
Consulting Group (BCG)  to partner with the Port to transform our procurement
function and processes.
Phase 1 consisted of a diagnostic effort, to identify the key opportunity areas for the Port
based on external benchmarks and best practices and a deep-dive into the Port's current
state. BCG engaged many of our internal and external stakeholders to develop a current
state "factbase" and recommended improvement areas.  In total, over 50 specific
initiatives were identified for potential implementation across several categories,
including: 
Century Agenda 
Capital expenditures 
Operating expenditures 
Port capabilities 
Procurement processes 
Tools and metrics 
The identified opportunities included over $4M over near-term savings or avoidance,
which was a key component of the request for proposal (RFP). It also included the tools
and processes to implement procurement best practices more broadly to deliver steadystate
savings of $20M+. 
With the Commission's approval on April 26, 2016, we commenced Phase 2
(Implementation) with BCG. On July 26, 2016, we shared an interim briefing that
highlighted progress underway, focusing on actions related to our re-defined core
strategic principles for procurement: 
1.  Procurement supports our values 
2.  Procurement processes emphasize customer service 
3.  Procurement is about planning ahead and working collaboratively 
4.  Procurement should be grounded in rigorous and transparent decision making 
Since then, progress on over 30 initiatives has continued with BCG and Port staff
collaborating closely to turn our strategic principles into reality. These initiatives are
now being tracked on a Program Management Office (PMO), which BCG has recently
fully transitioned over to Port ownership. Procurement will continue to be guided and
overseen by the Procurement Council, a group of ELT-level stakeholders. This body,
like the PMO, will continue to meet beyond our engagement with BCG and will be a core
aspect of Procurement Excellence into 2017 and beyond.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
September 20, 2016 
Page 3 of 7 
As our engagement with BCG comes to a close, we wanted to share what we have
collectively accomplished, discuss key factors for long-term success and share how the
Commission can support this effort moving forward. 
PROCUREMENT EXCELLENCE ACHIEVEMENTS 
We have fundamentally changed how the Port approaches Small Business Enterprise
(SBE)/Women and Minority Business Enterprise (WMBE)  utilization and
environmental purchasing. 
The Port has set high aspirations for SBE and WMBE engagement and development.
Through Procurement Excellence, we have developed a robust strategy to achieve these
objectives, grounded in vastly improved collaboration between Central Procurement
Office (CPO)  and Economic Development Division (EDD). The deliverables and
outcomes here include: 
A new data-driven methodology for establishing SBE and WMBE utilization
targets at the spend category level, including targets for 2017 
In collaboration with EDD, a comprehensive overhaul of our Port Gen outreach
program, with more targeted training and supplier development based on major
upcoming procurements 
Clear guidance on bidding levers the Port has at their disposal to drive
SBE/WMBE utilization. These materials have been posted to our Procurement
Excellence SharePoint (that the broader Port Staff has access to), and they have
been incorporated into our new acquisition planning process to encourage earlier
strategic decision-making on SBE/WMBE inclusion 
In progress: Updating the way we track and report on SBE/WMBE utilization at
the Port so that it is more reliable and readily available 
Clarifying the organization structure to support achieving our ambitious goals, in
collaboration with the Office of Strategic Initiatives and EDD 
We have revamped the Port's environmental purchasing practices in line with our
goals. 
The Port is a leader in overall environmental practices but lacks a clear strategy for how
that translates to the purchasing process. Through Procurement Excellence, we've made
three changes to enable us to procure in an environmentally friendly way: 
We've created an accessible, Port-wide resource bank of environmental product
guidelines and specs to aid in purchasing 
We've created a guidance document to help the Port make more purposeful use of
environmental bid levers in the procurement process 
We've created a clear process for how roles and responsibilities should
breakdown between environmental team, CPO, and requesting departments

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
September 20, 2016 
Page 4 of 7 
The Port is already testing these changes on key procurements (e.g. airport seating) and
has identified target procurements in 2017 for increased focus. 
We have made it (and will continue to make it) significantly easier to do business with
the Port. 
One of the consistent areas of feedback early in the project was that the Port, and
specifically its procurement processes, made it challenging for suppliers to work with us.
While there will also be certain constraining factors in a public setting, we set out to
address process pain points where feasible. Among the changes implemented (or soon to
be implemented), we have targeted: 
Improving the consistency and speed of our selection processes (including RFPs,
interviews and negotiations) 
Eliminating unnecessary forms and signatures 
Simplifying terms and conditions in small works contracts 
Establishing more consistent and rational insurance requirements 
Establishing a Continuous Improvement Process amongst the CPO management
team to drive ongoing optimization of CPO's performance 
We have improved CPO's capabilities. 
In order to work differently, CPO needed to evolve its capabilities. Our new procurement
strategy requires that CPO is more of a strategic partner to other departments. This
means improved planning and analytics skills, as well as the ability to consider and
recommend innovative approaches to procurements in order to deliver the optimal
solution for the Port and its stakeholders. 
While this process takes time, we were able to kick-start the evolution by: 
Conducting trainings on strategic procurement levers (including consolidated
purchasing, demand management), total cost of ownership (TCO), continuous
process improvement, and project planning 
Providing hands-on coaching from BCG on specific procurements to apply
innovative analytical and strategic solutions 
Updating existing or developing new tools for use by CPO 
o  Total Cost of Ownership model 
o  Procurement Calendar tool 
o  Service Agreements rate negotiation tool 
o  Program Management Office (PMO) tool 
Gaining approval for a new Planning and Analytics function within CPO. These
three Full Time Equivalents (FTEs) will be a resource to the entire Port to help
implement many of the new analytical approaches to procurement

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
September 20, 2016 
Page 5 of 7 
We have implemented new processes to drive collaboration across departments. 
Another challenge identified in the Diagnostic phase was the lack of planning for specific
procurements and limited cross-functional engagement. CPO was often brought in late in
the process.  As part of Procurement Excellence, BCG facilitated a cross-functional
working team of director-level leaders from CPO, Aviation, Maritime, Economic
Development, Information and Communication Technology (ICT)  and Capital
Development to develop new planning and collaboration processes for procurement. 
This working team defined several new processes and solutions that will facilitate better
collaboration across departments: 
Procurement Calendar which will improve the line of sight on upcoming
procurements and foster improved communication between CPO and requesting
departments on timing and resourcing 
An update to how acquisition planning is done. Specifically, a new acquisition
planning cover sheet that is jointly owned by CPO and the requesting department
that defines the strategy for a specific procurement and guides subsequent crossdepartment
interactions 
More broadly, the establishment of the Procurement Council and its ELT-level
membership from across the Port signals the fundamentally cross-functional nature of
procurement. This group has and will continue to serve as a leadership by example in
terms of overcoming silos and operating as "One Port". 
We have saved money and set the Port up to be a better public financial steward. 
While we recognize that saving money was not the primary objective of this effort, it is
also true that we have an obligation to be effective financial stewards on behalf of the
Port, its stakeholders and the broader public. In the process of Procurement Excellence,
we have identified and are expecting to deliver over $5M of savings within the first 12
months of implementation (by July 1, 2017). 
Other deliverables of the effort will help ensure that the Port continues to realize the
financial benefits of this effort well into the future: 
Trainings on strategic procurement levers and total cost of ownership 
Tools to support optimal financial decisions for the Port 
o  Service Agreements Rate Tool 
o  TCO Model 
Engagement and training with the Aviation Investment Committee on more
rigorous upstream project analysis and justification

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
September 20, 2016 
Page 6 of 7 
KEYS TO LONG-TERM SUCCESS 
While we are proud of the accomplishments of the effort thus far, we recognize that we
cannot let up our commitment or focus now. There are several keys to sustained success
that CPO and the broader Port staff must ensure happen: 
Drive the message that CPO can be a valuable partner in delivering other
departments' objectives.  Whether in hitting SBE utilization goals, making
environmentally-sound purchasing decisions or saving money, CPO can be a
valuable resource to the rest of the organization  but only if they are engaged
early in the process. 
CPO must live up to that message, and re-commit to being a great business
partner, both to our internal and external stakeholders. We will do this by an
ongoing commitment to our PMO, the continuous improvement process, and by
being open to the input and feedback from other functions and external suppliers. 
Continued leadership and management commitment, as demonstrated by
ongoing engagement in the Procurement Council, and more importantly, by each
leader holding their respective teams accountable for engaging proactively and
constructively with CPO. 
Celebrate the wins we achieve loudly and publicly. Part of driving change is
reinforcing positive behaviors. 
Recognize that change will take time and not get discouraged or revert to old
behavior if something does not work perfectly at first.  Especially as our
consultants leave, Port staff needs to commit to working through the challenges
and coming up with constructive solutions. 
NEXT STEPS 
BCG's contract with the Port will end on September 30. During the month of September
we are working closely with BCG to ensure all current initiatives are either completed or 
fully transitioned to Port ownership. 
Procurement Excellence will continue beyond BCG's engagement. With the PMO and
Procurement Council we have the structure in place to execute on existing initiatives and
to develop new initiatives for improvement. 
We will plan to periodically brief the Commission on the status of Procurement
Excellence in 2017 and beyond.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
September 20, 2016 
Page 7 of 7 

ATTACHMENTS TO THIS BRIEFING 
PowerPoint 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
July 26, 2016  Study Session 
April 26 2016  Procurement Excellence Services Contract Action Item 
(Phase 2 Commission Authorization) 
February 9, 2016  Procurement Excellence Services Contract Action Item
(Phase 1 Commission Authorization) 
January 6, 2016  Strategic Initiatives Commission Briefing