PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.       4 
STAFF BRIEFING 
Date of Meeting      July 26, 2016 
DATE:    July 19, 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. 
This briefing is intended to update the Commission on our progress, as we are roughly
50% complete with the consultant-engagement portion of Implementation.
Since we last met, significant progress has been made to transform both the Central
Procurement Office (CPO) and the cross-functional procurement processes.  This
transformation is taking shape in several forms, 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 
Culturally, we are on a path to turn procurement from a compliance-focused function to a
core value-driver at the Port.  With the changes underway, 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. 
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, the Port will be
making capital investments in facilities and infrastructure to enable significant increased
throughput of passengers and goods. Capital expense and operational 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 
July 19, 2016 
Page 2 of 5 
$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. Since then over 30 of the initiatives identified in Phase 1
have been kicked off, often with close collaboration between BCG and Port-staff. This
team-based, partnership approach will help engrain the capabilities and best practices
from BCG. The initiatives are being tracked and reported on with the support of a
Program Management Office (PMO), which over time will be led by Port personnel
within CPO. And the ongoing effort is guided by a Procurement Council, made up of
senior leaders from across the Port.
As part of the implementation phase, we have developed a procurement strategy for the
Port to inform our priorities and decisions, both during this specific project and once our
engagement with BCG has ended. The strategy is based on four key principles, and
underneath each principle there are multiple initiatives ongoing. 
Principle 1: Procurement supports our values 
Procurement is a critical function to deliver the small business (SBE), women and
minority-owned business (WMBE) and environmental objectives for the Port. Through

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
July 19, 2016 
Page 3 of 5 
supplier development and targeted application of bidding and contracting levers (e.g.,
preferential pricing and set-asides, where legal), procurement can impact our SBE and
WMBE utilization rates. As these goals are now part of the Port's Incentive Pay plan,
there is an increased focus within the organization on what can be done to help deliver
these targets. 
As part of Procurement Excellence, BCG, CPO and Economic Development are
partnering closely to develop a new approach to improving engagement with SBEs and
WMBEs. This includes activities such as: 
Developing a more robust supplier database 
Improving the visibility of upcoming procurements to engage in more targeted
SBE and WMBE outreach 
Enhancing our ability to track and report on SBE and WMBE utilization 
Building the broader organization's awareness of bidding and contracting levers at
their disposal to optimize SBE and WMBE participation 
The goal of these initiatives is to improve SBE and WMBE utilization and assist the
broader Port in meeting its Century Agenda and Incentive Pay targets. 
Environmental initiatives are being developed for the later portion of Phase 2. 
Principle 2: Procurement processes emphasize customer service 
We have conducted multiple workshops with CPO and internal stakeholders, and had
conversations with external partners, to identify pain points in the procurement process
that can be addressed as part of Procurement Excellence. Examples of the types of
changes we are undertaking include: 
Improving the consistency and speed of our selection processes (including RFPs,
interviews and negotiations) 
Reducing iterations on scopes of work 
Reducing the number of stage gates for smaller-dollar procurements 
Eliminating unnecessary forms and signatures 
Simplifying terms and conditions in contracts 
Establishing more consistent and rational insurance requirements 
These changes will improve the ease of doing business with the Port, especially for small
businesses.
Principle 3: Procurement is about planning ahead and working collaboratively 
One of the core challenges identified in the Diagnostic phase was the lack of planning for
specific procurements and limited early cross-functional engagement. CPO was often
engaged only late in the process. As part of Procurement Excellence, BCG is facilitating
a cross-functional working team of director-level leaders from CPO, Aviation, Maritime,

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
July 19, 2016 
Page 4 of 5 
Economic Development, ICT and Capital Development to develop new planning
processes for procurement. 
These processes will result in a robust Procurement Calendar that will drive the early
cross-functional engagement necessary to: 
Apply strategic procurement levers to drive cost efficiency (including coordinated
purchasing, total cost of ownership, demand management, etc.) 
Optimize SBE and WMBE utilization and conduct the necessary supplier
outreach and development to ensure a robust set of competitive bidders 
For construction projects, determine the optimal construction contracting method 
These actions will reinforce the concept of "One Port" and improve the capabilities of the
Port as a whole as more employees practice implementing strategic procurement levers. 
Principle 4: Procurement should be grounded in rigorous and transparent decisionmaking
This principle is in part derived from Principle 3. With better planning and earlier
engagement, the Port will be able to conduct more rigorous analysis of alternatives and
communicate tradeoffs of different options more clearly. 
In the process of Procurement Excellence, BCG has worked closely with CPO and non-
CPO employees on specific procurements, applying rigorous analysis, external best
practices and creative problem-solving to align on optimal decisions for the Port. This
includes procurements on: 
Janitorial services 
Baggage optimization equipment and construction 
Maritime security services 
Roofing contracts 
Snow removal equipment 
Passenger loading bridges 
Airport gate seating 
In practice, this principle will continually improve the capabilities of the Port's employees
and drive cost avoidance and savings that can be re-invested in additional high-priority
areas.
Next Steps 
BCG will be engaged with the Port through the end of September, at which point CPO
will take over full leadership of Procurement Excellence. Over the coming months our
focus will remain implementing and embedding the various, tools, capabilities and
process changes noted above.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
July 19, 2016 
Page 5 of 5 
We will plan to update the Commission again around or after the completion of BCG's
engagement this fall. 
ATTACHMENTS TO THIS BRIEFING 
PowerPoint Presentation 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
April 26, 2016  Procurement Excellence Implementation Initiative 
February 9, 2016  Procurement Excellence Services Contract Action Item (Phase
1 Commission authorization)