PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      6a 
ACTION ITEM 
Date of Meeting     April 26, 2016 
DATE:    April 19, 2016 
TO:      Ted Fick, Chief Executive Officer 
FROM:   Dave Caplan, Sr. Director, Office of Strategic Initiatives 
Nora Huey, Director, Central Procurement Office 
SUBJECT:  Procurement Excellence Services Contract 
Amount of This Request:    $3,760,000       Source of   2016 Operating Budget 
Funds: 
Est. Total Contract Cost:    $4,000,000 

ACTION REQUESTED 
Request Commission authorization for the Chief Executive Officer to execute an amendment to
the Procurement Excellence Services contract for an estimated amount of $3,760,000 and
commence the implementation phase of the Procurement Excellence initiative. 
SYNOPSIS 
Central Procurement Office (CPO) purchases goods and services from paper clips to computers
to service agreements to capital facilities and equipment. CPO is strategically and operationally
critical to delivering key Century Agenda goals as well as a driver of financial stewardship and
project excellence. Boston Consulting Group (BCG) is the consultant retained in March 2016 to
perform a 4-week diagnostic on the efficiency and effectiveness of our existing procurement
processes, systems and capabilities. Through that effort, BCG, in collaboration with employees 
and suppliers, identified several initiatives to help deliver the Century Agenda, significantly
improve internal processes, and at the same time save money. We expect the return on
investment to meet or exceed our initial targets of cash neutrality within 12 months of
implementation and an annual run-rate savings of at least $20M (5x the expected cost of the total
effort). 
BACKGROUND 
CPO, part of the Office of Strategic Initiatives, is responsible for acquiring all public works, 
goods and services, and consulting services.
In order to meet the projected growth rate of the Aviation, Maritime and Economic Development
Divisions, the Port will be making capital investments in facilities and infrastructure to enable
significant increased throughput of passengers and goods. We see an opportunity to reduce
capital and expense spending in a smart, efficient manner, while ensuring that the Port of Seattle

Template revised May 30, 2013.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
April 19, 2016 
Page 2 of 5 
achieves the highest possible value in future capital procurement decisions. Capital expense and
operational expense spending for 2014 and 2015 was approximately $280 million ($160 million
capital and $120 million operating expenses). With the growing capacity at the Airport, we
anticipate significantly increased capital spending in the coming years, further emphasizing the
need to build the right processes, capabilities and practices today. 
The recently completed Phase 1 (Diagnostic) validated that we have several key opportunities
worth pursuing in the near-term. The priority recommendations reflect a combination of external
best practices and benchmarks from our consultant and the collective wisdom and experience of
our staff and customers whose input was actively solicited throughout the Diagnostic. Due to the
value of the work, but also the collaborative nature of the effort, Port employees are broadly
supportive of moving ahead with implementation of the Diagnostic recommendations. 

PROJECT JUSTIFICATION AND DETAILS 
Project Objectives 
The overarching objective for the implementation phase is the translation of identified
opportunities into positive realized outcomes for the Port. We expect the initiatives to drive
critical non-monetary value related to the Century Agenda and developing a High Performance
Organization including but not limited to: 
Faster speed to delivery in the procurement process 
Improved capabilities of internal Port staff 
Making the Port an easier partner with whom to do business 
Stronger strategic partnerships with our key internal and external customers 
Improved ability to support our small business and minority, women, and disadvantaged
business (MWDBE) community 
Improved ability to support our environmental objectives in the procurement process 
Both the Port and our consultant will be focused on sustaining the change that we implement in
Phase 2. We expect to leverage the expertise of BCG as an outside consultant and they are
committed to ensuring the right capabilities are transferred to the Port to sustain the impact well
beyond the completion of the engagement. 
Scope of Work 
The focus for Phase 2 is to execute the implementation plans for the highest-value opportunities.
Some of the specific initiatives we plan to execute in Phase 2 include, but are not limited to: 
Enabler: Reinforce Port's 40% SBE goal through more active supplier development,
updated bid process and better tracking & reporting on performance 
Enabler: Increase speed to delivery and ease of  doing business by addressing key
procurement process bottlenecks, including: insurance requirements  and concurrent
reviews

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
April 19, 2016 
Page 3 of 5 
Opex: New janitorial contract procurement with productivity enhancements and key
performance criteria to meet and exceed our customers' needs 
Opex: Re-negotiate credit card fees to be in line with benchmarks to driver $200-300k in
annual savings 
Capex: Formalize new strategic planning process for major projects to ensure alignment
with all key internal and external stakeholders and drive more efficient, cross-functional
collaboration 
Capex: New approach to managing change orders with opportunity to drive $8M+ in
annual avoided cost based on industry best practices 
The other key dimension within scope for Phase 2 is sustaining the change. Both the Port and
our consultant are focused on ensuring that the tools, processes and capabilities developed in
Phase 2 are sustained beyond the completion of the contract. One of the most important factors
in sustaining the change is clear commitment from Port Leadership.
To that end, one of the priority initiatives for Phase 2 is the establishment of a permanent
Procurement Governance Board, consisting of the members of the Procurement Excellence
Steering Committee. This Board will meet regularly to review progress on key initiatives, ensure
effective cross-functional partnership on major projects,  develop overall Port procurement
strategy, and identify new opportunities for improvement.
Schedule 
The Port anticipates commencing Phase 2 implementation immediately pending Commission
approval. Services with the consultant will be completed in 2016.
FINANCIAL IMPLICATIONS 
Phase 1 (Diagnostic) was completed at a cost to the Port of $240,000. The estimated cost of
Phase 2 is $3,760,000, for a total project cost estimate of $4,000,000. Costs associated with this
contract were included in the 2016 annual budget. We expect the contract to be cash neutral 12
months after implementation with an eventual steady state ROI of five times the initial
investment (i.e., $20M or more per year). 
In accordance with RCW 53.19, the Commission is notified that this amendment exceeds 50%
value of the original contract and this memorandum will be made available for public inspection.
STRATEGIES AND OBJECTIVES 
This initiative supports key aspects of the Century Agenda (see "Triple Bottom Line" below). At
the same time, implementing the recommendations from Phase 1 is expected to result in annual
savings  or cost avoidance  of five times the Port's investment into this contract. The 
implementation of the Procurement Excellence supports the port-wide strategies of exceeding
customer expectations; managing our finances responsibly; and supporting the Port's mission
with implementation of divisions' business plans. Furthermore, it aligns with the Port's values of

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
April 19, 2016 
Page 4 of 5 
ensuring the Port possesses high-performing employees who continue to value public service and
conducting business with the highest ethical standards.
TRIPLE BOTTOM LINE 
Economic Development 
The Procurement Excellence initiatives will support more effective partnerships with small 
businesses, and minority & women-owned businesses. Through improved supplier development
and management, the Port will continue on its path to 40% of eligible dollars spent on qualified
small businesses and make progress on attaining 4% of eligible dollars on minority and women
owned businesses.
Environmental Responsibility 
In addition to supporting small business, Procurement Excellence will also focus on developing
processes and procedures to address environmental purchasing. For example, taking a Total
Cost of Ownership, or lifecycle, perspective on major asset purchases will potentially drive
better environmental outcomes (e.g., passenger loading bridges, baggage optimization, rooftop
solar). 
Community Benefits 
Procurement Excellence will benefit the broader community in several ways, including: 
Making the Port a better partner to do business with through more robust customer
engagement and outreach 
Allowing the Port to re-invest money and time saved from the initiative into higher-value
add activities 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1)  Execute Phase 2 implementation using in-house staff and do not retain
consultant. This would require a significant investment of dedicated resources, time and internal
expertise to execute in the desired time frame. We estimate direct cost of $400,000 (equivalent
to 2 dedicated FTEs to focus on initiatives) with an ROI of $2,000,000 on Opex levers within 2
years of implementing changes (50% of expected realized savings from consultant). 
Pros: 
Development opportunity for high-potential staff 
Potentially lower direct cost outlay 
Cons: 
Requires specialized expertise that may not exist within existing in-house staff, and will
lose opportunity to learn from consulting firm with necessary skillset 
Process will take longer to implement and may face greater status quo inertia  difficult
to make cultural change, establish a "new way to work" and sustain the change 
Specifically, will face challenges on implementing major Capex opportunities (e.g.,
Change Order Management)

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
April 19, 2016 
Page 5 of 5 
Less data mining and benchmarking capability may hinder ability to identify additional
opportunities in the future 
Likely lower ROI 
This is not the recommended alternative. 
Alternative 2)  Retain consultant for the implementation phase to execute on the initiatives
they helped define and scope in the diagnostic phase. Estimated cost for the implementation
phase is up to $3,760,000.  This does not include staff time costs associated with the 
implementation phase or subsequent ownership of initiatives once the contract with BCG is
complete 
Pros: 
BCG brings significant implementation and change management expertise on major
strategic transformation efforts 
Represents continuity from diagnostic phase 
Develop in-house staff capability and effective transition of initiatives upon project
completion 
Cost savings/avoidance and speed to delivery opportunities identified in diagnostic phase
likely to be delivered 
Ability to make sustained Port-wide cultural change in strategic sourcing and
procurement activities. 
Cons: 
Continued cross-functional engagement and significant time investment required from
staff across Port functions 
Significant upfront cost outlay to consultant 
This is the recommended alternative. 
ATTACHMENTS TO THIS REQUEST 
PowerPoint  Procurement Excellence 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
February 9, 2016  Procurement Excellence Services Contract Action Item (Phase 1
Commission authorization) 
January 6, 2016  Strategic Initiatives Commission Briefing