PORT OF SEATTLE 
MEMORANDUM 
COMMISSION AGENDA               Item No.      6a 
ACTION ITEM 
Date of Meeting     February 9, 2016 
DATE:    February 1, 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:    $ 500,000       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 the diagnostic
phase of a consulting contract for services relating to Procurement Excellence. The estimated
cost for diagnostic phase and implementation is anticipated to be $4,000,000. The  Port will
come back for specific authority to amend the contract to authorize the implementation phase.
SYNOPSIS 
The Office of Strategic Initiatives is proposing to hire a qualified consulting firm to lead the Port
on a procurement excellence project. The Port is reviewing the effectiveness and efficiency of its
procurement, process, practices, and systems. The objective of this project is to support the rapid
growth of our businesses and operations and reduce the total cost of the procurement functions
while ensuring that the Port achieves the highest possible value in capital expenditures. The Port
anticipates the initial diagnostic phase to be between $300,000 and $500,000. The diagnostic
phase (Phase 1) will result in a detailed report on the opportunity (scope, expected savings/cost
avoidance, methodology, staff development and capability). We will return to Commission for
authorization to move forward with Phase 2 (implementation) if we see a significant return on
the investment and a high probability of a successful implementation. The Port anticipates total
cost for phase 1 and 2 will be $4,000,000. The Port anticipates a return on investment (ROI) five
times the contract value and the contract to be cash neutral 12 months after implementation. 
BACKGROUND 
Central Procurement Office (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

Template revised May 30, 2013.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
February 1, 2016 
Page 2 of 5 
passengers and goods. With this background, we see an opportunity to reduce capital and
expense spending while ensuring that the Port of Seattle 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. 
PROJECT JUSTIFICATION AND DETAILS 
Project Objectives 
Assess the Port's procurement practices and make recommendations about how to
improve capabilities within the Port organization that will lead to improved quality of
our procurement results and decreasing cost of procurement and total spending. 
Outline future functional processes, practices and policies and assist with executing the
plan. 
Incorporate the Century Agenda goals of increasing contracting opportunities for small
businesses and improving environmental purchasing. 
Reduce annual spending by improving strategic sourcing and procurement processes
and their link to capital projects. 
Reduce delivery time of procurements. 
Demonstrate and achieve real dollar savings and a high return on investment. 
Increase organizational capabilities and develop a new way to work to deliver more
value to the Port over the long term. 
Scope of Work 
The scope of work will be constructed into two phases. The first phase will consist of an
assessment of the Port's current state and performing an opportunity analysis. The consultant
will conduct a detailed assessment of the base-line spending structure relative to total cost
against industry/regional best practices. The assessment will hold an emphasis on identification
of "quick fixes or wins" in addition to long-term capability development. 
As a result of phase one, the consultant will be expected to provide the Port with specific
recommendations, implementation plans, approximate timelines, staffing requirements, and
potential risks. The Port will assess those recommendations and make a determination on what
specific recommendations we will move forward and implement.  We will come back to
Commission to obtain authority to move forward with phase two.
During phase two, the consultant will partner with the Port project team in executing the
implementation plan. The consultant will assist with overcoming challenges that occur in the
implementation process and provide the Port with the tools and know-how required to manage
the new sourcing process that will take effect in the future.

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
February 1, 2016 
Page 3 of 5 
Schedule 
The Port anticipates executing a contract in March or April 2016 with services to be completed
in 2016.
FINANCIAL IMPLICATIONS 
The estimated cost of the agreement will be $4,000,000 for the duration of one year with the
ability to continue into 2017 if all work is not accomplished in 2016. Phase one is estimated to
cost around $300,000 to $500,000. Charges to this contract will be from the Office of Strategic
Initiatives and included in the 2016 annual budget. We expect the contract to be cash neutral 12
months after implementation with an overall five times return on investment. 
.
STRATEGIES AND OBJECTIVES 
The services and recommendations resulting from the consultant's proposed strategy are
expected to result in savings of five times the Port's investment into this contract. This project
will result in demonstrable savings and high return on investment in addition to improving
internal capabilities and speed of delivery. 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 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 
One primary outcome of Procurement Excellence is to address our Century Agenda goals. Focus
will be placed on improving our procurement planning, strategy, and processes so that our
procurement processes are more efficient and effective, we provide contracting opportunities for
small businesses and attain our goal of increasing contracting with qualified small businesses to
40% of eligible dollars spent by the Port. 
Environmental Responsibility 
In addition to addressing small business, Procurement Excellence will also focus on developing
processes and procedures to address environmental purchasing.
Community Benefits 
Procurement Excellence will benefit the community as we improve our processes, delivery
speed, financial stewardship and focus on social responsibility. 
ALTERNATIVES AND IMPLICATIONS CONSIDERED 
Alternative 1)  Do not hire an outside consultant to perform services. Perform services with in-
house staff. This would require a signification amount of time and specialized expertise from
internal staff to perform the work in the time frame desired. Estimated direct cost of $400,000

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
February 1, 2016 
Page 4 of 5 
(represents 2 full time people to focus on and implement process improvements). This cost does
not include other staff time to work on the projects.  We anticipate a $600,000 return on
investment within two years of implementing changes. 
Pros: 
Less cost.
In-house staff is familiar with operations. 
Cons: 
Require significant amount of time and specialized expertise that may not exist within the
Port. Process will take longer to implement and may find more difficulty in making Portwide
cultural change. 
Port staff may not have the broader perspective and experience with private sector best
practices. 
Less certain return on investment. 
This is not the recommended alternative. 
Alternative 2)  Retain a consultant to assess the Port's procurement and capital management
program and implement changes that will transform the Port's approach to strategic sourcing,
operational procurement practices, and achieve real saving and high ROI.  Estimated consulting
costs $4,000,000. This cost does not include staff time associated with the diagnostic phase or to
work on the projects that result from the diagnostic phase. 
Pros: 
The consultant will have significant national expertise in procurement optimization,
bringing successful ideas and concepts from private industry into the Port. 
Ability to make sustained Port-wide cultural change in strategic sourcing and
procurement activities.
Develop internal capabilities and decrease delivery time. 
Cons: 
Cost of utilizing outside consultant and require significant time commitment from
numerous groups throughout the Port, including but not limited to Central Procurement
Office, Capital Development, Aviation, Maritime, ICT, and Economic  Trade &
Development. 
Significant investment of Port staff time to work with the Consultant. 
This is the recommended alternative. 
ATTACHMENTS TO THIS REQUEST 
Powerpoint  Procurement Excellence

COMMISSION AGENDA 
Ted Fick, Chief Executive Officer 
February 1, 2016 
Page 5 of 5 
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS 
January 6, 2016  Strategic initiatives Commission Briefing