by Dawn Kennedy
This is the continuation of the series on developing an acquisition strategy for your agency. Last time, we covered a method for identifying any capability gaps in your agency, and a way to examine whether or not you can start to close those gaps without any new equipment purchases http://www.atthereadymag.com/site/thegap. In this installment, we are looking at what happens when you need to buy something new, and how to ensure you get what you need.
Before you click off this article with a chuckle, thinking that no one knows your agency, city, municipality, etc., I DO understand that oftentimes budget constraints dictate what you get. I also know that purchasing approval often comes through many levels of people who don’t really know what you are trying to accomplish with your purchase. I actually once had a purchasing authority make a comment about the medics buying “surfboards,” not understanding that we were purchasing spine boards. But I digress. My goal in this series is to help you make the case for what you need. People are more apt to say “yes” to a bigger dollar value upfront IF you can show a greater value to the agency (less maintenance, ease of training and use, longer life cycle, etc.) I have found over the years that many agencies do not clearly articulate WHY exactly they chose the type, model, and manufacturer of the equipment they need, and the people with the power of the purse have no idea either. Those people get “sticker shock” and just say “no” or “maybe next year” or “hold a bake sale.” But there are other ways to get what you need funded. At the Ready published a series of articles on finding your funding, and specifically about grant money http://www.atthereadymag.com/site/findingyourfunding, and I reference this article knowing that the municipality is most often the entity that submits the grant application.
Value vs Cost
It is human nature to look at the cost of something, and fail to see the overall value of the item. The value of a piece of equipment should be determined, irrespective of its costs. For a moment, put the price tag out of your mind, and ask a few questions. How often will we need to use this (apparatus, tool, radio, other equipment)? Is this an upgrade or truly a new buy for a capability we just don’t have? If it is an upgrade, how long did we have the current one, and what are the limitations that need to be improved? What will the agency gain? Efficiency? Effectiveness? A new organic capability altogether? For another example of cost vs value, for real estate there is a cost/ value report that discusses different remodeling projects, and how these affect the market value of a home, http://www.remodeling.hw.net/cost-vs-value/2014/. These change annually, and are reflective of different variables in the market. Some people will choose to go forward with a project irrespective of whether the value of the home will increase, others will use this guidance to determine which projects they are willing to invest in based on anticipated return. The cost/ value analysis will assist your agency in determining where the next investment needs to be made. While I am not advocating any one approach to determining value, if you take a look at the capability gaps your refined in step one, and prioritize them in a manner that will bring the best VALUE to the department, you may discover that the higher cost items need to be purchased sooner than the lower cost equipment. Knowing this will help you craft your case, and may assist you in getting the higher dollar, but higher priority equipment.
Speak to Requirements, not Specifications
At first glance, these two might sound like the same thing or seem to define the same thing, but let’s look at your requirements versus a particular product. A requirement is what you need a piece of equipment to do; drive to the scene, get water to a fire, prevent injuries to personnel from a bullet, and communicate with dispatch. Requirements are the performance parameters that a product must meet in order to provide the capability. Requirements belong to you, the user. The “product” is the thing that provides you a certain capability; the police car, the fire hose, the body armor, the radio. Specifications belong to the vendor, the guy who is trying to get you to buy his product. They generally or specifically describe the widget and are most often presented on a glossy sheet of paper with cool pictures, and maybe a quote or two about how this particular piece of equipment compares to sliced bread. Many vendors offer specification sheets on their websites. Or you can ask for them individually as you weigh similar products that may fit your needs. Never forget that spec sheets, while informative, sexy, and nice to look at, are but a form of advertising. If you are not careful to keep your requirements at the front of your mind, they could seduce you into buying that product because it is sexy and cool, not necessarily because it meets your requirements. YOU must quantify what the equipment must do to meet the needs of your agency, THEN you can look at the range of potential products, based on the advertised specifications. This is critical because price points may vary. Heated seats? An extra environmental setting? These features may drive up the cost per unit, while not adding much value to your particular agency’s needs (heated seats may be a MUST in Alaska, but a nice to have in South Carolina)
The first step for your agency is to characterize a product, most often against the vendors own spec sheet. Here’s why. Remember, essentially spec sheets are a form of advertising. Now, we all know that drinking X soda won’t really make us the most popular person on the block or get us that great job, like it did for the guy or girl in the advertisement. The same is true here. The specification they advertise certainly can’t be oversold because the first time the user employs it and it doesn’t meet it, they lose. So, there may be a tendency to undersell the specification so that the first time the user employs the product they are wowed because it performs even better than the spec sheet. There is naturally then, some gray area in every spec sheet. Well defined requirements have no gray area. The product must do X, work for X amount of time, etc... or it doesn’t meet the requirement. If it doesn’t meet the requirement it doesn’t help fill our capability gap. If it doesn’t fill our capability gap, why would we buy it?
Defining the True Cost of Ownership
Another consideration in analyzing equipment needs focuses on the true cost of ownership. Sometimes the lower priced model is not necessarily the cheapest over its lifecycle. A consumer car website, Edmunds, has a tool to calculate the “true cost to own” a specific make and model of car http://www.edmunds.com/tco.html. First responder equipment also has an ownership cost that goes beyond the original procurement pricetag. Special batteries or lightbulbs? Tires, oil, and regular maintenance? In the DoD this is referred to as a logistics “tail” and includes everything from the cost of training users to the disposal of the equipment at the end of its useful life. Take the time to figure out what the equipment is REALLY going to cost your agency, and you may find a little more investment upfront is the better value in the long term. Consider:
1. Cost of Training your personnel, and sustainment (refresher) training
2. Maintenance Costs (daily, weekly, annual), include service contracts
3. Disposables and replacement items: batteries, filters, etc.
4. Storage costs (facilities), space, temperature, building, etc.
5. Disposal: sell. Donate, special disposal of certain parts, etc.
These variables will help you discover the true cost of ownership. This will allow you to request funding for the lifecycle of the equipment and not just the purchase. True and tragic story: there is an anonymous rural department that received a piece of technology, and then the municipality balked on the $30.00 fee to replace a filter one year later, because it is not in the budget- so the darn thing sits in a closet because no one else is permitted to buy the part... (Please hear my frustration in this- but I DO have a solution)
Money Required for Operational Availability- NOT Procurement
When agencies go to the powers that be to ask for equipment, they ask for the cost, plus maybe a service contract, warranty fee, or first year of licensing for a software product. I have a different approach. Operational Readiness is what you are aiming for- NOT procurement. The equipment doesn’t do any good in six months if it is relegated to the closet. UP FRONT get approval for a year’s worth of batteries, or a spare filter or two, or a spare lamp, or a spare laptop. These are called SPARES for a reason. You are asking for an investment in a capability to ensure your agency is operational. Please include a line item for the things that you will need to be operational over a period of time.
In our next installment- documenting your real agency’s needs and presenting your case to the bill payer. We will discuss a format that is repeatable, concise, and answers questions before those with the checkbook even ask.