With 18,000 employees and a $2.1 billion budget, the procurement of equipment and supplies for the Los Angeles County Sheriff’s Department can be a daunting task for department personnel tasked with purchasing everything from firearms to protective equipment to, even, toilet paper.

Government agencies become very good at accomplishing certain tasks, in part, because they have always done things in a specific and highly regimented way. This approach, while effective in an operational or tactical setting, was extremely ineffective in times of constrained budgets and fiscal adversity.  While public agency’s business model remains constant, business models in the private sector are continuously evolving in order to maximize profit for the organization.

In December 2011, Los Angeles County Sheriff Lee Baca gave clear guidance to his agency: “think out of the box and reevaluate our agency’s strategic business model.”  Sgt. Chris Kovac and Sgt. Jennifer Barsh, a 2012 graduate of the Naval Postgraduate School Center for Homeland Defense and Security, worked with LASD Administrative Services Division to help evolve the business model into a more methodological and strategic approach.  The results were more cost-effective purchasing and higher accountability amongst vendors. 

“Our agency is taking a private sector mindset and bringing it into public service,” Barsh said. “Budgets and grants are being cut. It’s time for us to be smarter and more diligent about the way we purchase with the public’s money.”

1)  Disparate Pricing Models

The traditional approach to purchasing supplies by public agencies, gave vendors leverage to charge higher prices to some agencies than others.  A public agency would test cars or handguns, for example, and then standardize on that particular product prior to defining the potential cost index model.  As a result, the incentive for a manufacturer or vendor to provide competitive pricing models is substantially lowered.  Sgt Barsh stated this method is similar to a private person telling a used car dealer that they were set on purchasing a specific car and then asking for the price.

Additionally, various government agency procurement specialists were rarely in contact with one another thereby creating a vacuum of information in terms of pricing, commodity purchasing and customers service issues.

The end result was that vendors and manufacturers were charging public agencies of similar sizes, varying prices for the exact same commodity.  For example, in August 2011, two large California agencies independently communicated with the same firearm’s manufacture.  According to Sgt Barsh, the manufacturer’s proposed price to one agency was 27 percent higher than that the price offered to the other agency.

2)  Consolidated Buying Power

Working in conjunction with an established non-profit organization named

“The Safe Cities Foundation,” the Los Angeles County Sheriff’s Department helped develop a concept to consolidate buying power and increase vendor accountability.  This concept is called the “FISCAL Association.”  The idea is simple, yet brilliant: agencies from a region or even from across the country, uniting to exchange information, define pricing and to hold manufacturers/vendors accountable for their business practices. 

The idea resulted in immediate savings.  In response to the 27 percent cost discrepancy for firearms, the two agencies subsequently united in their negotiations with the manufacturer, resulting in a 35 percent savings for one agency and a 10 percent cost reduction for the partnering agency.

Simply partnering with other agencies and defining disparate pricing models has helped drive down prices offered by various vendors and manufacturers.  In some cases these pricing models have dropped more than 50percent. 

3)   FISCAL Association President Bob Keyes stated the purpose of the association is to “unite public agencies across the nation in order to provide transparency and a level playing field in terms of pricing models.  Additionally, it ensures vendors and manufacturers are always mindful in providing high quality customer service to their public agency clientele. 

Sgt. Barsh envisions the FISCAL Association concept will expand to other public agencies across the country.