Master Shopper

John Ely is out to change spending behavior.

Assisted by a team in Indianapolis, John Ely is working to negotiate better deals on bulk purchases of everything from specially trained dogs to body armor for the Homeland Security Department's Customs and Border Protection bureau. He saves money by analyzing spending patterns to locate better bargains-a practice called strategic sourcing.

Ely, executive director of CBP's Office of Procurement, says strategic sourcing works because it prompts fundamental changes in shopping habits. He first learned that at the Internal Revenue Service, where he worked with Gregory D. Rothwell-now DHS' chief procurement officer-during what both describe as one of the more "litigious periods" there. At the IRS, Ely analyzed spending on cell phones and copiers. Strategic sourcing wasn't a buzzword then.

But the analysis made sense, Ely says, and not just because it helped achieve economies of scale. Strategic sourcing is "almost more about how you use commodities," he says. When he gathered data on cell phone use, for instance, the numbers showed exactly what the IRS paid for cellular service. "The first question was: Why does everybody have a [cell] phone?" Ely says.

Then there were the disparities in calling plans. "Somebody who never left D.C. might have a [nationwide] calling plan," he says. So the procurement shop set up rules and "very clear directions as to who should get a phone and what kind," he says.

Ely's own cell phone broke shortly after he set the rules and negotiated a few contracts to fit different needs, affording him the opportunity to test his work. He visited the site he'd set up for ordering and "sure enough," he says, his number popped up, accompanied by notations about his needs. Next to that were three options.

Rothwell persuaded Ely that CBP would be a good place to further test his skills. "I talked to CBP leadership and was instantly sold at how important their jobs were," Ely recalls. Once he was on the job, a couple of quick tours of the southern borders convinced him he'd made the right move. "In my opinion, this is one of the most important missions in the government," he says. "I can see us already improving how that's done."

Ely's shop is one of eight in DHS. A basic challenge is to eliminate confusion about purchases for people in the field. "We don't want them distracted" with buying equipment, he says. He is also a member of DHS' commodity councils, which work on strategic sourcing departmentwide. Four of them saved DHS $14 million in fiscal 2004.

The goal is to shop more efficiently, says Ely, whose wife works in private industry. "When you're out there [in the private sector], you can see that it's survival," he says. "If we think that way, I can make CBP even better."

Ely, who started his public service 26 years ago as an Army intern, is an optimist about overcoming challenges that procurement chiefs typically cite. He's looking at setting up the body armor contract as at least a partial set-aside for small businesses, eliminating the concern that bulk purchases could shut out smaller companies.

He also is one of many procurement executives set to retire in the next few years, contributing to what some have called an acquisition workforce crisis. But Ely doesn't think of it that way. He points to several young CBP employees who within seven months of their start dates were completing complex reverse auctions on computer systems. Ely's hiring numbers speak for themselves: The agency's procurement staff has increased from 79 to 120, and is likely to rise by 30 people during the next two years. "I don't see [it] as much a crisis as a management challenge," he says.