AMES LABORATORY PURCHASING SERVICES
BALANCED SCORECARD SELF-ASSESSMENT PLAN
The following Balanced Score Card (BSC) plan describes self-assessment activities for the Ames Laboratory Procurement Division and will be the primary procurement self-assessment activity at the Laboratory. This plan is derived from the Department of Energy (DOE) mandated model and reflects the core measures identified by DOE. It is designed to implement strategic procurement initiatives and provide a measure of the success of these strategies. All BSC objectives and measures are in support of DOE and Ames Laboratorys Procurement Mission, Vision and Strategy statements:
MISSION: To provide procurement and technology transfer services to the laboratory in consonance with efficient and effective business practices, proper control of funds, high integrity, and compliance with contract requirements. Secondary mission activities include customer service to the laboratory community and advancement of the laboratory's socioeconomic and environmental policies and objectives.
VISION: To deliver on a timely basis the best value product or service to our customers while maintaining the public's trust and fulfilling public policy objectives.
STRATEGY: To maintain customer focus, a sense of urgency, continuous and breakthrough process improvement, and an emphasis on results.
The DOE contractor purchasing system Balanced Score Card (BSC) is a functional component of the Departmental business systems performance measurement and management program issued by the DOE Procurement Executive, dated October 1, 1997.
In order to achieve Department-wide consistency, this review and assessment program is based on the policy outlined in the Federal Register, dated June 2, 1995, in which the Department identified certain purchasing system objectives and standards which it believes are common to superior purchasing activities. Contractors are expected to achieve the most effective combination of performance results in accordance with Departmental expectations, customer requirements, laws, regulations, good business management practices, contractor management objectives, and the terms and conditions of their contracts.
The core performance measures are exclusive of additional optional measures that DOE encourages its contractors to develop and implement as may be appropriate for its operations. Ames Laboratory and the Ames Group will agree on any optional measures proposed for use.
Under the BSC program, performance measures are established and prioritized, targets are assigned and measurements taken. Formal documented self-assessments are the principal means for generating or gathering this information. Measurements are formulated to report status of performance to management and the customer and the feedback cycle drives improvement actions as appropriate.
The initial step in each area will be to establish a baseline against which future performance will be compared. The objective should be to measure trends in continuous improvement affecting the contractor's performance. To ensure this data is trendable and reliable, the method used to establish the baseline should also be applied in subsequent assessments. It is recognized that the results may not be directly comparable from one purchasing management activity to another.
The Ames Laboratory procurement system is approved by DOE, and procurement processes are documented and approved via the Procurement Policies and Procedures Manual (Rev 1) which was approved and implemented January 1997. Current dollar thresholds requiring DOE approval are listed in Appendix G of the Prime Contract with DOE.
Ames Laboratory BSC activity will focus on implementing the strategic initiatives of DOE and Ames Laboratory Management via the BSC process as follows:
Learning & Growth
Effective Internal Controls
Optimum Cost Efficiency
Actions Placed By Users
Award Lead Times
# of Satisfied Employees
% Employees Aligned
% of Items Available
Cost to Spend Ratio
Each year, the BSC will be reviewed by both DOE and Ames Laboratory for revisions and adjustments as necessary to be aligned with strategic management initiatives. A significant part of each revision will be the corrective action plan described in each final report for the previous year's action items. These items will be tracked until they are closed and approved by the Laboratorys Purchasing Manager.
Identification of Self Assessment Review Personnel
Jack Cummings, Head Purchasing & Property Services (acting) is the primary individual responsible for conducting the BSC self assessment process. His procurement experience spans 18 years of buying, administration, managing, formulating policy and inspecting acquisition practices. In performing these responsibilities he may use internal Procurement Department personnel, Laboratory personnel, DOE personnel, personnel from other Laboratories as well as the private sector to carry out the charter of the BSC.
DOE personnel are also considered essential to the self assessment process and may provide information and assistance to conduct assessments as they deem necessary for survellance, validation and verification purposes. DOE may also identify information from other internal audits, Inspector General, Defense Contract Audit Agency or contracting officer appraisals they feel are appropriate for BSC activity.
Current Balanced Scorecard Assessment
Self Assessment Activities
Purchasing Services self assessment activities are comprised of three major elements; statistical information gathering via surveys or computer generated reports, random file reviews and analysis, and final corrective action plans. This information will be obtained and compiled and made available to the Ames Group. Purchasing Services BSC self-assessment is designed to be a dynamic process with statistical information and random reviews being accomplished throughout the year and the final corrective action plan being completed at the end of the cycle. The final BSC report will reflect all BSC activity and include any DOE, internal Laboratory, or external reviews or assessments.
BALANCED SCORECARD CRITERIA
INTRODUCTION: Each perspective will have an assigned weight, performance objective, performance measure, performance result and performance target. The sub-weight of each performance objective will also be identified, as well as any grading scales used, for compiling the overall score for each prospective. A total score will then be calculated for the entire BSC. The total available BSC score is 100 points. The following table will be utilized to assess our overall effectiveness.
Adjectival Rating Total Points
Outstanding 90 to 100
Excellent 80 to <90
Good 70 to <80
Marginal 60 to <70
Unsatisfactory (poor) 50 to <60
Unsatisfactory (failing) 0 to <50
1. CUSTOMER PERSPECTIVE (CP) WEIGHT (30 Points)
This perspective provides Purchasing Services feedback on the customer's view of purchasing operations.
Performance Objective (CP-1): Customer Satisfaction (Sub-weight = 30 Points)
The customer satisfaction metric measures the effectiveness of the procurement system to provide quality materials and services in a timely and accurate manner which meets or exceeds customer expectations. Various types of customer surveys may be used to obtain the perceptions of the customer regarding the procurement process. Survey results will be made available to respondents.
Performance Measure (CP-1): Customer Satisfaction Survey
Surveys are conducted and cover core elements of timeliness, quality, and communication, as well as other key areas such as professionalism, supplier delivery and teamwork/support of customers' goals. The following formula will be used for this measure:
% = Number of satisfied customer responses to questions (3 or higher)
Number of customer responses received
Performance Results (CP-1): A % score will be calculated by using the following scale:
>95% Satisfactory or better responses = 30 points
>85% Satisfactory or better responses = 24 points
>75% Satisfactory or better responses = 18 points
>65% Satisfactory or better responses = 12 points
<65% Satisfactory or better responses = 0 points
Performance Target (CP-1): The DOE target is 95% for this measure.
2. INTERNAL PERSPECTIVE (IP) WEIGHT (50 Points)
The Internal Perspective assures that customer requirements and expectations are understood, and that the appropriate procurement processes are in place to support the customers needs. Performance measures are established and prioritized, targets are assigned and measurements taken. Formal documented self-assessments and standard reporting shall be the principal data generation or gathering tools.
Measures in this model are:
I. Effective Internal Controls
II. Effective Supplier Management
V. Acquisition Excellence via Timely Support
VI. Corporate Citizenship
Performance Objective (IP-1): Effective Internal Controls (Sub-Weight = 7 points)
The process of performing critical self-assessments of procurement operations and systems is a key element in the continuing success of a procurement organization. A successful purchasing organization provides for an annual evaluation of its performance with special emphasis on areas considered to present the greatest risk. As a result of the special requirements involved in performing work for the government, DOE contractors' purchasing systems must pay particular attention to the integrity of the system, especially in regard to compliance with applicable laws, regulations, terms and conditions of contracts, ethics, etc.
Performance Measure (IP-1): Compliance
Laws, regulations, terms and conditions, Laboratory policies and procedures, and ethics are reviewed during random file reviews (Procurement Actions). At the conclusion of each random file review, reviewers will identify the number of areas in full compliance, and the total number of areas evaluated. The degree of success in meeting this measure will be determined by the following equation:
% = Areas in Full Compliance
All Areas Evaluated
Performance Results (IP-1):
Although it is recognized that certain administrative deficiencies will exist from time to time and that the goal is 100% compliance, the following scale, for the purposes of the BSC, will be used for computing the points earned under this measure:
>90% = 7 points
>85% = 5 points
>80% = 3 points
>75% = 1 point
Performance Target (IP-1): The DOE target is for the contractor to meet or exceed expectations (with the expectation defined by DOE as 90%).
Performance Objective (IP-2): Effective Supplier Management (Sub-Weight = 7points)
A successful Procurement organization should support an effective Supplier Management Program. Suppliers should deliver items on time, in accordance with the terms and conditions of the order.
Performance Measure (IP-2): On-time Delivery
The core measure for supplier management is the percentage of line item deliveries on time computed as follows:
% = Items Delivered On-Time
Total Items Due
Performance Results (IP-2): An on-time % score will be correlated to the table for the purpose of establishing BSC earned points.
> 85% = 7 points
> 80% = 5 points
> 75% = 3 points
> 70% = 1 point
Performance Target (IP-2): The DOE target is 85% for this measure.
Performance Objective (IP-3): Using Alternate Procurement Approaches (Sub-Weight = 4 points)
This measure examines the transfer of traditional purchasing activities such as supplier selection, best value determination, ordering and receiving, from a purchasing organization directly to the user organization. These actions are transferred by the use of purchase card programs, just-in-time or basic ordering agreements (BOAs), and other such arrangements.
Performance Measure (IP-3): Volume of Decentralized Actions
This measurement can be accomplished by determining the number of transactions placed directly by the user and those placed by procurement. Examples of these types of transactions are decentralized just-in-time subcontracting, calls placed against standing orders, or any other delegated procurement action outside of Procurement. This ratio becomes the metric.
% = Actions placed by Users
Total Actions Awarded
Performance Results (IP-3): A percentage score will be used to translate a numerical score by using the following scale:
> 75% = 4 points
> 65% = 3 points
> 55% = 2 points
> 45% = 1 point
Performance Target (IP-3): The DOE target is 75% for this measure
Performance Objective (IP-4): Streamlined Processes (Sub-Weight = 2 points)
With the ever changing technology, missions and reduced budgets affecting the Purchasing arena, it is necessary to identify and implement streamlined processes to enhance procurement efficiency, reduce cycle time, reduce operating cost and increase overall customer satisfaction with the procurement process. It is imperative to continually evaluate existing systems and areas for reengineering or redesign of the systems. One measure of the effectiveness of streamlined processes is the number of critical processes evaluated, reengineered or redesigned. The operative word is "critical" where maximum benefit can be gained.
Examples of reengineering/redesign of the purchasing process could involve process mapping of existing systems, developing a "can be" approach to minimize non-value added steps, benchmarking, or evaluating organization changes.
Performance Measure (IP-4): Number of Reengineered or Redesigned Processes
This measure will count the number of formally mapped, reengineered, or redesigned processes accomplished each year. Evidence of this activity will be documented in the central procurement file.
Performance Results (IP-4): Points will be earned based on the following scale:
2 or more mapped, reengineered or redesigned processes = 2 points
1 mapped, reengineered or redesigned process = 1 point
Performance Target (IP-4): The DOE target is for the contractor to map, reengineer or redesign two systems annually.
Performance Objective (IP-5): Acquisition Excellence through Timely Support
(Sub-Weight = 18 Points)
Timely acquisition support is critical to the Laboratory and the DOE to meet programmatic goals and plans. As a result, timeliness needs to be evaluated to ensure the most effective use of procurement personnel and to ensure that procurement personnel are providing customers with the necessary goods, supplies and services necessary to meet objectives.
Performance Measure (IP-5): The measure of the time between receipt of an approved purchase requisition and award of the order.
Average Cycle Time = Total # of days Between Receipt of Requisitions and Award
Number of Awards
Performance Results (IP-5): For the purposes of the BSC, the following grade scale will be used to compile the BSC score:
< 20 calendar days = 18 points
< 24 calendar days = 13 points
< 28 calendar days = 8 points
< 32 calendar days = 3 points
Performance Target (IP-5): The DOE target for this measure is 20 days.
Performance Objective (IP-6): Corporate citizenship (Sub-Weight = 12 Points)
It is recognized in government and corporations that citizenship is a desirable business practice. The contractor and DOE staff shall conduct local negotiations for socioeconomic, regional and local outreach programs and other economic and social diversity program goals.
Performance Measure (IP-6): Socio-Economic Goals
This measure will be negotiated annually and be derived from values and percentages in the annual Small Business Plan for awards to Small, Small Disadvantaged, Small Woman-Owned, and HubZone Small businesses.
Performance Results (IP-6): The calculations for the BSC points will be 3 points for each graded area (Small, Small Disadvantaged, Small Woman-Owned, and HubZone Small business awards) and will be calculated using the following scales:
At or higher of each goal = 3 points each
Within 5% of each goal = 2 points each
Within 10% of each goal = 1 points each
Performance Target (IP-6): The DOE Ames Group targets are the annual percentage goals incorporated into the Laboratorys subcontracting plan.
3. LEARNING & GROWTH PERSPECTIVE (LG) WEIGHT (10 Points)
The Learning and Growth perspective on the Balanced Scorecard involves objectives and measures to drive organizational learning and growth. The objectives established in the Financial, Customer, and Internal Business process perspectives identify where the organization must excel to achieve breakthrough performance. The objectives in the Learning and Growth perspective provide the infrastructure to enable ambitious objectives in the other three perspectives to be achieved. Objectives in the Learning and Growth perspective are the drivers for achieving excellent outcomes in the other three scorecard perspectives.
The Learning and Growth perspective looks to the future and sets objectives that, if achieved, will be beneficial to an organization at some later date.
Performance Objective (LG-1): Employee Satisfaction (Sub-Weight = 5 Points)
As we move from the industrial age to the information age, enlightened managers recognize that good ideas for improving processes and performance increasingly come from front-line employees who are closest to internal processes and an organizations' customers. The primary driver for retaining these employees and making them productive is employee satisfaction.
The measure of employee satisfaction is most often determined through surveys that ask a series of questions about an employees view of his or her working environment. The answers to these questions determine whether the employee is satisfied or not satisfied. The percent of satisfied employees is the primary measure.
Performance Measure (LG-1): Survey results will be tallied to identify employee satisfaction. On a scale of 1 to 4, with 3 and 4 being satisfied, the total employee satisfaction index will be derived using the following formula:
% = Number of satisfied employees
Number of employees surveyed
Performance Results (LG-1): BSC scores are compiled using the following scale for the % of satisfactory responses received from the survey
„ 90% = 5 points
„ 80% = 3 points
„ 70% = 0 points
Performance Target (LG-1): The DOE Ames Group target for this measure is 90%.
Performance Objective (LG-2): Employee Alignment (Sub-Weight = 3 Points)
To optimize performance, the various levels within the purchasing organization should all have their goals aligned with the top-level of that organization. Achieving alignment is a top down, repetitive process which starts by assigning top-level purchasing managers personal goals that are aligned with the corporate objectives. Top-level purchasing managers, in turn, create objectives within their function that are aligned with corporate objectives and assign their subordinates personal goals that are aligned with these lower level objectives. This process continues until all individuals have goals that are aligned with the objectives of their organization.
Evidence of alignment comes from a review of individual performance evaluations. When actual accomplishments, or standards in support of top-level objectives are documented in an individual's performance appraisal, that employee is considered to be aligned.
Performance Measure (LG-2): % of Aligned Employees
The alignment measure is the ratio of aligned employees to total employees. This measure may require changes to standardized performance appraisal documents in order to accommodate an alignment perspective. Appraisals with one or more evaluation elements aligned with any BSC measure, or other strategic objective will be considered aligned. In its simplest form, this measure is computed as follows:
Employee alignment % = Number of aligned employees
Total number of employees
Performance Results (LG-2): The following scale will be used to derive BSC points earned under this measure.
> 90% aligned = 3 points
> 85% aligned = 2 points
> 80% aligned = 1 point
< 80% aligned = 0 points
Performance Target (LG-2): The DOE target is 90% for this measure.
Performance Objective (LG-3): Information Availability (Sub-Weight = 2 Points)
If employees are to be effective in today's competitive environment, they need excellent information on strategic goals and objectives, on customers, on vendors, on internal processes and on financial consequences of their decisions. They need information that is current and readily accessible that will help them do their jobs better and faster. The most important consideration is to have the right information in the right place at the right time.
Required Information items needed:
Institutional goals and objectives
Organizational goals and objectives
Policies and procedures
Performance measures related to their work
Buyer's Performance Reports
Performance Measure (LG-3):
This objective will be measured by identifying information requirements, and correlating an availability % from an annual review by the Purchasing Manager.
Information availability % = Number of information items made available to employees
Number of information items needed
Performance Results (LG-3): The following scale will be used to compile BSC points
> 90% = 2 points
> 80% = 1 points
< 80% = 0 points
Performance Target (LG-3): The DOE target is 90% for this measure.
4. FINANCIAL PERSPECTIVE (FP) WEIGHT (10 Points)
Private sector financial objectives generally represent clear, long-range targets for profit-seeking organizations, operating in a purely commercial environment. Financial considerations for public organizations, to include the DOE prime contractors, have an enabling or a constraining role, but will rarely be the primary objective for procurement and property systems. Success for governmental organizations should be measured by how effectively and efficiently these organizations meet the needs of their constituencies. The Laboratory supports this perspective by balancing scientific and support costs, and improving the cost efficiencies within the Procurement process.
Performance Objective (FP-1): Optimize Cost Efficiency of Purchasing Operations (Sub-Weight = 10 points)
Optimize the cost efficiency of Procurement so as to ensure high customer satisfaction, high quality performance and that cost reductions do not interfere with important customer objectives.
Performance Measure (FP-1): Cost to Spend Ratio
For the purposes of the BSC, this measure will be the purchasing organization's costs, divided by the total business volume of all procurement award documents. Purchasing costs are personnel, travel, overhead, fringe, and materials and services required to produce the business volume. Business volume figures are comprised of all awards as well as any decentralized dollars awarded by Laboratory personnel.
Cost to Spend ratio = Purchasing organization cost
Performance Results (FP-1): The results of this measure will be correlated to BSC points in accordance with the following scale:
< .030 = 10 points
< .035 = 6 points
< .040 = 2 points
< .045 = 0 points
Performance Target (FP-1): The DOE Ames Group target is .030 for this measure.