September 20, 2007California General Services Association 2007 General Services Academy 1 Maverick Spending Presented by : County of Sacramento Contract

September 20, 2007California General Services Association2007 General Services Academy

1

Maverick SpendingPresented by :

County of Sacramento

Contract & Purchasing Services Division

Craig Rader, Purchasing Agent

John Finney, Contract Services Manager

Johnnie Terry, Contract Services Manager


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Agenda

Define Maverick Spending Your Organizational Structure Why does it occur? Why is it important? How does it affect your agency? Why can’t we do “it” this way? Why do I have to adhere to Purchasing Policies? How can you reduce or eliminate it? Examples Q&A


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POP Quiz #1

Why is he called “Maverick”?


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What is “Maverick Spending”?

Purchasing goods/service in non-compliance with your policiesOff-contract spendingProcessing “paperwork” after the fact:

retroactive contractingSplitting OrdersRecurring Orders

What “issues” is your agency experiencing?


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Your Organizational Structure

Org StructureCentralized

• Easier to control

Decentralized• Very difficult to control

Hybrid/Combination of Both How is Your Agency Structured?


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Why does it occur?

Many causes:Ignorance of policies and proceduresBurdensome procurement processNot aware item was on contractWillful disregard for policies and

proceduresInevitable part of a decentralized

purchasing approach


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Why is it Important?

Opportunity for Cost Savings Compliance Process Improvement Liability Public Scrutiny


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POP Quiz #2

What is the average % of increased costs of a typical “Maverick Purchase”?


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How Does it Affect Your Agency? Costs (typically 2-5% higher)

Examples later Time (How much time did you spend when

you could have been doing other things?) Governing Body (Board, Council) approval

for retroactive. Delay vendor payment Risks

Insurance Reputable Firm Licensing Limiting Vendor Pool


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Why Cant We Do “It” this way?

State Law

Agency Policy

Public Scrutiny of Purchasing habits


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Why do we have to adhere to Purchasing policies?

We all have PolicyFor Non-purchasing folks:

• What is your most “abused” policy?• What are the ramifications of not adhering

to policy?Why are they important?

Guardians of Taxpayer Dollars Allow fair and open competition


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How can you reduce or eliminate it?

Management “Buy in” Purchasing Management Finance Counsel Executive Management

Review Purchases Enforce Policy

Willingness to take corrective action Training & Education

Formal• Classroom

Informal• Whenever you “touch” your customers

• Phone conversations or impromptu meetings• Include Purchasing staff

Newsletters• Division, Department, Agency

Emails


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Examples

Office Supplies from non-contracted vendor User spent $6,765.56 Would have paid $4,504.95 if used Corporate Express OVERPAID $2,044.71 (30%)

Forms Burster Contract User signed contract for List Price Purchasing renegotiated User would have OVERPAID $3,328 (19%)

Envelopes $4,060 (18%) savings on envelope

Matching Orders to Contracts

Retroactive Contracts Must be ratified by Governing Board (County Supervisors, City

Council, District Board, etc.)


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What Have We Learned?

Maverick Spending is define as…. It occurs because… It is important because… It affects my agency in the following

ways… It cannot be done this way because… I must adhere to Purchasing Policies

because…. I can reduce or eliminate it by……


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Questions and Answers

Documents

September 20, 2007California General Services Association 2007 General Services Academy 1 Maverick Spending Presented by : County of Sacramento Contract