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The improvement plan to enable HHSC Procurement and Contracting to take off
Phase III
31 October 2018
This work product has been prepared for The Texas Health and Human Services Commission for its use and purposes only. It is not intended
to be relied upon as professional advice for other Texas agencies or their affiliates, other Health and Human Services agencies outside Texas
or their affiliates, or any other organizations or persons. Neither Ernst & Young LLP nor any other member of the global Ernst & Young
organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this
document.
Page 1Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Executive letter from the EY Engagement Partner (1 of 2)
Ms. Jordan Dixon
Deputy Executive Commissioner
Office of Transformation and Innovation
Texas Health and Human Services
4900 North Lamar BoulevardAustin, Texas 78751
Dear Ms. Dixon,
Ernst & Young LLP (EY US) was engaged in July 2018 to perform a comprehensive analysis of the Texas Health and Human Services Commission’s (HHSC, the
Commission or the Agency) procurement and contracting functions with the aim of understanding current state application, root cause analysis, and creation of a fit-for-purpose improvement road map to alleviate the true cause of issues that are impacting HHSC’s procurement and contracting performance.
EY US applied our Procurement Maturity Model Assessment Methodology across the breadth of the Agency and observed variations in process, speed, accuracy,
information flow, and governance. Our most critical observation is that, while its name implies that it is primarily a service delivery agency, HHSC actually depends
upon the compliance, efficiency and effectiveness of its procurement and contracting function to drive many of its critical business outcomes. HHSC is a
procurement agency at its core with the vast majority of the HHSC services being provided in an outsourced third party contracted configuration. The Commission’s procurement and contracting function is regulated within a state government framework; yet at the same time, HHSC is presented with procurement
challenges akin to a large private corporation as HHSC’s spending levels and demands rival those of several Fortune 50 compan ies. The mechanism used in
private business when entering into an outsourced condition is to intentionally modify its operating model to help enable success. It cannot be overstated the extent
to which the success of HHSC hinges on the success of its procurement and contracting capability and teams. Those teams are still operating within a traditional
structure and now must have access to modern procurement processes, training, technology, leading practices and visionary supply chain leadership in order for Texas HHSC – one of the largest state agencies in the nation – to deliver quality third party services and solutions at the right terms and conditions that the
Legislature envisions and that Texans deserve.
We see that the necessary improvement is within the Commission’s reach and thus we have developed a customized improvement road map to guide the
necessary changes. The road map is customized to your particular pain points and condition yet built upon procurement process improvement experience and
leading practices. The road map is comprehensive at the top level; however, there are many decisions to be made within the course of executing each of the projects. This format is found to be constructive by other clients and your projects are designed with what works for state governments coupled with appropriate
measures necessary to support the spending volume of a Fortune 50 equivalent company.
This report (the Report) has been prepared by EY, from information and material supplied by Texas Health and Human Services for the sole purpose of assisting
the Agency in assessing its procurement process.
Page 2Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Executive letter from the EY Engagement Partner (2 of 2)
The nature and scope of our services was determined solely by the Agreement between EY and HHSC dated 15 July 2018 (the Agreement). Our procedures were
limited to those described in that Agreement. Our work was performed only for the use and benefit of HHSC and should not be used or relied on by anyone else.
Other persons who read this Report who are not a party to the Agreement do so at their own risk and are not entitled to rely on it for any purpose. We assume no
duty, obligation or responsibility whatsoever to any other parties that may obtain access to the Report.
The services we performed were advisory in nature. While EY’s work in connection with this Report was performed under the consulting standards of the American Institute of Certified Public Accountants (the AICPA), EY did not render an assurance report or opinion under the Agreement, nor did our services constitute an
audit, examination, review, agreed upon procedures or any other form of attestation as those terms are defined by the AICPA. None of the services we provided
constituted any legal opinion or advice. This Report is not being issued in connection with any issuance of debt or other financing transaction.
In the preparation of this Report, EY relied on information provided by HHSC or publicly available resources, and such information was presumed to be current,
accurate and complete. EY has not conducted an independent assessment or verification of the completeness, accuracy or validity of the information obtained. Any assumptions, forecasts or projections contained in this Report are solely those of HHSC and any underlying data were produced solely by HHSC.
Management of HHSC has the knowledge, experience and ability to form its own conclusions.
I extend my personal thanks to HHSC’s leadership team for encouraging the assessment work. During the course of our work, it became abundantly clear to the
EY US team that the public servants at HHSC are deeply committed to its success. HHSC team members were forthcoming about their needs and hopes, and it is
evident to us that those team members are hopeful for the success of the Agency they serve. You are now at a key inflection point, and the Improvement plan enclosed if implemented can deliver desired improvements. It is incumbent on the State of Texas and its stakeholders to make investments in HHSC with leading
tools, bolstered Agency processes and infrastructure and next-generation talent management strategies. With the unwavering support of Texas leadership, HHSC
can resolve the issues identified in this document. We appreciate the opportunity to continue to serve HHSC and Texas, we are excited about your journey ahead.
Best Regards,
Beth GutweilerPrincipal, EY Supply Chain, Procurement and Operations
Page 3Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Contents
A call to action 4–9
Improvement plan 10–26
Project charters 27–66
Insights and additional projects 67–116
Appendix 117–279
Phases I and II summary 119–129
Current state maturity assessment 130–172
Root cause analysis 173–178
Next steps 179–181
Detailed analysis 182–272
Operating model and strategy considerations 273–279
Page 4Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
A call to action
Page 5Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Call to action
► The Agency has repeatedly faced public scrutiny surrounding procurement
and contracting concerns that has pressed the Agency into a reactive mode
► This assessment is intended to help the commission:
► Harmonize the audit reports and analysis on how procurement is performed
► Seek the root causes driving the issues
► Identify a series of projects that can be undertaken as an improvement plan/road
map to go from reactive to proactive
► Create a baseline that can be retested over time
“We made it crystal clear that HHSC has become to some extent a
contracting agency and must be structured and staffed with the right people
to reflect this responsibility. And in my opinion, these recent problems have
nothing to do with the size of this agency or boxes on an organizational
chart, but rather a failure to elevate the importance of contracting at an
agency that contracts out a very high percentage of its services. This has to
change.”
Committee Chair Senator Jane Nelson speaking to the HHSC Transition Legislative Oversight Committee (29 May 2018).
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to limitations and restrictions on page 2.
1) The operating model,
strategy and investment
of HHSC, has not
evolved to meet the
needs of an outsourced
service delivery
solution, which depends
upon Procurement for
its success.
2) Volume of transactions
amplified the effect,
quadrupling the impact
on an unfit model.
3) The communication
plan is built for a
smaller organization.
The Agency has suffered from a lack of investment in enterprise capable skills, process, systems, governance and communications to help enable the procurement and contracting function.
Partnership, accountability and interdependency from PCS, Program and Legal need improvement to achieve the value proposition.
Data, reporting and visibility are inadequate to run the procurement and contracting function.
The traditional and heavily restricted approach for developing and maintaining suppliers, vendors and providers is holding back the Agency.
Overarching
root causeImprovement opportunities
Efficiency and effectiveness from the procurement and contracting function need improvement to become high performing.
Critical realities observed in HHSC’s translation of strategy to operations
Page 7Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Procurement maturity assessment methodology
EY maturity model Assessment
Stage 1: Informal
Stage 2: Functional
Rating
Stage 3: Standardized
Stage 4: Collaborative
Stage 5: Leading
Po
rtfo
lio
an
d
► The methodology measures an organization’s procurement practices along eight dimensions.
► Each dimension is rated based on a five-level rating that takes into consideration leading practices.
► From the assessment, a spider diagram is produced showing the current state. Based on this, the gap analysis is produced and
initiatives are identified to bridge the gap between the current state and the targeted state.
Page 8Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
“Hero-based” environments rely on staff to go the extra mile to complete work to compensate for a lack
of supportive and systematic technology features. System-based environments utilize technology for
reliable process completion. The findings of the assessment are consistent with the general sentiment of
the PCS team as well as their leadership.
Weak
Str
on
gIm
pact
Reactive ProactiveMaturity levels
Leading
Tactical fixes/backlog cleanupTechnology not optimized;
strategy not recognized
Agency standards and
governance established and enforced
Integrated technologies;
automation, transparency
Proactive aged
with decision analytics
Capabilities in place; inconsistent
processes
E2E process design formally
documented and published
Performance driven;
improvement program chartered
Processes integrated across
Agency boundaries
Standardized processes/defined
strategyOptimized and efficient
Executive leadership directly
drives improvement strategies
Integration of leading practice
and standardized processes
Supply chain as a competitive
advantage
Recognized in the industry as
best in classEfficiency/
effectiveness
Span of control
The greatest inflection point for effectiveness
and efficiency occurs between levels 3 and 4
Informal
Functional
Standardized
Collaborative
“Hero-based” environment System-based environment
Maturity models provide analysis to align performance, cost and risk across a number of criteria
Page 9Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
During weeks 1–6, a maturity model was used to understand the current state of HHSC. The maturity model broke down procurement
and contracting into eight pillars to assist in the identification of root cause. Based on this assessment, the Commission has
opportunities to improve across all eight dimensions. Such results should be expected and in line with the recent audit reports. New
management has begun enhancements to improve scores, but needs additional support and improved processes and systems.
Strategic
Direction
Performance
Management
Technology
Internal
Stakeholder
Management
Governance
and
Risk Management
Procure to
Pay Process
and Complex
Services
People and
Organization
Portfolio
and Supplier
Relationship
Management
*Represents the average rating of the included subsections.
HHSC Procurement and Contracting Current state capabilities summary
Internal Stakeholder Management
Average: 1.6
Governance and Risk Management
Average: 1.4
Performance Management
Average: 1.3
Technology
Average: 1.7
Procure to Pay Process and Complex
Services
Average: 1.7*
Portfolio and Supplier Relationship Management
Average: 1.6*
People and Organization
Average: 1.5
Strategic Direction
Average: 1.3
Page 10Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Improvement plan
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to limitations and restrictions on page 2.
Improvement plan project approach
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to limitations and restrictions on page 2.
Project timelineOverview
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to limitations and restrictions on page 2.
Improvement plan
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Approach to project creation
► Developed initial database of 113 potential projects and activities, which
address the closure of all critical and noncritical gaps
► Met individuals with key stakeholders for rounds of vetting and refining. Met
multiple times with transformation team and key PCS staff to further refine
► Tested, prioritized and rationalized project listing to a tailored set of 29 critical
“must address” projects
► Defined key activities that support transformation team chartering and
tracking of projects
► Where flexibility on project sequencing was possible, EY US prioritized that
characteristic so that HHSC has flexibility for realistic scheduling of resources
involved in multiple projects
► Ultimately change management and executive support is critical to the
success of all projects
Page 15Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Future state road map/improvement plan
Wave 1 Wave 2 Wave 3 Future state and beyond
Po
rtfo
lio
Mg
tP
rocu
re to
Pa
yG
overn
an
ce a
nd
Ris
k
Technology People and Organization
26PM: Procurement
spend analysis
17PM: Standardize contract management and
monitoring27PM: Vendor outreach
program
Strategic DirectionInternal Stakeholder
12PP: PCS forms, contract
tools, contract templates
23PP: Complex
services process
Performance Management
18SD: Enhance
policies
21TE: Fit-gap
analysis
4IM: Program
liaison process
1SD: Operating model
creation
5IM: Lessons
learned touch
point
29TE: Remaining
procurement
technology
16GR: Procurement and
contract risk assessment
2SD: Data cleansing
25GR: Control effectiveness testing program
13GR: Compliance monitoring
14GR: Align processes for managing
external stakeholder governance
15GR: Lines of defense
11PP: Procurement and contract
management manuals
24GR: Review and approval workflow
8TE: CAPPS and SCOR
training
22PP: Procurement
end to end process
3IM: Dashboard
automation
10TE: eSignature tools
28PO: Employee
engagement plan
9TE: Immediate CAPPS19PO:
Communication
framework
20PO: Training
programs
7PE: Performance
management
practice
6PO: PCS Organization
re-design
For more information, please see EY Insights on Procurement Transformation
Page 16Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
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Areas of focus within the improvement plan
Strategic Direction► PCS mission is widely known
► Cross-functional procurement planning
People and Organization
► People are empowered
► Cultural survey scores improve dramatically
► HHSC/PCS is an employer of choice in Austin
Portfolio Management► Items are strategically sourced for economies of scale
► PCS has proficiency in sourcing in all categories
Procure to Pay► Complex procurements are completed in a timely fashion
► Procurement function is fully automated
Governance and Risk ► Full compliance with legislative mandates
► Full adherence to internal policies and processes
Internal Stakeholders ► Collaborative work environment across appropriate stakeholders
Technology► Integrated Procure to Pay system
► Integration across all Agency systems
Performance
Management
► Balanced scorecards that are used to drive improvement
► KPIs integrated with performance
For more information, please see EY Insights on the Future of Procurement.
Page 17Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Path to future state
# Project name Ease Impact
Str
ate
gic
Dir
ectio
n
1SDDevelop sufficient operating model for the Agency’s dependency
on contracting as a critical success factor4 5
2SD Conduct data cleansing 3 5
18SD Enhance policies governing key business components 2 3
Pe
ople
6PO Create a fit-for-purpose organization design for PCS 4 4
19PO Establish a comprehensive communication framework 2 4
20PO Develop comprehensive training programs 5 3
28PO Create an employee engagement plan 3 3
Po
rtfo
lio
Ma
na
ge
me
nt 17PM
Standardize contract management and monitoring practices
across HHSC4 2
26PM Develop procurement spend analysis practice 3 4
27PM Establish a vendor outreach program 4 3
Pro
cure
to
Pa
y
11PPUpdate and refine procurement and contract management
manuals4 4
12PPEnhance PCS forms, contract tools and contract templates
related to procure to pay process4 4
22PP Redesign procurement end-to-end process 4 4
23PP Enhance complex services process 3 5
Ease of implementation ranking legend:
► 1 = No external support required to implement and drive adoption (1–3 months)
► 2 = Little to no external support required to implement; minimal integration and adoption complexity (1–3 months)
► 3 = External support required to manage, configure/integrate, test, deploy
and enable adoption (1–6 months)
► 4 = External support required to manage, configure/integrate, test, deploy
and enable adoption (3–12 months)
► 5 = External support required to manage, configure/integrate, test, deploy
and enable adoption (9+ months)
ROI impact ($, efficiencies and improved end-user experience):
► 1/2 = Low business case impact
► 3/4 = Moderate business case impact
► 5 = High business case impact
Ease of implementationLow = 1 High = 5
Imp
ac
tL
ow
= 1
Hig
h =
5
The upper-left quadrant represents high-impact, low ease of implementation projects that HHSC can action.
1SD2SD
18SD
6PO19PO
20PO28PO
17PM
26PM
27PM
11PP
12PP22PP
23PP
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to limitations and restrictions on page 2.
Path to future state
The upper-left quadrant represents high-impact, low ease of implementation projects that HHSC can action.
Ease of implementationLow = 1 High = 5
Imp
ac
tL
ow
= 1
Hig
h =
5# Project name Ease Impact
Go
ve
rna
nce
13GR Strengthen compliance monitoring processes and controls 4 2
14GRAlign processes for managing reports to governing entities
outside of HHSC2 4
15GR Risk management – lines of defense (LOD) alignment 2 3
16GR Perform procurement and contract risk assessment 2 4
24GR Develop review and approval workflow 3 4
25GR Implement a continuous control effectiveness testing program 3 3
ISM
3IMEnable dashboard automation for business administrative
functions1 4
4IM Expand upon the program liaison process 3 4
5IM Establish a lessons learned touch point 2 3
Te
chno
logy
8TE Conduct comprehensive CAPPS and SCOR training 5 5
9TE Resolve immediate CAPPS configuration needs 5 5
10TE Align eSignature tools 4 4
21TE Perform full fit-gap analysis 5 5
29TE Streamline remaining procurement-related technology 4 4
Pe
rfo
rma
nce
7PE Performance management practice 3 5
13GR
14GR
15GR
16GR
24GR
25GR
3IM
4IM
5IM
8TE9TE
10TE
21TE
29TE
7PE
Ease of implementation ranking legend:
► 1 = No external support required to implement and drive adoption (1–3 months)
► 2 = Little to no external support required to implement; minimal integration and adoption complexity (1–3 months)
► 3 = External support required to manage, configure/integrate, test, deploy
and enable adoption (1–6 months)
► 4 = External support required to manage, configure/integrate, test, deploy
and enable adoption (3–12 months)
► 5 = External support required to manage, configure/integrate, test, deploy
and enable adoption (9+ months)
ROI impact ($, efficiencies and improved end-user experience):
► 1/2 = Low business case impact
► 3/4 = Moderate business case impact
► 5 = High business case impact
Page 19Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Wave 1 project summaries
Dimension Project name Project situation
Strategic
Direction
1SD: Develop sufficient operating model for the
Agency’s dependency on contracting as a
critical success factor
► PCS vision, mission and purpose are not fully aligned with the Agency’s vision/mission
and not openly confirmed and communicated to all stakeholders. Misalignment drives
inconsistent priorities in people, process, technology and governance within the
function.
2SD: Conduct data cleansing ► Historical data within CAPPS, SCOR, Budget/Finance does not appear to be aligned
with correct dollar amounts or other specific areas of data capture.
People and
Organization
6PO: Create a fit-for-purpose organization
design for PCS
► Unclear roles and responsibilities coupled with undefined KPIs and job openings keep
the organization from being structured appropriately. Workload inconsistent; staff doing
tasks for which they don’t have the competencies; oversight of contract quality is
inconsistent, inhibiting effectiveness, compliance and efficiency.
Portfolio
Management
17PM: Standardize contract management and
monitoring practices across HHSC
► As a consequence of transformation, the approach to contract management and
monitoring at HHSC has not been unified into a standardized set of policy, practice and
process guidance for programs to utilize. More recently, HHSC policy and guidance on
contract management and monitoring practices and processes have not been updated
or aligned to the state guidance on contract management. As such, contract management and monitoring practices vary dramatically by program.
Procure to Pay 11PP: Update and refine procurement and
contract management manuals
► Processes are often inconsistent across similar requisitions, causing inefficiencies and
increasing errors and noncompliance; workarounds are prevalent in part because of
lack of knowledge. Current manuals are more than two years old and have not been
updated with current information, including no specificity to HHSC procedures which
drives audit exposure.
12PP: Enhance PCS forms, contract tools and
contract templates related to procure to pay
process
► Processes are often not written to support a large organization, limiting opportunities
for economies of scale and optimization improvements. PCS and Program have
different templates that are created outside of CAPPS that are then imported into
CAPPS. Some forms may have the ability to be created inside CAPPS.
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Wave 1 project summaries
Dimension Project name Project situation
Governance and
Risk
Management
13GR: Strengthen compliance monitoring
processes and controls
► Inconsistencies in compliance processes were noted both during the current state
assessment and identified in previously issued audit reports. A methodical approach to
addressing these issues will increase confidence in the integrity of the process and
reduce the risk of control failures and repeated audit findings.
14GR: Align processes for managing reports to
governing entities outside of HHSC
► Processes and controls for identifying and coordinating reporting to third-party
governance entities are not defined and may lead to inaccurate or noncompliant
external reporting, resulting in unnecessary rework and loss of confidence in reports
provided to third parties to HHSC.
15GR: Risk management – lines of defense
(LOD) alignment
► Roles and responsibilities for risk ownership and oversight across PCS, Compliance
and Quality Control (CQC), Programs, Legal and Budget/Finance are not clearly
defined, and may result in inefficiencies, gaps in monitoring responsibilities and
objectivity concerns of CQC auditing its own work. Without clearly delineated roles, the
risk of control failures or management override is increased.
16GR: Perform procurement and contract risk
assessment
► Generally, review and approval follow the same process and rigor regardless of the
risk level of the procurement or contract, creating gaps in efficiencies, overengineering
and a false sense that risk is covered.
Internal
Stakeholder
Management
3IM: Enable dashboard automation for business
administrative functions
► Program/Agency is unable to run reporting dashboard to determine where in the life
cycle inputted requisitions reside within CAPPS.
4IM: Expand upon the program liaison process ► The root cause that says HHSC operates in a “hero” environment – reliant on
extraordinary individuals’ efforts to compensate for inadequate technology and
processes. Without a formal process in place, both PCS and program have noted that
whether certain tasks were completed correctly and efficiently depended on whom
from PCS or which program you were dealing with. For instance, programs noted that direction over process, next steps and status were difficult to consistently obtain from
PCS and frequently rely on a few individuals to find the information they need.
Similarly, PCS has noted problems in obtaining necessary forecasting plans from
varying programs.
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Wave 1 project summaries
Dimension Project name Project situation
Technology 8TE: Conduct comprehensive CAPPS and
SCOR training
► Training programs are insufficient in content and frequency, and there are limited
designated support resources to provide compliance and technical guidance. The
existing training programs (onboarding and ongoing) do not provide employees with
the knowledge and tools needed to be successful in their roles. The lack of training,
coupled with excessive workloads and nonstandard processes, has contributed to staff often feeling overwhelmed and frustrated.
► The train-the-trainer model used previously was not successful. Adequate budget must
be allocated to support a robust training program to educate users on the system in its
current state and provide ongoing training as system changes are implemented in the
future.
9TE: Resolve immediate CAPPS needs ► Business needs and volume are not sufficiently synchronized to process/technology.
CAPPS has been heavily modified to accommodate State of Texas statutory
contracting requirements, as well as HHSC-specific contracting needs; however, the
system is not designed to support a specific set of agency or program purchasing
processes and procedures.
10TE: Align eSignature tools ► The lack of visibility within, and integration among, procurement-related systems (e.g.,
CAPPS and the digital signature tool) in so far as how it is configured and applied
creates risk for policy compliance issues and undermines statewide transparency
efforts.
Performance
Management
7PE: Establish a performance management
practice
► Current systems do not facilitate visibility and extraction of data to support
procurement-related business decisions.
► HHSC program areas are performing ad hoc and manual reporting to track and
manage the status of their procurement requests.
► The lack of integration among procurement-related systems combined with the lack of properly configured reporting functionality in CAPPS frustrates users, precludes data-
driven procurement practices and hampers statewide transparency efforts.
Page 22Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Wave 2 project summaries
Dimension Project name Project situation
Strategic
Direction
18SD: Enhance policies governing key business
components
► Constant change in management priorities drove suboptimal policies with frequent
revision. HHSC needs clarity.
People and
Organization
19PO: Establish a comprehensive
communication framework
► Currently, procurement-related communications are not actively and comprehensively
planned and managed. Communication is unstructured, inconsistent and not properly
cascaded. This has led to knowledge gaps for key roles, a systematic lack of end-user
engagement and the inability to create a culture of cooperation and collaboration. For
instance, one program noted having discontinued the use of the digital signature tool for certain processes where it was no longer required because notice was given in a
meeting, but not documented or cascaded.
20PO: Develop comprehensive training
programs
► Although limited training has been provided to PCS employees, a formal training
strategy, plan and program have not been developed or provided to procurement staff.
Training programs are generally insufficient and there are limited designated support
resources to provide compliance and technical guidance.
Portfolio
Management
26PM: Develop procurement spend analysis
practice
► PCS does not currently utilize data to help it to identify and execute strategic
contracting opportunities for the Agency. This coupled with the current limitations in
data integrity, accuracy and access leads to a need to establish a consistent
methodology and practice for spend analysis at the Agency to support improved data-
driven decision-making regarding procurement activities.
27PM: Establish a vendor outreach program ► Hindering communication and engagement throughout procurement planning and
contracting hampers meaningful outcomes for complex, high-risk contracts; limiting
vendor input provides an inherent advantage to incumbent vendors because a new
vendor is more challenged in its ability to communicate emerging practices or unique
products or services that the vendor may be able to offer the state agency.
► Agency vendor management policies and practices reflect unnecessarily limited vendor
interaction that is not aligned with statewide guidance that creates collaboration
opportunities. For example, TGC 2155.081 directs the CPA to establish a vendor
advisory community to provide input into state procurement practices and serve as a
channel of communication among the vendor community.
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Wave 2 project summaries
Dimension Project name Project situation
Procure to Pay 22PP: Redesign procurement end-to-end
process
► Due to significant changes in procurement-related organization, roles, responsibilities,
policies and processes that will be put in place in light of this report, it will be necessary
for PCS to establish a consistent procure to pay process so that current SOPs are
tailored to align with changes as they are implemented.
23PP: Enhance complex services process ► Lack of documentation standardization, evaluation process that does not meet the
needs of the Agency.
Governance and
Risk
24GR: Develop review and approval workflow ► After the risk assessment process is complete, the approval workflow will need to be
updated to align with the new process of approving contracts differently based on the
assigned risk.
25GR: Implement a continuous control
effectiveness testing program
► While the CQC function has recently been established, a process has not been
consistently implemented to assess compliance with processes and procedures across
the Agency. Without a rigorous quality control testing program, the ability of the Agency
to consistently execute new and redesigned controls will be limited, increasing the risk
of process and policy noncompliance.
Internal
Stakeholder
5IM: Establish a lessons learned touch point ► This project seeks to address the root causes: processes are often not written to
support a large organization, limiting opportunities for economies of scale and
optimization improvements. For instance, there is currently minimal process in place to
help prevent problems from repeating themselves, such as the repeated evaluation
mistakes. By establishing a lessons learned touch point, PCS can seek to address this issue by having a published repository for new staff to refer to as well as the ability for
PCS staff, PCS leadership and program staff to have an effective feedback loop.
Technology 21TE: Perform full fit-gap analysis ► CAPPS was not configured/implemented to serve HHSC fit-for-purpose procurement-
related purposes (i.e., complex contract proposal evaluation, vendor performance
tracking, document management, spend analysis and public data transparency) in
function or in HHSC-level volume.
Page 24Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Dimension Project name Project situation
People and
Organization
28PO: Create an employee engagement plan ► Good performance and success are rewarded much less frequently than bad behavior
or failure is punished. This significantly impacts morale and prevents employees from
feeling empowered and engaged. Given the preexisting fear culture in PCS, action is
warranted.
Procure to Pay 29TE: Streamline remaining procurement-
related technology
► The lack of integration among all of the procurement-related systems combined with
the lack of properly configured reporting functionality in CAPPS creates difficulty for
users, precludes data-driven procurement practices and undermines statewide
transparency efforts.
Wave 3 project summaries
Page 25Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Subsequently, supply chains are no longer linear but complex ecosystems, requiring a fundamental reinvention of Supply Chain and
Operations.
Degree of Taylorism/distribution of value creating processes on multiple entities within partner ecosystem
Le
ve
l o
f s
ys
tem
an
d d
ata
in
teg
rati
on
/us
ag
e o
f c
lou
d-b
as
ed
IT
sys
tem
s
Cloud-based
SW platforms
External
systems integration
On-premise
IT systems
Internal
business functions
Collaboration
with partners
Service and
platform-based businesses
The old world: value creation
within entities, on-premise ITTraditionally, creators have been selling products and
services through linear value chains. Companies were
owning a dedicated part of the value chain, competing
with competitors.
The new world: ecosystems
on cloud-enabled platformsDigital ecosystems do not work linearly; they are
shaping market networks and enable hybrid forms
of cooperation and competition: coopetition.
Ecosystems create and serve communities, and
harness their creativity and intelligence. Entities
may play multiple roles in an ecosystem.
CustomersSuppliers
Innovation & Product Lifecycle
Management
Manufacturer
OEM
Finance & Controlling
Sales &
Marketing
Service &
Spare Parts Management
Supply Chain & Operations
Pro-
duction
Ware-
housing
Logis-
tics
Distri-
bution
Order
Mgmt
Plan-
ning
Quality
Mgmt
Mainte-
nance
Sourcing &
Purchasing
Supplier
Customer
Customer
Retail/
consumer
Customer
Con-
nector
SC as
a service
For-
warder
Eng.
contractor
Logistics
contractor
Supplier
Platform-based
business model
SC planning
Supplier mgmt.Risk management
Coopetition
Retail/
consumer
OEM
Contract
manufact.
Engineering
collaborationPLM in the cloud
Co-creation
Com-
petitor
Supply chain of the future
BeyondProcurement leading practices continue to evolve
Page 26Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Taking flight
► This 10-week rapid assessment has
covered much ground in an
extremely limited amount of time with
106 interviews, 301 ThinkTank
participants and countless reviews.
► This project has been an exercise of
trust from all parties to be both
comprehensive and timely.
► You are now at a key inflection point
with a viable improvement plan, as
well as momentum to take flight.
► We are here to support you in this
journey however you determine
yields the best result.
► Thank you for the opportunity to be
involved in this work.
Page 27Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Project charters
Page 28Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Flight plan details: project charters
Page 29Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Project charter details
► To accelerate HHSC’s future improvement road map plan, we have initiated the
creation of a project charter for each of the 29 recommended Procurement and
Contracting improvement projects.
► Charter legend may be found on the following page.
► Some charters extend over two pages, indicated by (1 of 2) and (2 of 2).
► Each charter is meant to frame the mid-level details for the project but not meant to cover
information such as resourcing, specific time scheduling, precise project targets, project
sponsor, project owner, etc.
► Detailed project plans and Gantt charts will need to be created for each of the project charters.
► HHSC will need to determine a long-term owner for each project in advance of the
project initiation to drive and maintain progress; this is a lesson learned from HHSC.
► A detailed PMO (Project Management Office) will need to be active to keep all
projects in flight and to manage dependencies in the same way an airport control
tower passes information across all active flight plans.
► A governance board has been defined by HHSC and will need to be active and meet
regularly to facilitate decisions.
► Change management and communication are critical to the success of all projects.
Page 30Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Estimated costs beyond HHSC existing resources:
$: Less than $10,000
$$: Between $10,000 and $100,000
$$$: Between $100,000 and $1,000,000
$$$$: Over $1,000,000
Project duration
Short term: 0–3 months; medium term: 3–9 months
long term: 9 months or greater
Estimated number of project resources: assumes full-time resources who are skilled in the necessary areas needed to complete the project
► FTE = One Full-Time Equivalent who works at least 40 hours per week is dedicated to the particular project.
► FTE resource assumes that individual has key skills and thought leadership to complete projects.
► FTE does not include Subject-Matter Resource (SMR) – subject-matter resources will need to be consulted for every project but are not deemed full time.
Project charter legend
Project overview
Situation: The project is created in response to this finding in the current state/root cause analysis.
Project # XXX Project name This is where the project name will be found.
Project description A short description defining the project is listed here.
Areas of impact 1. Top project impacts are listed here.
2. Top project impacts are listed here.
Project start time Waves 1, 2 or 3
Project duration Short, medium term Ease of implementation (1–5) 3
Estimated costs $$$ Estimated number of project resources 2–4
Affected groups PCS, Program, Legal, Budget/Finance
Project activities
1. Key steps necessary to execute this project, to be used to develop the task level; Gantt charts required for initiation of each project.
2. Key steps necessary to execute this project, to be used to develop the task level; Gantt charts required for initiation of each project.
3. Key steps necessary to execute this project, to be used to develop the task level; Gantt charts required for initiation of each project.
Dependencies: Other road map project dependencies as well as known Agency efforts are listed here if they create dependencies on or to this project.
Ease of implementation ranking legend:
1 = No external support required to implement and drive adoption (1–3 months)
2 = Little external support required to implement; minimal integration and adoption complexity (1–3 months)
3 = External support required to manage, configure/integrate, test, deploy and enable adoption (1–6 months)
4 = External support required to manage, configure/integrate, test, deploy and enable adoption (3–12 months)
5 = External support required to manage, configure/integrate, test, deploy and enable adoption (9+ months)
Page 31Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Strategic directionDevelop sufficient operating model for the Agency’s dependency on contracting as a critical success factor (1 of 2)
Project overview
Situation: PCS and the Agencies are not aligned with the procurement operating model and existing operating model is not openly confirmed and communicated to all
stakeholders. Misalignment drives inconsistent priorities in people, process, technology and governance within the function.
Project # 1SD Project name Develop sufficient operating model for the Agency’s dependency on contracting as a critical success factor
Project description Incorporate PCS into the HHSC strategic plan in a more formal manner that allows it to document and communicate its vision, mission
and purpose. Develop the requisite operating model framework to support the above.
Areas of impact 1. Common alignment of PCS priorities across the Agency’s people, process, technology, governance
2. Balancing of contract load throughout the year
3. Smoothing out impact to all Agency resources
Project state time Wave 1
Project duration Short term Ease of implementation (1–5) 4
Estimated costs $$$ Estimated number of project resources 3–6
Affected groups PCS, Program, Legal, Budget/Finance and indirectly all elements of HHSC
For more information, please see EY Insights on Procurement Operating Model and EY Insights on Procurement Transformation
Page 32Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Strategic directionDevelop sufficient operating model for the Agency’s dependency on contracting as a critical success factor (2 of 2)
Project overview
Project # 1SD Project name Develop sufficient operating model for the Agency’s dependency on contracting as a critical success factor
Project activities
1. Establish an HHSC-wide strategic direction that articulates integrated responsibilities of PCS in the HHSC system.
2. Establish PCS strategic goals as well as a timeline for executing projects toward those goals given all known constraints (people, budget, technical capabilities and workload).
Projects to support strategic contracting include, but are not limited to, spend analysis, contract portfolio review, staff t raining, stakeholder meetings, RFIs, market analyses and
benchmarking.
3. Establish an HHSC procurement planning practice that focuses on identifying major procurement projects from programs during the upcoming fiscal year. The planning process
should engage HHSC management and leadership to approve and accept priorities, goals, projects and approach for alignment prior to execution.
4. Review and update Executive Commissioner vision and goals that span five years and are incorporated in a procurement plan schedule.
5. Establish an operating model that fits both business and finance functions.
► (a) Review current state operating model design future state operating structure and implement road map for transition; (b) define role descriptions and identify potential
resources who will sit in those positions; (c) assess internal resource skill set and align with HR on talent recruitment strategy; (d) clearly define triggers for the creation,
revision and decommissioning of policies vs. procedures, work methods, checklists and quick reference cards (QRC); (e) develop and finalize transition strategy for FTEs;
(f) finalize and announce vision, mission and operating guidelines; (g) develop change management strategy to effectively communicate to stakeholders and transition from
current to future state; (h) create central Shared Services business case and develop Shared Services strategy across the HHSC system; (i) design Shared Services
management, pricing, service level agreements/support service agreements, governance and organization; (j) design, develop and conduct training; (k) transition from
current state to interim state; (l) transition from interim state to future state; and (m) standardize procurement policy definitions and socialize across PCS and
Program/Agencies.
6. Enable review of key functional areas of operating model not captured throughout other project areas.
► Functional areas of review: (a) information management, (b) commercial excellence, (c) supplier portal gateway, (d) buying channels, (e) buying assistance, (f) invoice and
payment.
► Review existing projects areas and determine whether the timing of project start and end will meet the operating model needs. If needs are not meet, reexamine whether
project area start and end time adjustments can take place: (a) governance, (b) people, (c) supplier relationship management, (d) source to contract, (e) strategy.
7. Review strategic plan, operating model, vision and mission with the Governor’s office, Legislative Budget Board (LBB) and legislature.
Dependencies: 6PO: Create a fit-for-purpose organization design for PCS, 19PO: Establish a comprehensive communication framework
For more information, please see EY Insights on Procurement Operating Model and EY Insights on Procurement Transformation.
Page 33Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Strategic directionConduct data cleansing
Project overview
Situation: Historical data within CAPPS, SCOR, Budget/Finance is not standardized or consistently populated.
Project # 2SD Project name Conduct data cleansing
Project description Conduct data cleansing exercise across the organization to improve data integrity and accuracy.
Areas of impact
1. Improved data integrity and transparency
2. Improved data accuracy will make leadership more informed and enable better decision-making
3. Increased visibility into the Agency’s performance
Project start time Waves 1–2
Project duration Medium term Ease of implementation (1–5) 3
Estimated costs $$$ Estimated number of project resources 2–4
Affected groups PCS, Program, Legal, Budget/Finance
Project activities
1. Perform data profiling and identify gaps in required fields.
2. Define approach to address gaps.
3. Work with cross-functional teams to collect data and address gaps.
4. Develop data cleansing road map.
5. Conduct comprehensive data cleanup to improve data integrity in CAPPS and SCOR. This should include correction of legacy data and known data entry errors for all records
created in SCOR and CAPPS.
6. Establish a program for ongoing monitoring of data quality.
7. Utilize data to drive Agency procurement, contract management, contract monitoring and executive leadership decision-making.
Dependencies: 9TE: Resolve immediate CAPPS needs
Page 34Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Procurement operating model
Proprietary and confidential
► The procurement vision, objectives,
strategies and performance scorecard is documented, communicated and understood across the business
► A procurement policy is documented and communicated An organisation wide
procurement plan is in place which covers spend, project, performance targets and people, process and technology initiatives
Quarterly and annual procurement reports inform strategy and drive continuous
improvement
Strategy
► Portal as a single point of entry into the
source to Pay landscape► Customer satisfaction with buying channels
Customer Portal Gateway
► Demand is profited and optimised
► Market analysis provides insight for strategy► Sourcing considerations define ‘go to
market’
► Contract models are aligned with category► Tendering and evaluation are streamlined
► Best case scenario led negotiations deliver greater value
► Contract management plans are in place
prior to contract award► Contracts meet all legal and statutory
requirements
Source to Contract
► Service model for procurement provides
sourcing & admin support to allow focus on strategic category & supplier management
Buying Assistance
► Central and operational bodies
► Delegations reflect value, risk and capability
► Performance management regularly
reviewed► Risk and compliance monitored
Governance
► A clear link between strategy and operations
exists► Structures reflect categories and markets► Roles and responsibilities are defined
► Capability and capacity known► Recruitment and retention aligned
People and Organization
► Spend map in place on customer, spend,
categories and suppliers by Pareto► Information is captured, analysed,
shared, reported and reviewed
► Performance KPIs are SMART and ► Information is real time and informs
management decision making
Information management
► Portal as a single point of entry for P2P
landscape► Supplier satisfaction with portal
Supplier Portal Gateway
► Suppliers are segmented based on
impact and complexity► Relationships are established based on
strategic, management and operational
requirements► SRM aligns with the procurement
governance model► Contract performance management is
standardised by supplier segment and
used to drive value► Governance and financial stability health
checks are performed for high risk high value suppliers
► Recognition and reward mechanisms in
place to drive additional value► Collaboration valued and planned
Supplier Relationship Management
► Paperless invoicing and payment
► Balance between world class efficiency and effectiveness giving best value for money
► Optimised invoice solutions additional methods
including (PO-flip and Self-Bill)
Invoice and Payment
► Categories are aligned to buying channel
► Buying channels align to category managers and governance model
► Goods, services and assets are visible for
both type and price► Information management requirements are
embedded
Buying Channels
Commercial Excellence
► Strategic Sourcing
► Negotiation tools and templates► Market Indexes
eProcurement systems
Information management & reporting
Strategy
Governance & Risk Management
People and Organization
Procure to pay processes
Governance. Process model Technology model
Supplier website
eRequisition
ERP
Managed service provider
Category specific solution
Purchase card
Travel & expense
Recurring payment
Cu
sto
me
r p
ort
al
Ca
teg
ory
Ma
na
ge
me
nt
&
So
urc
ing
Su
pp
lier p
orta
l
Inv
oic
e p
roc
es
sin
g &
pa
ym
en
t
Buying channels
Cu
sto
me
r Su
pp
lier
No
n-P
urc
ha
sin
g C
on
tra
cte
d
Ag
ree
me
nts
Su
pp
lier d
ive
rsity
“H
UB
” &
rela
tion
sh
ip m
an
ag
em
en
t
Supplier MgmtSourcing Enablement
Co
ntr
ac
t L
ife
cy
cle
Ma
na
ge
me
nt
People
Procurement Operating Model
Page 35Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Strategic directionEnhance policies governing key business components
Project overview
Situation: Constant change in management priorities drove suboptimal policies with frequent revision. HHSC needs clarity.
Project # 18SD Project name Enhance policies governing key business components
Project description Align capacities to manage policies governing key components of the business (to support efforts of Chief Policy Officer).
Areas of impact1. Engagement with programs and other non-PCS stakeholders around process changes and the impacts of those changes across
HHSC
2. Elimination of workarounds used due to misinformation
Project start time Wave 2
Project duration Medium term Ease of implementation (1–5) 2
Estimated costs $$$ Estimated number of project resources 2–3
Affected groups PCS, Program, Legal, Budget/Finance
Project activities
1. Establish policy governance framework.
► Create a centralized policy owner/group: (a) identify policy owner/group; (b) define roles and responsibilities; (c) clearly define triggers for the creation, revision and
decommissioning of policies vs. procedures, work methods, checklists and quick reference cards (QRC); (d) establish standardized policy creation/review process; (e)
define ownership of policies, including key stakeholders and end users; (f) determine appropriate levels of review and approval of policy documents; and (g) develop and
outline mandated review periods.
2. Align policy library.
► Create inventory of policies needed and revise/create policies as needed for all relevant areas. Key work steps include (a) prioritize policies to be created; (b) identify key
stakeholders and form working groups; (c) draft policy; (d) circulate policy among stakeholders and end users for feedback; and (e) finalize and approve policy.
3. Create a formalized policy numbering system.
► Identify a numbering structure organized by compliance topic or other logical structure.
4. Develop how to educate and communicate policies.
► Create a formal policy deployment mechanism and governance process. Key work steps include (a) create intranet site or other policy platform that is accessible to all
users; (b) develop standard communication for new policies issued or revised policies; and (c) hold education/training session (as needed).
5. Update policies to safeguard compliance with state requirements or administrative rules.
► (a) Identify technical guidance and references; (b) prepare examples; and (c) identify policy owner/contact.
6. Conduct federal and state laws, rules and regulations and HHSC policies compliance assessment.
► Examine risk-based sample or population to identify potential issues or trends in areas, including, but not limited to, timing requirements, contractor screening and
compensation, cost estimate preparation, vendor performance tracking, signature authority and required disclosures.
Dependencies: 1SD: Develop sufficient operating model for the Agency’s dependency on contracting as a critical success factor, 19PO: Establ ish a comprehensive communication
framework, 28PO: Create an employee engagement plan, 11PP: Update and refine procurement and contract management manuals, 22PP: Redesign procurement end-to-end
process, 13GR: Strengthen compliance monitoring processes and controls
Page 36Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
People and organization Create a fit-for-purpose organization design for PCS (1 of 2)
Project overview
Situation: Unclear roles and responsibilities coupled with undefined KPIs and job openings keep the organization from being structured appropriately. Workload inconsistent; staff
doing tasks for which they don’t have the competencies; oversight of contract quality inconsistent inhabiting effectiveness, compliance and efficiency.
Project # 6PO Project name: Create a fit-for-purpose organization design for PCS
Project descriptionDevelop an improved organization design for PCS by helping to define roles and responsibilities, balance workloads and staffing, create a function to
oversee contract compliance and create a formal liaison process.
Areas of impact
1. Employees will gain clarity to responsibilities and clear accountability. This will help identify job/role gaps and eliminate redundancies. It will also be
a key component of a communication plan.
2. Clarity of roles and responsibilities will strengthen job descriptions, which would help with recruiting.
3. Finally, clear roles and responsibilities will allow those responsible for training to determine – by newly defined roles – which skills will need to be
strengthened or remediated.
4. PCS will have clear communication channels, reducing inefficiencies and enabling leadership to better manage resources and workloads.
5. Reduced span of control leading to greater supervisor support; workloads will be right-sized, which will help with employee retention.
Project start time Waves 1–2
Project duration Medium term Ease of implementation (1–5) 4
Estimated costs $$$ Estimated number of project resources 6–8
Affected groups: All of PCS
For more information, please see EY Insights on People & Organization.
Page 37Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
People and organization Create a fit-for-purpose organization design for PCS (2 of 2)
Project overview
Project # 6PO Project name: Create a fit-for-purpose organization design for PCS
Project activities
1. Compare current organizational chart to function realignment model and operating model project decisions.
► Review the functional realignment model (following) as compared with the current organizational model of PCS to finalize target future state and identify short-term
realignment opportunities.
2. Create a detailed, task-level RACI for major work streams/tasks within PCS and their association through the Agency.
► The RACI will clarify who is Responsible, Accountable, Consulted and Informed related to key work streams and tasks within PCS. The RACI will include key PCS work
streams. While many of those responsible are located within PCS, there will be instances where those who are consulted or informed are within HR, Programs,
Budget/Finance or Legal.
3. Perform a work inventory of PCS individuals. Use the results of this inventory to reorganize the function based on core tasks .
► Given turnover and change, many individuals indicated that the guidance on position responsibilities is loose, and given overtasking there were multiple instances of
individuals taking on tasks because there were not enough individuals to complete work. A work inventory should be completed to determine workload, core competencies
and tasks for work reallocation.
4. Demand forecasting (people)
► Conduct forecasting exercise to compare anticipated workloads with staffing plan. Focus on creating balanced workloads.
5. Redefine roles and responsibilities in individual position descriptions.
► Clarify responsibility and level of authority for all procurement-related staff. These should both comply with statute and enable staff to execute their duties efficiently.
Establish performance measures (KPIs) for staff within position descriptions.
6. Refine PCS organizational chart.
► Based on redefined roles and responsibilities, an updated RACI, the work inventory, skill realignment, span of control and demand forecasting, refine and tailor the PCS
organization structure.
7. Skill realignment.
► Once the organizational model is redesigned, align employees against skills needed for current and future roles.
Dependencies: 1SD: Develop sufficient operating model for the Agency’s dependency on contracting as a critical success factor, 19PO: Establish a comprehensive communication
framework
For more information, please see EY Insights on People & Organization.
Page 38Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
People and organizationEstablish a comprehensive communication framework
Project overview
Situation: Currently, procurement-related communications are not actively and comprehensively planned and managed. Communication is unstructured, inconsistent and not
properly cascaded. This has led to knowledge gaps for key roles, a systematic lack of end-user engagement, and the inability to create a culture of cooperation and collaboration.
For instance, one program noted having discontinued the use of the digital signature tool for certain processes where it was no longer required because notice was given in a
meeting, but not documented or cascaded.
Project # 19PO Project name Establish a comprehensive communication framework
Project description Create a comprehensive and sustainable communication framework and plan for PCS to disseminate information both internally and externally.
Areas of impact
1. Clear communications allow for all updates to policies and procedures to be properly disseminated throughout the organization.
2. Version control is actively managed to instill clarity and compliance.
3. Clearly identified point of contact for managing content to help employees stay informed, reduce confusion and Align compliance.
Project start time Wave 2
Project duration Short term Ease of implementation (1–5) 2
Estimated costs $$$ Estimated number of project resources 2–3
Affected groups: Primarily PCS, but all groups within HHSC could be recipients of communications or invited to key meetings (Agency-wide)
Project activities
1. Develop comprehensive PCS communication framework and plan to include the following:
► Define and establish a plan and framework by identifying the best methods (email, CAPPS, SharePoint, newsletters, social media, etc.) to deliver timely and useful
information such as policy/procedure changes, procurement planning efforts and sharing of ideas.
► Communication plan categories would include audience, message, delivery vehicle, frequency, timing, responsibility, feedback mechanism and repository.
► Ensure status reports through CAPPS are accessible to all necessary stakeholders or establish a forum to share these reports on a recurring basis (i.e., exported Excel
report for requisition status published to SharePoint every two weeks).
► Create a process to monitor statewide contract changes via available communication tools through CPA/DIR (GovDelivery, TxSmartBuy home page, CPA purchasing web
page, DIR contracts web page), identify an owner of this responsibility and choose a forum to disseminate the information to programs (email, SharePoint, newsletter).
2. Create meeting schedule to include the following:
► Creation of meeting schedule so that all needed meetings are on the calendar of events (weekly, monthly, quarterly).
► Create a process to take, synthesize, and distribute notes and outcomes from the meeting to the appropriate distribution list as determined by the RACI development in
project 2PO.
► The meeting schedule and outputs would be included in the comprehensive communication plan.
Dependencies: 1SD: Develop sufficient operating model for the Agency’s dependency on contracting as a critical success factor, 6PO: Create a fit-for-purpose organization design
for PCS, 28PO: Create an employee engagement plan
For more information, please see EY Insights on People & Organization.
Page 39Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
People and organizationDevelop comprehensive training programs
Project overview
Situation: Although limited training has been provided to PCS employees, a formal training strategy, plan and program have not been deve loped or provided to procurement staff.
Training programs are generally insufficient, and there is limited designated support resources to provide compliance and technical guidance.
Project # 20PO Project name: Develop comprehensive training programs
Project description Develop a formal training strategy and robust onboarding and ongoing development programs to support PCS staff.
Areas of impact
1. Employees will feel less frustrated and complete their tasks more efficiently and with higher accuracy.
2. Standardization and efficiencies across processes and procedures can be achieved.
3. The organization will be able to maintain compliance consistently.
4. This will help drive retention.
Project start time Wave 2
Project duration Medium term Ease of implementation (1–5) 5
Estimated costs $$$ Estimated number of project resources 3–5
Affected groups: PCS or any Agency roles that will require training on new governance, tools or process (e.g., contract management).
Project activities
1. Develop a training model that identifies critical procurement and contract management training course needs.
2. Develop a training program to establish critical procurement and contract management capabilities.
► The program would leverage leading practices and use of technology tools. A formal technical training program is particularly important when there is no backup for key
roles and/or there is high turnover or heavy hiring cycles. Without consistent curriculum updates and predictable training delivery schedules, it is not possible to achieve skill
standardization.
3. Develop an HHSC training program that is aligned with new policies, procedures and processes. The program should be developed to provide staff involved in the procurement
and contract management processes with the competencies necessary to complete their respective role/function in the process. Key items include:
► (a) Develop the high learning objectives for personnel and getting clarity of the scope of the training required; (b) understand the detailed training needs (competencies) of
all personnel; (c) develop content with an HHSC wrapper, training schedule creation and business engagement to book people into training; (d) develop a training delivery
model consistent to competency mapping; (e) report the number of people who have been trained and what they have been trainedon; and (f) tie competency development
back to role KPIs.
4. Staff performing contracting duties are properly certified according to state requirements:
► Confirm HHSC is compliant with state requirements for performing procurement and contracting functions. HHSC should perform a review of all program staff identified as
performing said functions so that they are all properly trained and certified according to state requirements, and if not, help ensure they have proper supervision to perform
said tasks. Also, review system access and capabilities to help ensure they are aligned properly to certifications.
5. Onboarding:
► Create formal onboarding process for new hires that will help ensure a buddy system and proper role training specific to PCS.
Dependencies: 1SD: Develop sufficient operating model for the Agency’s dependency on contracting as a critical success factor, 6PO: Create a fit-for-purpose organization design
for PCS, 19PO: Establish a comprehensive communication framework, 11PP: Update and refine procurement and contract management manuals, 22PP: Redesign procurement
end-to-end process, 4IM: Expand upon the program liaison process, 8TE: Conduct comprehensive CAPPS and SCOR training
For more information, please see EY Insights on People & Organization.
Page 40Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
People and organization Create an employee engagement plan
Project overview
Situation: Good performance and success are rewarded much less frequently than bad behavior and failure are punished. This significantly impacts morale and prevents
employees from feeling empowered and engaged. Given the preexisting fear culture in PCS, action is warranted.
Project # 28PO Project name Create an employee engagement plan
Project description Develop an employee engagement plan to improve trust and develop a continuous learning culture within PCS.
Areas of impact1. Reduce fear, cultivate talent, reward good work, build trust between PCS and Program, clarity on responsibility
2. Addressing engagement and other culture-related issues will be key to improving morale, productivity, and talent retention
Project start time Wave 3
Project duration Short term Ease of implementation (1–5) 3
Estimated costs $$$ Estimated number of project resources 2–3
Affected groups: All of PCS
Project activities
1. Create continuous development culture.
► Develop and deliver a purpose-led leadership course and high performing teams course for the PCS leadership team. These two courses are designed to create alignment
on what a positive work culture should look like and how to best achieve one.
2. Culture change, employee engagement program.
► Analyze the PCS results from the HHSC SEE report. Develop a step-by-step plan to address the lowest scoring factors with the largest impact. Track improvements on
those factors on the next HHSC SEE report.
► Create team-building and/or workshop activities for groups for which it would be beneficial. This could include (but is not limited to) workshops that allow all parties a
statement in the development of a new operating model; bringing in a third-party team-building facilitator; and taking “field trips” to operating facilities, program areas, PCS,
etc., to align the groups around the true purpose of each other’s responsibility and mission.
3. Develop employee incentive program.
► Develop an employee engagement program that offers incentives for high performers. The incentives should be a combination of financial and nonfinancial benefits (time
off, preferred parking, flexible schedules, etc.).
4. Connect to purpose.
Dependencies: 1SD: Develop sufficient operating model for the Agency’s dependency on contracting as a critical success factor , 19PO: Establish a comprehensive communication
framework, 20PO Develop comprehensive training programs
For more information, please see EY Insights on People & Organization.
Page 41Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Portfolio managementStandardize contract management and monitoring practices across HHSC
Project overview
Situation: As a consequence of transformation, the approach to contract management and monitoring at HHSC has not been unified into a standardized set of policy, practice and
process guidance for programs to utilize. More recently, HHSC policy and guidance on contract management and monitoring pract ices and processes have not been updated and
aligned to the state guidance on contract management. As such, contract management and monitoring practices vary dramatically by program.
Project # 17PM Project name: Standardize contract management and monitoring practices across HHSC
Project description
Identify, develop and document fit-for-purpose business processes for contract administration and oversight in order to develop contract management
best practices guidance that provides a framework to standardize contract management and monitoring processes and practices for the enterprise.
The guidance should provide practical suggestions as well as best practices to improve Agency contracting practices; assist contract managers in
leveraging technology, metrics, training and lessons learned for the purpose of minimizing project risks; and clearly define roles and responsibilities of
all players in the process.
Areas of impact
1. Creates standardized practices for contract management and monitoring for consistent practices enterprise-wide.
2. Establishes clear guidance regarding roles and responsibilities in managing contract relationships to successful outcomes.
3. Establishes and enforces process that drives consistency, controls and quality.
4. Provides guidance on best practices for management of contracts and vendor relationships.
5. Establishes consistent, risk-based reviews and controls.
6. Improves professionalism of contract and vendor management.
7. Identifies and unifies disparate policies into a cohesive process “how to” document.
8. Ensures adherence to state and federal requirements.
Project start time Waves 1–2
Project duration Medium term Ease of implementation (1–5) 4
Estimated costs $$$ Estimated number of project resources 2–3
Affected groups All
Project activities
1. Work with stakeholders to map current contract management life cycle and processes.
2. Work with stakeholders to tailor processes and develop future state process maps.
3. Identify and document roles, responsibilities and expectations for all actors in the contract management life cycle processes .
4. Develop content to update and tailor the procurement and contract management manual.
5. Review and tailor Agency administrative rule for consistency and compliance.
6. Develop a training model based on the manual that identifies contract management training course needs. Ensure training addresses the need to improve Agency contract
manager/developer SOW creation competencies.
7. Develop training course content based on model that is aligned to manual content.
8. Deliver training to staff responsible for contract management processes to improve competencies.
Dependencies: 1SD: Develop sufficient operating model for the Agency’s dependency on contracting as a critical success factor, 19PO: Establ ish a comprehensive communication
framework, 17PM: Standardize contract management and monitoring practices across HHS, 11PP: Update and refine procurement and contract management manuals, 13GR:
Strengthen compliance monitoring processes and controls, 16GR: Perform procurement and contract risk assessment, 7PE: Performance management practice
For more information, please see EY Insights on Procurement Transformation.
Page 42Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Portfolio managementDevelop procurement spend analysis practice (1 of 2)
Project overview
Situation: PCS does not currently utilize data to help it to identify and execute strategic contracting opportunities for the Agency. This coupled with the current limitations in data
integrity, accuracy and access lead to a need to establish a consistent methodology and practice for spend analysis at the Agency to support improved data-driven decision-making
regarding procurement activities.
Project # 26PM Project name: Develop procurement spend analysis practice
Project description
PCS should establish a strategy and associated practices related to employing portfolio and spend management practices appropriate for a large
agency operating within state-level master contracts and individual agency purchases to help ensure the Commission is receiving maximum
economies of scale.
Areas of impact
1. Develops the capacity and capabilities of key staff in topics necessary for PCS to begin turning toward a more strategic, data-driven approach to
contracting.
2. Ability to identify broader enterprise needs that can help to reduce workload on PCS over time.
3. Improves quality of system data to improve overall ability to perform spend analyses.
4. Establishes a standardized practice for strategic contracting, including supporting tools and templates.
5. Identifies hard-dollar savings opportunities to inform future sourcing and budgeting decisions.
Project start time Wave 2
Project duration Medium term Ease of implementation (1–5) 3
Estimated costs $$$ Estimated number of project resources 3–4
Affected groups PCS, Program, IT, Budget/Finance, Data Projects
For more information, please see EY Insights on Procurement Transformation.
Page 43Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Project overview
Project # 26PM Project name: Develop procurement spend analysis practice
Project activities
1. Establish a standard commodity code category taxonomy for use in performing spend analyses.
2. Run a report of spend for a past FY from the system and perform a baseline spend analysis .
► Cleanse and streamline data files.
► Validate applicable data files for completeness and accuracy (match against taxonomy).
► Identify key data elements that inform spend analysis and develop and deliver guidance and training to procurement and program staff to improve data accuracy and the
ability to perform spend analysis.
3. Seek to identify a means to capture the required data elements (such as inclusion of contract ID) either as a system improvement or through other means.
4. Research topics and develop training for PCS staff on spend analysis that includes active participation to practice topics di scussed.
5. Conduct training with chosen staff.
6. Establish processes for reviewing, reporting and acting upon strategic sourcing activities.
7. Develop templates for category reports and opportunity assessments and other tools and templates as identified to support strategic sourcing practices.
8. Work with trained staff to identify tangible project opportunities that can be worked using the topics learned.
9. Work identified opportunities through the process, supported by PCS management.
10. Execute projects through development of category reports and opportunity assessments and, if possible, solicitations and establishment of enterprise strategic contracts.
Dependencies: 1SD: Performance management practice, 2SD: Conduct data cleansing
Portfolio managementDevelop procurement spend analysis practice (2 of 2)
Page 44Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Portfolio managementEstablish a vendor outreach program (1 of 2)
Project overview
Situation:
► Hindering communication and engagement throughout procurement planning and contracting hampers meaningful outcomes for complex, high-risk contracts. This limits vendor
input because a new vendor is more challenged in its ability to communicate emerging practices or unique products or services that the vendor may be able to offer the state
agency.
► Agency vendor management policies and practices reflect unnecessarily limited vendor interaction that is not aligned with sta tewide guidance that creates collaboration
opportunities. For example, TGC 2155.081 directs the CPA to establish a vendor advisory community to provide input into state procurement practices and serve as a channel
of communication among the vendor community.
Project # 27PM Project name: Establish a vendor outreach program
Project description
The vendor outreach program will create a framework for structured engagement between HHSC system procurement and program personnel and the
vendor community. The project establishes policies and implements practices that strengthen accountability, transparency and uniformity in vendor
interaction, communication, collaboration and management. This project comprises two phases, with the development of a preliminary schedule for
outreach events based on review of the HHSC System Strategic Procurement Plan.
Areas of impact
Through structured outreach, HHSC procurement and program staff and vendor community collaboration will:
1. Provide a forum for education and insight into emerging technologies and practices for HHSC program and procurement staff.
2. Support HHSC procurement professionals in their market research and analysis.
3. Update the vendor community on future program developments and procurements.
4. Enable a consistent and transparent approach to sharing HHSC program requirements, schedule and other procurement planning considerations.
5. Provide a forum for potential contractors to network with potential subcontractors, subconsultants and the small business community for upcoming
procurements.
Project start time Waves 2–3
Project duration Long term Ease of implementation (1–5) 4
Estimated costs $$$ Estimated number of project resources 3–4
Affected groups PCS, HHSC Policy Office, HHSC Program and Contract Managers
Page 45Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Portfolio managementEstablish a vendor outreach program (2 of 2)
Project overview
Project # 27PM Project name: Establish a vendor outreach program
Project activities
Identify and assign a resource responsible for implementing and administering the vendor outreach program.
1. Create a project plan, identifying resources, responsibilities, schedule, tasks and deliverables to complete development of the program.
2. Conduct policy reviews to identify opportunities to establish a constructive vendor engagement framework:
► Review and revise Agency policy regarding interaction with vendors, including vendors under current contracts. (Complete, HHSC Vendor Interaction Policy, effective 1
September 2018.)
► Review and revise Agency policy regarding vendor notification within a procurement event (Policy 571).
► Review and refresh HHSC guidelines for engaging vendors prior to a formal solicitation process for alignment with other vendor policies (Policy 793).
► Review other applicable policy.
► Incorporate all policy guidance regarding vendor relationship management by reference into the consolidated contract and procurement manual (refer to update/refine
procurement and contract management manuals project).
3. Develop and publish parameters of the program and procedures for vendor engagement, tailored to the nature of the procurement , and communicate procedures to program
staff and the vendor community.
4. Plan and incorporate procurement or category-specific webinars, video conferences, telephone conferences or other methods in ongoing market research activities
(short/medium term).
5. Review HHSC system strategic procurement plan to preplan industry days for vendors to showcase skills and strengths regarding specific planned procurements (medium/long
term).
Dependencies: 1SD: Develop sufficient operating model for the Agency’s dependency on contracting as a critical success factor, 19PO: Establ ish a comprehensive communication
framework, 17PM: Standardize contract management and monitoring practices across HHS, 13GR: Strengthen compliance monitoring processes and controls, 16GR: Perform
procurement and contract risk assessment, 4IM: Expand upon the program liaison process
Page 46Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Procure to payUpdate and refine procurement and contract management manuals
Project overview
Situation: Processes are often inconsistent across similar requisitions, causing inefficiencies and increasing errors and noncompliance; workarounds are prevalent in part because
of lack of knowledge. Current manuals are more than two years old and have not been updated with current information, including no specificity to HHSC procedures which drives
audit exposure
Project # 11PP Project name Update and refine procurement and contract management manuals
Project description
Update and refine procurement and contract management manuals and identify administrative rule requirements for a consistent and
compliant practice. Short-term requirement is to bring manuals to current state to achieve audit requirements. Long term, project will
include an updated manual based upon new procurement processes.
Areas of impact1. Increase compliance during the process of creating requisitions.
2. Team members are following the same process to reduce process variations and workarounds.
Project start time Waves 1–2
Project duration Medium term Ease of implementation (1–5) 4
Estimated costs $$$ Estimated number of project resources 2–4
Affected groups All/Agency-wide
Project activities
Short term
1. Review current procurement and contract manuals, process maps and supporting documentation, including checklists, work methods and quick reference cards (QRCs)
designed for PCS and Program, excluding comprehensive policy review referenced in a separate project charter.
2. Confirm compliance of federal and state laws/regulations are met within the procedures of the manual.
3. Update and validate process maps (Level 5 detailed Visio mapping, with interaction between all functions and technology) for all procurement processes at HHSC.
4. Create compliant manual, develop communication strategy for planned manual releases and communicate plan to affected PCS and Program business areas.
5. Remove existing manual.
Long term
1. Repeat steps 1–5 from short term in parallel with project 17PM, “Standardize contract management and monitoring practices across HHSC” so that the manual can be updated
and unified, along with 19PO, “Establish a comprehensive communication framework.”
2. Organize content to create best practice in procurement life cycle approach.
3. Consolidate procurement and contract management manuals into one.
Dependencies: 1SD: Develop sufficient operating model for the Agency’s dependency on contracting as a critical success factor, 6PO: Create a fit-for-purpose organization design
for PCS, 19PO: Establish a comprehensive communication framework, 17PM: Standardize contract management and monitoring practi ces across HHS, 22PP: Redesign
procurement end-to-end process, 13GR: Strengthen compliance monitoring processes and controls
For more information, please see EY Insights on Policies.
Page 47Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Procure to payEnhance PCS forms, contract tools and contract templates related to procure to pay process
Project overview
Situation: Processes are often not written to support a large organization, limiting opportunities for economies of scale and optimization improvements. PCS and program have
different templates that are created outside of CAPPS that are then imported into CAPPS. Some forms may have the ability to be created inside CAPPS.
Project # 12PP Project name Enhance PCS forms, contract tools and contract templates related to procure to pay process
Project descriptionDevelop and/or refine PCS forms, contract tools and contract templates that are aligned with the revised manual to facilitate efficient and
effective procurement life cycle processes and compliance with state-required processes.
Areas of impact1. Compliance with state-required processes.
2. Increase efficiency with which a requisition completes the procure to pay process.
Project start time Waves 1–2
Project duration Medium term Ease of implementation (1–5) 4
Estimated costs $$$ Estimated number of project resources 2–4
Affected groups All/Agency-wide
Project activities
1. Survey program and PCS staff to identify and catalog existing procurement and contract management and monitoring-related templates, forms, checklists or other supporting
tools used to expedite procurement processes.
2. Review revised HHSC procurement and contract management manual to identify and catalog additional new tools and templates necessary to support efficient procurement
and contract management processes.
3. Assess catalogued tools and templates to determine need for development or revision.
4. Develop a responsibility matrix assigning appropriate staff to complete development/revisions.
5. Develop new and update existing tools and templates as identified. Consider ability to develop and/or implement the tools/templates in technology systems where possible.
6. Determine necessary changes to the technology system; delete the bad templates by working with the CAPPS PCS team and interviewing PCS and program on the business
and function needs.
7. Implement new/updated tools and templates upon approval.
Dependencies: 1SD: Develop sufficient operating model for the Agency’s dependency on contracting as a critical success factor, 6PO: Create a fit-for-purpose organization design
for PCS, 19PO: Establish a comprehensive communication framework, 17PM: Standardize contract management and monitoring practi ces across HHS, 11PP: Update and refine
procurement and contract management manuals, 22PP: Redesign procurement end-to-end process, 13GR: Strengthen compliance monitoring processes and controls, 9TE:
Resolve immediate CAPPS needs
Page 48Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Procure to payRedesign procurement end-to-end process (1 of 2)
Project overview
Situation: Due to significant changes in procurement-related organization, roles, responsibilities, policies and processes that will be put in place in light of this report, it will be
necessary for PCS to establish a consistent procure to pay process so that current SOPs are tailored to align with changes as they are implemented.
Project # 22PP Project name Redesign procurement end-to-end process
Project descriptionBuild a standard, repeatable process for identification, review and optimization of PCS as procurement-related changes are implemented
at HHSC to remain aligned to implemented policies, processes, technology and organization.
Areas of impact
1. A document that includes end-to-end process flows and interactions, including planning and forecasting, along with the business
needs and the functions within PCS and program/Agencies.
2. Procurement transactions would be processed uniformly across the Agency.
3. Facilitate onboarding of new hires to provide material for them to follow to execute their new duties.
4. Increased compliance with laws and regulations.
Project start time Wave 2
Project duration Medium term Ease of implementation (1–5) 4
Estimated costs $$$ Estimated number of project resources 3–5
Affected groups PCS, Program, Legal, Budget/Finance
Page 49Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Procure to payRedesign procurement end-to-end process (2 of 2)
Project overview
Project # 22PP Project name Review and tailor PCS internal SOPs
Project activities
Build a robust process and control framework through documentation of SOPs and drive implementation through training for PCS and the program. SOPs should include:
1. Catalog all existing internal PCS SOPs for easy identification.
2. Compile all SOPs into a PCS desk guide folder available to staff to improve standardization and work quality.
3. Identify and review impacted SOPs.
4. Design detailed to-be processes, including templates, to address areas of improvement identified – including streamlined governance and control.
5. Define interventions required for improved utilization along with incremental HHSC development.
6. Define KPIs for subprocesses; define baseline for KPIs identified.
7. Develop implementation plan for process improvement, including change management initiatives.
8. Develop business case for implementation, including targeted improvement on process KPIs and monitoring mechanism.
9. Obtain sign-off on to-be design, business case and implementation plan.
10. Identify pilot projects for implementation.
11. Conduct process improvement workshops to communicate to-be design to designated role holders.
12. Roll out to-be design to pilot projects; monitor development of improvements.
13. Monitor progression in KPIs, highlight risks/issues; obtain approval on resolution/mitigation; conduct change management workshops.
14. Identify and document an agreed-upon review schedule.
15. Consider more frequent reviews during project implementation (recommend including as a key component of all implementation project plans).
16. Consider a less frequent, but consistent review period following project implementation that is aligned with state policy development processes.
17. Perform reviews in accordance with agreed-upon schedule.
18. Collate learnings from pilot implementation; discuss and obtain approval from Steering Committee on proposed design changes.
19. Incorporate change in to-be design post-approval; roll out updated to-be design across all HHSC.
20. Monitor benefits realization.
21. Help ensure SOPs are updated and maintained in the PCS desk guide folder upon revision.
Dependencies: 1SD: Develop sufficient operating model for the Agency’s dependency on contracting as a critical success factor, 6PO: Create a fit-for-purpose organization design
for PCS, 19PO: Establish a comprehensive communication framework, 11PP: Update and refine procurement and contract management manuals, 9TE: Resolve immediate CAPPS
needs, 7PE: Performance management practice
Page 50Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Complex servicesEnhance complex services process
Project overview
Situation: Lack of documentation standardization, evaluation process that does not meet the needs of the Agency.
Project # 23PP Project name Enhance complex services process
Project description Establish and document policies, processes and templates for the development and documentation of a complex solicitation.
Areas of impact
1. Standardized approach to complex procurements and contracts.
2. Speed with which a procurement is completed as templates are based off frequently used procurement types.
3. Increased confidence that procurements are being completed in compliance with state and Agency policies.
Project start time Waves 2–3
Project duration Medium term Ease of implementation (1–5) 3
Estimated costs $$$ Estimated number of project resources 4–6
Affected groups Program, PCS
Project activities
1. Establish and document policies, processes and templates for the development and documentation of an evaluation plan for all complex solicitations detailing the processes
and other relevant aspects of the evaluation that must be drafted prior to posting of the solicitation and finalized and approved prior to receipt of supplier responses.
2. Establish and document policies, processes and templates for the development and documentation of a strategy plan for all complex solicitations that captures all planning
documentation and decisions made, including the specifications/SOW, in preparation for solicitation development activities.
3. Leverage the procure to pay process to create a standardized process for creation and life cycle management of complex procurements.
4. Determine and adhere to standard skill set and competencies determined for complex services buyers and contract managers.
5. Develop modular solicitation templates that include improved contractual performance language, monitoring and compliance with contract execution.
Dependencies: 1SD: Develop sufficient operating model for the Agency’s dependency on contracting as a critical success factor, 19PO: Establish a comprehensive communication
framework.
Page 51Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Governance and risk managementStrengthen compliance monitoring processes and controls
Project overview
Situation: Inconsistencies in compliance processes were noted both during the current state assessment and identified in previously issued audit reports. A methodical approach to
addressing these issues will increase confidence in the integrity of the process and reduce the risk of control failures and repeated audit findings.
Project # 13GR Project name Strengthen compliance monitoring processes and controls
Project description Incorporate additional rigor into review and audit processes to improve enforcement and consistency of compliance.
Areas of impact
1. Greater consistency and alignment of organizational structure, authorities and responsibilities with business goals.
2. Reduced risk of conflicts of interest and potential impropriety.
3. Fewer audit findings and reduced scrutiny by third parties.
Project start time Waves 1–2
Project duration Medium term Ease of implementation (1–5) 4
Estimated costs $$$$ Estimated number of project resources 8–12
Affected groups CQC and PCS
Project activities
1. Review current standard operating procedures for RFAs and establish policies, procedures and controls so that they are only used when allowed by law.
2. Improve process for identifying and evaluating potential conflicts of interest and establish mitigation policies, procedures and controls.
3. Complete policy updates related to SB 20 and related legislation (e.g., cost estimates, best value determination, enhanced co ntract monitoring, posting of solicitations,
American Steel rule, and collection and reporting requirements).
4. Ensure that Texas Administrative Code related to HHSC Procurement and Contracting is updated and aligned with policies and procedures.
5. Identify and document reporting needs that support improved tracking of data related to HUB participation and monitoring of contract compliance items related to the use of
HUB vendors.
6. Review and update purchasing procedures, checklists and file management to improve document retention and accountability.
7. Perform a segregation of duties analysis regarding roles and duties and establish an aligned policy.
8. Assess adherence to data use agreements on contracts and revise procedures as needed.
9. Review contractor screening and onboarding processes for improvement opportunities.
10. Complete updates as needed for compliance on all task and activities related to audit compliance.
Dependencies: 1SD: Develop sufficient operating model for the Agency’s dependency on contracting as a critical success factor, 6PO: PCS organization redesign, 11PP:
Procurement and contract management manuals
For more information, please see EY Insights on Risk Management and EY Insights on Policies.
Page 52Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Governance and risk managementAlign processes for managing reports to governing entities outside of HHSC
Project overview
Situation: Processes and controls for identifying and coordinating reporting to third-party governance entities is not defined and may lead to inaccurate or
noncompliant external reporting, resulting in unnecessary rework and loss of confidence in reports provided to third parties to HHSC.
Project # 14GR Project name Align processes for managing reports to governing entities outside of HHSC
Project description
Identify, develop and document tailored business and governance review processes related to the function of external reporting
requirements related to procurement, contract management and vendor performance for the Agency. Establish a role responsible for
identifying and managing governance processes helping ensure all external reporting requirements of the Agency are being met.
Areas of impact
1. A formal review and approval process for better reporting delivered to governing agencies outside of HHSC (QAT, HUB, CPA, LBB,
DIR, federal counterparts, etc.).
2. A coordinated response to required external reporting, resulting in better compliance and accuracy, less rework and improved
confidence in HHSC’s reporting process by third-party governance entities.
Project start time Waves 1–2
Project duration Medium term Ease of implementation (1–5) 2
Estimated costs $$ Estimated number of project resources 2–6
Affected groups All
Project activities
1. Identify a role at the Agency to manage the function of tracking and monitoring Agency compliance with external reporting related to procurement, contract management and
vendor performance.
2. Perform a survey of all programs at HHSC to identify and document key data elements related to all external reporting requirements related to procurement, contract
management and vendor performance. Examples include reporting requirement(s), reporting purpose, reporting data elements, reporting cycle, report recipient, etc.
3. Formalize and document external reporting policies and practices. Reporting processes should include:
► Governance over the external reporting process.
► Forecasting, planning and scheduling the external reports.
► Establishing the approval process for each report based on identified risk factors.
► Tracking and monitoring of compliance to deadlines.
► Monitoring of accuracy of reporting (auditing on a sample basis).
4. Establish practices for the ongoing identification, cataloging and management of future reporting requirements.
Dependencies: 13GR: Strengthen compliance monitoring processes and controls
For more information, please see EY Insights on Risk Management.
Page 53Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Governance and risk managementRisk management – lines of defense (LOD) alignment
Project overview
Situation: Roles and responsibilities for risk ownership and oversight across PCS, CQC, Programs, Legal and Budget/Finance are not clearly defined, and may result in
inefficiencies, gaps in monitoring responsibilities and objectivity concerns of CQC auditing its own work. Without clearly de lineated roles, the risk of control failures or management
override are increased.
Project # 15GR Project name Risk management – lines of defense (LOD) alignment
Project description
Clarify the roles and accountabilities for risk ownership and risk oversight. Strengthen PCS’s accountability to own risks, c larify CQC’s
mandate to oversee and monitor risks, and clarify roles of a management level oversight committee for key decisions and governance
activities over procurement and contracting.
Areas of impactAchieving clarity on division of accountability and responsibility, reducing the risk of conflicts or overrides, and creating the right balance
between risk taking and risk oversight roles.
Project start time Waves 1–2
Project duration Medium term Ease of implementation (1–5) 2
Estimated costs $$ Estimated number of project resources 3–5
Affected groups PCS, CQC, Programs, Budget/Finance and Legal
Project activities
1. Perform an assessment of the mandates, activities, controls and risks assigned to PCS management (first LOD), CQC management (second LOD), HHSC Internal Audit (third
LOD) and a steering committee and/or HHSC Executive Council (Oversight).
2. Align the mandates and activities with three lines of defense risk management operating model. The lines of defense structure , responsibilities and accountabilities are
explained below and further explained in the three lines of defense model in Appendix A:
► First line of defense (PCS Management, Budget/Finance, Legal & Programs) – Full ownership and responsibility for day-to-day management of all business and compliance
risks. Develops policies and procedures.
► Second line of defense (Compliance and Quality Control) – Provides independent oversight of first line of defense. Monitors all frontline activities to gain an aggregate view
of procurement and contracting risks (financial and nonfinancial) relative to risk appetite and to escalate any excessive risk-taking.
► Third line of defense – HHSC Internal Audit – Independently assesses procurement and contracting processes, controls and policy compliance procedures.
► Oversight – Establishes roles within a risk management oversight committee, designated by the Executive Steering Committee and/or chaired by the Chief Operating
Officer for oversight activities such as delegation of authority approval, policy approvals, organizational and process improvements, and risk appetite definition.
Dependencies: Adequate staffing aligned with updated mandates; ability to establish a risk management oversight committee
For more information, please see EY Insights on Risk Management.
Page 54Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Governance and risk managementPerform procurement and contract risk assessment
Project overview
Situation: Generally, review and approval follow the same process and rigor regardless of the risk level of the procurement or contract, creating gaps in efficiencies,
overengineering and a false sense that risk is covered.
Project # 16GR Project name Develop a procurement and contract risk assessment
Project description
Establish a methodology for assessing procurement and contracting activities that is risk-based incorporating statutory requirements of
the state, cost estimates and contract types. Leverage the existing contract risk assessment process, updating for new polici es and
approval thresholds, and develop a procurement risk assessment process.
Areas of impactContract review and approval process is aligned with the risk of each procurement, increasing precision of review and efficiency of the
procurement process.
Project start time Waves 1–2
Project duration Medium term Ease of implementation (1–5) 2
Estimated costs $$$ Estimated number of project resources 6–8
Affected groups PCS, CQC, Budget/Finance, Legal and Programs
Project activities
Perform risk assessment across all types of procurements to develop a procurement risk assessment, categorizing procurements based on state laws, risks, Agency procedures,
policies, etc. Key steps include:
1. Identify classification process for segmenting contracts based on level of risk.
2. Develop qualitative and quantitative criteria to assign a risk rating to each contract.
3. Perform data analysis, interviews and surveys to complete the criteria and risk rating.
4. Align review and approval process to contract risk levels (see separate review and approval workflow charter).
5. Develop and implement a repeatable process to classify risks of new contracts.
6. Develop process to review and update, as needed, risk ratings of existing contracts annually.
7. Update any IT infrastructure (SCOR, CAPPS, etc.) to align with new processes as necessary.
Dependencies: 1SD: Establish a comprehensive communication framework
For more information, please see EY Insights on Risk Management.
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to limitations and restrictions on page 2.
Governance and risk managementDevelop review and approval workflow
Project overview
Situation: After the risk assessment process is complete, the approval workflow will need to be updated to align with the new process of approving contracts differently based on
the assigned risk.
Project # 24GR Project name Develop review and approval workflow
Project description Establish a delegation of authority and a risk-based approval workflow for HHSC for all procurement activities.
Areas of impact
1. Procurement approval activities would be more efficient as contracts that are deemed to be lower risk would not need similarly
substantial approval activities as higher risk procurement transactions.
2. Organizational structure, authorities and responsibilities are consistent with the goals of the business and are assigned to
appropriate personnel.
Project start time Waves 2–3
Project duration Medium term Ease of implementation (1–5) 3
Estimated costs $$$ Estimated number of project resources 6–8
Affected groups PCS, CQC, Budget/Finance, Legal and Programs
Project activities
1. Establish (or leverage) a representative workgroup involving PCS, Legal, Finance, IT and Program.
2. Categorize typical transactions that require review in order to normalize requests to be reviewed (renewals, non-task order-based master contract use, task
order-based contract use, hinged (set of co-dependent) procurements, RFPs, etc.), Categorize current reviewers and roles and objectives for review.
3. Perform a segregation of duties analysis for roles/duties across the organization to identify and remediate conflicting duties between employees such as authorizing bid
evaluation criteria and evaluating RFx responses.
4. Leverage the risk-weighted set of criteria for transactions that was created as part of the risk assessment (refer to the “Perform procurement and contract risk assessment”
charter) to determine necessary reviews per transaction type.
5. Establish a procedure for requiring higher level of review regardless of new procedure if directed by HHSC executives.
6. Align documented delegation of authority to include risk-based approval thresholds and designed to meet Agency procedures and state law.
7. Validate and update as necessary process maps and standard operating procedures that comprehensively capture current review and approval flows for both initial requisitions
and contract approvals.
Dependencies: 16GR: Perform procurement and contract risk assessment
For more information, please see EY Insights on Risk Management.
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to limitations and restrictions on page 2.
Governance and risk managementImplement a continuous control effectiveness testing program
Project overview
Situation: While the CQC function has recently been established, a process has not been consistently implemented to assess compliance wi th processes and procedures across
the Agency. Without a rigorous quality control testing program, the ability of the Agency to consistently execute new and redesigned controls consistently will be limited, increasing
the risk of process and policy noncompliance.
Project # 25GR Project name Implement a continuous control effectiveness testing program
Project description Perform continuous testing of procurement and contracting compliance with established policies and procedures.
Areas of impactProvide management with periodic reporting of the status of the compliance with current processes and procedures as well as adoption
of new controls and risk mitigation strategies.
Project start time Waves 2–3
Project duration Medium term Ease of implementation (1–5) 3
Estimated costs $$$$ Estimated number of project resources 10–15
Affected groups CQC, PCS, Program
Project activities
Establish a testing program to assess new controls implemented in the procurement and contracting processes. Include the following key activities:
1. Align the organizational structure and tasks to future state (see “Risk management – line of defense charter”: Transition first line of defense activities to PCS, allowing CQC to
function as a second line of defense).
2. Develop testing programs to assess whether key controls are operating effectively.
3. Perform testing on key controls and assess whether the control is operating as intended to mitigate the associated risks.
4. Confirm design and operating effectiveness issues as well as improvement opportunities with control owners.
5. Provide training to control owners related to execution of control activity and how their actions are mitigating key risks in the organization.
6. Assist with development of any remediation plans and identify remediation dates to address any control operating deficiencies identified.
7. Perform additional testing after remediation to assess control operating effectiveness.
8. Report testing results and remediation progress periodically to leadership of impacted organizations and to the risk manageme nt oversight committee.
Dependencies: 1SD: Develop sufficient operating model for the Agency’s dependency on contracting as a critical success factor, 11PP: Update and refine procurement and
contract management manuals, 19PO: Establish a comprehensive communication framework, 16GR: Perform procurement and contract risk assessment
For more information, please see EY Insights on Risk Management.
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Internal stakeholder managementEnable dashboard automation for business administrative functions
Project overview
Situation: Program/Agency is unable to run reporting dashboard to determine where in the life cycle inputted requisitions reside within CAPPS; extreme lack of visibility leads to
delays and stakeholder frustration.
Project # 3IM Project name: Enable dashboard automation for business administrative functions
Project description
Enable organization to automate existing high-volume and complex, multi-step data handling actions as if business users were doing the work.
Capture and interpret existing applications, manipulate data, trigger responses and communicate with other systems. Primary focus is to allow
Program/Agency access to see where requisitions are during the life cycle of the requisition within CAPPS.
Areas of impact
1. Enhanced timeliness and visibility into procurement processing and stages for IT spend.
2. Opportunity to repurpose human time saved for other high value-add activities.
3. Improved quality and accuracy of IT procurement reporting.
4. Automation could eventually be leveraged within the procurement function and other business functional areas.
Project start time Wave 1
Project duration Short term Ease of implementation (1–5) 1
Estimated costs $$ Estimated number of project resources 2–3
Affected groups PCS, Programs
Project activities
1. Confirm setup of the technical environment.
2. Complete process walk-through and recording of RPA scenario.
3. Document the scope automation for the as-is process.
4. Design and validate the future state process for automation.
5. Collaborate with HHSC IT stakeholders to identify test data.
6. Build the RPA POC scenario.
7. Finalize RPA output in test environment and create demo of the automated processes.
8. Perform user acceptance testing with identified process stakeholders.
9. Support transition of the completed bot into production.
10. Identify future RPA opportunities within procurement and contracting.
11. Provide monitoring support in the production environment.
Dependencies: Access to CAPPS system
For more information, please see EY Insights on Automation.
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Internal stakeholder managementExpand upon the program liaison process
Project overview
Situation: The root cause that says HHSC operates in a “hero” environment – reliant on extraordinary individuals’ efforts to compensate for inadequate technology and processes.
Without a formal process in place, both PCS and Program have noted that whether certain tasks were completed correctly and ef ficiently depended on whom from PCS or which
program you were dealing with. For instance, programs noted that direction over process, next steps and status were difficult to consistently obtain from PCS and frequently rely on
a few individuals to find the information they need. Similarly, PCS has noted problems in obtaining necessary forecasting plans from varying programs.
Project # 4IM Project name: Expand upon the program liaison process
Project description
A new process has been instituted under new management; it should be extended to include regular embedded (on-site) support, better case
management tools regarding status and a de-emphasis on call the top to move a procurement. Areas without enough liaisons need to review to right
size.
Areas of impact1. All programs and end users will be on a level playing field, and there will be fewer opportunities for customers to feel disregarded or less important.
2. Lessens the burden on “extraordinary” individuals to be the known “go-to” person within PCS for outside customers.
Project start time Waves 1–2
Project duration Medium term Ease of implementation (1–5) 3
Estimated costs $$ Estimated number of project resources 2–3
Affected groups PCS, Programs
Project activities
1. Define the objectives and desired outcomes for the liaison role to help formulate the responsibilities and processes for the role.
2. Determine the responsibilities and competency qualifications for the liaison role that align with the objectives and desired outcomes. Factors to include:
a. How often the liaison will be on-site at the Program.
b. Types of information to be shared between Program and liaisons (process changes, requisition status, next steps, templates to use, forecast planning, etc.) and at which
intervals and via which communication channels.
3. Determine how and by whom the liaison role will be filled. Factors to consider should include division of responsibilities (procurement vs. contract administration) and
procurement type (goods, services, complex).
4. Help ensure all program areas are adequately supported. Consider size and scope of program areas in determining whether multiple liaisons should be assigned.
Dependencies: 1SD: Develop sufficient operating model for the Agency’s dependency on contracting as a critical success factor, 4IM: Expand upon the program liaison process,
6PO: Create a fit-for-purpose organization design for PCS, 19PO: Establish a comprehensive communication framework
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to limitations and restrictions on page 2.
Internal stakeholder managementEstablish a lessons learned touch point
Project overview
Situation: This project seeks to address the root causes; processes are often not written to support a large organization, limiting opportunities for economies of scale and
optimization improvements. For instance, there is currently minimal process in place to help prevent problems from repeating themselves, such as the repeated evaluation
mistakes. By establishing a lessons learned touch point, PCS can seek to address this issue by having a published repository for new staff to refer to as well as the ability for PCS
staff, PCS leadership and program staff to have an effective feedback loop.
Project # 5IM Project name: Establish a lessons learned touch point to enable continuous improvement
Project description
At the end of each complex solicitation, both PCS and Program should have the opportunity to provide feedback regarding what went well and what
didn’t go well at key phases in the contract development process. Responses should be recorded for reference for future solic itations of the good or
service. Any opportunities for learning regarding general process improvements should also be documented and shared for future reference.
Areas of impact1. Ability to tailor historical information to help reduce opportunities for repeat mistakes to occur.
2. Opportunity to further develop customer relationship between PCS and Program.
Project start time Waves 1–2
Project duration Medium term Ease of implementation (1–5) 2
Estimated costs $$ Estimated number of project resources 3–4
Affected groups PCS, Programs, Legal, Budget/Finance
Project activities
1. Determine for which solicitations this lessons learned touch point will be completed. Consider dollar thresholds and level of complexity to create a more balanced workload.
2. Create a lessons learned form for both PCS, Program, and Legal to complete at the end of each solicitation that meets the criteria of step 1 (as well as whether the solicitation
resulted in a contract or was canceled). The form should have sections to indicate what went well and what didn’t go well for key phases in the process –initiation/planning,
SOW development, evaluation, award, etc. Determine whether a meeting should take place to discuss the lessons learned as a pa rt of this process.
3. Establish a process for the documents to be reviewed by PCS leadership and a process for aggregating comments related to the general process (vs. specific to the good or
service being procured).
4. Establish a process for publishing the final documents to a shared repository viewable by PCS and Program to be able to learn from for future solicitations.
Dependencies: Processes will be updated to reflect a lessons learned touch point (assumption)
For more information, please see EY Insights on Procurement Transformation.
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to limitations and restrictions on page 2.
TechnologyConduct comprehensive CAPPS and SCOR training
Project overview
Situation: Training programs are insufficient in content and frequency, and there are limited designated support resources to provide compliance and technical guidance. The
existing training programs (onboarding and ongoing) do not provide employees with the knowledge and tools needed to be successful in their roles. The lack of training, coupled
with excessive workloads and nonstandard processes, has contributed to staff often feeling overwhelmed and frustrated.
The train-the-trainer model used previously was not successful. Adequate budget must be allocated to support a robust training program to educate users on the system in its
current state and provide ongoing training as system changes are implemented in the future.
Project # 8TE Project name Conduct comprehensive CAPPS and SCOR training
Project descriptionProvide additional, immediate training in the use of CAPPS and SCOR in their current states to increase awareness and intended
capacity.
Areas of impact
1. Greater system proficiency among user groups resulting in increased productivity.
2. Increased compliance with system-related policies and procedures facilitated by enhanced awareness.
3. Improved morale and job satisfaction through reduced system-related frustrations. Improved morale is correlated with less turnover
and increased productivity.
Project start time Wave 1
Project duration Short term Ease of implementation (1–5) 5
Estimated costs $$$ Estimated number of project resources 8–10
Affected groups All CAPPS user groups in all agencies
Project activities
1. Establish a training workgroup responsible for delivering CAPPS procurement functionality and SCOR training, comprising subject-matter resources skilled in training delivery.
2. In addition to standardized basic data-entry procedures and using available reports, determine topic areas for immediate training needs in the current CAPPS and SCOR
systems.
3. Develop curriculum to effectively address the organization’s immediate training needs (e.g., “first bite of the system training apple”).
4. Publish written training materials to be disseminated to all user groups and made available for download from a central HHSC website.
5. Offer training to all CAPPS and SCOR users by topic area in person and online via live and/or recorded webinars.
6. Address immediate needs for system assistance with CAPPS and SCOR by identifying subject-matter resources to be available to provide hands-on assistance in the program
area. The issues reported to these subject matter resources should be tracked and used to inform future training efforts.
Dependencies: Working with CAPPS and SCOR systems staff, Agency training staff and all procurement user groups
For more information, please see EY Insights on Technology.
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TechnologyResolve immediate CAPPS needs
Project overview
Situation: Business needs and volume are not sufficiently synchronized to process/technology. CAPPS has been heavily modified to accommodate State of Texas statutory
contracting requirements, as well as HHSC-specific contracting needs; however, the system is not configured to support a specific set of Agency or program purchasing processes
and procedures.
Project # 9TE Project name Resolve immediate CAPPS needs
Project descriptionComplete a rapid analysis to determine how the CAPPS Phase II release can be influenced to address immediate system functiona lity
priorities.
Areas of impact
1. Mitigate the risk of wasted resources to solve low-priority issues.
2. Ensure effective use of existing resources to address priority issues.
3. Improve data integrity and transparency.
4. Achieve short-term system improvements (wins).
5. Create positive momentum for CAPPS improvement projects to build the stakeholder confidence required to garner support for future
enhancement initiatives and a process to facilitate future system enhancements.
Project start time Waves 1–2
Project duration Long term Ease of implementation (1–5) 5
Estimated costs $$$ Estimated number of project resources 8–10
Affected groups IT, PCS, Executive Leadership, Budget/Finance, CAPPS Users
Project activities
1. Pause CAPPS Phase II development/implementation in order to critically analyze planned and potential changes.
2. Determine priority needs based on input from user groups and redirect IT resources and efforts to address higher-priority procurement functionality. Develop a plan to design
solutions for the remaining, lower-priority issues to be addressed in Project 21TE: “Perform Full Fit Gap Analysis.”
3. Compare planned scope to high-priority (as determined by HHSC leadership and programs) system issues requiring immediate resolution.
4. Examine system and user controls, approvals and access levels and adjust to align with appropriate user roles.
5. Place special emphasis on developing tools that support dashboarding and more robust access to information for end users. At a minimum, this should include the ability to see
which individuals have reviewed each step.
6. Analyze the fit and purpose of the “Collaboration” tool within CAPPS to determine whether it can be improved through system changes or should be eliminated from the process.
7. Additional short-term improvements for system response time.
8. Develop a plan to dedicate adequate resources and implement the high-priority changes within 12 to 18 months.
9. Develop and deliver in-person and online training on proper use of altered functionality before, during and after implementation (e.g., “second bite of the system training apple”).
Dependencies: Working with CAPPS system staff and procurement stakeholders, as well as obtaining executive support to obtain any necessary additional budget allocations
For more information, please see EY Insights on Technology.
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TechnologyAlign eSignature tools
Project overview
Situation: The lack of visibility within, and integration among, procurement-related systems (e.g., CAPPS and digital signature tool) creates risk for policy compliance issues and
undermines statewide transparency efforts.
Project # 10TE Project name Align eSignature tools
Project descriptionSolution digital signature tools for integration or end of life. Assess digital signature tools that have similar functionali ty and potentially
superior integration/costs, and determine a plan going forward.
Areas of impact
1. Enhanced federal audit compliance through the use of additional security measures (levels of authentication) built into the Agency’s
digital signature tool.
2. Reduced costs associated with duplicative functionality.
3. Increased integration with the CAPPS system (Agency’s current digital signature tool was designed to work within the Agency’s
current ERP environment).
4. Eliminate the need for PCS to “own” a digital signature software contract that is a better fit for IT.
Project start time Waves 1–2
Project duration Medium term Ease of implementation (1–5) 4
Estimated costs $$$ Estimated number of project resources 8–10
Affected groups IT, PCS, all users of the Agency’s digital signature tool
Project activities
1. Transfer the “ownership” of the Agency’s digital signature tool to IT to remain consistent with the ownership model for other Agency software.
2. Catalog the digital signature tool functionality currently in use by HHSC.
3. Compare this functionality to the tools available in the Agency’s current digital signature solution.
4. Determine which solution offers the most relevant functionality and build comprehensive policies and procedures for use of the selected solution.
5. Develop a plan to deliver any training required for compliance with policy and to increase user satisfaction with the solution.
6. Communicate the policies and procedures to all user groups.
7. Provide training opportunities/online guidance and resources for proper use of the signature tool.
Dependencies: Working with CAPPS system staff, digital signature tools owners (IT), legal and procurement stakeholders
For more information, please see EY Insights on Technology.
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TechnologyPerform full fit-gap analysis
Project overview
Situation: CAPPS has not been configured to serve many important procurement-related purposes (i.e., complex contract proposal evaluation, vendor performance tracking,
document management, spend analysis and public data transparency) in function or in HHSC-level volume.
Project # 21TE Project name Perform full fit-gap analysis
Project description Perform a comprehensive fit-gap analysis to align CAPPS and SCOR system functionality with fit-for-purpose processes.
Areas of impact
1. Identify systems gaps to be addressed through configuration or customization of functionality.
2. Inform analysis to determine options available in the current system, as well as those requiring a third-party solution (via integration
or interface with CAPPS and/or SCOR).
3. Enable system improvement solutioning by providing essential information.
Project start time Wave 2
Project duration Long term Ease of implementation (1–5) 5
Estimated costs $$$$ Estimated number of project resources 10–12
Affected groups PCS, IT, CAPPS and SCOR Users
Project activities
1. Work with procurement stakeholders to review and revise procurement system-related policies and procedures to align them with purchasing staff performance and with
procurement automation best practices.
2. Determine system functionality needs based on the tailored system-related policies and procedures (to facilitate full procurement automation) and convert them to system
business requirements. Project leaders should help ensure that the requirements include tools to mitigate the risk for data -entry errors as well as tracking contract amendments.
3. Coordinate with IT and procurement stakeholders to compile a detailed list of all known gaps in CAPPS and SCOR system functionality (e.g., adequate reporting and evaluation
tools) as compared to the Agency’s automated procurement functionality needs (in support of fit-for-purpose policies and procedures).
4. Conduct an in-depth fit-gap analysis to determine fit within the CAPPS and SCOR systems in current and/or approved future state (including all necessary and feasible
configuration and customization changes). This analysis should also consider deployment of additional modules of the Agency’s ERP platform.
5. Use the results of the fit-gap analysis to determine the potential need for a third-party solution. If substantial business requirements cannot be met through configuration or
customization of the existing systems, then third-party solutions should be evaluated for a potential acquisition.
6. Work with executive leadership to determine the best approach to meet the organization’s needs given priorities and resource constraints.
7. Develop and deliver in-person and online training on proper use of new functionality before, during and after implementation of the enhancements (e.g., “third bite of the system
training apple”).
Dependencies: 1SD: Develop sufficient operating model for the Agency’s dependency on contracting as a critical success factor, 12PP: Enhance PCS forms, contract tools and
contract templates related to procure to pay process, 22PP: Redesign procurement end-to-end process
For more information, please see EY Insights on Technology.
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TechnologyStreamline remaining procurement-related technology
Project overview
Situation: The lack of integration among procurement-related systems combined with the lack of properly configured reporting functionality in CAPPS frustrates users, precludes
data-driven procurement practices and undermines statewide transparency efforts.
Project # 29TE Project name Streamline remaining procurement-related technology
Project descriptionReview other procurement-related technology solutions (i.e., digital signature tool and Excel spreadsheets) outside of the CAPPS system
to verify fit and identify potential alternative solutions.
Areas of impact
1. Identify opportunities for enhanced system alignment with fit-for-purpose procurement processes and procedures.
2. Reduced costs associated with duplicative functionality.
3. Potential increased integration with the CAPPS system.
4. Streamlined automated processes.
Project start time Wave 3
Project duration Medium term Ease of implementation (1–5) 4
Estimated costs $$$ Estimated number of project resources 8–10
Affected groups IT, PCS, all procurement-related system users
Project activities
1. Catalog functionality of all non-CAPPS and non-SCOR procurement-related systems remaining in use by HHSC.
2. Work with procurement stakeholders to conduct a fit-gap analysis to compare this functionality with the Agency’s procurement bus iness requirements (established during the fit-
gap analysis in Project 21TE.
3. Determine which solution(s) should remain in use and which should be integrated or replaced by a module in CAPPS or a third-party solution available on the market. This will
require executive buy-in for adequate resource allocation to support the decision.
4. Develop comprehensive policies and procedures (with input from stakeholders) for use of the selected solutions and communicate them to affected groups.
5. Develop a plan to deliver in-person and online training for compliance with policy and increase user satisfaction with the exist ing systems, as well as any new solution.
Dependencies: 1SD: Develop sufficient operating model for the Agency’s dependency on contracting as a critical success factor, 9TE: Resolve immediate CAPPS needs, 10TE:
Align eSignature tools, 21TE: Perform full fit-gap analysis
For more information, please see EY Insights on Technology.
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to limitations and restrictions on page 2.
Project overview
Situation:
► Current systems do not facilitate visibility and extraction of data to support procurement-related business decisions.
► HHSC program areas are performing ad hoc and manual reporting to track and manage the status of their procurement requests.
► The lack of integration among procurement-related systems combined with the lack of properly configured reporting functionality in CAPPS frustrates users, precludes data-
driven procurement practices and hampers statewide transparency efforts.
Project # 7PE Project name Establish a performance management practice
Project description
Coordinating with the Office of Performance Management (OPM) of the Chief Policy Office, the project will establish a continuous
improvement initiative to identify, measure and act on performance data across the procurement life cycle. Using a data -driven approach,
PCS and OPM will work with stakeholders to identify key performance indicators (KPIs) and establish methods to track and report on
process and subprocess cycle times, among other measures relevant to the procurement function.
PCS will work with project stakeholders to establish standards for the type of performance information that will be collected and
published, and will coordinate with OPM to establish publishing frequency, format and platform.
Areas of impact
A formal performance management practice with PCS, consistent with Agency standards for performance management, will provide a
consistent method to track, measure and demonstrate value to internal and external stakeholders. Establishing a
data-driven approach to measuring performance through KPIs supported by system data will:
► Eliminate current ad hoc and manual reporting practices borne by HHSC program areas.
► Align individual staff performance expectations with operational goals and objectives.
► Provide visibility into and ability to act on functional activities affected by resources, cycle fluctuations and other facto rs.
► Improve predictability in scheduling and developing procurement.
► Enable comprehensive contract reporting at the enterprise level to drive data-driven business decisions and identification of
opportunities for improvement.
Project start time Waves 1–2
Project duration Long term Ease of implementation (1–5) 3
Estimated costs $$$ Estimated number of project resources 5–7
Affected groupsExecutive Leadership, Human Resources, Office of Performance Management, PCS, Program and Contract Managers, Program
Stakeholders
Performance managementEstablish a performance management practice (1 of 2)
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Project overview
Project # 7PE Project name Establish a performance management practice
Project activities
1. Work with PCS stakeholders to review existing policies and procedures related to Support Service Agreements (SSAs) and other performance criteria related to
procurement activities to refine Program and PCS SSAs.
2. Review peer and best practice performance management and measurement frameworks focused on efficiency, quality and stewardship, for example:
► Efficiency measures: Year-over-year number of POs/contracts; staff load vs. number of contracts/bids/POs; time from requisition to PO
► Quality measures: Cost of procurement operations as a % of spend/cost avoidance; customer service survey results
► Stewardship measures: % of solicitations without protests upheld; % of special vs. overall spend; % change in volume of vendor responses to solic itations
3. Evaluate applicability of identified KPIs and determine and prioritize initial KPIs for performance management.
4. Develop and document methodology for measuring each KPI identified and determine ability to measure using current and future systems.
5. Develop standard reports and other tools that enable consistent ability to report performance using system data (staff reports, internal division reports, external
management reports, dashboards, among others).
6. Incorporate relevant KPIs into staff performance appraisal system.
Dependencies: 1SD: Develop sufficient operating model for the Agency’s dependency on contracting as a critical success factor 2SD: Conduct data cleansing, 9TE:
Resolve immediate CAPPS needs, 21TE: Perform full fit-gap analysis, 19PO: Establish a comprehensive communication framework, 3IM: Enable dashboard automation
for business administrative functions
Performance managementEstablish a performance management practice (2 of 2)
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Insights and additional projects
1. EY Insights on Procurement Transformation
2. EY Insights on Procurement Operating Model
3. EY Insights on People and Organization
4. EY Insights on Technology
5. EY Insights on Automation
6. EY Insights on Risk Management
7. EY Insights on Policies
8. EY Insights on the Future of Procurement
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EY Insights on Procurement Transformation
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Procurement maturity model
Our maturity model articulates the main domains of procurement transformation in eight dimensions, each of which needs
to be considered independently to reposition an effective procurement and contracting function.
► Review current state Procurement and
Contract Services (PCS) capability
► Review existing sourcing and procurement
process documentation, including policies and
procedures and existing ERP system
documentation
► Review organizational structure
► Conduct key stakeholder interviews
► Identify critical procure to pay (P2P) process
benchmarks currently managed by PCS and
compare current P2P capabilities to leading
practices
Every dimension is divided into five maturity stages:
Stage 1: Informal/no process
Stage 2: Functional
Stage 3: Standardized
Stage 4: Collaborative
Stage 5: Leading
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Procurement maturity modelEight facets defined
The maturity model breaks down procurement and contracting to drive at the root cause of any procurement and contracting issue:
► Strategic Direction: course of action that leads to the achievement of the goals of an organization’s strategy
► People and Organizations: how the people in the organization engage to accomplish the goals of an organization
► Portfolio and Supplier Relationship Management: how an organization interacts with its suppliers from a mutually beneficial
relationship and legal (contract) perspective
► Complex Contracts: contracts that are of high dollar value and require RFx to procure goods and services
► Contract Management: an essential function that helps support the needs of the Agency as reflected in a supplier contract are
met in order to deliver critical services to our constituents and that taxpayer dollars are being used efficiently and appropriately.
► Supplier Relationship Management: provides a framework for interacting with the vendor community across the contract
management life cycle to advance innovative solutions for the organization and equip the procurement organization with
knowledge and expertise in solicitation planning.
► Category Management: by analyzing detailed spend, transactional and pricing data, and continuously monitoring the pricing
markets, the category management team can routinely identify and implement solutions that drive incremental unit cost
reductions through additional sourcing, substitutions and better demand management.
► Procure to Pay Process: the process of obtaining and managing the materials needed for a product or service.
► Governance and Risk Management: an organization’s coordinated strategy for managing the broad issues of corporate
governance, enterprise risk management and corporate compliance with regard to regulatory requirements. A comprehensive risk
program in the opinion of EY involves the effective identification and avoidance of fraud, waste and abuse.
► Internal Stakeholder Management: an organization’s management of the people who may be affected by the decisions it makes
or can influence the implementation of its decisions.
► Technology: an enabler that allows organizations to process actions and extract materials.
► Performance Management: an ongoing process of communication between a supervisor and an employee that occurs
throughout the year, in support of accomplishing the strategic objectives of the organization.
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Procurement maturity model rating and definitions(part 1 of 2)
Topic Informal/no process Functional Standardized Collaborative Leading
Strategic
Direction
No procurement strategy
is in place
Procurement strategy is
not defined in a number of
areas and there is no
visibility on key future
initiatives
Procurement strategy and
formal idea of future
initiatives exist in most
areas, but procurement
strategies are not always executed
Full understanding of the
transformational journey
that must be followed and
a demonstrated history of
success
Detailed plans updated on
a regular basis with cross-
functional executive
support on the journey to
procurement excellence
People and
Organization
Procurement department
is seen as a second tier
function and focuses on
administrative activities
Procurement employees
exhibit transactional skill-
sets but the department is
not recognized as a value-
adding function
Procurement employees
demonstrate strategic
thinking and focus more on
category management than
administrative tasks
Procurement employees
exercise strategic thinking
and category management
and attract internal and
external talent
Procurement has a global
network of high-quality
people who make the
department a desirable
place within the company
Portfolio and
Supplier
Relationship
Management
Day-to-day pressure
dictates the activity of the
department, there is
limited leverage of
strategic sourcing opportunities and no
contracts are in place
The procurement
department is driven by
contract end dates, does
not have strategic
procurement plans, leverages regional
sourcing on an adhoc
basis and has few
contracts
Formal strategic sourcing
process, leverage global
sourcing on most
categories with mid-term
plans for key categories and contracts are in place
but are managed by BUs
Comprehensive strategic
sourcing process, mid- to
long-term category plans
with a global focus on key
categories, and contracts are managed by category
managers
Sourcing approach is
recognized as one of the
best in the market,
preferred vendors are
established and contracts are reviewed with
suppliers at least annually
Technology There is no P2P system in
place
Basic P2P systems exist in
most business units but
systems are not linked
together, few eCatalogs
exist and many transactions are still
processed manually
P2P systems are in place
in all BUs and functional
procurement areas but are
not integrated, eCatalogs
are in place and maverick buying still occurs
Harmonized P2P systems
exist and are widely used,
manual processes have
been eliminated and there
is moderate adoption of eCatalogs with key
suppliers
One integrated P2P
system across the
organization that links all
POs and suppliers
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Procurement maturity model rating and definitions(part 2 of 2)
Topic Informal/no process Functional Standardized Collaborative Leading
Governance
and Risk
Management
No governance body in
place to support overall
purchasing strategy,
noncompliance is high and
organization is reactive to risk
Governance exists for a
few key purchases, low
compliance and risk
management is
acknowledged within other functions
Processes and systems
are formally documented
and published but are not
always enforced,
inconsistent compliance and siloed risk
management capabilities
Governance model has
been established and is
supported by executives
and there are
multifunctional integrated risk assessment, planning
and response capabilities
in place
Governance body is in
place, documented
processes and controls
are in place, the
organization is nearly always compliant and
predictive supplier risk
management exists
Internal
Stakeholder
Management
Procurement works in its
silo and internal customers
do not think it adds value
to the organization
Some areas of
collaboration with other
departments but is not
uniformly seen as high
value
Procurement is regularly
consulted but not fully
integrated with other
processes in other
departments
Procurement is engaged
early in the process and
manages cross-functional
streams
Procurement proactively
manages all categories in
close collaboration with
relevant departments
Procure to Pay
Process
No standard P2P
processes in place and
existing processes require
manual paperwork
Basic P2P process without
guidelines and a mix of
paper-based and
electronic processes
End-to-end P2P processes
in place but low levels of
compliance
Fully integrated and
automated P2P processes
are in place and
compliance is high
Lean and highly integrated
P2P processes, eCatalogs
and a robust order
tracking process
Performance
Management
No monitoring of the
performance of the
procurement department
Basic metrics are in place
but provide limited insight
and may not be linked to
business performance
Formal metrics exist but
are not consistently used
and are not closely linked
to performance
Savings targets are in
place to monitor
department performance
and KPIs link to
performance
Sophisticated balanced
scorecards are in place
and KPIs are integrated
with performance
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Root cause analysis
Overarching
Root Cause
Manifestations Impacts
People
Process
Technology
Success is often not rewarded; there is largely only punishment, which can significantly
impact morale and prevents employees from feeling empowered
Processes are often not written to support a large organization, limiting opportunities for
economies of scale and optimization improvements
Processes are often inconsistent across similar requisitions, causing inefficiencies and
increasing errors and noncompliance
Policies and procedures are not effectively maintained in many cases and changes often are
not effectively communicated to guarantee compliance
Legacy system errors have been transitioned over to CAPPS, negatively impacting
system performance and data integrity
Business needs and volume are not sufficiently synchronized to process/technology
causing risk of system overload and downtime
“Hero” environment – reliant on extraordinary individuals, efforts to compensate for
inadequate technology and processes
Systems do not always enable visibility and extraction of data to support business
decisions
Training programs are generally insufficient and there is limited designated support
resources to provide compliance and technical guidance
1. The operating model,
strategy and
investment of HHSC,
has not evolved to
meet the needs of an
outsourced service
delivery solution,
which depends upon
Procurement for its
success.
2. Volume of transactions
amplified the effect,
quadrupling the impact
on an unfit model.
3. The communication
plan is built for a
smaller organization
The approval process does not always sufficiently consider factors outside of the dollar
value of the contract for establishing the extent of review and approval procedures
Controls activities are not always appropriately aligned to the risk
Oversight of procurement processes is often not performed to test whether all necessary
control activities occur in a timely manner
Governance
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EY Insights on Procurement Operating Model
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As companies seek to optimize their operating models, we believe they must consider each of the following questions
1. 2. 3.
4. 5. 6.
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EY Insights on People & Organization
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Role and function comparison example
► Review and assess routed purchasing requests
► Interact with end users as needed to clarify
requirements and identify best approach to
fulfillment
► Place orders against existing master contracts
and track receipt and closure
► Perform informal quote procedures according to
state and HHSC required practices
► Perform Invitation to Bids procedures according
to state and HHSC required practices
► Confirm proper and complete documentation
exists regarding transactions in designated
systems
► Identify procurement needs that cannot be
fulfilled adequately via master contract, informal
quote and Invitation to Bid and coordinate with
procurement services leadership to route the
need to the appropriate analyst
Procurement Analyst
Intake Management/Service Desk
► Review (and assess for completeness)
procurement transactions routed for contract
initiation processes and the originating
procurement materials
► Confirm proper exhibits and artifacts exist as
required for contract initiation (e.g., certificate of
insurance)
► With designated SMEs, including staff attorneys,
complete contract documentation for contract
initiation
► Review and assess requests for contract
amendments for appropriateness
► Assemble necessary parties in order to address
deficiencies and prepare amendments
► Support portfolio success efforts to interact with
programs systematically and proactively
► Track assigned contracts to proactively request
procurement actions prior to expiration
Contract Analyst
Contract Initiation and Facilitation
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Establish an improved communication plan
1) Develop comprehensive PCS communication framework and plan
► Define and establish a plan and framework by identifying the best methods to deliver timely and useful
information.
► Communication plan categories would include audience, message, delivery vehicle, frequency, timing,
responsibility, feedback mechanism and repository.
2) Create meeting schedule
► Creation of meeting schedule so that all needed meetings are on the calendar of events (weekly,
monthly, quarterly).
► Create a process to take, synthesize and distribute notes and outcomes from the meeting to the appropriate
distribution list as determined by the RACI.
► The meeting schedule and outputs would be included in the comprehensive communication plan.
A large portion of our interviews and a clear majority of our ThinkTank observations pointed to communications as an
area of opportunity for PCS. In particular, it was noted that PCS should undertake a review of critical communication
types and vehicles; a look at accountability structures related to a RACI; and a process to more efficiently, effectively
and consistently cascade communications within and without PCS.
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Create an employee engagement plan
1) Create continuous development culture
► Develop a leadership point of view (PoV) that can be easily adopted and cascaded. This PoV should encourage
PCS staff to strive for development and skill growth in a culture of continuous improvement in order to increase
productivity and reduce errors.
2) Culture change, employee engagement program
► Prioritize PCS engagement issues that arose from the PCS engagement survey. Develop a step-by-step plan to
address those issues.
3) Develop employee incentive program
► Develop an employee engagement program that offers valuable incentives for high performers. The incentives
should be a combination of financial and nonfinancial benefits (time off, preferred parking, flexible
schedules, etc.).
ThinkTank sessions conducted by EY, as well as the PCS engagement survey, clearly indicate a need for improving the
level of engagement and culture within the Agency. Given the historical cultural challenges, harsh previous leadership
team and high turnover, addressing employee engagement and other culture-related issues will be key to improving
morale, productivity, compliance and talent retention.
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Develop comprehensive training programs
1) Develop training program to establish critical procurement and contract management capabilities
► The program would leverage leading practices and use of technology tools. A formal technical training program is
particularly important when there is no backup for key roles and/or there is high turnover or heavy hiring cycles.
Without consistent curriculum updates and predictable training delivery schedules, it is not possible to achieve skill
standardization.
2) Develop an HHSC training program that is aligned with new policies, procedures and processes. The program
should be developed to provide staff involved in the procurement and contract management processes with the
competencies necessary to complete their respective role/function in the process. Key items include:
► Develop the high learning objectives for personnel and getting clarity of the scope of the training required.
► Understand the detailed training needs (competencies) of all personnel.
► Content development, training schedule creation and business engagement to book people into training.
► Develop a training delivery model.
► Report number of people who have been trained and what they have been trained on.
► Tie competency development back to role KPI.
Through the interviews and ThinkTank sessions, it became very apparent that significant training gaps exist in the
Agency. Onboarding training is often inadequate and opportunities for ongoing development are not readily available for
employees. Over the last few years, training programs that were scheduled for a week have been condensed to a day.
Policies and procedures are not always followed, and many processes are not standardized or documented, which
jeopardizes compliance and results in widespread inefficiencies. A comprehensive procurement manual is lacking and
members often feel as though they don’t have anywhere to turn with questions. Training on systems, tools and processes
has been insufficient to build baseline proficiency.
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Develop comprehensive training programs
3) Staff performing contracting duties are properly certified according to state requirements
► Confirm HHSC is compliant with state requirements for performing procurement and contracting functions. HHSC
should perform a review of all program staff identified as performing said functions so that they are all properly
trained and certified according to state requirements, and if not, confirm they have proper supervision to perform
said tasks. Also review system access and capabilities so that they are aligned properly to certifications.
4) Onboarding
► Create formal onboarding process for new hires with a buddy system and proper role training.
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Functional realignment model for end-to-end accountability
Key characteristics of functional
realignment
► Clearer lines of responsibility for intake
management, which addresses the program
liaison function and management of requisitions
and standard procurements
► Master data management enabling strategic
sourcing capability to establish spend analysis
of savings opportunities
► Alignment of multiple disparate contract
management elements
► “Portfolio success” engagement center with
programs regarding contract health, tracking for
risk and triage of poor performance
► Contract initiation function under contracts and
out of procurement as a new capacity
► Vendor management capacity to establish
supplier programs and oversee HUB
► Operations responsibility of policy planning and
research, external reporting and system support,
all underresourced in current models
► Proactive risk management by having QA/QC
report to the COO and has oversight
responsibility over all of PCS. Absorbs the
contract monitoring function
Procurement
Services
(Front Office)
Intake Management
Category Management
Strategic Sourcing
Vendor Management
Portfolio Success
Contract Initiation and Facilitation
Audit and Compliance
Performance Reporting
Policy Planning and
Research
System Support and
Planning
Logistics
Chief Procurement
Officer
QA/QC PCS Monitoring and Review
Accountability
Services
(Middle Office)
Operations
Services
(Back Office)
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EY Insights on Technology
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Technology deliverables truncated
Deliverable not completed Reason team was unable to complete deliverable
Identify adoption, configuration and customization
of existing technology
► Leading practice indicates that business processes are to be finalized
before additional customizations should be considered confirming that
business processes align with business goals is part of the project road map
Identify quick wins related to adoption and simple
configuration changes and estimated level of effort
Identify customization requirements and estimated
level of effort (leading practice technology
requirements)
Identify new solution capabilities
Identify capability gap and shortlist portfolio of
potential marketplace solutions
Leading technology practice is to perform business requirements prior to technical requirements as well as prior to enhancements. Business requirements need to come first.
The list below reflects deliverables truncated due to insufficient information related to the items below:
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Procurement technology implementation leading practices
Key steps to a technology implementation:
1. Develop desired procurement automation outcomes based on the enterprise’s strategic plan.
2. Consult with subject-matter resources to tailor procurement-related policies and procedures to
facilitate automation.
3. Coordinate with purchasing stakeholders to develop business (functional) requirements.
4. Engage IT experts to develop technical requirements based on business requirements and address
data architecture documentation exists for all existing systems.
5. If applicable, conduct an in-depth fit-gap analysis of existing system against the newly developed
requirements.
6. If an existing system cannot meet the enterprise’s procurement automation needs or does not exist,
explore solution options on the open market.
7. Execute the approach that best supports the enterprise’s procurement automation needs and fits
within the available budget (including customization, implementation and ongoing maintenance).
8. Confirm the implementation plan includes details on required customizations and configurations,
testing plan, rollout strategy and timeline, training delivery and ongoing support.
To help implement technology implementations, HHSC can consider using the following implementation framework life cycle below:
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Technology tool gap identification
Below are a few gaps in configuration of the tools that were identified during the course of the
assessment:
► Legacy system errors have been transitioned to CAPPS, negatively impacting system performance
and data integrity.
► Data from legacy systems was loaded into the CAPPS system without a complete master data cleanup to
correct errors and without a comprehensive data conversion plan to address the upload of complete and
accurate historical information.
► Business needs and volume are not sufficiently synchronized to process/technology causing risk of
system overload and downtime .
► CAPPS was not configured to serve many important procurement-related purposes (i.e., complex contract
proposal evaluation, vendor performance tracking, document management, spend analysis and public data
transparency) in function or in HHSC-level volume.
► CAPPS has been heavily modified to accommodate State of Texas statutory contracting requirements, as well
as HHSC-specific contracting needs; however, the system is not designed to support a specific set of Agency or
program purchasing policies and/or processes. There is no baseline set of procurement processes and
procedures that can be applied across HHSC.
► HHSC does not have a complete application portfolio detailing the data architecture, relationship diagrams and
user models for all purchasing-related systems. This results in inconsistent processes, data entry redundancy,
inefficient system administration and unnecessary technology costs associated with duplicative functionality.
► Systems do not always enable visibility and extraction of data to support business decisions.
► The lack of integration among procurement-related systems combined with the lack of properly configured
reporting functionality in CAPPS frustrates users, precludes data-driven procurement practices and undermines
statewide transparency efforts.
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System Configuration gaps Industry insights and recommendations
Procurement tools
in CAPPS – The
state’s ERP system
CAPPS was intended to automate 80% of HHSC’s procurement and
contracting processes. The CAPPS system has been heavily modified
for HHSC, but the scope of these modifications is limited by a variety of
factors, including, but not limited to, hard-coding of the software,
licensing restrictions, CPA-mandated functionality, statutory
requirements, limited budget, a desire for process consistency and a
complete lack of input from user groups. There was no data
architecture planning or consideration for HHSC’s transaction volume
included in the implementation process. While some performance
issues still remain, the debilitating latency in system processing time
has recently been addressed by PCS.
As currently deployed, the CAPPS system:
► Is not user-friendly
► Has functionality that does not support Agency business processes
(i.e., proposal evaluations, contract management, adequate
approval workflow, strategic sourcing, complex contracting or
reporting)
► Does not allow for flexibility where certain steps add no value (i.e.,
“Collaboration” process outside of contract development)
► Does not offer dashboard reporting/status updates
► Has preloaded templates that are outdated and/or have limited utility
► Has minimal data visibility
eProcurement functionality in a modern ERP
system must facilitate automation of Agency
business processes and enforce all necessary
controls. In order to tailor system functionality,
customization should seek to address the needs
of all stakeholders in accordance with Agency
priorities. This effort should include
standardization and optimization of business
processes to operate in an automated
environment.
Effective system customization must be preceded
by an Agency-level needs assessment to inform
system architecture design (including any
integration requirements) as well as
comprehensive implementation planning.
It is key to purchase a system that provides the
majority of the organization’s required
functionality without customization. The right
system solution should be able to meet the
majority of the organization’s requirements
through a combination of process optimization
and functionality configuration.
Below are a few gaps in configuration of the tools that were identified during the course of the assessment:
Technology tool gap identification
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System Configuration gaps Industry insights and recommendations
SCOR – HHSC’s
contract management
system
SCOR was developed specifically to meet the contract management
needs of HHSC, so it offers functionality that is more intuitive and more
closely aligns with Agency business processes. However, there are
data integrity issues in SCOR due to undertrained and overworked staff
inputting incorrect information and errors in the legacy data conversion
from other systems.
As currently deployed, the SCOR system:
► Lacks complete data from legacy systems
► Has some inaccurate data for current and expired contracts due to
coding and filing errors
► Lacks modern contract management automation tools (i.e.,
dashboard reports, automated reminders and supplier enablement)
► Requires updates in multiple function areas
As the official system of record, it is essential that
the contract management component of an
eProcurement system contain complete and
accurate procurement documentation. Validating
the integrity of the data loaded into the system is
the key to its utility.
If contract management functions are performed
outside of the ERP, the tool should be fully
integrated with the ERP’s procurement module.
Technology tool gap identification
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EY Insights on Automation
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Digital solutions are a journey
► Process automation is the
application of software that
can mimic human action and
perform many manual,
repetitive, rules-based tasks at a much greater speed and
accuracy. This technology is
rapidly gaining adoption in
back-office functions such as
finance, supply chain, tax and HR, as well as many
customer-facing departments.
Characteristics:
► Focus is on eliminating
manual, repetitive, rules-driven activity that can be
anticipated and programmed.
► Can work nonstop, with
consistency and accuracy,
and at a speed much faster than manual processing.
► Net benefit is more time
available for existing teams to
focus on value-added
activities that require judgment and
decision-making.
Robotic
process
automation
(RPA)
Perform
► Machine learning
combined with robotics
to form cognitive
automation
► Nonroutine tasks
requiring judgment
(cognitive capabilities,
dynamic rules or artificial
learning)
► Value- and impact-driven
implementations
Machine
learning RPA
cognitive
► Personalized tasks
requiring judgment and
conversation via chat,
messaging and/or
voice (cognitive
capabilities, dynamic
rules or artificial
learning)
► Allowing human-like
reasoning to be applied
in larger volumes
► For increasing value
rather than reducing
cost
Conversational
intelligence
► Data analytics,
insights, decision-
making
► Enhanced and
automated data
analytics
► Allowing human-like
reasoning to be
applied in insights
► Replacing human
need for decision-
making
Artificial
intelligence
Incre
men
tal
valu
e
Digital solutions consist of more than just robotics, and include automation as a large contributing factor. There are
multiple levels to automation.
Learn
Interact
Think
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Digital solutions must be focused on more than achieving efficiency targets in order to realize the full value equation
Characteristics of high potential
digital solution opportunities within business
process hierarchy
► Automation helps address areas of high frequency of
effort reduction from automation of high-frequency,
manual, repetitive tasks and reduced exception
costs.
► Automation helps to address elimination of routine
tasks, resulting in increased value-add of talent as
workforce can be dynamically deployed to address
fluctuating demand while maintaining optimal
productivity, ultimately leading to reduced attrition.
► Automation helps to address improved
consistency, control and traceability of manual
activity prone to errors, as well as reduced critical
path time during peak load periods when service
levels or key deadlines are at risk.
People
Efficiency
Outcomes
► Need for change driven by larger business
need; automation viewed as a lever for
improvement
► Business process executed frequently, in large
volumes, with common components present
across functions
► Easily recognizable business process and
stakeholder engagement complexity
► Structured (unstructured) data required can be
identified and accessed
► Business process, once started, requires
limited human intervention and/or
unambiguous rules can be applied
Digital solutions have the potential to lead to
specific, quantifiable benefits
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Examples of process automation opportunities across organizational functions
IT services
• Installation
• FTP download, upload
and backup
• Server application and monitoring
• Synchronizing, deleting and emptying
folders
• File management, batch processing
• Email processing
HR services
• Payroll
• Benefits administration
• Payslip management
• Time and attendance
management
• Recruiting process
• Onboarding
• Education and training
F&A
Risk and control
• Quality audit
• Compliance audit
• Internal audit enablement
• Security tracking and monitoring
• Technical threat and vulnerability management
• Comparisons against role-based access control
rules and segregation of duties matrices
Procurement
• Create requisition
• Category analysis
• Budget approval
• Issue payment
Operations
• Claims
administration –claims adjudication
and processing, payment integrity,
appeals and grievances
• Member – account setup, eligibility and
enrollment, billing benefit
• Provider data
• Record to report
• Order to cash
• Procure to pay
• Financial planning
and analysis (FP&A)
• Incentives claims
processing
• Order
processing
• Vendor setup
• Trend tracking
• Finance operations
Note: The potential opportunities will depend upon how these processes are implemented in the company, the level of existing automation and number of FTEs used.
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Procurement automation segmentation*
Automation of need,
review, sourcing from
catalogs, approval, order,
receipt, payment and
verification
Need to Pay
Automation of establishing
price lists and online
shopping capabilities
Catalog Establishment
Automation of the
development, presentation,
evaluation and award of
solicitation events
Sourcing Management
Automation of active
contract management in a
full and integrated life cycle
Contract Management
Automation of data
collection, organization and
analysis necessary to a
strategic procurement
practice
Data Management
Automation of relationships
with suppliers and creation
of self-service tools
Vendor Enablement
*Leveraged in multiple current leading practice public sector solicitations.
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Procurement
Manage categories
Manage strategic sourcing
Manage contracts
Manage commodity risk
Manage operational procurementManage supplier relationship and
performance
Manage and report
procurement performance
Define category strategy
Develop category profiles
Create contract terms and conditions
Manage demand planning
Create and approve purchase requisition
Complete order receipt
Manage supplier segmentation and strategy
Manage supplier risk
Identify and develop core performance KPIs
Manage category governance
Manage future sourcing/ procurement requirements
Manage contract creation according to negotiatedT&C
Manage coverage reporting
Determine source of supply
Resolve order discrepancies
Manage supplier integration
Manage supplier remediation
Prepare and report performance against KPIs
Manage demand and spend compliance
Analyze supply market
Execute penalties and rebates
Manage price risk Generate purchase order and transmit
Process invoices Collaborate with suppliers
Develop and agree sourcing strategy
Execute supplier reconciliation accruals
Manage supply risk Maintain order Develop supplier capabilities
Execute sourcing strategy
Resolve supplier payment issues
Manage hedging Receive goods Manage supplier information (vendor masterdata)
Implement sourcing strategy
Process returns/claims
Monitor supplier performance
Monitor and sustain strategic sourcing
Sample areas of procurement automation
6
6
6
6
6 6
6
Robotics
OCR/structured forms
Rules engines
Digital/workflow
6
Desktop acceleration
RPA – high potential of automation
RPA – low potential of automation
Note: Processes will need to be agreed on and modified as leading practices before automation efforts are started.
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People and organizationHow automation technologies create value
Eliminate material human effort
Reduce costly errors and improve quality
Speed time-critical process
Refocus knowledge workers for greater value
Potential scope for RPA
Assessment of RPA applicability needed
Note: Processes will need to be agreed on and modified as leading practices before automation efforts are started.
Resourcing and
Onboarding
Learning and
Development
Talent and
PerformanceMgmt
Rewards and
Benefits
HR Information
and SystemsManagement
Query and Case
Management
Role and
Time and
Diversity and Payroll reporting
and administration
Search and
(e.g., Vendor)
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EY Insights on Risk Management
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Three lines of defense – risk management operating model
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Risk accountability: first lineFront line needs clear risk responsibilities and support tools
► Individuals who engage in activities that generate revenue and enable or support risk-
taking (e.g., frontline business units, operations, IT)
► These individuals accept full ownership and responsibility for day-to-day management
of risks inherent in their activities (including nonfinancial risks)
► Identify, assess, measure, control, monitor and report all risks related to the front
line or risk-taking activities against the board-approved risk appetite
► Engage second line to gain risk-based perspective in establishing limits and policies,
controls, risk indicators and interpretation of legal and regulatory requirements for
ownership and management of risks
► Establish sound risk taxonomies and assess adequacy of controls in place to manage
risks
► Identify, remediate and report risk limit breaches or excessive risk-taking to senior
management and board; collaborate with second line to remediate breaches or
issues identified
What firms are doing:
► Better aligning frontline
compensation structures
with risk-taking and
compliance
responsibilities and
results
► Documenting detailed
responsibilities matrices
for risk management roles
and responsibilities
► Developing detailed job
descriptions and role
profiles for key frontline
roles
► Developing and assessing
competency maps in
collaboration with HR
► Mapping regulations and
related controls to
detailed procedures
► Conducting training on
frontline roles and
expectations, as well as
the importance of risk
management
► Clarity as to whether activities fall into the front or second line (e.g., the development
of controls related to new products) to enable risk ownership where appropriate and
across second-line functions
► Structural implications for certain functions (compliance, legal, HR, IT, risk
management) to distinguish between activities that support risk-taking vs. risk
measurement, required for independent view of aggregate exposure
of these risks
► Employee life cycle changes, including required talent (recruitment), and how talent is
trained (learning and development) and compensated (balanced risk-taking via
incentive compensation processes that are better aligned with risk management goals
and responsibilities); this may result in an increase in the number and qualifications of
resources (e.g., risk and control functions within the front line)
Principle and
definitions
Responsibilities
Implications of
the activities-
based model
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Risk accountability: second lineIndependent risk management has to expand its reach
► Provide independent oversight of risk-takers and enablers – oversee all frontline
activities to gain aggregate view of firm’s risks (financial and nonfinancial) relative to
risk appetite and escalate excessive risk-taking
► Able to provide a risk-based viewpoint where appropriate (e.g., strategic planning) and
guide senior management in risk management responsibilities (e.g., by discussing
risk-based implications of new products and providing counsel to the front line)
► Independently identify, assess, measure, control, monitor and report on aggregate
risks against the board-approved risk profile and appetite
► Establish enterprise risk management framework (including risk thresholds, policies
and concentration limits) commensurate with the size, profile and complexity of the
business’s operations
► Make certain the firm’s risk levels and business processes are consistent with
appetite, policy and regulatory requirements
► Provide independent, risk-based view of key processes owned by the front line, such
as strategic planning, limit setting and policy development
► Proper governance required to enable risk ownership remains in the front line
What firms are doing:
► Increasing resources,
stature and authority of
the second line;
enhancing available tools
to more efficiently/
effectively execute
expanded role
► Increasing coordination
within the second line to
eliminate role overlap and
coverage gaps
► Improving consistency in
risk management
processes/procedures
► Centralizing any testing
activities that exist in front
or second lines
► Upgrading talent and
competencies to address
added scope
► As needed, using external
service providers to assist
with addressing emerging
risks or new regulatory
focus areas; oftentimes to
help build in-house
capabilities in the long
term
► As the three lines model is improved, some of the second-line resources may move to
the first line. However, increased second-line resourcing and competencies may be
needed to address areas that traditionally had a gap in coverage, were inappropriately
addressed or are an emerging risk area (e.g., legal, IT, cybersecurity, people,
independent view of compliance)
► Enhanced firmwide risk and control processes well integrated and provide increased
effectiveness with coverage of financial and nonfinancial risks
► Understanding of current organizational mechanisms that provide independent client
assurance or validation of key risk-taking activities (for future leverage by the second
line in meeting its responsibilities and impact on third line)
Principle and
definitions
Responsibilities
Implications of
the activities-
based model
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Risk accountability: third lineInternal audit as independent verification
► Internal audit should verify that the firm’s risk governance framework complies with guidelines
and is appropriate for the firm’s size, complexity and risk profile
► Audit staff should have capacity, required skills and expertise to conduct an effective assessment of the risk governance framework
► Internal audit should prioritize emerging risks and material issues to formulate corrective action
plans to report to the audit committee
► Maintains complete and current inventory of material processes, product lines, services and
functions and assesses risks associated with each, including emerging risks
► Establishes and adheres to an audit plan that is periodically reviewed and updated to take into account risk profile, emerging risks, issues and the frequency with which activities should
be audited
► Audits risk framework and risk management activities (e.g., anti-money laundering (AML), model risk) and the second-line functions
► Reports audit conclusions, material issues and recommendations carried out under required
audit plan, with reports identifying root causes of material issues
► Internal audit is functionally accountable to the Audit Committee, while reporting to a Senior
Executive Manager on administrative matters. Internal audit reports administratively to the CEO
► The results of the internal audit do not affect management’s compensation
► Provides independent view of subjective or judgmental matters, including an assessment of risk
culture, adequacy of model assumptions, etc.
► Additional competencies (beyond technical areas) and techniques (e.g., data analytics, structured interviews) to support a broader understanding of governance, soundness and
sustainability
► Focus on maintaining balance between independence and collaboration with the front and second lines
► Audit plan establishes scope in the front and second lines to include an evaluation of risk
management framework (including whether it addresses financial, nonfinancial and emerging
risks), as well as the adequacy of compliance with policies, procedures and processes established by front and second lines
Principle and
definitions
Responsibilities
Implications of
the activities-
based model
What firms are doing:
► New skills and capabilities
such as risk management
and financial modeling
► Forward-looking approach
to assessing risk and
“cultural risk assessment”
on all audits
► Interlinkages with second-
line coverage to minimize
duplication of what is
necessary, and to enable
consistency of risk
assessments
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EY Insights on Policies
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What is a policy?
Policies establish standards of conduct and promote compliance with applicable laws and
regulations.
Policy considerations
Related to the objectives of the
organization
A statement that guides
decision-making and actions
Fact-based and objective
Clear, concise, simple and direct
Stable (changing infrequently so it can set a
course for the foreseeable future), yet
flexible (capable of adapting to change)
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Catalog of policies
We recommend conducting a full inventory of policies needed based on statute, regulatory
requirements or business processes.
We reviewed the following policies and noted they were incomplete; not up to date; do not
safeguard compliance with state requirements or administrative rules; do not clearly define
roles, responsibilities and approval limits; and have not been communicated to all impacted
employees. We recommend that the following policies at a minimum be reviewed and
updated as necessary in addition to the policies identified in the aforementioned analysis:
► Texas Health and Human Services – Contract Management Handbook
► Texas Health and Human Services – Procurement Manual
► Texas Health and Human Services – Form PCS 160 – Solicitation checklist
► Texas Health and Human Services – Form PCS 138 – Electronic State Business Daily
(ESBD) – Solicitation Approval Form
► Procurement and Contracting Services Policy – Policy 400 Emergency Procurements
► Procurement and Contracting Services Policy – Policy 401 Proprietary and Sole Source
Procurements
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Procurement policy library (1/4)Governance and control framework
The following core management policies are the foundation for leading practices governing procurement:
Procurement policies Purpose Audience Scope
Policy and procedure
developmentTo establish and promote the
creation and maintenance of the
procurement policies and
procedures
► Procurement staff
► All employees with
procurement-related
responsibilities
► Policy attributes/elements/definitions
► Policy development and review
P2P code of
conduct
To establish and promote
operating and behavioral
standards for the Procurement
function based on honesty,
integrity, fairness and
compliance with the letter and
spirit of the law
► Conflict of interest
► Perceived impropriety
► Confidentiality
► Responsibilities to employer
► Issues of influence
► Gifts and gratuities
► Supplier relationships reciprocity
► Reporting misconduct, business
► Relationships with former employees
Procurement
governance
(C-level mandate)
To establish the protocol for
managing the governance
structure for procurement
► Commercial due diligence
► Fact-based decisions
► Issue escalation
► Identification of decisions and
opportunities
► Enforce consequences
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Procurement policy library (2/4)Governance and control framework
The following core management policies are the foundation for governing procurement:
Procurement policies Purpose Audience Scope
P2P delegation of
authorityTo determine who in the Agency
should approve different types of
transactions dependent upon the
procurement risk levels
► Procurement staff
► All employees with
procurement-related
responsibilities
► Requisition and solicitation
► Evaluation
► Contract
Source to pay (S2P)
generalTo establish the basic
purchasing rules of engagement
and business terms for acquiring
goods and services
► Category management
► Strategic sourcing process
► Signature authority
► Purchase to pay channels
► Contract terms
► Non-disclosure agreement
► Accounts payable
► Benefits realization
Knowledge
management
To establish the protocol for
managing the knowledge content
for procurement
► Record-keeping
► Knowledge sharing
► New hire training and development
Performance
measurement
To establish and enforce
operating standards for
procurement functions across
internal and external clients, and
enable effective benchmarking
► Key performance metrics
► Benchmarking
► Performance feedback
► Compliance
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The following core management policies are the foundation for governing procurement:
Procurement policies Purpose Audience Scope
Strategic category
planning
To establish the manner in which
the long-term category plan
should be developed, including
aligning with business demand
forecasts and risks and engaging
with stakeholders
► Procurement staff
► All employees with
procurement-related
responsibilities
► Demand analysis
► Supply market assessment
► Commodity inflation management
► Category strategy development
► Category strategy implementation
Supplier relationship
management
To establish the manner in which
procurement employees are to
engage and manage suppliers
► Supplier relationship management
► Bidding and solicitation
► Supplier selection
► Performance management
► Supplier diversity
Business partnering To establish and promote the
collaboration and common
needs of procurement policies
and procedures
► Stakeholder engagement
► New product development/demand
management
► Business planning and target setting
► Requirements and specifications
gathering
► Strategy execution/category integration
Procurement policy library (3/4)Governance and control framework
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The following core management policies are the foundation for governing procurement:
Procurement policies Purpose Audience Scope
Strategic sourcing To establish the manner in which
procurement employees are to
engage and manage sourcing
► Procurement staff
► All employees with
procurement-related
responsibilities
► Execute sourcing project
► Execute value engineering project
► Provide e-sourcing services
Contract
management
To establish the basic rules of
engagement for establishing
procurement contracts
► General contract administration
► Amendments to approved contracts
► Nonstandard contracts
Requisition to pay To establish the basic payment
rules of engagement and
business terms for acquiring
goods and services
► Execute spot buys
► Perform customer services (helpdesk)
► Perform procure to pay
► Perform supplier e-enablement services
► Perform master data management
► Perform operational reporting
Travel and
entertainmentTo establish the basic
purchasing rules of engagement
and business terms for acquiring
travel and entertainment
► Air travel
► Hotel
► Rental car
► Meals
► Entertainment
Procurement policy library (4/4)Governance and control framework
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Additional policies (1 of 3)
Procurement policies Purpose
Financial services This policy encompasses all third-party fees and expenses for audit,
banking or insurance services.
Professional services This policy encompasses all third-party fees related to professional
services and outsourced services performed on an ongoing basis that do
not relate to a facility.
Outsourced business
support
This policy includes outsourced services that are performed on an ongoing
basis (excluding third-party sales and marketing, technology and non-
administrative outsourced services that relate to a facility).
Legal services This policy encompasses all fees and expenses paid to law firms,
independent lawyers, legal experts or notary practices for legal advice and
procedures.
Events and sponsorships This policy encompasses all expenses associated with internal events,
subscriptions, and donations, sponsorships and memberships intended to
promote the company’s reputation and image.
Company vehicles This policy encompasses all expenses associated to the leasing and rental
of vehicles or airplanes and fuel for vehicles owned by the company.
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Additional policies (2 of 3)
Procurement policies Purpose
Facilities and related
services
This policy manages expenses associated with the rent and use of office
space and equipment, including lease expenses, site services, facility-
related benefits, and security; office supplies; and office parcel couriers. It
also includes all expenses related to commodities or services such as
water, electricity, gas and fuel.
Technology This policy encompasses all technology spend, including, but not limited to,
software as a service, application and IT support outsourcing, data center,
technology equipment and maintenance, communication services, software
maintenance and fees, and application development.
HR benefits This policy encompasses all company expenses related to hourly or
salaried employees and executives. It includes all taxes and social security
contributions related to the remuneration.
People recruitment and
development
This policy includes the end-to-end HR cycle from sourcing, selection and
deployment of talent, training and development.
Sales support and
resources
This policy encompasses all commercial costs related to the selling of the
products posted below marginal contribution (booked as SG&A).
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Additional policies (3 of 3)
Procurement policies Purpose
Marketing support and
resources
This policy encompasses all expenses related to the promotion and
support of Client products and brands that are performed either internally
or by a third party.
Maintenance This policy encompasses all expenses and provisions associated to
maintenance of company facilities and equipment, excluding vehicle
maintenance, IT maintenance and transportation fleet maintenance.
Logistic support This policy encompasses all expenses associated with all third-party
logistics (3PL) expenses and certain other expenses that support logistics
operations in the warehouses. It also includes warehouse-related costs.
Transportation This policy encompasses all transportation costs associated with freight
distribution (both third party and own fleet), as well as some cost elements
for in-house transport of finished goods, mainly the fleet fuel and
maintenance.
Contingent staffing This policy addresses the proper execution of the contingent staffing
process and the criteria for approval, including, but not exclusive to, the
provisional group of workers who work as a non-permanent basis,
temporary contract workers, independent contractors or consultants.
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EY Insights on the Future of Procurement
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Other procurement organizations have successfully matured into leading organizations
Governance and Risk
Management
Performance
Management
Procure-to-Pay Process
Internal Stakeholder
Management
People and Organization
Technology
Strategic Direction
Category Management
and SRM
► Most own full decision rights on majority of categories (all direct and key indirect categories)
► Most have developed a risk scoring and segmentation model to manage supplier (third party)
risk
► Most expand definition of savings to include cost avoidance and innovation to drive behaviors
► All place significant emphasis on standardized processes and training to deploy
► Most retain some degree of in-region capability to execute activity and maintain connectivity with
the business
► Most have established one or more global operating hubs
► Most weigh soft skills (influencer, global mindset) equal to technical skills in selecting
resources
► Most have deployed enabling technologies globally
► All have support from executive leadership to manage the P2P process
► All operate as a single global sourcing organization
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Additional EY Insights
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Additional EY Insights
The following documents are being provided under separate cover to
HHSC. They provide context and thought leadership that may be useful
to HHSC as reference material.
► Five things – Getting the basics right in procurement
► Can you transform your third parties’ risk into a competitive
advantage?
► Infinite possibilities – Procurement in 2025
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EY additional projects removed
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Sample project removed
► Increase commercial effectiveness
► Create a spend analysis and repeatable funnel management process
► Redefine the demand signal which initiates activity
► Establish a formal Strategic Sourcing program
► Establish/refresh modular solicitation templates
► Conduct annual or semi-annual anonymous surveys regarding Procurement function
performance
► Establish performance measures for staff in position descriptions
► Develop and strengthen communication conduit to Comptroller’s office
► Utilize a legislative champion to assist in getting updates to procurement and related
statutes that eliminate identified process inefficiencies
► Establish Supplier Summits and deeper supplier collaboration opportunities
► Create and publish vendor/provider scorecards on supplier portal
► Ensure origins codes are enabling requisitions to follow the appropriate routing flows
► Align systems to force the collection of contract IDs to enable you to tie contracts to
financial spend
Below are a list of additional projects for HHSC to consider at a later time to continue their evolution
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Appendix
State of Texas
Health and Human Services
Commission Procurement and
Contracting Review
Phase I and Phase II
Maturity Assessment Report
27 September 2018
This work product has been prepared for The Texas Health and Human Services Commission for their use and purposes only. It is not intended to be relied upon as professional advice for other Texas agencies, affiliates or other Health and Human Servicesagencies, affiliates outside Texas. Neither Ernst & Young LLP nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this document.
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Phases I and II summary
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The HHSC Procurement and Contracting department has made several enhancements to the procurement process and tools
Topic Updates
Governance and Risk
Management
► Created policy to address effective procurement planning, scoring and execution.
► The evaluation tool and calculations have been updated to remove errors noted in previous audit reports. A team has
been formed for continual creation and monitoring of the tool.
► Quality control began to provide more fair and accurate solicitation evaluations with a goal of having all required
documentation be consistently maintained (April 2018).
► Checklists are being structured to guide the compliance of procurements to stay within state requirements.
► The creation of a legal compliance checklist, PCS 160: HHSC Sollicitation Checklist, has been implemented (June
2018).
Procure to Pay
Process
► PCS has created an initial workflow of the procurement process for Requests for Proposals (RFPs), Requests for
Applications (RFAs) and Requests for Quotes (RFQs), showing the interaction points between PCS, program, legal
and budget; also inclusive of consultant solicitation.
Complex Services ► The Compliance and Quality Control department was created to provide quality control on complex solicitations.
Supplier Relationship
Management► PCS has recently implemented a new policy that allows for initial guidance for vendor interaction.
Internal Stakeholder
Management
► PCS has assigned liaisons to some program areas and established a forum to engage HHSC programs, DSHS and
DFPS to collaborate and prioritize business needs.
► PCS has adopted more proactive customer engagement regarding program support, providing more flexibility with
program areas and business requirements.
People ► Strong performance and going “above and beyond” have begun to be recognized by leadership.
► PCS has begun to provide subject-matter resources to answer questions regarding CAPPS.
► PCS has begun to fill vacant positions to work toward appropriate staffing levels.
The EY US team has noticed the beginning of a change to the procurement and contracting function with the new
management team. The initial steps below are a start in the right direction. We cannot yet assert the long-term impact and
sustainability of these improvements though we wish to acknowledge that the below collection of activities help to address
these areas.
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► The priorities of HHSC are to serve Texans by improving health outcomes and well-
being, supporting independence for people and families, and driving efficiency and
accountability.
► The primary objective of the Procurement and Contracting Review is to develop, vet
and produce a detailed improvement plan to make the Agency better. All contracted
members of the Agency have expressed throughout the process that improvement is
paramount and all parties are aligned.
► The improvement plan will be illustrated using a road map, which requires the
completion of the current state and root cause analysis.
Begin with the end in mind
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Approach
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Project timelineOverview
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Project approachOverview
Background: Drawing from our experience in performing 110 domestic and 460 global procurement
transformation projects and civic initiatives’ experience working exclusively with public sector clients
on procurement assessment and transformation, the following methodology and approach were
applied to this project:
► Face-to-face interviews: 106 face-to-face interviews with approximately 135 people were
completed. Interviews covered the senior HHSC leadership, as well as middle management and
staff. Members of DSHS and DFPS were also interviewed.
► Crowdsourcing: Conducted 9 anonymous ThinkTank™ sessions to allow more than 300 PCS
and non-PCS personnel to have their voice heard.
► Data: Requested nearly 70 different data sets, closing ~83% of the total data sets requested and
performed fundamental analytics. In some cases, valid system reasons inhibited ability to provide
certain data requests. A listing of data and document requests is located in the Appendix.
► Hypothesis: Compared 37 pre-identified hypotheses with 8 procurement maturity dimensions.
► Experience: Utilized our procurement professional experience and engaged multiple subject-
matter resources, including EY US’s Procurement Lead for the Americas.
► Review of prior audits: The following audit reports were assessed to support the project review:
► OIG Review of the HHS Procurement Process: 2013–2018, July 2018 (OIG Report)
► Audit of PCS Procurement Processes, Office of Internal Audit Report 18-01-023, 5 July 2018 (OIA Report)
► An Audit Report on Scoring and Evaluation of Selected Procurements at the Health and Human Services
Commission SAO Report No. 18-038, July 2018 (SAO Report)
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► The methodology measures an organization’s procurement practices along eight dimensions.
► Each dimension is rated based on a five-level rating that takes into consideration leading practices.
► From the assessment, a spider diagram is produced showing the current state. Based on this, the gap analysis is
produced and initiatives are identified to bridge the gap between the current state and the targeted state.
EY maturity model Assessment
Stage 1: Informal
Stage 2: Functional
Rating
Stage 3: Standardized
Stage 4: Collaborative
Stage 5: Leading
Po
rtfo
lio
an
d
Procurement maturity assessment methodology
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Maturity models provide analysis to enhance performance, cost and risk across a number of criteria
“Hero-based” environments rely on staff to go the extra mile to complete work to compensate for a lack of supportive and
systematic technology features. System-based environments utilize technology for reliable process completion. The
scoring is consistent with the general sentiment of the PCS team as well as their leadership.
Weak
Str
on
gIm
pact
Reactive ProactiveMaturity levels
Leading
Tactical fixes/backlog cleanupTechnology not optimized;
strategy not recognized
Agency standards and
governance established and enforced
Integrated technologies;
automation, transparency
Proactive aged
with decision analytics
Capabilities in place; inconsistent
processes
E2E process design formally
documented and published
Performance driven;
improvement program chartered
Processes integrated across
Agency boundaries
Standardized processes/defined
strategyOptimized and efficient
Executive leadership directly
drive improvement strategies
Integration of leading practice
and standardized processes
Supply chain as a competitive
advantage
Recognized in the industry as
best in classEfficiency/
effectiveness
Span of control
The greatest inflection point for effectiveness
and efficiency occurs between levels 3 and 4
Informal1
Functional2
Standardized3
Collaborative4
5
“Hero-based” environment System-based environment
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HHSC Procurement and Contracting Current state capabilities summary
Procure to Pay Process and Complex
Services
Average: 1.7*
Portfolio and Supplier Relationship Management
Average: 1.6*
People and Organization
Average: 1.5
Internal Stakeholder Management
Average: 1.6
Governance and Risk Management
Average: 1.4
Performance Management
Average: 1.3
Strategic Direction
Average: 1.3
Technology
Average: 1.7
Note: Captures status quo baseline.
Pillars are defined in detailed analysis section pg 66–69.
Strategic
Direction
Performance
Management
Technology
Internal
Stakeholder
Management
Governance
and
Risk Management
Procure to
Pay Process
and Complex
Services
People and
Organization
Portfolio
and Supplier
Relationship
Management
*Represents the average rating of the included subsections.
The maturity model breaks down procurement and contracting into eight pillars to assist in the identification of root cause. Based on this
assessment, the Commission has opportunities to improve across all eight dimensions. Such results should be expected and are in line with the
recent audit reports. New management has begun enhancements to improve scores, but needs additional support and improved processes and
systems.
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1. The operating model,
strategy and investment
of HHSC, has not
evolved to meet the
needs of an outsourced
service delivery
solution, which depends
upon Procurement for
its success.
2. Volume of transactions
amplified the effect,
quadrupling the impact
on an unfit model.
3. The communication
plan is built for a
smaller organization.
The Agency has suffered from a lack of investment in people, alignment of skills, processes, systems, governance and communications to support the
procurement and contracting function.
Partnership, accountability and interdependency from PCS, Program and Legal need improvement to achieve the value proposition.
Data, reporting and visibility are inadequate to run the procurement and contracting function.
The traditional and heavily restricted approach for developing and
maintaining suppliers, vendors and providers is holding back the Agency.
Overarching
root cause
Efficiency and effectiveness of the procurement and contracting function need improvement to become high performing.
Critical realities observed in HHSC’s translation of strategy to operations
Improvement opportunities
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HHSC spend tree
Other
~ $0.001
Inspector
General
~ $0.01
Regulatory
Services
~ $0.01
Executive
Commissioner ~ $0.01
Texas Office
of Civil Committee ~
$0.01
Chief
Information Officer
~ $0.2
Medicaid
and CHIP Services ~$38.1
State
Facilities Division
~ $0.3
Financial
Services
~ $0.4
Access and
Eligibility Service
~ $0.4
IDD and
Behavioral Health Svcs
~ $0.9
Health
Develop-mental and Indep ~ $0.9
System
Support Services
~ $0.6
HHSC ~$42b
212,149,818
695,288,574
1,395,088,720
2,454,064,210
37,088,843,058
$- $10,000,000,000 $20,000,000,000 $30,000,000,000 $40,000,000,000
Rent and Utilities; Utilities; Rent - Machine and Other; Consumable supplies; Foodfor Persons - Wards of Stat; Capital Expenditures; Fuels & Lubricants
Professional Fees & Services
Grants
Other Operating Expense
Client Services
LBB Spend
The figure below represents the procurement spend breakdown across HHSC’s largest programs. As a procurement analysis, this
reflects total spend data, including pass-through spend, which flows through the Agency.
The bar chart below represents the LBB spend breakdown: Client services make up 89% of the total spend based on LBB classification.
*Data source: HHSC budget.
*All categories include some client services spend.
*
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Current state maturity assessment
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Strategic direction
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Strategic directionMaturity assessment
HHSC recent audits
► “Given the magnitude of the HHSC
mission and the complexity and
volume of procurements and
contracts it is imperative that HHSC
support the integrity of the
procurement process.” (OIG Report)
► With $42b in associated spending,
the supply chain is fundamental to
the success of the Commission.
Hypothesis testing
► Operational strategy of the business,
including planning, goals and vision
of success, could be missing.
► There is misalignment of strategy,
business objectives and operational
plans.
► Organization and overall operating
model of the business may be
insufficient.
► Leading practices are not integrated
into the operating model, leading to
inefficiencies and rework.
A clear and detailed procurement and
contracting strategy that is aligned to top-level
strategy; is easily implementable; and includes
financial, environmental and ethical aspects
Leading practice companies have alignment from their corporate strategy down through the procurement operating model to guide the expectations on the
procurement and contracting systems design and execution. In HHSC, the PCS function impacts the totality of the commission’s ability to execute its
priorities, and thus the PCS function is fundamental to the Agency’s success.
Review considerations within this dimension
Operational
strategy of the
business,
including
planning, goals
and vision of
success
► The organization’s vision for success supported by its strategic goals and objectives
► The strategic planning process, frequency of review and proactive response to
changing conditions
► Stakeholder roles/involvement in planning and setting the strategic direction
► Key risks and assumptions associated with the organization’s strategy and the
organization’s competitive advantage
► Consideration of external forces
► Alignment of the organization’s strategy with those the entity serves
Alignment of
strategy,
business
objectives and
operational
plans
► How effectively the organization’s strategic goals are defined and communicated at
the business unit level
► How strategic goals are aligned to business unit objectives and operational plans
► Organization of customer-facing and support functions, business units and
departments
► Mechanisms in place to monitor and report the achievement of business plans and
objectives
► The organization’s current performance as related to business plans and objectives
► Linkages between the strategy and the current capabilities and strengths of the
organization
Operating
model
effectiveness
► Organization and overall operating model of the business
► Location of operations
► Sourcing strategy
► Industry risk profile and risk management activities
► Communication and dissemination of information
► Change management
► Governance structure and associated functions
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Strategic
Direction
A clear and detailed procurement and contracting strategy that is aligned to top-level strategy; is easily
implementable; and includes financial, environmental and ethical aspects.
1. Informal/
no process2. Functional 3. Standardized 4. Collaborative 5. Leading
Limited procurement
strategy is in place.
Procurement strategy is not
defined in a number of
areas and there is no
visibility on key future
initiatives.
Procurement strategy and
formal idea of future
initiatives exist in most
areas, but procurement
strategies are not always
executed.
Full understanding of the
transformational journey
that must be followed and a
demonstrated history of
success.
Detailed plans updated on
a regular basis with cross-
functional executive
support on the journey to
procurement excellence.
1.3
Current state findings
Strategic vision:
► PCS vision, mission and purpose are not fully aligned with the Agency’s vision/mission and not openly confirmed and communicated to all
stakeholders.
► PCS annual priorities and goals are not widely shared across the Agency.
► Each time upper management changes, new priorities start the change management cycle all over again.
Partnership and strategic planning:
► Common alignment of PCS priorities across HHSC is lacking, there is little comprehensive planning, and programs’ goals and strategy are not
coordinated with PCS.
► Engagement with programs and other non-PCS stakeholders is minimal regarding process changes and the impacts of those changes across
HHSC.
Strategic directionMaturity assessment
Current state
“We don’t have much of a strategic direction,
but we need one.”
– HHSC employee, July 2018
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Strategic directionMaturity assessment
Typical operating model architecture
During the interviews, it was noted that:
► Previous leadership had not developed or
communicated a strategy alignment to procurement
across the Agency.
► An end-to-end “systems thinking” approach is
required.
In practice, we saw:
► HHSC submits a biannual strategic plan to the
state, though we would want to see language
whereby the strategy is specifically tied to a
procurement operating model.
► We are not aware of an associated procurement
operating model defined for HHSC.
In other benchmarks and/or using our experience,
we note:
► Large (similarly sized) organizations heavily
dependent on third-party suppliers for the bulk of
their service delivery depend on a more defined
and deliberate procurement system solution.
Supply chain networkC
Supply chain processes
R&D
D
Plan
Make Move (inl return & customer service)Source
Supply chain
Design DeployDiscover
Product lifecycle management
Governance and performance management
FunctionalCostsAssets
FulfilmentManagement cost FlexibilitySG&A
COGS
CCC
ROA
ROWC
Supplier
Performance
Management
Customer
Perform-ance
Manage-ment
B
Promo effectivenessCycle time Penetration
Brand awarenessTime to market Customer sat
Strategy, design principles and business case
Supplier
alignment and
partnerships
Alignment
and partner-
ships
A
People, organization and geographic locationE
Location
assessment
Resources
Capability
Structure
Roles
► Shareholder expectations► Geo political environment
► Economic environment
► Competition► Consumer & customer trends & insight
► Regulatory
Global
Region / Clusters
Mature
Developing
Functional
category
Segmentation
Common
vs vs
vs vs
Network design Customs & excise VAT
Transactional
Record to report Order to cashPurchase to pay
Corporate tax and legal entity structureG
Transactional model
Legal title flows
Factories
CustomersSuppliersSC Hubs
DCs
Marketing & brand
mgt
HQR&D
Opcos
Financial flowsSupplier
interface
Customer
interface
F
Physical flows
Qualitative – by multiple observations
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Governance and risk management
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Governance and risk managementMaturity assessment
Governance and risk refers to the
overall governance model and also
includes policies, procedures,
compliance and risk management.
An adequately designed governance model is critical to support team members to perform duties as intended and to provide management with the
information it needs to verify that procurement activities are conducted in compliance with regulations and good business practices.
Review considerations within this dimension
Policies and
procedures and
documentation
► Do policies and procedures adequately
govern the source to contract process?
► Is there a process for updating policies
related to changes in legislation?
► Is relevant documentation appropriately
maintained?
Tools ► Are prequalified contract templates
effectively used across the Agency?
► Is there a reliable standard scoring and
evaluation tool that is used consistently?
Quality assurance ► What is the goal of the Internal quality
assurance function?
► How effective is the Internal quality
assurance process?
Governance ► Are conflicts of interest and nepotism
verifications consistently performed and
documented?
Training ► Are PCS employees adequately trained
on policies and procedures?
► Are PCS employees adequately trained
on HHSC tools?
HHSC recent internal audits
► Policies and procedures are incomplete and are not updated to reflect
current processes and statutory requirements. (OIG Report)
► None of the applicable procurements tested had all the documentation
needed to help support the procurement process was followed as
intended. (OIA Report)
► PCS has neither consistently nor adequately identified and
documented potential conflicts of interest. (OIA Report)
► Each purchaser appeared to have the latitude to use the evaluation
and scoring tool with which it was most comfortable. (OIG Report)
► The lack of necessary procurement policies and procedures, including
quality assurance and training, as well as the lack of oversight,
consistency and transparency in evaluation and scoring process have
been repeated issues for HHSC. (OIG Report)
Hypothesis testing
► Lack of active governance of the procurement process
► Limited to no auditing or follow-up after noncompliance is discovered
► Lack of data to effectively manage procurement activities
► Policies present excessive hurdles that do not support operations and
end up being ignored
► Approval thresholds for requisitions and contracts are not aligned with
risk and operational requirements
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► Policies – Many procurement policies and procedures are incomplete; are not up to date; do not safeguard compliance with state requirements or
administrative rules; do not clearly define roles, responsibilities and approval limits; and have not been communicated to al l impacted employees.
► Procedures and documentation – Several procedures and documentation requirements have not been consistently documented, resulting in inconsistent
implementation approaches related to procedures and retention of key documentation.
► Fit for purpose approval process – Although a risk rating is assigned to individual procurements, the approval process is not consistently aligned to the
level of risk of the procurement.
► Risk management – While a Compliance and Quality Control (CQC) function has recently been established, the function’s primary mandate should be
strengthened to have it operate as a pseudo-independent risk monitoring function. PCS management should own risk (identify, assess and manage the risks
in its business), and the CQC function should provide oversight of management’s effectiveness in identifying and managing those risks.
► Tools and templates – Standardized tools and templates to facilitate the accuracy, efficiency and effectiveness of controls within the procurement process
have not been designed and/or provided to staff for all procurements.
► Training – Although limited training has been provided to PCS and program employees, a formal training strategy, plan and program have not been
developed and provided to procurement staff.
Governance and
Risk ManagementGovernance and risk refers to the overall governance model and also includes policies, procedures, compliance and risk management.
1. Informal/no process 2. Functional 3. Standardized 4. Collaborative 5. Leading
No governance body in place
to support overall purchasing
strategy, policies and
procedures are not developed
and communicated, and organization does not
adequately consider risk
throughout its processes.
Governance exists for a few
key purchases, low process
compliance and risk
management is acknowledged
within other functions.
Processes and systems are
formally documented and
published but are not always
enforced, inconsistent
compliance with process and siloed risk management
capabilities.
Governance model has been
established and is supported
by executives, and there are
multifunctional integrated risk
assessment, planning and response capabilities in place.
Governance body is in place,
documented processes and
controls are in place, the
organization is nearly always
compliant with policies and procedures, and predictive
supplier risk management
exists.
Current state findings
1.4
Current state
*See details in slides 190-202
Governance and risk managementMaturity assessment
“Clear roles and responsibilities do
not exist within PCS.”
– HHSC employee, July 2018
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Quantitative – by the numbers
A review of documentation found a 56% failure rate or lack of evidence to
determine compliance with key attributes tested by the HHSC Internal Audit
department across 10 phases of the procurement life cycle. The chart below
depicts the number of attributes that passed or failed, as presented in the
Audit of PCS Procurement Processes Report (18-01-023) developed by HHSC Internal Audit in July 2018.
Governance and risk managementMaturity assessment
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
De
term
inatio
n o
f n
eed
Pro
cu
rem
en
t pla
nn
ing
Do
cu
me
nt d
eve
lop
me
nt
So
licitation p
rocess
HU
B c
om
pliance
Evalu
atio
n p
rep
ara
tion
,re
spo
nse
re
ceip
t a
nd b
idop
en
ing
Pro
cu
rem
en
t evalu
atio
ns
Co
ntr
act
ne
gotiatio
ns
Re
co
mm
end
ation f
or
aw
ard
s
Co
ntr
act
aw
ard
Evalu
atio
n t
ool te
sting
Pass Fail or lack of evidence
Consistent themes have been identified in recent internal and external audit reports.¹ The table below highlights the nature of observations and issues included in select audit reports presented to HHSC management from 2013 to 2018.
Observations or issues
related to: 20
13
20
14
20
15
20
16
20
17
20
18
Policies – –
Procedures
Documentation
Policy Compliance
Tools –
Quality control
Risk management and
monitoring –
Training
Issue was noted in audit report.
– Issue was not noted.
1 Audit Reports reviewed were SAO 14-013: An Audit Report on Information and Communications Technology Cooperative Contracts at the Health and Human Services Commission (2013); SAO 14-035: An
Audit Report on Selected Contracts at the Health and Human Services Commission (2014); Sunset Advisory Commission Staff Report: HHSC and System Issues (2014); SAO 15-019: A Report on Recent Contracting Audits (2015); SAO 15-030: An Audit Report on Procurement for Terrell State Hospital Operations at the Health and Human Services Commission and the Department of State Health Services (2015); SAO 15-031: An Investigative Report on The Health and Human Services Commission’s and the Office of Inspector General’s Procurement of Services and Commodities from 21CT, Inc. (2015); OIG
Audit: Brain Synergy Institute Contractor Performance and Billing, and HHSC Contract Procurement and Monitoring (2016); SAO-KPMG Independent Auditor’s Report 16-317 (2016); SAO-KPMG Independent Auditor’s Report 17-314 (2017); SAO-KPMG Independent Auditor’s Report 18-314 (2018); Texas HHSC Internal Audit – Audit of PCS Procurement Processes (2018), and SAO 18-038: An Audit Report on
Scoring and Evaluation of Selected Procurements at the Health and Human Services Commission (2018).
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Governance and risk managementMaturity assessment
Through interviews and inspection of PCS documentation, we noted the following:
► Policies: Policies and procedures for effective procurement planning, scoring and execution are not consistently defined and/or implemented.
► A formal process has not been fully established to update policies and procedures to reflect changes in current laws and regulations for all policies. Additionally, a formal
process to communicate changes or updates to policies has not been established.
► Roles and responsibilities, and associated delegations of authority, related to review and approval of requisitions and contracts are not consistently defined, resulting in
duplication and potential gaps.
► Procedures and documentation: Procedures and documentation requirements have not been consistently documented, resulting in inconsistent implementation methods
related to procedures and retention of key documentation. Examples include lack of signed nondisclosure forms, signed nepotism forms, completed scoring evaluation
documents and approvals of the final award recommendation.
► Tools:
► A defined evaluation tool with adequate document protection is not consistently used to increase accuracy of scoring calculations.
► Prequalified standard contract templates are not effectively used across the Agency.
► Risk management:
► While a CQC function has recently been established, a process has not been consistently implemented to verify the following:
► Solicitation evaluation criteria used are fair and accurate.
► All required documentation is being consistently maintained.
► Policies and procedures are being followed and procurements are in compliance with state requirements.
► Programs are complying with PCS policies and procedures.
► Oversight of processes is not performed to verify that all necessary governance controls are consistently performed, such as discovering and documenting conflicts of
interest and nepotism verifications.
► Fit for purpose approval process: The approval process does not adequately consider risk factors outside of the dollar value of the contract when determining appropriate
review procedures. Additionally, although risk ratings have been assigned for procurements the approval process is not fully aligned to the level of risk of the procurement. For
example, a renewal for standard services should not warrant the same approval process as a new contract.
► Training: Although limited training, with varying effectiveness, has been provided to PCS and program employees, a formal training st rategy, plan and program have not been
developed and provided to PCS and program staff.
► Staff members are often not appropriately trained on their expected job functions and all applicable state requirements necessary for purchasing.
► Training conducted related to use of CAPPS and System of Contract Operation and Reporting (SCOR) has not been consistent to support all impacted employees.
► Adequate training has not been performed to equip vendor evaluators with the proper skills and knowledge to properly perform evaluations, such as how to properly use
Microsoft Excel templates for evaluations.
Qualitative – by multiple observations
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Technology
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TechnologyMaturity assessment
An agency’s systems that aid in the procure to
pay process and can produce output reports,
preferably a single integrated system that is
fully automated and produces timely reports.
Technological infrastructure affects the culture, efficiency and effectiveness of government agencies. The health of any agency’s
technological infrastructure impacts not only its ability to efficiently execute each step of the procure to pay process, but also its ability to
effectively serve its customers.
Review considerations within this dimension
Technology
architecture,
including
applications,
platforms and
networking
► The information technology architecture/network supporting the Agency and how
it relates to key processes
► Key functionality to support operational and strategic procurement
► Enterprise resource planning (ERP) design and integration with other business,
operational and reporting systems
► Key limitations in terms of IT hardware or software capacity, functionality,
reliability or integration with other business systems that may restrict business
performance
► Known issues associated with the IT infrastructure, e.g., limitations of legacy
systems
► Workflow and integration of core applications
Instances of
technology
► Instance strategy of major technology components (HHSC-specific modifications)
► Use of globally consistent technology platforms and related processes (process
standardization, where feasible)
Data model, data
organization,
naming and data
governance
► Organization and consistency of global data
► Existence of clear data definitions
► Reporting capabilities to facilitate data-driven decisions and support
transparency efforts
► The organization’s data governance policy and procedures
► The database structure employed by the organization and links between
databases
► Data integrity policy and procedures governing access to view and/or manipulate
key data elements
HHSC recent audits
► Auditors identified errors in
the evaluations performed for
all 28 procurements that
were tested. (SAO Report)
► Data within the System of
Contract Operation and
Reporting (SCOR) is not
accurate or complete. (OIA
Report)
Hypothesis testing
► Automation and leading
practices are not integrated
into the operating model
allowing for inefficiencies and
rework.
► Common IT system gaps are
not addressed
systematically, but managed
individually.
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Policies and procedures
► Business processes and system functionality modifications (current customizations) are not fully enhanced to maximize use of automated tools.
► There is often an insufficient effort by IT and leadership to identify subject-matter resources in the program areas and engage them as system stakeholders.
Governance
► CAPPS has not been entirely configured and customized to meet the governance needs of all user groups.
► Workflows in relation to approvals established in the system are often insufficient to support Agency policies and overengineered to the point that they are not entirely effective.
Training
► Staff has not been adequately trained to use CAPPS and SCOR effectively.
► System changes and staff turnover have exacerbated the overall training deficiency.
Tools
► The CAPPS system is not properly sized for volume, and requisition approvals are not correctly synced.
► Not all contracts are included in SCOR, and some contract records contain inaccurate and/or incomplete data.
► Lack of visibility and tracking significantly hinders reporting capabilities.
► The Agency’s digital signature tool is not owned by IT and is disconnected from CAPPS and SCOR.
► Inconsistent and incorrect use of system tools often results in loss of transparency and reduced system efficiency.
► As presently configured, the system tools are limiting to support business processes and users are often unaware that system enhancements and canned report development
are still in progress (they have had little input and received minimal communication).
► Legacy data conversion was executed poorly and data entry errors occur regularly, resulting in the loading of inaccurate info rmation.
► A concerted effort across all stakeholder groups to address data integrity and lack of reporting capabilities is an urgent need.
► CAPPS appears to have been customized to attempt to meet business needs rather than fully exploring out-of-the-box ERP system capabilities.
TechnologyAn organization’s systems that aid in the Procure to Pay (P2P) Process and can produce output reports, preferably a single integrated
system that is fully automated and produces timely reports.
1. Informal/no process 2. Functional 3. Standardized 4. Collaborative 5. Leading
There is no P2P system in
place.
Basic P2P systems exist in
most business units (BUs) but
are not linked together, few e-
catalogs exist and many
transactions are still processed manually.
P2P systems are in place in
all BUs and functional
procurement areas but are not
integrated, e-catalogs are in
place and maverick buying still occurs.
Harmonized P2P systems
exist and are widely used,
manual processes have been
eliminated and there is
moderate adoption of e-catalogs with key suppliers.
One integrated P2P system
across the organization links
all purchase orders (POS) and
suppliers.
Current state findings
TechnologyMaturity assessment
1.7
Current state
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Quantitative – by the numbers Qualitative – by multiple observations
During the interviews, it was noted that:
► The CAPPS system was intended to automate 80% of
the procurement process; that has not been realized.
► The CAPPS system is not configured to be user
friendly (90+ comments).
► Agency business processes are not supported by
system functionality.
► There is limited visibility into requisition status.
► The information in SCOR is inaccurate.
In practice, we saw:
► Data flows one way from CAPPS to SCOR.
► The procurement process is still heavily manual.
► The CAPPS system had latency issues that were
recently improved
► The few available reports are formatted improperly,
requiring extensive manipulation to make the data
useful.
In our experience, basic functionality should include:
► Easy to navigate tools to support the procure to pay
process
► Standard reports and ad hoc reporting capabilities
Additional analysis on this topic is located on pages 207–227.
ERP system
► Originally sized for a $13b spend organization but is
now supporting a $42b spend organization
► Created roughly 24,000 custom tables, more than
double the number of out-of-the-box tables provided by
the Agency’s ERP system
► Observed by users to take approximately 10 minutes to
upload a single PDF when the system is performing
poorly
► More than 100 customizations (functional use cases or
EPICs) with no governance or approval process for
changes
CAPPS
► No detailed current state system architecture diagram
and lack of development documentation creating limited
to no visibility into CAPPS, reliant on individual rather
than institutional knowledge
► “Collaboration” function in CAPPS often an impediment
to progress
TechnologyMaturity assessment
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Procure to pay process
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Procure to pay processMaturity assessment
HHSC recent audits
► CHIP rural service area – Manual process
instead of automated data entry (OIG
Report)
► CHIP rural service area – Purchase
transactions where the procurement
process was not utilized and purchase
order was improperly changed (OIG
Report)
► Issue on transparency and objectivity of
the evaluation process (SAO Report)
Hypothesis testing
► Gaps in spend are caused through
sourcing.
► End users are not using or
discouraged from using existing tools.
► There is reliance on Excel without
using existing tools, leading to zero
visibility and poor performance.
► Policies present excessive hurdles
that do not support operations and
end up being ignored.
The complete P2P cycle, from the time a purchase
requisition is created to the time the invoice is paid.
A fully integrated process will provide end-to-end
coverage and tracking functionality.
A mature P2P process executes the transactional purchasing processes and requirements for release of purchase orders, expedit ing,
goods receipts process and exception resolution. Demonstrates awareness and adherence for internal purchasing control policies and
processes and impact on business processes.
Review considerations within this dimension
Process
► Standard procedures or guidelines in place for the P2P process
► List of current initiatives to automate the procurement process
► Detail flow of procedures to create a purchase requisition
► Detailed list of authorization process for purchase orders
► Key performance indicator (KPI) of percentage of purchase requisitions that do
not have a purchase order number or contract number
► KPI of receiving cycle time – from dock arrival to available in inventory/to
requisitioner (in business hours)
► Detailed flow of process in case of mismatch between purchase orders and
goods receipts and invoices receipts
► Number of people involved in each step of the process and a short description
of their role and department
► Description of technology that your department uses for each step of the
process
► Description of compliance level of the actual P2P processes with the
recommended P2P processes
► Estimate of the level of compliance for each stage of the process and the key
issues faced
► Procedure listing of how compliance is monitored with the recommended
processes
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Procure to
Pay Process
The complete P2P cycle, from the time a purchase requisition is created to the time the invoice is paid. A fully integrated
process will provide end-to-end coverage and tracking functionality.
1. Informal/
no process2. Functional 3. Standardized 4. Collaborative 5. Leading
Informal/no P2P processes
in place, and existing
processes require manual
paperwork.
Basic P2P process has no
guidelines and a mix of
paper-based and electronic
processes.
End-to-end P2P processes
are in place, but low levels
of compliance exist.
Fully integrated and
automated P2P processes
are in place, and
compliance is high.
There are lean and highly
integrated P2P processes,
e-catalogs and a robust
order tracking process.
Process
► Multiple system process variations exist, inclusive of workarounds. Design not entirely fit for purpose; workarounds appear to be used with high
frequency.
► Process is not formally documented with full process flow and interactions for PCS buyers and program contract managers. As o f 31 July 2018, a
Word document showing process flow and interaction was published for RFPs, RFAs and RFQs. Process flow start time is when PCS receives the
requisition and continues until the contract is placed into SCOR.
► HHSC moved to a state contract with the Texas’ online ordering portal for office supplies; outcome resulted in extended delivery time of goods,
higher price of goods, lack of transparency and additional processing time by the Agency and PCS. This situation needs improvement.
► Lack of a dashboard means the inability to confirm with significant detail where a requisition is within the process without going directly to a buyer.
PCS manuals are often not adequately updated in a timely manner and can be misleading.
► The business needs and the functions within procurement were not sufficiently involved in the development of the CAPPS and SCOR systems.
► Pre- and post-implementation of CAPPS and SCOR had limited input from PCS on both systems.
► HHSC needs a better linkage between the purchasing function and the financial function for reporting.
► HUB – Historically Underutilized Businesses operate in a similar process as seen in other state procurement processes.
1.7
Current state
Procure to pay processMaturity assessment
Current state findings
“Process drives everything, but process and
accountability can’t come at the expense of
everything else.”
– HHSC employee, July 2018
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PCS KPIs
Procure to pay process Maturity assessment
The average number of new vendors per
month is 360.
There are eight vendors in the masterfile
with more than $1b in purchases.
Sources: 1) HHSC file 20180824 Req information by Team FY18, 2) HHSC file 20180824 Vendor Created since 9-5-17 data, 3) HHSC file 20180824 Total Procard, 4) PCS document OP 571 RFP Contract Procedures_FI.NAL
07-30-218.doc published 31 July 2018 and interview with HHSC employees
0100200300400500600700800
Number of monthly new vendors
Requisitions and POs created
(1 September 2017–31 August 2018)
Qu
an
tita
tive
Qu
ali
tati
ve
Num
be
r o
f ve
ndo
rs
► Total spend is $41.8b
► Top 66 vendors are 80% of spend.
► For top 66 vendors, average spend is ~$504m and
average number of transactions year is ~225.*
► For vendors with spend in the bottom 20% average spend
is ~$27k and average number of transactions per year is ~
0.2%.*
► A disproportionate amount of energy is expended on the
bottom 20% of spend.
► There were 313,098 vendors.
► Limited supplier screening process exists for placement on
Centralized Master Bidders List (CMBL).
► Due to volume of new vendors, it is debatable who is the
proper administrator of the vendor checklist (PCS vs.
program).
► A more robust vendor checklist would benefit HHSC.
► More robust vendor master data collection would benefit
HHSC.
► No closed loop connects performance to eligibility.
► There are 4,585 requisitions and 85 POs that are
outside of these categories.
► Some portion of transactional work is pure
processing, while some is based on determination
(complex bidding).
► Total requisition value is ~10% of total yearly spend.
► Related benchmarks: 1) Number of purchase orders
processed per FTE that performs the process “order
materials and services,” 2) overhead cost to perform
the process “order materials and services,” 3)
percentage of purchase order line items transacted
using e-procurement enabled catalog suppliers and
4) percentage of purchase orders approved
electronically.
FY 2018 total FY 2018 total per week*
Category # of reqs # of POs # of reqs # of POs
Goods 22,945 17,905 459 358
Services 22,198 10,902 444 218
Complex
contracts231 75 5 2
Total (as of Aug 2018)
# of FTE Buyers
FTE buyer total per
week*
# of reqs # of POs
Goods 39 12 9
Services 27 16 8
Complex
contracts 250.2 0.1
$ in b
illio
ns
PCS KPIs show that PCS has room for improvement in areas of vendor spend management, vendor data management and requisition
forecasting.
*Based on 50 weeks
* Transaction calculation is based on spend 80/20 rule.
$0.00$0.50$1.00$1.50$2.00$2.50$3.00$3.50$4.00
Vendors spend over $1b
Series 1
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Qualitative review
Procure to pay processMaturity assessment
Impediment findings► To combat the one-size-fits-all condition affiliated with PCS,
the Agency could benefit from a defined fit for purpose
buying channels and analysis to manage transaction flow.
► Approvals in some cases are overengineered and in some
cases underengineered. Fit for purpose is needed.
► Backlog builds in a cyclical manner influenced by the
Program and PCS’s inefficiencies of forecasting.
► Much of the process is represented by the statement “it
depends,” reducing clarity and imposing optionality.
Findings
► Over-/underengineered processes exist (see Appendix),
► Cycle time is not measured.
► >90% of spend has a requisition with no dollar amount.
► Requisitions of zero value allow for program to expedite
the process, but they hinder PCS and the activities that
need to be accomplished (see “Requisitions without PO
and without approvals” to the right).
► CAPPS configuration has allowed for a manual process
with multiple forms created out of the system and inserted
back into CAPPS; a large portion of the requisition process
is performed outside of the system.
► Formal buying channels are not defined sufficiently for an
organization of this size, where the method of purchase is
selected from e-catalogs, purchase cards, service
agreements and buyer-negotiated contracts.
► Scanning and comparing receipts is still a manual process.
► The routing process hinders success in limited
transparency, untracked changes and manual
determination.
► During the RFx process, sometimes the process in
programs has been to fix mistakes with an addendum as
opposed to putting the time in earlier to get it right the first
time.
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Complex services
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Complex servicesMaturity assessment
Contracts of high dollar value require RFx to
procure goods and services.
Complex contracts have been the source of many audits and inquiries. These types of procurements and subsequent contracts have
several intricate inputs that all need to be correctly done for the process to be a success. Leading companies leverage automation where
possible to minimize chances of error. Understanding the areas of improvement for complex contracts will help the Agency address many
audit findings.
Review considerations within this dimension
Plan
procurement
► Procurement templates are in place.
► Procurement policy and procedures are updated.
► Procurement/contract management roles and responsibilities are clearly
defined.
Solicitation
process
► Procurements are assigned to appropriate people based on skill.
► Procurements are provided with all appropriate inputs.
► Procurements are reviewed by skilled leadership prior to being released to the
public.
► Question-and-answer periods are handled appropriately.
► An appropriate evaluation tools template is used.
Solicitation
evaluation
► Appropriate scoring was done.
► Evaluation was validated to help support compliance with policies.
Contract
compliance
► Confirmation that all policy and procedural compliance activities have occurred
exists.
► Confirmation that correct information has been received from vendors exists.
► Confirmation that the correct contract template is being used exists.
HHSC recent audits
► There is a lack of necessary
procurement policies and procedures.
(OIG Report)
► Evaluations were not correctly scored
or calculated. (SAO Report)
► Incomplete records of the evaluator
score sheet exist. (OIA Report)
► There is a lack of validation of
accuracy of evaluation scores. (SAO
Report)
Hypothesis testing
► Gaps in category experience to handle
complex categories lead to errors.
► Organizational turnover occurs without
standard handover processes, leading
to skills mismatches.
► Poor tools lead to incorrect evaluation.
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Complex contracts Contracts of high dollar value require RFx to procure goods and services.
1. Informal/no process 2. Functional 3. Standardized 4. Collaborative 5. Leading
Day-to-day pressure dictates
the activity of the department,
there is limited leverage of
strategic sourcing
opportunities and no contracts are in place.
Procurement department is
driven by contract end dates,
does not have strategic
procurement plans, leverages
regional sourcing on an ad hoc basis and has few
contracts.
Formal strategic sourcing
process, leveraged global
sourcing on most categories
with mid-term plans for key
categories, and contracts are in place but are managed by
the business.
Comprehensive strategic
sourcing process, mid- to
long-term category plans with
a global focus on key
categories and contracts are managed by category
managers.
Sourcing approach is
recognized as one of the best
in the market, preferred
vendors are established and
contracts are reviewed with suppliers at least annually.
Current state findings
Complex servicesMaturity assessment
1.8
Current state
“During the RFP process, the process in programs has been to fix mistakes
with an addendum as opposed to putting the time in on the front end to get it
right the first time. Part of the issue is PCS not having the authority/influence
to require consistency from the programs.”
– HHSC employee, July 2018
All findings from P2P apply, in addition to the following:
► Workarounds: Template language in CAPPS may not be accurate based on the solicitation per program area; the correct template is sometimes stored outside of
CAPPS and/or incorrect within CAPPS. The evaluations of the complex contract occur mostly outside of the system, allowing for process errors and calculation errors,
largely and specifically detailed through the most recent audits (system issue, governance issue and training issues).
► Lack of documentation standardization: Programs have latitude to create scoring templates that work for them, but many have limited automation and are not
always aligned with best practices. SOWs and requisitions are developed/prepared differently by each program area prior to being sent to PCS.
► Evaluation processes do not serve the Agency: Stratification of winning vendors: there is no limit/guidance on the number of evaluation criteria that can be used
on an RFx. This results in a lack of stratification of the results (some evaluation tools have in excess of 500), often referred to as micropointing. Evaluation tool
selection criteria are not consistently adjusted based on criteria impact to the service or good. Recent safeguards have begun to improve the scoring portion of the
evaluation process.
► Competency: Staff do not routinely have the advanced expertise to fully perform complex contract procurements. Complex contracts skill attainment path within the
program is undefined. Procurement and contract staff are not consistently receiving needed training to be proficient in their roles. Job duties are blended between
buyer and purchaser (i.e., those buying off TxSmartBuy vs. sourcing through solicitation). Requisitions are being used as a triggering mechanism to start both a PO
and a solicitation.
► Teaming: As the program and others are directly impacted by changes, these stakeholders desire to be a part of designing and improving the PCS processes.
► Transparency: Visibility of complex contract requisition type appears not to be tracked through budgeting (i.e., budget cannot easily identify which contract is
complex). Requisition-to-PO cycle time appears not to be readily available or tracked.
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Quantitative – by the numbers
Transactional volume
► Complex procurement processed 231 requisitions in FY18, which represents 0.5% of PCS’s requisition volume.
► Complex contracts are the highest value, most visible and most scrutinized contracts for HHSC.
► Despite the volume being low in comparison to the total requisitions, the time to process RFAs and RFPs is 9 to 18 months (as seen below). This has resulted in a reverse pareto, where the bulk of the time is spent on an activity that has the least amount of volume.
► Streamlining the RFA/RFP process could provide additional resource time while maintaining compliance.
PCS’s processing times for requisitions and POs (Process flow start time is from PCS receiving the requisition until the contract is placed into SCOR)
Complex servicesMaturity assessment
Qualitative – by multiple observations
Through interviews, it was noted that:
► The HHSC procurement staff remarks indicate that
workarounds are needed to complete a complex contract.
► Changes in policies and procedures are not clearly
communicated.
► Governance over the evaluation process is lacking.
In practice, we saw:
► HHSC is working toward updating policies and procedures to
provide clarity.
► The CQC department has been created to provide compliance
and governance expertise.
Based on EY US’s past experience, the following leading
practices are generally found in government agencies:
► Exceptions are monitored and root cause analysis is
performed.
► Segregation of duties exists between vendor setup, voucher
processing and payment processing personnel.
► Formalized documentation outlines the optimal process flow
for requisitioning, and purchase order activities exist for each
of the Agency’s expenditure areas.
► Procurement procedures are clear, simple and detailed
accurately at the activity level.
► RFI – Request for Information: 1 month
► RFA – Request for Application: grants: State or Fed 9 to
18 months
► RFQ – Request for Qualification: 1 to 2 months
► RFP – Request for Proposal: 9 to 18 months depending
on complexity
► RFO – Request for Offer: 1 to 2 months
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People and organization
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People and organizationMaturity assessment
HHSC recent audits
► CHIP rural service area indicates
inadequate staffing. (OIG Report)
Hypothesis testing
► Organizational turnover may
lead to gaps in the transitioning
of roles, processes, etc.
► Roles and responsibilities may
not be well defined.
► Role overlap results in
undertrained resources
performing activities above their
skill set, while highly trained
resources are performing basic
tasks.
The right people, with the right
capabilities, are in the right place, for
the right cost, doing the right things.
People and Organization is a process that is impacted by a variety of programs within PCS and across HHSC: Human Resources (HR),
organization design, leadership strategies, learning and development, performance management, recruiting, staffing, retention strategies,
change management, and rewards and recognition.
Review considerations within this dimension
Organizational
structure, including
reporting lines and
spans of control
► How the organization is structured so as to support a strong governance
framework and, in particular, exert control over decentralized/outsourced
functions
► The establishment of clear reporting lines to support effective communication
and responsibility/accountability for operational performance and decision-
making
► Awareness of any gaps in reporting/management’s control coverage
► Appropriate spans of control to produce efficient management structures and fit
business strategies
Roles,
responsibilities and
authorization levels
► The extent to which roles, responsibilities and authorization levels are formally
defined, approved and maintained
► The existence of succession/contingency plans for key roles and responsibilities
Talent life cycle:
recruitment, training
and development
► Defined recruitment policy and procedures to include how candidates are
identified and evaluated
► Understanding of key roles and the vetting of appointments to key positions
► Established training strategy, including procedures to support how training and
development are initiated and training needs identified and addressed
► Recording and monitoring of staff training and development
Skill profiles and
performance
appraisal
► The extent to which skill/competency profiles have been developed and
maintained, especially for key roles
► The existence and frequency of performance appraisal and how the process is
linked to training and development
► Awareness of any skills gaps or resource needs arising from the organization’s
strategy or the underperformance of business functions
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People and
OrganizationThe right people, with the right capabilities, are in the right place, for the right cost, doing the right things.
1. Informal/
no process2. Functional 3. Standardized 4. Collaborative 5. Leading
Procurement department is
seen as a second-tier
function and focuses on
administrative activities.
Procurement employees
exhibit transactional skill
sets, but the department is
not recognized as a value-
adding function.
Procurement employees
demonstrate strategic
thinking and focus more on
category management than
administrative tasks.
Procurement employees
exercise strategic thinking
and category management
and attract internal and
external talent.
Procurement has a global
network of high-quality
people who make the
department a desirable
place within the company.
Current state findings
► Organization structure, roles and responsibilities: The PCS organization has been siloed from the programs — organizationally and physically. Roles and
responsibilities within PCS and across PCS, programs and Legal are often unclear. True capacity in PCS is unknown; however, employees seem
overworked, high employee turnover is an issue and while many vacancies have recently been filled, many roles continue to go unfilled in both PCS and non-
PCS legal support. Spans of control are appropriate.
► Talent, skills and performance: Talent processes (sourcing, onboarding, training and development, performance management, skills alignment, and succession planning) are generally reactive and tactical instead of strategic. Career paths are often not clearly defined. Because of the self-service HR
model, PCS managers are responsible for implementing all talent processes, with little HR oversight or assistance. Performance management processes are
conducted annually, but it is possible to stay in your role with poor performance ratings. Training is generally inconsistent and inadequate to build skills.
► Culture, leadership and compensation: Although employees are feeling more hopeful and supported with recent leadership changes, there is still a
significant culture of fear. The leadership team within PCS and across programs needs to be better aligned in relation to purpose and goals. Comptroller regulations regarding salary caps for promotion within a function result in people leaving the organization to get higher salaries. If they return, they are paid at
higher rates than their peers who stayed and were promoted from within.
1.5
Current state
People and organizationMaturity assessment
“PCS is understaffed and overwhelmed.”
– HHSC employee, July 2018
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► 271 ThinkTank participants voted on the following question:
“Of the seven options listed below, what are the top three people and organizational issues that you feel need to be prioritized?”
► We grouped “Ongoing training and development (31.0%),” “Subject matter expertise (29.5%),” and “Onboarding/training (26.6%)” into a larger issue bucket of “Competence.”
► When the three competence areas are combined, they rise to the top of the priority list as seen in the figure below.
Quantitative – by the numbers
Communications within and outside of PCS
► Communication has been repeatedly
flagged as a key issue for HHSC.
► PCS leadership has begun implementing
improvements (e.g., PCS Ambassadors
have been named to liaise with the
programs; Tuesday leadership meetings
are in place to provide key updates);
however, that information is not consistently
cascaded.
Staffing and workload levels► Despite the recent hiring efforts, ~23.5% of
PCS jobs are still vacant or filled with temps/interns.
Competence► Lack of new-hire competence, ongoing skill
development, and development and accessibility of advanced skills are repeatedly mentioned by PCS and program employees.
► Professional development has become a key reason employees seek and stay with an organization.
People and organizationMaturity assessment
17.0%
26.6%
29.5%
31.0%
44.6%
52.0%
57.6%
0% 20% 40% 60% 80% 100%
Goal setting and performance measurement
Onboarding / training
Subject matter expertise
Ongoing training and development
Role definition and clarity
Staffing and workload levels
Communications within and outside of PCS
Qualitative – key takeaways
17.0%
44.6%
52.0%
57.6%
87.1%
0% 20% 40% 60% 80% 100%
Goal setting and performance measurement
Role definition and clarity
Staffing and workload levels
Communications within and outside of PCS
Competence
Additional analysis is located on
Appendix pages 250 – 257.
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Portfolio management
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Looks across all spend and manages it as a portfolio
inclusive of strategy, creation, authorization,
execution, governance, compliance/performance,
analysis, closure and renewals.
Portfolio Management is an essential function that helps the needs of the Agency to be reflected in supplier contracts and utilizes data to identify and execute on
Agency-level procurement opportunities to drive consolidation of spend and avoid duplication of procurement efforts across programs.
Review considerations within this dimension
Monitoring and
compliance
► The extent to which mechanisms and processes are in place to understand the
requirements and terms and conditions of externally created contracts
► Defined mechanisms for determining a contract’s risk level
► Existence of standard monitoring procedures for every contract
► The extent to which contracts are monitored more closely due to higher risk levels
► Appropriate measures in place to monitor a contractor’s performance against the contract
► Established processes for the confirmation and acceptance of delivery of goods or
services
► The existence of mechanisms for resolving negative performance issues
► Implementation of remedies in the contract terms, including remuneration and contracting
penalties
► Availability and determination of circumstances under which a contractor could be
terminated early
Administration ► The establishment of clear, complete guidelines of what a procurement file should contain
and how and when it should be stored
► Established closeout procedures
► Whether contracts are tracked to know which renewals or re-solicitation needs are
upcoming
► Known processes in place for contract amendments or changes
Payment ► The existence and frequency of monitoring the availability of funds throughout the contract
► The extent to which invoices are verified for accuracy
► The determination of payments authorized so that they are consistent with the contract
terms
► Appropriate payment methods are being used
HHSC recent audits
► HHSC needs better
procedures regarding
contract documentation
and retention. (OIG
Report)
► Data reliability and
completeness revealed
inaccuracies in the data
provided and could not
verify whether all of the
Commission’s contracts
were included in the
SCOR database. (SAO
Report)
Hypothesis testing
► Lack of ongoing internal
supplier performance
monitoring data
► Lack of clear contract
terms to enforce
compliance
Portfolio managementMaturity assessment
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► Technology: Current portfolio management technologies are often not reviewed for completeness or accuracy of the required information. The CAPPS/SCOR system contains known
incomplete information and intervention is lacking accuracy before final contracting. The programs commonly rely on contract amendments to address inaccuracies. Current technologies do
not provide necessary reporting capabilities. Medicaid/CHIP uses spreadsheets to track its contracts instead of CAPPS or SCOR. In addition, the availability of historical vendor spend
information to assess contract performance is limited. Current data availability and access make data-driven procurement decisions difficult. The Agency utilizes state-wide contracts
available to it for much of its commodity purchasing needs. In some cases, state-wide contracts may hinder timely purchases for simple commodities such as office supplies. Where strategic
contracts are used, data entered in CAPPS often does not properly link the contract to the purchase, making it impossible to know the spend on a contract.
► Roles and responsibilities: Portfolio monitoring it appears to vary based on the HHSC program. Each program area appears to have autonomy to choose which contract(s) and the degree
to which it monitors those contracts, leaving potential gaps in the portfolio. The roles and responsibilities of 1) central contract oversight and support group and 2) a contract administration
group appear not to be consistently understood throughout HHSC. Post-contract monitoring is currently being performed within the program area and without formal procurement guidance.
The majority of procurement staff activity in PCS is focused on tactical, reactive work. No dedicated staff in PCS is assigned to data analysis and/or portfolio management for the Agency.
► Process: There are limited cross-program coordination processes that would support the identification of common procurements that could be strategically procured on behalf of the Agency.
Programs sometimes seek to establish their own strategic contracts but do not typically seek to coordinate with other programs. No procurement planning process is in place that could help to
identify strategic category procurements. Procurements are often not strategically planned and scheduled to balance workload throughout the year, leading to high-demand periods at the start
and end of the state and federal fiscal years. Lack of portfolio management is evident in that the contract cycle is not planned to spread the workload throughout the full year.
Portfolio
Management
Looks across all spend and manages it as a portfolio inclusive of strategy, creation, authorization, execution, governance,
compliance/performance, analysis, closure and renewals.
1. Informal/no process 2. Functional 3. Standardized 4. Collaborative 5. Leading
Day-to-day pressure dictates the
activity of the department; there is
limited leverage of strategic sourcing
opportunities and no tracking
mechanisms of contracts.
The procurement department is
driven by contract end dates, does
not have strategic procurement
plans, leverages regional sourcing
on an ad hoc basis and has few contracts, tracking ad hoc.
There are established portfolio
management procedures and
guidelines with a centralized tracking
mechanism in place.
Portfolio management activities are
done regularly across the
organization, and the tracking
mechanism is used consistently and
effectively.
Entire portfolio is actively monitored
for performance and compliance,
and enabling tools and technologies
support the tracking and
management of contracts for the organization. Preferred vendors are
established, and results are reviewed
with suppliers at least annually.
Current state findings
1.9
Current state
Portfolio managementMaturity assessment
“It’s likely different programs have
contracts with the same provider
with different terms and pricing.”
– HHSC employee, July 2018
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The table below demonstrates the readily stratified categories available in the spend data for FY18
LBB description Spend
% of total spend
Client Services $ 37,088,843,057.89 88.6%
Other Operating Expense $ 2,454,064,210.49 5.9%
Grants $ 1,395,088,720.15 3.3%
Professional Fees & Services $ 695,288,573.90 1.7%
Rent and Utilities $ 93,446,505.56 0.2%
Utilities $ 45,374,086.26 0.1%
Rent - Machine and Other $ 29,811,651.90 0.1%
Consumable supplies $ 18,104,314.56 0.0%
Food for Persons $ 17,110,017.61 0.0%
Capital Expenditures $ 6,467,089.60 0.0%
Fuels & Lubricants $ 1,836,152.85 0.0%
Through our interviews, it was noted that:
► SCOR appears to be the intended contract repository for HHSC
but is currently not being used by all programs.
► Programs seem to have primary responsibility for contract
management through the procurement life cycle, which could
make segregation of duties difficult.
► PCS COS team has some contract management duties but is
currently diverted to support PCS internal activities.
► The contract management job function is shared across PCS
and programs, but clear distinction in the roles is lacking.
► Minimal data analysis is performed by PCS.
► There is little to no cross-examining of needs by different
programs to be considered for a single procurement.
► Need for better processes and communication among PCS,
CPA’s Statewide Procurement Division, and DIR to manage
who should perform sourcing events, when and for what.
In practice, we saw:
► Existing tools and storage of data are not configured to facilitate
meaningful data analysis or category management.
Using our vast experience, we see that:
► Organizations can more effectively manage categories when
they create their own spend taxonomy and build it into their
system.
Qualitative – by multiple observations Quantitative – by the numbers
Portfolio managementMaturity assessment
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Supplier relationship management
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Supplier Relationship Management (SRM) builds a trusting relationship with third parties (suppliers) that strengthens accountability,
transparency and performance. When such a relationship exists, the value proposition typically increases because the third party is able to
contribute solutions that benefit both parties in the relationship.
Review considerations within this dimension
Supplier collaboration:
Collaboration with an
organization’s supplier
community fosters an
integrated and constructive
engagement.
► Promoting communication and engagement throughout the
procurement planning and contracting phase produces meaningful
outcomes for complex, high-risk contracts.
► Limiting input provides an inherent advantage to incumbent suppliers
because it is hard for new vendors to communicate with state agencies
regarding the products and services that they may be able to offer.
Supplier development and
improvement: Due
diligence in market research
leverages supplier and
industry expertise and
knowledge base.
► Interaction between the vendor community and an organization’s
procurement and program staffs provides an opportunity to gain insight
into market forces, supplier segmentation and innovative practices that
can facilitate the organization’s ability to develop a robust solicitation.
Supplier performance
management: Performance
outcomes are managed and
improved through ongoing
interaction.
► A defined framework for managing vendor performance, including
service-level agreements, processes and documentation, before
contract execution.
HHSC recent audits
► Audits conducted on the HHSC
System over the past year did
not examine SRM as this was
outside the scope and audit
parameters.
Hypothesis testing
► The Agency may be missing out
on modern SRM principles due
to an abundance of concern of
showing favoritism. If so, this
would cause subpar commercial
arrangements with suppliers.
► Continuous improvement of
suppliers may be limited.
Existing suppliers do not have
continuous monitoring for
performance standards and
rework.
Supplier relationship managementMaturity assessment
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► Limited implementation: Supplier relationship management as a practice lacks definition and a framework to share information
and institutionalize leading practices across the Agency.
► Overly restrictive approach to interaction: Contract management and vendor management policy as historically implemented
unnecessarily limited vendor interaction and overinterpreted relevant state policy.
► Decentralized implementation: Program areas manage their supplier relationships through individual processes and controls
according to contract terms, state and federal laws and regulations, and Agency policies.
Supplier
Relationship
Management
SRM provides a framework for interacting with the vendor community across the contract management life cycle to advance innovative
solutions for the organization and equip the procurement organization with knowledge and expertise in solicitation planning.
1. Informal/no process 2. Functional 3. Standardized 4. Collaborative 5. Leading
There is no supplier
segmentation, internal
stakeholder community or
data to support SRM.
Some spend data gathered;
stakeholders identified and
may be surveyed. Key
performance indicators are
developed and supplier evaluation is performed, and
risk is identified and response
strategy is developed based
on risk level.
Knowledge-based spend and
performance management
supports supplier
segmentation and strategic
sourcing practice. Stakeholders and business
culture are aligned with
segmentation. Risk
management and contingency
planning is present.
SRM aligns with strategic
sourcing goals, supports
contract portfolio
rationalization and
procurement planning. Technology/innovation is
leveraged and scorecards and
metrics published. Detailed
risk management and
contingency plans are in place.
SRM aligns with
organizational strategy and
drives procurement
organization behavior.
Continuous improvement delivers benefits in areas
outside of traditional sourcing
arena. Risk status and
contingency plans are
continuously monitored.
Current state findings
“Should a vendor request to meet with HHSC
staff, the vendor must submit a request to
COS and must include the purpose of the
meeting and presentation materials.”
Section 1.4.1, HHSC ContractManagement Handbook
1.3
Current state
Supplier relationship managementMaturity assessment
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Supplier relationship components
There is a very limited concept of SRM as it relates to the concepts below in the HHSC practice today, so data related to the function will be not present.
Supplier relationship managementMaturity assessment
Through our interviews, it was noted that: ► HHSC processes for vendor interactions may hinder
innovation and effectiveness. The HHSC policy on
vendor interactions is not supported by state law or
practice.
► Refer to TGC 2155.081, which creates, as a leading
practice, a committee comprising representatives from
the vendor community to advise the CPA on matters
related to state procurement practices and serve as a
channel of communication among the vendor
community.
► New vendor interaction policy as of 1 September 2018
will assist in addressing supplier relationships.
► Guidance on contract management practices is provided
in the PCS Contract Management Handbook; however,
SRM is primarily driven within program areas. For
example:
► One program hosts monthly governance meetings
with all providers at the director level, and quarterly
governance meetings with the deputy executive
commissioner.
► Quantitative and qualitative metrics to gauge ongoing
performance are built into certain contracts but not
universally instituted.
Qualitative – by multiple observations
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Performance management
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Helps an organization measure the
performance of its P2P processes. Can use
various tools such as executive dashboards,
balanced scorecards, key performance
indicators and benchmarking.
To address timeliness, quality and transparency of P2P processes, an organization must identify and track key data that inform decision-
making and strengthen its processes and operations.
Review considerations within this dimension
Business objectives:
Aligned operational
and financial metrics to
monitor achievement of
business objectives
► The key operational and financial performance indicators and
associated objectives
► How performance indicators are used to monitor the organization’s
strategic objectives and the performance of key controls
► Management actions and initiatives that address issues identified by
key performance metrics
Monitoring and
analysis: Dynamic
business monitoring
and analysis, including
design and integration
of supporting
technology
► The responsiveness of metrics in light of changes/developments in the
organization (such as the design and implementation of performance
metrics central to any change management plan)
► The extent to which technology is used to monitor, analyze and report
key data, in particular, the use of automated process controls and
analysis tools
► Gaps in the monitoring framework (such as key areas/functions where
performance is not fully visible to management)
Performance
improvement:
Monitoring to support
sustainable
performance
improvement
► Gaps in the monitoring framework (such as key areas/functions where
performance is not fully visible to management)
► The indicators used to monitor the performance of implemented
improvements, and the extent of reporting to demonstrate the
realization of anticipated benefits
HHSC recent audits
► The procurement process relies heavily
on the integrity of each staff member
and does not have checks and
balances in place. (OIA Report)
► The Draft Request for Application (RFA)
Process Overview document does not
include statewide oversight review
requirements. (OIA Report)
Hypothesis testing
► Lack of mature governance of the
process
► Lack of data to effectively manage
activities
► Lack of mature reporting compliance
and no auditing or follow-up to
noncompliance
► Where KPIs are known, the systems
and/or processes in place do not collect
the relevant data to measure them
Performance managementMaturity assessment
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Performance management uses various tools such as dashboards and performance indicators to measure the
efficiency in completing the procurement processes:
► Business objectives – Extremely limited access to actionable tactical and operational data on how purchases
progress through the procurement life cycle to establish trackable quality measures. Process maps detail legacy
systems’ workflows and do not inform the development of KPIs.
► Monitoring and analysis – Programs and PCS appear to be unsupported by sustainable tools to meaningfully report
on the status of a purchase in CAPPS. Program areas have developed individual ad hoc reporting constructs.
► Performance improvement – To address the backlog and workflow challenges within PCS at year-end, some HHSC
program areas have implemented internal processes that initiate procurement actions much earlier in the fiscal year.
For example, one program area indicated it began submitting contract renewal and extension requests seven months
prior to term expiration dates under prior management.
Performance
Management
Helps an organization gauge the performance and alignment of its P2P processes with its organizational goals. Leverages various tools
such as executive dashboards, balanced scorecards, key performance indicators and benchmarking against peers.
1. Informal/no process 2. Functional 3. Standardized 4. Collaborative 5. Leading
No monitoring of the
performance of the
procurement department
exists.
Basic metrics are in place but
provide limited insight and
may not be linked to business
performance.
Formal metrics exist but are
not consistently used and are
not closely linked to
performance.
Savings targets are in place to
monitor department
performance and KPIs link to
performance.
Sophisticated balanced
scorecards are in place and
KPIs are integrated with
performance.
Current state findings
1.3
Current state
“In the name of efficiency, processes are being
standardized, which often slows the
completion of work and processes.”
– DSHS employee, August 2018
Performance managementMaturity assessment
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Performance managementMaturity assessment
Performance goals and measures | draft SSA
Goal 1: Help support timely and accurate processing of procurements and
contracts.
1.1 Assign a properly approved CAPPS Fin 9.2 requisition to a
procurement team within two business days of receipt of the
approved CAPPS requisition.
90%
1.2 Assign the approved requisition to a specific Purchaser within
one business day of the approved HHSAS requisition being assigned
to the procurement team.
90%
Goal 2: Help support timely and correct approvals and executions of
contracts, amendments, extensions and renewals.
2.1 Measure of the contract administration division routing for
execution, HHSC system contracts, amendments, renewals and
extensions that must be signed by the Executive Commissioner and
other system authorized signatory staff.
95%
Quantitative – by the numbers
Through interviews and a review of documentation provided, it was noted that: ► Support services agreements (SSAs) specify metrics for PCS functions
that have not been ratified and are in draft state. The framework is
meaningful; however, the measures are limited to intake and
assignment and not representative of P2P processes.
► Additionally, there is no evidence that the practice is implemented, so it should be revisited. For example:
► PCS purchasers will notify requestors within two days of
assignment – this was not demonstrated in interviews.
► Noncomplex procurements time frame is identified as a measure,
but the period is not specified.► Many program areas indicate use of spreadsheets to track
procurement activities because systems of record are regarded as
having low and practical usability.
► There is lack of visibility and relationship between departmental metrics
and ability to drill down to individual performance.
Qualitative – by multiple observations
A review of the HHSC system and Agency strategic plans provided a framework that includes administrative functions and an opportunity to
align operational performance tracking; however, the measures were not included in the plan submitted in May 2018 and the website does not
reflect an update as of 27 September 2018.
Linking performance to strategic plan goals
Agency goals (driving efficiency and accountability)
3.1: Promote and protect the financial integrity of HHSC programs.
3.2: Strengthen and sustain a high-functioning, efficient workforce.
3.3: Optimize technology to support business strategy and goals.
3.4: Promote a culture of data-driven decision-making for continuous improvement.
3.5: Improve business functions and processes.
Objectives: Define as outcome, output, efficiency measures
3.1.2: Review and improve procurement, contract oversight and grant management
processes.
3.1.4: Maintain and enhance timeliness, quality, and transparency of statewide
financial and programmatic reports. 3.4.1: Implement an HHSC performance management system for increased
effectiveness in governance and accountability for success.
3.5.3: Achieve efficiencies in administrative services, including procurement,
products, office space and licenses.
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Internal stakeholder management
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An organization’s management of
the people who may be affected by
the decisions it makes or who can
influence the implementation of its
decisions.
Internal Stakeholder Management provides a framework for engaging an organization’s workforce to help align operational strategies and
desired business outcomes.
Review considerations within this dimension
Stakeholder
engagement
► The extent to which the procurement department manages all the categories
in close collaboration with the other relevant departments
► Whether internal customers’ feedback is received and, if so, how it is
recorded and monitored
► The extent to which the procurement department works as a cross-functional
team
Integration ► Internal stakeholders understand the need to regularly communicate their
demand and forecast to the procurement department
► Existence of forecasts and use of advanced planning tools
► Established information/coordination meetings with internal stakeholders and
procurement
Demand
management
► The stage at which internal stakeholders enter the sourcing process with their
procurement department
► The existence of formal service-level agreements established for internal
customers of the procurement department
► Whether orders are set in collaboration with other departments
► The extent to which similar products/services are bought from different
suppliers
Compliance
management
► Existence of an established communication process when new contracts are
signed
► The extent to which controls are in place if an end user wants to buy outside
of contracts deliberately
HHSC recent audits
► PCS was not involved in key
procurement planning and
development processes. (OIA
Report)
► There needs to be better
collaboration regarding policies
and procedures. (OIG Report)
Hypothesis testing
► Typically, stakeholders within an
organization are siloed and only
work within their area without
collaborating across
departments.
► Processes are not in place to
facilitate communication.
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Stakeholder engagement
► Historically, clear communication channels and communication strategies have been lacking between PCS and HHSC programs. To improve stakeholder
relationships, PCS created a liaison role that established a forum to engage HHSC programs.
Integration
► HHSC program areas have inconsistent experiences with PCS across many functions, citing challenges in support, level of knowledge and direction.
► There is a lack of a mentality for customer service and collaboration, although there have been recent efforts made by management to shift this mentality (such as the creation of the liaison role). DSHS and DFPS particularly express sentiment of lacking a voice in process and system design and decision-
making. Perception is reality and the customers of PCS don’t feel treated as customers.
Demand management
► Historically, program areas have felt that PCS adopted a one-size-fits-all mentality regarding program support, with little flexibility or acknowledgment of program area or business requirements. With more touch points between PCS and the program recently established, customers hope their voices will be
heard.
Compliance management
► Program areas are creating and managing ad hoc reports based on status received through emails and manual touch points, and they pursue follow-up
actions on procurement events through a variety of communication channels.
Internal Stakeholder
Management
An organization’s management of the people who may be affected by the decisions it makes or who can influence the implementat ion of
its decisions.
1. Informal/no process 2. Functional 3. Standardized 4. Collaborative 5. Leading
Procurement works in its silo
and internal customers do not
think it adds value to the
organization.
Some areas of collaboration
exist with other departments
but is not uniformly seen as
having high procurement
value.
Procurement is regularly
consulted but not fully
integrated with other
processes in other
departments.
Procurement is engaged early
in the process and manages
cross-functional streams.
Procurement proactively
manages all categories in
close collaboration with
relevant departments.
Current state findings
1.6
Current state
“Success of PCS is dependent on
a functional ecosystem.”
- HHSC employee, July 2018
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Quantitative – by the numbers
► 58% of ThinkTank respondents identified communications within and outside of PCS as a top issue.
► Approximately 80 current PCS staff members manage the procurement needs for roughly 15 to 20 different
customers that are internal and external to HHSC — divisions, programs and agencies.
Internal stakeholder managementMaturity assessment
It was repeatedly noted in interviews that:
► There appears to be a lack of visibility once a requisition is submitted to PCS. Many identify or think of PCS as a “black hole” and
have to do many manual follow-ups to check on status.
► DFPS and DSHS generally do not feel that PCS knows enough about their needs and how they function. For example, some
terms have different meanings across programs.
► There appears to be an overall lack of voice of the customer when it comes to receiving and implementing feedback for process
changes.
In practice, we saw:
► Whether a forecasting timeline of procurement needs is created varies from program to program. If program areas do complete a
procurement forecasting timeline, it is typically done with little or infrequent collaboration with PCS.
► Changes to statewide contracts are not always communicated by PCS to programs and have caused service interruptions (e.g.,
shipping contract — Lonestar to FedEx). This suggests a breakdown in communication at one of two points — between CPA
and PCS or PCS and the end user. Either way, opportunities for improving these communication channels, to the extent
possible, should be considered.
► Programs and PCS often had differing views on roles and responsibilities.
Using our vast experience, we see that:
► Regular and frequent communication between stakeholders fosters and encourages a collaborative mentality to achieve goals.
► Clearly delineated roles and responsibilities for all parties reinforce accountability and reduce opportunities for unnecessary
delays due to stakeholders being unaware of their responsibilities
Qualitative – by multiple observations
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Root cause analysis
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Root cause analysis
Overarching root cause Manifestations Impacts
People
Process
Technology
Success is often not rewarded, while failure brings punishment, which can
significantly impact morale and prevents employees from feeling empowered.
Processes are often not written to support a large organization, limiting
opportunities for economies of scale and optimization improvements.
Processes are often inconsistent across similar requisitions, causing
inefficiencies and increasing errors and noncompliance.
Policies and procedures are not effectively maintained in many cases, and
changes often are not effectively communicated to guarantee compliance.
Legacy system errors have been transitioned over to CAPPS, negatively
impacting system performance and data integrity.
Business needs and volume are not sufficiently synchronized to
process/technology, causing risk of system overload and downtime.
The “hero” environment is reliant on extraordinary individuals’ efforts to
compensate for inadequate technology and processes.
Systems do not always support visibility and extraction of data to support
business decisions.
Training programs are generally insufficient, and there are limited designated
support resources to provide compliance and technical guidance.
1. The operating model,
strategy and investment
of HHSC, has not
evolved to meet the
needs of an outsourced
service delivery solution,
which depends upon
Procurement for its
success.
2. Volume of transactions
amplified the effect,
quadrupling the impact
on an unfit model.
3. The communication plan
is built for a smaller
organization.
The approval process does not always sufficiently consider factors outside of
the dollar value of the contract for establishing the extent of review and
approval procedures.
Control activities are not always appropriately aligned to the risk.
Oversight of procurement processes is often not performed to verify that all
necessary control activities occur in a timely manner.
Governance
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People root causes
► The “hero” environment is reliant on extraordinary individuals’ efforts to compensate for inadequate
technology and processes
► Without streamlined processes and user-friendly tools, individuals are forced to act as “heroes” for the
organization to complete basic tasks and meet deadlines. The extra efforts needed from these individuals
distract them from their core responsibilities and leave the organization’s timeliness and confidence to meet
deadlines in a state of uncertainty.
► Training programs are generally insufficient, and there are limited designated support resources to
provide compliance and technical guidance.
► The existing training programs (onboarding and ongoing) do not provide employees with the knowledge and
tools needed to be successful in their roles. The lack of training, coupled with excessive workloads and
nonstandard processes, has contributed to staff often feeling overwhelmed and frustrated, with nowhere to turn
with questions.
► Success is often not rewarded while failure brings only punishment, which can significantly impact
morale and prevents employees from feeling empowered.
► The historical culture of punishing employees for mistakes devastated morale and has created fear across
much of the organization. By contrast, strong performance and going “above and beyond” have not been
consistently recognized by leadership, and employees do not feel incentivized. The only reward for hard work is
more hard work, while low performers are punished but allowed to remain.
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Process root causes
► Processes are often not written to support a large organization, limiting opportunities for economies
of scale and optimization improvements.
► HHSC is currently operating as a small organization that delivers process updates via email, vs. routinely
posting to a SharePoint site or website. Without the proper written instruction for processes that can been seen
by all employees with a revision date and notification of update, many employees are relying on word of mouth
vs. checking a regulated source for updates, leaving a state of uncertainty.
► Processes are often inconsistent across similar requisitions, causing inefficiencies and increasing
errors and noncompliance.
► Legislation dictates how the requisitions should be processed and which forms are needed for a requisition
completion. Requisitions of the same type can vary depending on the Agency/program. With varying degrees of
change for the same type of process, a level of uncertainty and confusion remains for many purchasers. Since
June 2018, the PCS group has been working toward streamlined procedures for specific types of requisitions.
► Policies and procedures are not effectively maintained in many cases and changes often are not
effectively communicated to guarantee compliance.
► As updates are made to policies and procedures, there are few collaboration sessions between PCS and
internal customers to guarantee that all parties are updated. There is not a central repository where all
employees can see the latest updates to the policies and procedures that are affecting their specific type of
requisition.
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Technology root causes
► Legacy system errors have been transitioned over to CAPPS, negatively impacting system
performance and data integrity.
► Data from legacy systems was loaded into the CAPPS system without a complete master data cleanup to
correct errors and without a comprehensive data conversion plan to help support the upload of complete and
accurate historical information.
► Business needs and volume are not sufficiently synchronized to process/technology causing risk of
system overload and downtime.
► CAPPS was not configured to serve many important procurement-related purposes (e.g., complex contract
proposal evaluation, vendor performance tracking, document management, spend analysis and public data
transparency) in function or in HHSC-level volume.
► CAPPS has been heavily modified to accommodate State of Texas statutory contracting requirements, as well
as HHSC-specific contracting needs; however, the system has not been configured to support a specific set of
Agency or Program purchasing policies and/or processes. There is no baseline set of procurement processes
and procedures that can be applied across HHSC.
► HHSC does not have a complete application portfolio detailing the data architecture, relationship diagrams and
user models for all purchasing-related systems. This results in inconsistent processes, data entry redundancy,
inefficient system administration and unnecessary technology costs associated with duplicative functionality.
► Systems do not always support visibility and extraction of data to support business decisions.
► The lack of integration among procurement-related systems and the lack of properly configured reporting
functionality in CAPPS combine to frustrate users, preclude data-driven procurement practices and undermine
statewide transparency efforts.
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Governance root cause analysis
► Oversight of procurement processes is often not performed to verify that all necessary control
activities occur in a timely manner.
► All relevant documentation (both hard copy and electronic) is not sufficiently maintained by PCS staff members
to support verification that the procurement process was followed as intended.
► Prequalified standard contract templates are not consistently used across the Agency.
► Conflicts of interest and nepotism verifications are not consistently performed and documented.
► The approval process does not always sufficiently consider factors outside of the dollar value of the
contract for establishing the extent of review and approval procedures.
► A risk-based approach should be utilized pertaining to the review of solicitations and contracts and should
include factors other than just the dollar value of the contract. Applying the same amount of risk to every
solicitation/contract does not allow for the appropriate differentiation based on the specifications of the
contracts.
► Controls activities are not always appropriately aligned to the risk.
► Per inspection of the procurement process as documented in the HHSC process flow diagrams, the controls
appear to either over- or under control the process, resulting in gaps or redundancy in efforts and inefficient use
of resource time.
► Roles and responsibilities related to review of requisitions and contracts are not sufficiently defined, resulting in
duplication and potential gaps.
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Next steps
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Discussion and next steps
► This presentation encompasses the current state assessment and root cause
analysis (Phases I and II of the engagement).
► In Phase III, EY US will be focused on process redesign and will deliver
recommendations and an improvement plan by the end of September.
Upcoming phase of work
Detail of Phase III activities on next slide
Phases I and II Phases III Phases IV
Wk 0 Wk 1 Wk 2 Wk 3 Wk 4 Wk 5 Wk 6 Wk 7 Wk 8 Wk 9 Wk 10 Wk 11 Wk 12 Wk 13 Wk 14
Mobilization Phase I: Assessment
Phase II: Root Cause Analysis
Phase III: Process Redesign
Phase IV: Evaluation
Deliver
Assessment
Deliver Root
cause Analysis
Deliver
Improvement Plan
Deliver
Evaluation
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Phase IIIWk 7 Wk 8 Wk 9 Wk 10
Define actions and recommendations to improve process and address
failure pointsProcess
Technology
People
Governance
Identify digital solution/automation opportunities that support process,
technology and people initiatives
Identify key tools/templates and improvements
Identify adoption, configuration and customization of existing technology
Identify new solution capabilities
Define fundamental roles and reorganization recommendations
Define fundamental development/training needs and capabilities
Identify cultural improvement
opportunities and imperatives
Catalog policies requiring changes
Identify fundamental governance
structure for the future state
Define improvement initiatives,
including a high-level business
case with value impact
Draft prioritization of initiatives
Draft digital enablement vision
Socialize and prioritize
improvement plan
Finalize recommendation
Deliver plan
Key HHSC
stakeholder
activities
HHSC improvement plan
alignment and
prioritization session
Define improvement activities Draft improvement plan Deliver improvement plan
Phase III detailed activities
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Detailed analysis
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Detailed analysis contents
Maturity model definitions
Strategic Direction
Governance and Risk Management: governance process gaps, policy
assessment, forms and standards
Technology: technology spotlight, systems gap analysis
Procure to Pay Process: process stage views, approvals
Complex Contracts: evaluation tool review
People and Organization: ThinkTank analysis, organizational chart, job
descriptions, compensation benchmark
ThinkTank
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Procurement maturity model
Our maturity model articulates the main domains of procurement transformation in eight dimensions, each of which needs
to be considered independently to reposition an effective procurement and contracting function.
► Review current state of Procurement and
Contract Services (PCS) capability
► Review existing sourcing and procurement
process documentation, including policies
and procedures and existing ERP system
documentation
► Review organizational structure
► Conduct key stakeholder interviews
► Identify critical procure-to-pay (P2P)
process benchmarks currently managed
by PCS and compare current P2P
capabilities to leading practices
Every dimension is divided into
five maturity stages:
Stage 1: Informal/no process
Stage 2: Functional
Stage 3: Standardized
Stage 4: Collaborative
Stage 5: Leading
Po
rtfo
lio
an
d
A governance model has been
established and is supported by executives
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Procurement maturity modelEight facets defined
The maturity model breaks down procurement and contracting to drive at the root cause of any procurement and contracting issue:
► Strategic Direction: course of action that leads to the achievement of the goals of an organization’s strategy
► People and Organization: how the people in the organization engage to accomplish the goals of an organization
► Portfolio and Supplier Relationship Management: how an organization interacts with its suppliers from a mutually beneficial
relationship and legal (contract) perspective
► Complex Contracts: Contracts that are of high dollar value and require an RFx to procurement goods and services
► Contract Management: Contract management is an essential function that helps support that the needs of the Agency, as
reflected in a supplier contract, are met in order to deliver critical services to HHSC’s clients and that taxpayer dollars are being
used efficiently and appropriately
► Supplier Relationship Management: Supplier relationship management provides a framework for interacting with the vendor
community across the contract management life cycle to advance innovative solutions for the organization and equip the
procurement organization with knowledge and expertise in solicitation planning
► Category Management: By analyzing detailed spend, transactional and pricing data, and continuously monitoring the pricing
markets, the category management team can routinely identify and implement solutions that drive incremental unit cost
reductions through additional sourcing, substitutions and better demand management
► Procure to Pay Process: the process of obtaining and managing the materials needed for a product or service
► Governance and Risk Management: an organization’s coordinated strategy for managing the broad issues of corporate
governance, enterprise risk management and corporate compliance with regard to regulatory requirements. A comprehensive risk
program in the opinion of EY US involves the effective identification and avoidance of fraud, waste and abuse
► Internal Stakeholder Management: an organization’s management of the people who may be affected by the decisions it makes
or who can influence the implementation of its decisions
► Technology: tools that automate the organization’s process actions and extract data
► Performance Management: an ongoing process of communication between a supervisor and an employee that occurs
throughout the year, in support of accomplishing the strategic objectives of the organization
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Procurement maturity model rating and definitions(part 1 of 2)
Topic Informal/no process Functional Standardized Collaborative Leading
Strategic
Direction
No procurement strategy
is in place
Procurement strategy is
not defined in a number of
areas and there is no
visibility on key future
initiatives
Procurement strategy and
formal idea of future
initiatives exist in most
areas, but procurement
strategies are not always executed
Full understanding of the
transformational journey
that must be followed and
a demonstrated history of
success
Detailed plans updated on
a regular basis with cross-
functional executive
support on the journey to
procurement excellence
People and
Organization
The procurement
department is seen as a
second-tier function and
focuses on administrative
activities
Procurement employees
exhibit transactional skill
sets but the department is
not recognized as a value-
adding function
Procurement employees
demonstrate strategic
thinking and focus more on
category management than
administrative tasks
Procurement employees
exercise strategic thinking
and category management
and attract internal and
external talent
Procurement has a global
network of high-quality
people who make the
department a desirable
place within the company
Category,
Contract and
Supplier
Relationship
Management
Day-to-day pressure
dictates the activity of the
department, there is
limited leverage of
strategic sourcing opportunities and no
contracts are in place
The procurement
department is driven by
contract end dates, does
not have strategic
procurement plans, leverages regional
sourcing on an ad hoc
basis and has few
contracts
Formal strategic sourcing
process, leverage global
sourcing on most
categories with mid-term
plans for key categories and contracts are in place
but are managed by BUs
Comprehensive strategic
sourcing process, mid- to
long-term category plans
with a global focus on key
categories, and contracts are managed by category
managers
Sourcing approach is
recognized as one of the
best in the market,
preferred vendors are
established and contracts are reviewed with
suppliers at least annually
Technology There is no P2P system in
place
Basic P2P systems exists
in most business units
(BUs) but systems are not
linked together, few e-
catalogs exist and many transactions are still
processed manually
P2P systems are in place
in all BUs and functional
procurement areas but are
not integrated, e-catalogs
are in place and maverick buying still occurs
Harmonized P2P systems
exist and are widely used,
manual processes have
been eliminated and there
is moderate adoption of e-catalogs with key suppliers
One integrated P2P
system across the
organization that links all
POs and suppliers
Page 187Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Procurement maturity model rating and definitions(part 2 of 2)
Topic Informal/no process Functional Standardized Collaborative Leading
Governance
and Risk
Management
No governance body in
place to support overall
purchasing strategy,
noncompliance is high and
organization is reactive to risk
Governance exists for a
few key purchases, low
compliance and risk
management is
acknowledged within other functions
Processes and systems
are formally documented
and published but are not
always enforced,
inconsistent compliance and siloed risk
management capabilities
Governance model has
been established and is
supported by executives
and there are
multifunctional integrated risk assessment, planning
and response capabilities
in place
Governance body is in
place, documented
processes and controls
are in place, the
organization is nearly always compliant and
predictive supplier risk
management exists
Internal
Stakeholder
Management
Procurement works in its
silo and internal customers
do not think it adds value
to the organization
Some areas of
collaboration with other
departments but is not
uniformly seen as high
value
Procurement is regularly
consulted but not fully
integrated with other
processes in other
departments
Procurement is engaged
early in the process and
manages cross-functional
streams
Procurement proactively
manages all categories in
close collaboration with
relevant departments
Procure to Pay
Process
No standard P2P
processes in place and
existing processes require
manual paperwork
Basic P2P process without
guidelines and a mix of
paper-based and
electronic processes
End-to-end P2P processes
in place but low levels of
compliance
Fully integrated and
automated P2P processes
are in place and
compliance is high
Lean and highly integrated
P2P processes, e-
catalogs and a robust
order tracking process
Performance
Management
No monitoring of the
performance of the
procurement department
Basic metrics are in place
but provide limited insight
and may not be linked to
business performance
Formal metrics exist but
are not consistently used
and are not closely linked
to performance
Savings targets are in
place to monitor
department performance
and KPIs link to
performance
Sophisticated balanced
scorecards are in place
and KPIs are integrated
with performance
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to limitations and restrictions on page 2.
Critical issue: converting strategy into operating model
An operating model is the foundation for successful execution which, delivers on an
organization’s strategic intent.
What is our core mission?
► Service populations
► Equity, access, accountability
► Transparency, integrity and trust
Who are our customers/constituents?
► Citizens
► Medical providers and researchers
► State leadership
What is our service delivery strategy?
► Products and services
► Client and provider engagement
► Education and outreach
How do we operationalize our strategy?
► Business process structure
► Organizational structure
► Governance and decision-making
► Performance metrics and accountability
► Operating locations
► Technology enablement
How will we allocate resources and
measure results?
► Budget allocation
► Performance scorecard
► Service delivery vendor scorecards
Agency strategy Operating model
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to limitations and restrictions on page 2.
Governance process gaps process flow(heat map)
Lack of key activities leaves HHSC open to various levels of risk. Levels of risk are identified by the
triangles in the key.
Process flow developed by EY US based on:
► PCS document OP 571 RFP Contract Procedures_FINAL 07-30-218.doc published 31 July 2018.
► Interview with HHSC team members.
Note: Process flow includes “persona-based.”
Extended process flow is available in Visio format. High risk Medium risk Low risk
Page 190Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Governance process gaps
Highlighted risk areas from the governance process flow are listed below:
Procurement phase Process flow identifier Process gap
All phases Key documentation related to the procurement process is not consistently maintained
by PCS.
Document development/solicitation phase Programs do not consistently follow a formal process with the contract managers and
PCS to discuss future procurement objectives, resulting in a lack of planning and PCS
not being fully aware of the program's needs.
Conflict of interest checks between the employee/requestor and vendor are not being
consistently performed.
Standardized tools are not consistently utilized throughout the evaluation process.
Standard turnaround time for approval or rejection of purchase requisitions is not
sufficiently defined in the policies and procedures.
CAPPS has not been fully configured to route procurements for approval based on the
dollar amount of the transaction.
A Form 515 is completed to determine which approvals should be obtained. However,
the form is not being consistently completed accurately and/or entered accurately into
CAPPS.
If an approver supports multiple approval roles within the workflow, his or her initial
approval will count toward all approvals required by that individual. Once the approver
has approved the requisition at the first approval point, CAPPS will then auto-approve
him or her at later workflow approval points and the requisition will automatically move
to the next individual who needs to approve. Therefore, it is important that a reviewer
be aware of what his or her approval means when he or she initially approves a
requisition. However, reviewers expressed confusion related to what in the requisition
and/or contract they were responsible for reviewing.
1
2
3
4
5
6
7
8
High risk Medium risk Low risk
Page 191Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Governance process gaps
Highlighted risk areas from the governance process flow are listed below:
Procurement phase Process flow identifier Process gap
Conflict of interest review Conflict of interest checks between the employee/requestor and vendor are not being
consistently performed.
Procurement evaluationsStandardized tools are not consistently utilized throughout the evaluation process.
Interview and selections Sufficient training is not performed to provide procurement evaluators with the skills
and knowledge to properly perform evaluations.
Processes do not sufficiently define which scoring criteria should be used to evaluate
procurements.
Procurements are not consistently being reviewed by the same team; therefore, not all
evaluators reviewed all proposals received.
Evaluators are not consistently scoring all respondents.
All relevant scoring documentation (both hard copy and electronic) is not consistently
maintained.
Standardized tools are not consistently utilized throughout the evaluation process.
Contract negotiations PCS does not have a sufficient formal appeal process for procurement protests,
including an appeal review panel or established process in handling and/or resolving
protests from bidding vendors.
Recommendation for awards Conflict of interest checks between the employee/requester and vendor are not
consistently performed.
High risk Medium risk Low risk
3
4
9
10
11
12
13
4
14
3
Page 192Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
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Governance process gaps
Highlighted risk areas from the governance process flow are listed below:
Procurement phase Process flow identifier Process gap
After contract award phase CAPPS has not been fully configured to route procurements for approval based on
the dollar amount of the transaction.
A Form 515 is completed to determine which approvals should be obtained. However,
the form is not consistently being completed accurately and/or entered accurately into
CAPPS.
If an approver supports multiple approval roles within the workflow, his or her initial
approval will count toward all approvals required by that individual. Once the approver
has approved the requisition at the first approval point, CAPPS will then auto-approve
him or her at later workflow approval points, and the requisition will automatically
move to the next individual who needs to approve. Therefore, it is important that a
reviewer be aware of what his or her approval means when he or she initially
approves a requisition. However, reviewers expressed confusion related to what in
the requisition and/or contract they were responsible for reviewing.
Standard contract templates are not consistently utilized across the Agency.
6
7
8
15
High risk Medium risk Low risk
Page 193Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Policy assessment
Page 194Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Governance spotlight: policy assessment
Upon review of procurement and contract guides used by HHSC, particularly the Comptroller’s
Procurement and Contract Management Guide and HHSC’s Contract Management Handbook, some key
findings include:
► Policy at all levels (statute, rule, external guidance, internal policies) related to procurement, contract
management and reporting is not fully up to date, cohesive and consistent.
► The Agency lacks an updated procurement manual and is utilizing the Comptroller of Public Accounts
Procurement and Contract Management Guide (PCMG) as its manual in the interim.
► Requirements for engaging external governance are generally disparate and not automated.
► Reporting requirements in many cases could be consolidated or the frequency reduced to limit time
spent reporting.
► There are numerous non-value-added steps in the process that are not required by statute or rule.
► There is little to no support for procurement provided by the CPA Statewide Procurement Division
(SPD), and all procurements are considered delegated unless CPA SPD decides it wants to manage
them.
A detailed review of key policies is provided in the Appendix.
Governance spotlight: policy assessment
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to limitations and restrictions on page 2.
Policy/rule assessment report
Policy/rule reviewed Key gaps Overengineered policies
TAC §391
(v. 6/2015)
► Rule was adopted prior to completed
transformation and may not reflect current
HHSC PCS policies or procedures.
► Rule permits correction of minor
irregularities in vendor responses but is not
currently being allowed.
► Streamlined purchasing methods are
permitted for purchases under $25k;
however, these methods are not used.
► The open enrollment process is identified
but utilizes an RFA process that is not
allowed for use in procurement.
TAC §391, Subchapter D
(v. 6/2015)
► The vendor protest procedures under these
rules align with the comptroller’s procedures
and are compliant with Texas Government Code §2155.076; however, the procedures
can outline more specific requirements:
► For example, HHSC can require that
relevant facts should include a
description of the adverse impact to the
state and a description of the adverse
impact to the protester.
► Additionally, HHSC can specify that it
may attempt to settle and resolve a
protest by mutual agreement before
issuing a written determination.
Page 196Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Policy assessment report
Policy reviewed Key gaps Overengineered policies
CPA Procurement &
Contract Management
Guide (v. 8/2018)
► No service level agreements (SLAs)
provided for interactions with entities
involved in required-use programs (TCI,
TIBH, SPD, etc.).
► Requirements for delegation requests and
Agency review and approval are handled
outside of enterprise systems using
disparate processes (forms, portals,
reporting) and communication methods
(phone, fax, numerous email accounts, etc.).
► There are two distinct processes for SPD
review of goods and services.
► All communications with SPD are required to
be emailed.
► CPA SPD treats the process for non-
delegated procurements as a request for
delegation rather than meeting its
requirements to facilitate the procurement on
behalf of the Agency. Agencies, even if not
seeking delegation, are treated as such.
► Definitions of contract value between CPA
and DIR do not fully align.
► Requirement that a cost estimate be
developed for all procurements
► Requirement that agencies submit all non-
delegated goods and services procurements
to CPA
► Requirement for monthly reporting for
exceptions to state use programs
► Requirement that TCI be given a final
opportunity to provide a lower bid for print
services when already given an opportunity
to bid
► Requirement that the bid tab be sent to all
print shops upon award for print services
► Requirement to report for emergencies is not
based on delegated authority levels
► Emergency procurements over $25k are
required to be posted to the Electronic State
Business Daily (ESBD) and are subject to
CAT and QAT reviews
► Requirement that CPA SPD provide a
delegation letter for every delegation request
► Requirements that purchase of IT
commodities not on contract be certified by
DIR prior to purchase
Page 197Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Policy assessment report
Policy reviewed Key gaps Overengineered policies
CPA Procurement &
Contract Management
Guide (v. 8/2018)
(In lieu of HHSC
Procurement Manual that
is outdated and not used
by the Agency)
► Delegation requests can take up to 30 days
to process, and the Agency is not allowed to
act until delegation has been granted even
after the 30-day SLA.
► DIR statement of work (SOW) reviews
require submission 30 days before the
anticipated procurement date.
► Delegation, review and approval
requirements between non-IT and IT
procurements are not aligned.
► Definition of major consulting services is
below the Agency-delegated authority for
services.
► No contact information provided for required
submission of forms to the Governor’s
Office.
► RFP and RFP processes are identical.
► RFA is not a procurement method; it is a
method to request grant applications only.
► Required documentation is not supported by
templates in many cases.
► There is the ability to address minor
irregularities or deficiencies in vendor
responses to help make their submission
responsive.
► Requirement for DIR to review and sign
Agency SOWs for certain preestablished
contracts (Note: dollar threshold is also
below established delegated authority levels
for services)
► Requirement for DIR to review final agreed-
upon SOW (contract)
► Requirement that agencies report to LBB
within 10 days of award for certain
professional services and consulting
services contracts
► Requirement that notice be posted to the
Texas Register to advertise the procurement
within 20 days for consulting services
contracts (including new postings for
renewal or extension)
► Requirement that notification be given to
LBB and Governor’s Budget & Planning
Office, with receipt of a finding of fact, prior
to contracting for major consulting services
($15k+)
► Requirement that the entire evaluation be
performed again for all members following
oral presentations
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to limitations and restrictions on page 2.
Policy assessment report
Policy reviewed Key gaps Overengineered policies
CPA Procurement &
Contract Management
Guide (v. 8/2018)
► There are conflicting reporting requirements
for Agency contracts (all or $100k+ only?).
► Requirement exists that the Agency provide
solicitation and contract information in
CAPPS according to CPA rule, but no
reference to the requirements or rules exists.
► There is a lack of a comprehensive set of
required documents that must be included in
all solicitations.
► HUB process and requirements, especially
the disqualification of a vendor for not
properly completing the HUB form, even
though it cannot be considered in
evaluation
► Requirement that QAT review and approve
major IT contracts exceeding $10m
► Requirement that agencies report award of
the contract to QAT after their review
► Requirement that all Agency contracts for
goods and services of more than $1m be
signed by the executive director
► Requirement that all Agency contracts for
goods and services of more than $5m be
verified in writing by the procurement officer
or contract management office
► Requirement that Agency purchasers
perform numerous checks of state and
federal systems to verify vendors prior to
award
Page 199Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Policy assessment report
Policy reviewed Key gaps Overengineered issues
CPA Procurement &
Contract Management
Guide (v. 8/2018) (Cont.)
► LBB reporting requirements are not aligned
and not consolidated
► Requirement that the Agency post all
contracts and DIR SOWs not included in the
LBB contracts database on the Agency
website (redacted versions) upon award of
contract
► Requirement for vendor performance
reporting for all contracts of more than $25k
at end of contract life
► Requirement that employees who worked on
a procurement or contract in any way are not
allowed to accept employment from any
respondent to that procurement for two
years, regardless of whether the respondent
was given a contract
Page 200Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Policy assessment report
Policy reviewed Key gaps Overengineered policies
HHSC Contract
Management Handbook
(v. 4/2018)
► Updates are communicated through
GovDelivery, which requires users to
subscribe.
► Outdated references exist in some places
with issuance of new guidance from CPA in
August 2018.
► There are likely outdated processes in some
places with issuance of new guidance from
CPA in August 2018.
► Dates on sections of the manual vary
dramatically, from April 2016 to March 2018.
► References in the manual to HHSC
agencies and system remain and need to be
updated to reflect transformation efforts.
► Vendor interaction policy does not align with
PCS policy.
► The handbook references the HHSC
Procurement Manual that is outdated and
not utilized by staff.
► Lack of clarity on whether a cost-benefit
analysis is a “should” or a “must” process.
► Rule requires that contractors meet or
exceed standards of conduct required of
HHSC contract managers (PCS.122 form,
recertified annually)
► Legal review of procurement documents for
purchases of more than $25k
Page 201Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Key external process requirements with process/velocity impacts
► Requirements for delegation requests and Agency review and approval are handled outside of
enterprise systems using disparate processes (forms, portals, reporting) and communication methods
(phone, fax, numerous email accounts).
► There are distinct processes for the review of goods and services in the SPD.
► Delegation requests can take up to 30 days to process, and the Agency is not allowed to act until
delegation has been granted even after the 30-day SLA.
► DIR SOW reviews require submission 30 days before the anticipated procurement date.
► Definition of major consulting services is below the Agency-delegated authority for services.
► Requirement to report for emergencies is not based on delegated authority levels.
► There is a lack of a comprehensive set of required documents that must be included in all
solicitations.
► Required documentation is not supported by templates in many cases.
► Requirement exists that the Agency provide solicitation and contract information in CAPPS according
to CPA rule, but no reference to the requirements or rules exists.
► Requirement exists that notice be posted to the Texas Register to advertise the procurement within
20 days for consulting services contracts (including new postings for renewal or extension).
► Requirement exists that notification be given to LBB and Governor’s Budget & Planning Office, and
receipt of a finding of fact, prior to contracting for major consulting services ($15k+).
► The HUB process requires disqualification of a vendor for not properly completing the HUB form.
Page 202Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Governance spotlight: forms and standards
► A review of forms and standards revealed that with the exception of a few areas of noncompliance or
risk noted below, forms were generally compliant; however, a comprehensive understanding of when
and how to use forms in the process is not generally shared.
► Forms, templates and internal process guides are updated ad hoc, with little to no communication to
program staff and no single repository available to all procurement stakeholders (PCS and programs).
► A rigorous document management process is lacking. During the review process, PCS forms
retrieved from the SharePoint directory reflected earlier dates than hard copies provided to the
interview team.
Identified areas of noncompliance or risk
Document Reviewed Observations
PCS.08: Justification Procurement Selection
(v. unknown)
► Issue regarding the required approval of division/program staff. It implies some level of
purchasing authority by the program that should not exist.
► Document may have been created with good intentions to seek approved input from the
program. However, this blurs the line of purchasing authority and PCS’s role in the
procurement process.
PCS 144: Waiver IT Purchases
(v. 2/2015)
PCS 701: Waiver of Notification to all DIR Vendors
(v. 3/2017)
► PCS 144 appears to have been replaced by PCS 701.
► Purpose of either of the forms is not clear. There is no current requirement that
deliverables-based IT services SOWs be sent to all DIR vendors. If either form is
intended to be a sole source approval, the section for proposed procurement method
seems contradictory.A detailed review of forms is provided in the Appendix.
General observations
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to limitations and restrictions on page 2.
Forms and standards
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to limitations and restrictions on page 2.
Forms and standards
Document reviewed Observations
PCS.07: Engaging Vendor Guidelines
(v. 9/2016)
► Overall, document is compliant with the Comptroller’s Procurement and
Contract Management Guide (CPA’s PCMG).
► However, the form only addresses one aspect of vendor communication
(presentation and demonstration). It should include a reference to CPA’s
PCMG for other types of vendor contact.
► Some key information, such as who/where to communicate the request and
expected turnaround time frame, is missing. Also, the policy number in the
document is a different number from the title of the file.
PCS.08: Justification Procurement Selection
(v. unknown)
► Issue regarding the required approval of division/program staff. It implies
some level of purchasing authority by the program that should not exist.
► Document may have been created with good intentions to seek approved
input from the program. However, this blurs the line of purchasing authority
and PCS’s role in the procurement process.
RCD-16: Enterprise Risk Assessment
Instrument
(v. 12/2016)
► Overall, document is compliant with CPA’s PCMG.
PCS 111: Terms and Conditions
(v. 7/2018)
► Overall, document is compliant with CPA’s PCMG and Texas Government
Code for required clauses.
Document review
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to limitations and restrictions on page 2.
Forms and standards
Document reviewed Observations
PCS 117A: Nondisclosure and Conflicts of
Interest Certification
(v. 8/2017)
► Overall, document is compliant with CPA’s PCMG.
PCS 126: Centralized Master Bidders List
(CMBL) Supplementation Approval Request
(v. 11/2008)
► Overall, document is compliant with CPA’s PCMG.
► However, it needs a signature line for approval.
PCS 130: Conflict of Interest, under CPA
delegated authority
(v. 8/2017)
► Overall, document is compliant with CPA’s PCMG.
► It is out of date; it references an old CPA procurement manual.
PCS 138: ESBD Solicitation Approval
(v. 10/2016)
► Overall, document is compliant with CPA’s PCMG.
PCS 144: Waiver IT Purchases
(v. 2/2015)
PCS 701: Waiver of Notification to all DIR
vendors
(v. 3/2017)
► PCS 144 appears to have been replaced-by PCS 701.
► Purpose of either of the forms is not clear. There is no current requirement
that DBITS SOWs be sent to all DIR vendors. If form is intended to be a sole
source approval, the section for proposed procurement method seems
contradictory.
PCS 147: Vendor Performance Reporting
Form
(v. 5/2017)
► Overall, document is compliant with CPA’s PCMG.
PCS 160: HHSC Solicitation Checklist
(v. 6/2018)
► Overall, document is compliant with CPA’s PCMG.
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to limitations and restrictions on page 2.
Forms and standards
Document reviewed Observations
PCS 160-G: Legal Entity Screening Guide
(v. unknown)
► Overall, document is compliant with CPA’s PCMG.
PCS 201: Contract Routing $1m and Over
(v. 3/2017)
► Overall, document is compliant with CPA’s PCMG.
PCS 406: HHSC HUB Subcontracting
Determination
(v. 3/2017)
► Overall, document is compliant with CPA’s PCMG.
PCS 415: HHSC HUB Subcontracting Plan
Review
(v. 10/2016)
► Overall, document is compliant with CPA’S PCMG but may want to consider
adding further sections that provide for comments of the review of the
method that was selected. For example, if the contractor does not intend to
subcontract, was its self-performing justification acceptable?
► For clarity, may consider revising Section II. Method 5 (no intention to
subcontract) is included with the options for intention to subcontract.
PCS 515: Routing Form
(v. 4/2018)
► No information on the form is given regarding how program is selecting its
approvers.
PCS 540 & PCS 541: Kick-off Meeting
Agenda & Sign-in
(v. unknown)
► Overall, document is compliant with CPA’s PCMG.
PCS 550: RFP Template
(v. 3/2017)
► While the basic recommended RFP elements are present, it is not best
practice to use an unlocked Word document as a template. This practice
requires management and Legal to review the entire document each time it
requires their approval. Modular templates with locked sections are far more
efficient.
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to limitations and restrictions on page 2.
Technology spotlightCore technology (1 of 3)
System Assessment description Industry insights
Procurement Tools
in CAPPS – The
state’s ERP system
CAPPS was intended to automate 80% of HHSC’s procurement and
contracting processes. The CAPPS system has been heavily modified
for HHSC, but the scope of these modifications is limited by a variety
of factors, including, but not limited to, hard-coding of the software,
licensing restrictions, CPA-mandated functionality, statutory
requirements, limited budget, a desire for process consistency and a
complete lack of input from user groups. There was no data
architecture planning or consideration for HHSC’s transaction volume
included in the implementation process. While some performance
issues still remain, the debilitating latency in system processing time
has recently been addressed by PCS.
As currently configured, the CAPPS system:
► Is not user-friendly
► Has functionality that does not support Agency business processes
(e.g., proposal evaluations, contract management, adequate
approval workflow, strategic sourcing, complex contracting or
reporting)
► Does not allow for flexibility where certain steps add no value
(e.g., “Collaboration” process outside of contract development)
► Does not offer dashboard reporting/status updates
► Contains preloaded templates that are outdated and/or have
limited utility
► Has minimal data visibility
eProcurement functionality in a modern ERP
system must facilitate automation of Agency
business processes and enforce all necessary
controls. In order to enhance system
functionality, customization should seek to
address the needs of all stakeholders in
accordance with Agency priorities. This effort
should include standardization and optimization
of business processes to operate in an
automated environment.
Effective system customization must be
preceded by an Agency-level needs assessment
to inform system architecture design (including
any integration requirements) as well as
comprehensive implementation planning.
It is key to purchase a system that provides the
majority of the organization’s required
functionality without customization. The right
system solution should be able to meet the
majority of the organization’s requirements
through a combination of process optimization
and functionality configuration.
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to limitations and restrictions on page 2.
System Assessment description Industry insights
SCOR – HHSC’s
contract
management system
SCOR was developed specifically to meet the contract management
needs of HHSC, so it offers functionality that is more intuitive and more
closely aligns with Agency business processes. However, there are
data integrity issues in SCOR due to undertrained and overworked
staff inputting incorrect information and errors in the legacy data
conversion from other systems.
As currently deployed, the SCOR system:
► Lacks complete data from legacy systems
► Contains inaccurate data for current and expired contracts due to
coding and filing errors
► Lacks modern contract management automation tools (e.g.,
dashboard reports, automated reminders and supplier enablement)
► Requires updates in multiple function areas.
As the official system of record, it is essential that
the contract management component of an
eProcurement system contain complete and
accurate procurement documentation. Validating
the integrity of the data loaded into the system is
the key to ensuring its utility.
If contract management functions are performed
outside of the ERP, the tool should be fully
integrated with the ERP’s procurement module.
Technology spotlightCore technology (2 of 3)
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System Assessment description Industry insights
Digital signature tool
– HHSC’s tool for
contract document
review and approval
Users are generally happy with the functionality of the digital signature
tool system was designed to provide. Issues arise when it is used
inconsistently (sometimes contract documents are routed through the
digital signature tool and sometimes not) or as an alternative to the
approval workflow facilitated by CAPPS. The inconsistent use of
various systems to perform procurement governance functions creates
significant risk for the Agency and may result in negative audit findings.
HHSC’s current licensed software products include a tool that is very
similar to the digital signature tool that integrates directly into the
software behind CAPPS. This tool can be configured to look and feel
just like the digital signature tool, and it has the added benefit of triple
authentication and compliance with Internal Revenue Service (IRS)
regulations.
As currently deployed, the digital signature tool:
► Only offers single authentication
► Is not integrated with CAPPS
► Creates risk through a lack of consistent use and tools for policy
enforcement
► Is a software tool not owned or managed by IT
The use of electronic signature and review
software can greatly enhance an organization’s
ability to route documents efficiently and
transparently. However, it is important to
safeguard that the use of this software is part of
the eProcurement system process, not used
instead of it. Where an integrated solution is
available, it is preferred, to reduce risk and
increase transparency.
Protocol should be established for the use of the
software and should be enforced via spot checks
and internal audits.
Technology spotlightCore technology (3 of 3)
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Current state Capability description
Capability 1: ERP system integration plan
Capability 2: The eProcurement system core process
Capability 3: User types and associated permissions
Capability 4: Configurable workflow/approvals
Capability 5: Agency-wide accounting code set
Capability 6: Resources dedicated to assist users
Capability 7: Solicitation and contract document templates
Capability 8: Centrally based contract milestones records
Capability 9: Audit trail for contract documents/actions
Capability 10: Agency procurement document management
Capability 11: Spend data leveraged for strategic contracting
Capability 12: Agency data transparency requirements
Capability 13: Supplier self-service capacities
Capability 14: Vendor performance tracking
Capability 15: Dashboard capacity
Technology spotlightCore technology | systems gap analysis
Legend:
Present
Partial
Not present or
inadequate
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Technology spotlightNoncore technology
Enabling technology Purpose Owner
Solicitation Evaluation Excel Sheet Capture solicitation responses and calculate rankings PCS
Excel Spreadsheet Comprehensive, offline contract tracking HHSC Programs
Outlook Communicate regarding contract status and set reminders
for upcoming required contract actions
HHSC-IT
CRM tool Manage document review requests from internal customers DFPS Legal
HEART Track data entry activities PCS
IMPACT Capture contract data and KPIs for service agreements DFPS
PEIR (Prevention and Early
Intervention Review)
Vendor monitoring by case managers DFPS
ABCS Conduct background checks on vendors DFPS
PMET Monitor and track vendor performance DFPS
DTS Delivery tracking system Medicaid Managed
Care
CMBHS e Health Record Processing claims CM
MCATS Contract administration tracking Medicaid
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Technology spotlightNoncore technology
Enabling technology Purpose Owner
Source Processing payments CM
CMBL Centralized master bidders’ list CPA
TxSmartBuy Purchasing items from statewide contracts CPA
VPTS Vendor performance tracking CPA
ESBD Electronic State Business Daily – solicitation posting
platform
CPA
Procurement Oversight and
Delegation Portal
Procurement authority delegation and review CPA
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Capability assessment
Current state description Mission-critical systems have been integrated or interfaced with CAPPS, as applicable, at
a basic level. However, there are issues with data integrity, duplicate entry of data across
systems and duplicate functionality across systems.
Root cause A comprehensive system integration plan is necessary for determining which existing
systems need to integrate or interface with the new procurement system, as well as which
legacy systems can be replaced by functionality in the new system. Prior to implementing
CAPPS, HHSC-IT made an effort to confirm all key purchasing-related systems were
integrated or interfaced with the system to avoid loss of data. However, HHSC does not
have a complete application portfolio detailing the data architecture, relationship diagrams
and user models for all purchasing-related systems.
Core technologySystems gap report
Capability 1: ERP system integration plan is fully executed and all data is accurate and readily
accessible.
Legend: Present Partial Not presentor inadequate
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Capability assessment
Current state description Rather than automating their purchasing processes to achieve efficiencies and
transparency, many user groups have added the CAPPS system process to their offline
processes. Users perceive CAPPS as an impediment to efficiency because its
configuration the ability to support their unique procurement needs.
Root cause CAPPS has been heavily modified to accommodate State of Texas statutory contracting
requirements as well as HHSC-specific contracting needs; however, the current system
configurations are not designed to support a specific set of Agency or Program
purchasing policies and/or processes.
Core technologySystems gap report
Capability 2: The eProcurement system supports documented purchasing processes, specifically
purchase request and purchase order development.
Legend: Present Partial Not presentor inadequate
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Capability assessment
Current state description CAPPS supports the establishment of a distinct framework of delegated procurement
authority that can be enforced by the system through the assignment of user roles and
privileges. Unfortunately, there is no user role that allows a person to pick up the workload
of another. This results in rework.
Root cause The authority is determined by HHSC policy restrictions, which do not necessarily
coincide with state procurement statutes and rules (HHSC policy is sometimes more
restrictive). System security risk aversion is manifested in overly restrictive role
assignments with no ability to override assignments to prevent inefficiencies.
Core technologySystems gap report
Capability 3: The eProcurement system supports defined user types and associated permissions.
Legend: Present Partial Not presentor inadequate
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Capability assessment
Current state description Workflow in CAPPS is restricted to six levels of approval that cannot be changed at the
division level. This can result in certain required approvers being excluded from the
process.
In the absence of a dynamic approval workflow and document management tools in
CAPPS, the digital signature tool has been used beyond its initial purpose to meet users’
needs. The inconsistent use of various systems to perform procurement governance
functions creates significant risk for the Agency and may result in negative audit findings.
Root cause During configuration, the established governance practices at HHSC were not reconciled
with the workflow functionality in the system.
Core technologySystems gap report
Capability 4: eProcurement system facilitates a configurable workflow and approval structure for various
users and purchase types.
Legend: Present Partial Not presentor inadequate
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Capability assessment
Current state description The accounting codes in CAPPS are derived from the statewide codes used in the legacy
financial system, USAS. While the code set is serving its intended purpose, there is a
need for user training to certify the correct codes are entered for each transaction. Coding
errors are common and have a significant downstream impact on the accuracy of state
records.
Root cause Training is not sufficiently comprehensive to individuals needing to use the system
with quality.
Core technologySystems gap report
Capability 5: Agency-wide accounting code set loaded in the ERP is sufficient to meet the state’s needs.
Legend: Present Partial Not presentor inadequate
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Capability assessment
Current state description There are user guides and a help desk (phone line and email box) dedicated to assisting
users with eProcurement functions in CAPPS. However, users report that the guides are
often outdated, help desk response rates vary and hands-on training is lacking entirely.
Some teams have developed their own internal training to try to address the most
pressing issues.
Root cause The transition to an automated procurement system can be especially burdensome to
smaller teams lacking dedicated procurement staff as well as those teams experiencing
high rates of staff turnover. Tools and guides can be incorporated into the system, but the
type and format can vary widely. Without consistent curriculum updates and predictable
training delivery schedules, it is not possible to achieve skill standardization.
Core technologySystems gap report
Capability 6: Resources dedicated to assist users with navigating the eProcurement system.
Legend: Present Partial Not presentor inadequate
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Capability assessment
Current state description CAPPS has the ability to support the use of contract instrument templates. Some
solicitation and contract documents have been developed in CAPPS; however, they are
perceived to have limited usefulness for the highly variable needs of the vast program
areas. When entering information according to system prompts, users often feel that the
options presented do not apply to their situation, which contributes to overall frustration
and loss of efficiency, and which encourages users to seek alternative methods to
process their procurements. Furthermore, many of the existing templates are in need of
updates, rendering them obsolete.
Root cause There is no baseline set of procurement processes and procedures that can be applied
across HHSC. Each area has unique needs, some of which can be standardized, some of
which cannot.
Core technologySystems gap report
Capability 7: The eProcurement system supports the use of established solicitation and contract
document templates.
Legend: Present Partial Not presentor inadequate
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Capability assessment
Current state description SCOR was developed by HHSC to facilitate uniform contract management practices;
however, contract management responsibilities are held by different staff members in
various roles across the agencies.
Root cause There is no central contract management office responsible for all HHSC contracts, and
there is no consistent reporting structure for sharing key contract information with PCS
such as whether the contract is in good status. This inconsistency of practice and lack of
visibility into contracts throughout their life cycles makes centralized tracking impossible.
Furthermore, transparency and strategic decision-making efforts are negatively impacted.
Core technologySystems gap report
Capability 8: Records in the contract management system are tracked centrally based on key
milestones.
Legend: Present Partial Not presentor inadequate
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Capability assessment
Current state description Audits are regularly performed by Agency internal auditors, the State Auditor’s Office and
the federal government to evaluate Agency compliance with procurement regulations and
policies. During these audits, staff members are not currently able to pull reports
demonstrating all actions associated with a particular contract or procurement event.
While time stamps are present for certain activities, they are difficult to pull in a
comprehensive manner, and most staff members lack the technical knowledge to find this
information. Staff members typically piece together records from CAPPS, SCOR, email
and Excel spreadsheets to build a complete contract/transaction record for audit review.
Root cause Audit requirements were not well defined during CAPPS implementation and
configuration efforts.
Core technologySystems gap report
Capability 9: The eProcurement system creates a clear audit trail for all contract documents and actions.
Legend: Present Partial Not presentor inadequate
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Capability assessment
Current state description CAPPS does not have document management capabilities. SCOR and the digital
signature tool offer some tools for storing and managing document versions, but neither
offer comprehensive document management capabilities at the Agency level. Presently,
contract documents are stored in various systems (CAPPS, SCOR, the digital signature
tool, email, shred file drives, etc.) and in paper form.
Root cause None of the procurement-related systems (CAPPS, SCOR or the digital signature tool)
were acquired to serve as a document management system. There has been no Agency-
level document management strategy that would drive development of requirements for a
document management system.
Core technologySystems gap report
Capability 10: The eProcurement system supports an Agency document management strategy (a
detailed plan for managing procurement-related documents in a procurement system).
Legend: Present Partial Not presentor inadequate
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Capability assessment
Current state description Strategic contracting is encouraged by leadership, but there has been no comprehensive
effort to use Agency-wide spend data to define a methodology that prioritizes action and
identifies opportunities.
Root cause Rapidly changing policy, workload backlog, high staff vacancy rates and lack of data
analysis capabilities all contribute to this deficiency.
Core technologySystems gap report
Capability 11: eProcurement system helps enable the central procurement office to conduct strategic
contracting, and spend data is used to drive strategic procurement decisions.
Legend: Present Partial Not presentor inadequate
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Capability assessment
Current state description While reports are technically available for any data field populated in CAPPS, the spend
data reports currently available for HHSC lack detail and can be difficult to understand.
Reports have not been developed to display procurement data for ease of use by any
user group. “Dashboard” functionality (presenting user-specific statistics and info on a
homepage upon login) is not currently available in CAPPS.
Root cause CAPPS was not configured to facilitate public inquiry into contracting data. Specific report
development and/or interfacing with a public-facing site is necessary to support
transparency efforts.
Core technologySystems gap report
Capability 12: The eProcurement system fulfills Agency requirements for transparency of spend data.
Legend: Present Partial Not presentor inadequate
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Capability assessment
Current state description Presently, vendors are not able to perform self-service for contract administration (e.g.,
updating contract-specific signatories, submitting status reports, tracking invoices and
submitting advanced shipment notices) in CAPPS.
Root cause CAPPS was not configured to support these vendor self-service activities. Some vendor
profile management is available via the Centralized Master Bidder’s List, but it does not
carry over into contract/transaction records.
Core technologySystems gap report
Capability 13: The eProcurement system supports supplier self-service for profile management, contract
administration, invoicing and delivery management.
Legend: Present Partial Not presentor inadequate
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Capability assessment
Current state description CAPPS does not currently have functionality to facilitate vendor performance tracking.
Root cause CAPPS was not intended to serve as a vendor performance tracking system. The state
relies upon a stand-alone system administered by the Texas Comptroller of Public
Accounts.
Core technologySystems gap report
Capability 14: The eProcurement system supports vendor performance tracking.
Legend: Present Partial Not presentor inadequate
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Capability assessment
Current state description One of the most frequently reported issues with CAPPS is lack of transparency. Typical
users do not have access to a status report for their requisitions, so they have to call their
assigned purchaser in PCS to inquire about status. The few users with access to the
relevant requisition information have to run queries and manipulate the results to
determine where their requisitions are in the process. This lack of visibility results in
frustration among users submitting requisitions and adds to the workload of buyers in
PCS who spend excessive amounts of time responding to these inquiries.
Root cause CAPPS does not offer dashboard status reporting as currently configured. The
customizations made to the system for HHSC did not take into account the need for staff
to easily access requisition status reports, or the inefficiencies that would result from this
lack of functionality.
Core technologySystems gap report
Capability 15: The eProcurement system provides users with visibility into the status of their work
products in a dashboard-style presentation.
Legend: Present Partial Not presentor inadequate
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HHSC stage view Level 1–Level 3
Interviews and review of procedures showed how many process steps are needed for a requisition.
Process flow developed by EY US is based on:
► PCS document OP 571 RFP Contract Procedures_FINAL 07-30-218.doc published
31 July 2018.
► Interviews with HHSC employees. Note: See Appendix for Level 4 details.
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to limitations and restrictions on page 2.
HHSC stage view Level 1–Level 3 process flow
Interviews and review of procedures showed how many process steps and number of interactions are
needed for a requisition.
Process flow developed by EYUS is based on:
► PCS document OP 571 RFP Contract Procedures_FI.NAL 07-30-218.doc published 31 July 2018.
Note: Process flow includes
“persona-based”
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Process stage view
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Procurement and contract services process overview
HHSC Agency/Program
► Forecasting
► Initial procurement planning
► Request for PCS liaison
► Contract manager to take full ownership
Legislative session
► Session comes up with directive.
► Session comes up with directive.
► Program leadership adopts idea.
► Idea comes from program; contract manager is a part
of program.
PCS Liaison
The PCS Liaison will coordinate with the HHSC
Agency/Program to assist with its procurement planning.
Resources the PCS Liaison may be asked to provide may
include, among other things:
► Prior solicitation documents
► Procurement timelines
► Assistance with identifying NIGP class/item codes
► Guidance on procurement methods
► Checklists of required forms and documentation
► Updates on any changes to the procurement process
since the last procurement cycle
Forecasting:
HHSC Agency/Program should have a process in place to
manage upcoming procurement needs. Often, this may be
accomplished by tracking current procurements/contracts
and by being familiar with the life cycle and end dates of
procurements/contracts.
Initial procurement planning
When an HHSC Agency/Program identifies the need to
begin a new procurement cycle, the HHSC
Agency/Program may request assistance from PCS,
Financial Services, Legal Services and/or Information
Technology.
Requests for a PCS Liaison should be sent to the
Associate Commissioner for Procurement and the Deputy
Associate Commissioner of Complex Purchases.
PCS Management
► Request for PCS Liaison
PCS Liaison
► PCS Liaison
Request for PCS Liaison
Upon request from an HHSC Agency/Program, the
Associate Commissioner for Procurement and the Deputy
Associate Commissioner of Complex Purchases will
assign a PCS Liaison to assist the HHSC
Agency/Program with procurement planning.
Request for PCS Liaison
Upon request from an HHSC Agency/Program, the
Associate Commissioner for Procurement and the Deputy
Associate Commissioner of Complex Purchases will
assign a PCS Liaison to assist HHSC Agency/Program
with procurement planning.
PCS Liaison
The PCS Liaison will coordinate with the HHSC
Agency/Program to assist with its procurement planning.
Resources the PCS Liaison may be asked to provide may
include, among other things:
► Prior solicitation documents
► Procurement timelines
► Assistance with identifying NIGP class/item codes
► Guidance on procurement methods
► Checklists of required forms and documentation
► Updates on any changes to the procurement process
since the last procurement cycle
Step 1: Anticipating solicitation need + procurement planning Level 3–Level 4
Level 2
Level 3
Action owner
List of activities
Level 4
Process flow created by EY US is based on:
► PCS document OP 571 RFP Contract Procedures_FINAL 07-30-218.doc published 31 July 2018.
► Interview with HHSC employees.
► Purple text indicates areas of risk.
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Procurement and contract services process overview
HHSC Agency/Program
► Identification of need
► Initial forms and requisition
PCS Manager
► Verification of req and assignment
PCS Purchaser
► Updating the req
► Program notification
► Assignment of support staff
► Procurement file and checks
Identification of need
► Program must identify the need and follow approved Agency procedures and
complete the required procurement forms, as applicable, to obtain appropriate
internal program approvals for the procurement.
Initial forms and requisition
► Program requestor completes the following forms and attaches them to the
requisition:
► Helps support the PCS 552–RFP Statement of Work (SOW) Template, or a
SOW in a usable format, is completed with all pertinent information
► Helps support the PCS 438–Contractor or Subrecipient Determination has
been completed and signed by Contract Oversight and Support, which is
forwarded and approved prior to the entering of the requisition
► Helps support the PCS 505–Cost Benefit Analysis is complete with all
pertinent information
► Helps support Program has provided a timeline
► Enters the CAPPS Financial requisition
► If the budget amount is unknown, a $0.00 requisition is entered on the line
however, the estimated dollar amount of the requisition should include the
total estimated contract value including all potential renewals entered in the
requisition entry wizard
► If the requisition document does not include the total contract value including
renewals within the request document, Purchaser or PCS Manager will notify
the program area that the requisition needs to be cancelled and reentered for
the correct approvals
► Needs assessment, which is generated by the requisition entry wizard
Verification of req and assignment
► The PCS Manager verifies the
requisition and that all forms are
complete and assigns to Purchaser. If
the requisition is not complete or all of
the required forms are not attached, the
requisition will be rejected and sent back
to the Program to complete and/or
correct.
Updating the req
► When the requisition is assigned, Purchaser updates the requisition and supports the necessary
forms have been received and completed.
► The purchaser:
► Assigns the Purchaser’s name to requisition
► Adds the appropriate Action Code in the supplier item ID field
► Confirms the PCS 438–Contractor or Subrecipient Determination has been completed
► Reviews the PCS 438 to support the determination is vendor
► If the relationship is recipient/subrecipient, then a Request for Application (RFA) would be the
proper procurement method, not an RFP
► Confirms the PCS 552–RFP SOW Template is completed or that there is a SOW in usable format
► Completes the Risk Assessment in CAPPS Financial
► Confirms the PCS 505–Cost Benefit Analysis is completed
Program notification
► Purchaser notifies, via email, and requests a list of stakeholders for the kickoff meeting.
Assignment of support staff
► Purchaser must support assignment of a HUB Coordinator, an HHSC Contract Attorney and a CQC
Financial Analyst.
Procurement file and checks
► To support all applicable forms have been received for the procurement, the Purchaser shall track all
requirements for the solicitation on the PCS 160–HHSC Solicitation Checklist – RFPs, RFAs, RFQs
and RFOs, as well as all relevant internal correspondence, and save all required documents to the
procurement file in the designated network folder located under Procurement Resources.
Step 2: Determination of need process Level 3–Level 4
Level 2
Level 3
Action owner
List of activities
Level 4
Process flow created by EY US is based on:
► PCS document OP 571 RFP Contract Procedures_FINAL 07-30-218.doc published 31 July 2018.
► Interview with HHSC employees.
► Purple text indicates areas of risk.
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Procurement and contract services process overview
RFP template
Purchaser uses the PCS 552–RFP SOW Template or the submitted SOW, completed by the HHSC Agency/Program, and inserts the required sections into the PCS 550–RFP template.
PCS Purchaser
► RFP template
► Draft timeline
► Scheduling the kickoff meeting
► Kickoff meeting
► Nondisclosure and conflicts of Interests
Draft timeline
The Purchaser will complete a draft timeline of the procurement using PCS 542 or 543. Timeline template is based on the antic ipated contract start date and other information provided by the HHSC Agency/Program timeline. The timeline is used to support all procurement steps have been
identified and to confirm who is responsible for each step. The timeline also includes the maximum time for each step; it is essential to modify this document as the procurement progresses.
Scheduling the kickoff meeting
Purchaser sends an email meeting notification to the HHSC Agency/Program assigned Project Manager/Contract Manager and identi fied stakeholders as well as the assigned HUB Coordinator and the HHSC Contract Attorney to schedule a kickoff meeting.
Note: The draft RFP solicitation document may not be complete when the kickoff meeting is scheduled. If possible, the RFP template should be populated by the time the kickoff meeting takes place.
Kickoff meeting
Purchaser will use the PCS 540-Kickoff Meeting Agenda and PCS 541-Kickoff Meeting Sign-In sheet to support all necessary steps are discussed and all attendees are documented.
The kickoff meeting is used to discuss the following:
► Understanding the program need
► Identify and document roles associated with the RFP process
► Discuss the timeline to support a timely contract award
► Discuss the need for a prebid/offer/proposal conference with the HHSC Agency/Program and HHSC Contract Attorney and whether i t should be mandatory (for best practices regarding prebid/offer/proposal conference, see the SPD’s State of Texas Procurement and Contract
Management Guide)
► Discuss the evaluation process and request names of those who will be on the evaluation team
Note: Any external evaluators must be approved by PCS management .
Nondisclosure and conflicts of interest
The Purchaser must support all persons involved with the solicitation sign PCS 117A–Nondisclosure and Conflicts of Interest Certification.
Step 3: Procurement planning phase Level 3–Level 4
Level 2
Level 3
Action owner
List of activities
Level 4
Process flow created by EY US is based on:
► PCS document OP 571 RFP Contract Procedures_FINAL 07-30-218.doc published 31 July 2018.
► Interview with HHSC employees.
► Purple text indicates areas of risk.
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to limitations and restrictions on page 2.
Procurement and contract services process overview
Step 4: Solicitation development/processing Level 3–Level 4
Program specific documentsHHSC
Agency/Program assign a staff/
program member to edit the program-specific documents
that should be included in the
solicitation, as well as the following:reviews the RFP
template in CAPPS Financial collaborated
by the PCS Purchaser and supports the SOW is
correct and makes changes as
necessary;provides/reviews the evaluation criteria and
subcriteria for the evaluation tool;
identifies the statutory or administrative rule requirements that are
applicable to the solicitation and
resulting contract;
provides a filled-out PCS 126–CMBL
Supplementation Approval Request;
and identifies and provides a list of the evaluation team
subject-matter experts which may
include technical, financial, cost and advisory teams.
Develop/finalize RFP
► Purchaser will coordinate with HHSC Agency/Program, HUB Coordinator, HHSC System Contracting or the appropriate
HHSC Agency/Program legal division and other identified stakeholders to develop/finalize the RFP document. This will
include:
► Updating the projected timeline to develop the solicitation, evaluate, and award the contract
► Providing guidance to the assigned HHS Agency/Program, HHSC System Contracting or appropriate HHSC
Agency/Program legal division, or other identified stakeholders in modifying the solicitation using the RFP template
and any other required forms or attachments
► Finalizing the SOW related to the RFP
► Ensuring solicitation contains requirement that the response be sent to the PCS Bid Room and to be identified on the
outside of the envelope/package with the following information:
► Event number
► Event due date and time
► Respondent’s name and
► Purchaser’s name
► Ensuring solicitation contains prohibition on sending response by facsimile (fax)
► Ensuring solicitation has defined timeline for questions to be submitted by respondents and the anticipated release
date of the Agency’s answers
► Ensuring HUB Coordinator provides feedback of subcontracting opportunities in the solicitation to Purchaser, using
the PCS 406–HUB Subcontracting Determination
► Finalizing evaluation criteria and subcriteria to be documented within the solicitation
► Purchaser will work with HHSC Agency/Program and HHSC System Contracting on scored criteria and subcriteria
that are prioritized and weighted according to their relative importance in delivering best value to the State; that the
number of criteria and subcriteria will be kept to the essential minimum and be clearly defined for the vendor
community; and that scored criteria and subcriteria will be designed to assess the extent to which the respondent is
able to meet and exceed the requirements to perform the contract
► Purchaser may use:
► An evaluation tool he/she developed and regularly uses which must be reviewed and approved by the CQC
Financial Analyst prior to use
► The PCS Standard Evaluation Tool (Standard Tool), which is recommended
► Purchaser sends the following to CQC Financial Analyst:
► Evaluation criteria
► Subcriteria
► Weights
► Incorporation of the security and privacy requirements (i.e., DUA and SPI), as necessary
► Notification of requirements in the RFP that are necessary prior to contract execution
► Other factors that should be considered
Note: HHSC System Contracting is the legal division that reviews/assists HHSC programs with legal review of solicitations
and contracts. DFPS has an independent legal division that reviews the solicitations and contracts for DFPS. Purchasers
need to support that the appropriate legal division is included on all correspondence and during collaboration.
Note: The RFP template may be modified to support the best practices for the RFP process are incorporated.
HHSC
Agency/Program
► Program specific
documents
PCS Purchaser
► Develop/finalize RFP
Compliance & Quality Control
Team
► Evaluation tool selection
► CQC Financial Analyst
Nondisclosure and Conflicts
of Interest
Evaluation tool selection
► Upon selection of the
appropriate evaluation tool,
CQC Financial Analyst will
unlock the Evaluator Score
Sheet within the posted
approved evaluation tool to
enter the information
provided by the Purchaser
and will:
► Update the Evaluation
Tool to include
procurement specific
criteria and relock it,
saving it as the specific
tool for the solicitation;
► Review the evaluation
tool to support that the
addition of the evaluation
criteria did not affect the
formulas or coding of the
tool; and
► Provide the evaluator
score sheet to the
Purchaser to add as an
attachment/exhibit to the
solicitation
Note: Adding the evaluator
score sheet to solicitations as an
attachment/exhibit is effective
for solicitations initiated on or
after 1 September 2018.
CQC Financial Analyst
Nondisclosure and Conflicts
of Interest
Purchaser supports that any
staff of CQC who review the
solicitation sign the PCS 117A–
Nondisclosure and Conflicts of
Interest Certification.
HUB Co-
ordinator
► HUB
review of
RFP
PCS Purchaser
► RFP final review
PCS Manager
► PCS 126, 138
review
► Manager final
review
RFP final review
► Once the solicitation document, has been reviewed
by all parties, the PCS Purchaser will:
► Coordinate the final review of the solicitation with
the HHSC Agency/Program, HHSC System
Contracting or appropriate HHSC
Agency/Program legal division or other identified
stakeholders to finalize the draft RFP document
► Submit the RFP solicitation for required external
reviews, as applicable, i.e., Contract Advisory
Team (CAT) or program external reviewers
► If one or more contract(s) awarded has an estimated
value of $5 million or more, the purchaser will upload
the solicitation document along with any
attachments/exhibits to CAT through the
Procurement Oversight & Delegation portal
maintained by SPD and located on the CPA website,
see “Gaining Access to Procurement Oversight &
Delegation” page on the CPA’s requests for
assistance relating to the Procurement Oversight &
Delegation web application may be submitted to
► CAT will review the solicitation document(s) from a
contract management and best practices
perspective;
► CAT will provide recommendations, identify risks
and offer risk mitigations within 30 days of receipt;
► Coordinate review of CAT's recommendations with
the HHSC Agency/Program and HHSC System
Contracting or appropriate HHSC Agency/Program
legal division:
► Each item will be reviewed and a response
documented
► Where applicable, the recommendation will be
incorporated into the solicitation
► The Purchaser supports appropriate responses,
whether they are accepted or rejected, are sent
back to CAT and supports all documentation is
kept in the official procurement file
► Review the PCS 126–CMBL Supplementation
Approval List and submit to their manager;
► support the PCS 138–Electronic State Business
Daily (ESBD) – Solicitation Approval has been
submitted to a PCS Manager for approval
HUB review of
RFP
HUB
Coordinator is
responsible for
the following:
coordinates
requests for
clarification
through the
sole point of
contact for the
RFP with
identified
respondents
and
provides
assistance as
needed in
development
of HUB
Subcontracting
Plans (HSPs)
prior to
contract
award.
Manager PCS 126
review
PCS Manager will
review/approve the
PCS 126–CMBL
Supplementation
Approval Request.
Manager PCS 138
review
PCS Manager
verifies the PCS
138–Electronic
State Business
Daily (ESBD) –
Solicitation
Approval form has
been completed
and returns the
form to the
Purchaser. By
signing the form,
PCS Manager
certifies that all
requirements have
been completed
prior to posting the
solicitation.
Manager final
review
The PCS Manager
reviews/approves
the final RFP
document before
sending to CQC.
Level 2
Level 3
Action owner
List of activities
Level 4
Process flow created by EY US is based on:
► PCS document OP 571 RFP Contract Procedures_FINAL 07-30-218.doc published 31 July 2018.
► Interview with HHSC employees.
► Purple text indicates areas of risk.
Page 235Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Procurement and contract services process overview
Submit for CQC review
Purchaser forwards a copy of the final solicitation to be posted with all exhibits and attachments and the PCS 138–Electronic State Business Daily (ESBD) – Solicitation
Approval form to CQC for review and approval.
Note: Until CQC is included in the CAPPS system, Purchasers shall forward the documents listed above to the Associate Commiss ioner of CQC via email. Any other
documentation needed shall be provided at the request of the Associate Commissioner and/or Contract Specialist in CQC assigned to review the solicitation.
PCS Purchaser
► Submit for CQC review
► CQC nondisclosure and conflicts of interest
CQC nondisclosure and conflicts of interest
Purchaser supports that any staff of CQC who review the solicitation sign the PCS 117A–Nondisclosure and Conflicts of Interest Certification.
CQC RFP review for posting
CQC will review all documents for accuracy and compliance and will provide recommended changes
and/or approval to post the solicitation.
Compliance and Quality Control Team
► CQC RFP review for posting
► CQC change collaboration
CQC change collaboration
Any collaboration necessary to make changes to the solicitation will be coordinated by CQC in
conjunction with the Purchaser.
Step 5: Compliance and quality control review Level 3–Level 4
Level 2
Level 3
Action owner
List of activities
Level 4
Process flow created by EY US is based on:
► PCS document OP 571 RFP Contract Procedures_FINAL 07-30-218.doc published 31 July 2018.
► Interview with HHSC employees.
► Purple text indicates areas of risk.
Page 236Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Procurement and contract services process overview
Posting the RFP
► Purchaser shall be responsible for advertising the solicitation and will do the following:
► Post the solicitation on the ESBD, using Google Chrome, for a minimum of 21 days. The minimum of 21 days is recommended to support compliance with the HUB good-faith
effort requirements as well as the posting of the solicitation
► Provide notice of solicitation to all possible respondents on the approved supplemental listing
► Provide notice of solicitation to all possible respondents on the CMBL class and item identified on the solicitation document
► Send Project Manager/Contract Manager, PCS Bid Room (see Section VI below), HUB Coordinator and HHSC System Contracting Divis ion or appropriate HHSC
Agency/Program legal division the date and time the RFP responses will be due
PCS Purchaser
► Submit for CQC Review
► CQC Non-disclosure and Conflicts of interest
Update procurement file – record documents
► Purchaser will maintain the master version of the solicitation document at all times and support that all applicable requirements listed on the PCS 160–HHSC Solicitation
Checklist – RFPs, RFAs, RFQs and RFOs have been met and documented in the official procurement file.
Note: Purchaser is the sole point of contact. All communication between the respondents and the HHSC Agency/Program concerning the solicitation is strictly prohibited and must
be directed to Purchaser.
Prebid/offer/proposal conference
► Purchaser is responsible for coordinating a prebid/offer/proposal conference, if necessary, to highlight the requirements of the solicitation and the HSP requirements.
Note: Prebid/offer/proposal conferences are highly recommended for large procurements. In addition, for large, complex procurements, mandatory attendance of the
prebid/offer/proposal should be required.
Prebid/offer/proposal conference coordination
► If a prebid/offer/proposal conference is planned, the Purchaser coordinates with HHSC Agency/Program staff, HUB Coordinator and HHSC System Contracting or appropriate
HHSC Agency/Program legal division to:
► Locate a meeting room and any equipment needed
► Coordinate participants’ attendance
► Develop material for the conference using the following forms:
► PCS 132–Vendor Conference Agenda form
► PCS 133–Vendor Conference PowerPoint Template
► Work in conjunction with Project Manager/Contract Manager to:
► Lead the vendor conference
► Record all written questions received from participants and any tentative answers given in the conference (see PCS OP 574–Conducting Vendor Conferences); and
► support that all participants sign in on the sign-in sheet and names are recorded via e-mail for those who participated via conference call
► Facilitate questions/inquiries during the vendor conference
► Receive questions/inquiries related to the solicitation
► Develop or obtain answers for all purchasing process questions and coordinate with the Project Manager/Contract Manager and HHSC System Contracting or appropriate
HHSC Agency/Program legal division to obtain answers to program specific questions
► Compile the questions and answers into an addendum (PCS 121–Solicitation Addendum)
► Post the addendum on the ESBD, using Google Chrome
Note: The sign-in sheet of names of the vendors and other individuals who participated in the prebid/offer/proposal conference may also be included in an addendum posted on the
ESBD (optional, but recommended).
Prebid/offer/proposal conference – HUB
Attendance
► The HUB Coordinator will attend the
prebid/offer/proposal conference and
provide:
► An overview of HUB requirements for
the solicitation
► an explanation of the HUB
Subcontracting Plan (HSP) completion
and any applicable forms required for
submission
► Assistance to the respondent as
needed in development of HSPs prior
to the solicitation due date
Question and answer period
► Written questions must be received by
the deadline specified in the solicitation.
The PCS Purchaser will compile all
written questions received by the
deadline into a Q&A document.
Questions must be compiled verbatim
(with any spelling and grammatical
errors). Every question received, even
similar questions submitted by different
vendors, must be accounted for in the
Q&A document. The name of the entity
submitting the question and identifying
information should be omitted from the
published answers. Once the Q&A
document is compiled, the Purchaser will:
► Develop or obtain answers for all
purchasing process questions and
coordinate with the Project
Manager/Contract Manager and
HHSC System Contracting or
appropriate HHSC Agency/Program
legal division to obtain answers to
program-specific questions
► Compile the answers into the Q&A
document
► Insert the Q&A document into an
addendum (PCS 121–Solicitation
Addendum)
► Post the addendum on the ESBD,
using Google Chrome
PCS Purchaser
► Q&A period
HUB Coordinator
► Prebid/offer/proposal conference – HUB
Attendance
Step 6: Solicitation process/posting Level 3–Level 4
Level 2
Level 3
Action owner
List of activities
Level 4
Process flow created by EY US is based on:
► PCS document OP 571 RFP Contract Procedures_FINAL 07-30-218.doc published 31 July 2018.
► Interview with HHSC employees.
► Purple text indicates areas of risk.
Page 237Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Procurement and contract services process overview
Bid Room notificationPurchaser must send the PCS Bid Room Coordinator
a bid opening notification via a calendar event sent to
The notice must state:► That an event has been publicly posted
► The due date and time of event
► The specified format for responses, such as mail,
hand delivery and courier
Response receiptAll responses are to be received by the PCS
Bid Room Coordinator. Responses will be
logged as received and secured in
accordance with the Bid Room procedures,
PCS OP 210–Response Handling for Formal and Informal Solicitations.
Providing the responsesAt the due date and time, the Bid Room
Coordinator will provide all the original
responses to the PCS Purchaser in
accordance with the Bid Room procedures,
PCS OP 210–Response Handling for Formal and Informal Solicitations.
PCS Purchaser
► Bid Room notification
PCS Bid Room Coordinator
► Response receipt
► Providing the responses
HUB Coordinator
► HUB review of HSP
HUB review of HSPThe HUB Coordinator is responsible
for the following:
► Coordinates review of respondent
HSPs to support compliance with
statute and the HUB rules► Sends the Purchaser a list of the
respondents with approved HSPs
► Hosts post-award meetings with
awarded contractors, if necessary
Evaluator score sheetFollowing review by HUB, the
Purchaser sends the following to the
CQC Financial Analyst to finalize the
evaluator score sheet:
► Evaluation tool attached to the solicitation
► Names of evaluation team
members
► Names of the qualified respondents
Finalizing evaluator score sheetUpon receipt of the evaluation tool,
weights, names of evaluation team
members and names of the qualified
respondents, the CQC Financial
Analyst will finalize the evaluator score sheet.
Once the evaluation tool is complete,
the CQC Financial Analyst will provide
it to the Purchaser to use for the evaluation team training.
PCS Purchaser
► Evaluator score sheet
CQC Financial Analyst
► Finalizing evaluator score sheet
OpeningPurchaser receives all electronic and
hard-copy proposals from the PCS Bid
Room Coordinator and:
► Conducts the solicitation opening
on the specified opening date and time with a witness
► Documents if there are responses
that do not meet the solicitation
requirements and possibly
disqualifies the respondent
Step 7: Evaluation preparation and response receipt Level 3–Level 4
Level 2
Level 3
Action owner
List of activities
Level 4
Process flow created by EY US is based on:
► PCS document OP 571 RFP Contract Procedures_FINAL 07-30-218.doc published 31 July 2018.
► Interview with HHSC employees.
► Purple text indicates areas of risk.
Page 238Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Procurement and contract services process overview
Evaluation training
► Purchaser coordinates and facilitates the evaluation
training with members of the evaluation team,
including external evaluators who have prior
approval by PCS Management
► Provides the evaluation team mandatory training on
how the evaluation process will be administered, how
the evaluator score sheet will be accessed and how
to facilitate requests for clarification
Note: When applicable, evaluators will be given access
to SharePoint to streamline completing the evaluation
process.
► Supports, when applicable, the State Agency
Nepotism Disclosure Form for purchases over $1m,
is signed by all personnel involved with the
solicitation evaluation at the evaluation training;
► Sends notification of any conflicts notated by the
evaluators in the disclosure form to the PCS
Deputy Associate Commissioner, or designee
and when applicable, contacts the HHSC Ethics
Officer for guidance and direction
► Uploads any documentation regarding potential
conflicts and how such potential conflicts were
resolved or not to the procurement file
Evaluation
► Evaluation Team
members
(contract
manager,
program
leadership, legal,
budget) perform
evaluations on
the responsive
proposals prior to
or by the
requested
deadline
► Send any
required
clarification
questions to the
Purchaser
► Support final
evaluator score
sheets are sent to
Purchaser or
properly saved on
SharePoint via
the established
portal when
instructed by
Purchaser
PCS Purchaser
► Evaluation training
► Evaluation
Evaluation Team
members
► Evaluation
CQC Financial Analyst
► Evaluator Score
Sheets/Evaluation
Completion
Evaluator score sheets
or notification the
evaluation has been
completed, the CQC
Financial Analyst:
► Re-reviews the
completed evaluation
tool to support that all
evaluators’ scores are
in the tool accurately
and certifies the
integrity of the tool
► Provides the final
evaluation tool, which
includes the final
respondent rankings, to
Purchaser
► Saves a copy of the
final evaluation tool
with aggregated scores
and a ranked list of
respondents in the
procurement file in the
designated network
folder located under
Procurement
Resources and notifies
the purchaser the tool
is complete
Final evaluation tool
► Upon receipt of the final
evaluation tool from CQC
Financial Analyst, the
Purchaser will:
► Facilitate approval of
the respondents and/or
the competitive range
in coordination with the
program–based on the
overall evaluation
criteria/score–for
further consideration
during the procurement
process
► Submit selected
respondents for
approval to the PCS
Manager
Briefing staff and
management
It is the responsibility of the
HHSC Agency/Program to
support Agency/program
staff and executive
management are apprised
of next steps related to the
procurement.
Interviews
If the winning
respondent(s) cannot be
selected based on the
initial evaluation, HHSC
Agency/Program will notify
the Purchaser to
coordinate respondent
interviews with the
selected respondents.
PCS Purchaser
► Final evaluation tool
Evaluation
► During the evaluation process, the Purchaser:
► Coordinates with the HHS Agency/Program
and/or HHSC System Contracting or the
appropriate HHS Agency/Program legal division
to obtain responses to clarification questions
asked by the evaluators
► Notifies CQC to aggregate score once the
Evaluator Score sheets are finalized by the
evaluation team
► Works with the HHSC Agency/Program and CQC
on the review of evaluator scores
► Assists with an outlier meeting, if necessary
Note: All persons identified to evaluate proposals must
score all respondents for their assigned criteria.
Legal
► Legal reviews
HHSC Agency/Program
► Briefing staff and
management
► Interviews
► PCS has templates
for contracts to be
shared with Legal:
► Legal reviews in
CAPPS, called
“collaboration”
Budget
► Budget
notification
► Budget is
notified
► Budget can
kill it if there’s
no money
► May change
award
amounts
Purchaser notification
of winning
respondents
► If respondent
interviews are not
necessary, the
HHSC
Agency/Program
notifies the
Purchaser of
approval of the
winning
respondent(s).
HHSC
Agency/Program
Purchaser notification of
winning respondents
Step 8: Procurement evaluations Level 3–Level 4
Level 2
Level 3
Action owner
List of activities
Level 4
Process flow created by EY US is based on:
► PCS document OP 571 RFP Contract Procedures_FINAL 07-30-218.doc published 31 July 2018.
► Interview with HHSC employees.
► Purple text indicates areas of risk.
Page 239Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Procurement and contract services process overview
PCS Purchaser
► Interviews/oral presentations
► CQC
Interviews/Oral Presentations
If notified that HHSC Agency/Program wants to conduct respondent
interviews/oral presentation, the Purchaser:
► Locates a meeting room and any equipment needed
► Coordinates participants’ attendance
► Coordinates the development of a list of questions to be asked of each
respondent during the interviews, or the appropriate format to be followed,
if necessary
► Coordinates the method for scoring of the interviews and determining the
winning respondent(s)
► Supports presentations, when applicable, adhere to criteria in the
solicitation and the interview questions
► Supports all participants sign in on the sign-in sheet
► Coordinates the rescoring of the respondents after the interviews
► Establishes time limits for the interviews/oral presentations
CQC
If the interviews are scored using the evaluation tool, Purchaser will need to
coordinate review of the new scores with the CQC.
Step 9: Interview and selection Level 3–Level 4
HHSC Agency/Program
► Conduct interviews/oral presentations
Conduct interviews/oral presentations
If HHSC Agency/Program wants to conduct respondent interviews/oral
presentation, program contacts the Purchaser to set up:
► A meeting room and any equipment needed
► Coordinate participants’ attendance
► Working with Purchaser during the development of a list of questions to be
asked of each respondent during the interviews, or the appropriate format
to be followed, if necessary
► Coordination of the method for scoring of the interviews and determining
the winning respondent(s)
Level 2
Level 3
Action owner
List of activities
Level 4
Process flow created by EY US is based on:
► PCS document OP 571 RFP Contract Procedures_FINAL 07-30-218.doc published 31 July 2018.
► Interview with HHSC employees.
► Purple text indicates areas of risk.
Page 240Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Procurement and contract services process overview
Reference Checks
Once respondents have been selected for approval, the Purchaser:
► Sends an email to the listed vendors for reference checks using the PCS 145–Vendor Reference
Survey Form
► Follows up with a phone call to the listed vendors if no response is received within three days
Vendor checks
In concurrence with the negotiation phase, the Purchaser will be verifying PCS 160–HHSC
Solicitation Checklist – RFPs, RFAs, RFQs and RFOs vendor checks and reference checks.
.
Negotiation phase
Upon the selection of the winning respondent(s), the Purchaser facilitates the negotiation process, as
applicable, toward contract execution and award with the winning respondent(s) in negotiations and
documents the results and:
► Coordinates best and final offers (BAFOs) with respondents to finalize all negotiations
► Routes all BAFOs to the HHSC Agency/Program and HHSC System Contracting or appropriate
HHSC Agency/Program legal division for review and concurrence
► Coordinates collaboration of the contract document through CAPPS with the HHSC
Agency/Program and HHSC System Contracting or appropriate HHSC Agency/Program legal
division
► Supports all requirements of the solicitation, including the HSP requirements, when applicable, are
incorporated into the final contract and reporting requirements are included in the terms and
conditions of the final contract
► Supports all of the appropriate approvals of the contract document are sought and documented in
the procurement file
PCS Purchaser
► Negotiation phase
► Vendor checks
► Reference checks
Step 10: Contract negotiations Level 3–Level 4
Conduct negotiation phase
► Upon the selection of the winning respondent(s), assist in the coordination of best and final offers
(BAFOs) with respondents to finalize all negotiations
► Assist in the collaboration of the contract document through CAPPS
HHSC Agency/Program
► Conduct negotiation phase
Level 2
Level 3
Action owner
List of activities
Level 4
Process flow created by EY US is based on:
► PCS document OP 571 RFP Contract Procedures_FINAL 07-30-218.doc published 31 July 2018.
► Interview with HHSC employees.
► Purple text indicates areas of risk.
Page 241Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Procurement and contract services process overview
PCS Purchaser
► Justification for award
Justification for award
Upon selection of the winning respondent(s), the Purchaser will:
► Initiate drafting of the proposed justification for award using the
PCS 08-Justification of Award
► Coordinate review by HHSC Agency/Program for approval and
HHC System Contracting or appropriate HHSC Agency/Program
legal division for concurrence
► If applicable, receive and review the action item memo from HHSC
Agency/Program
► Submit award recommendations to executive management for final
approval
Step 11: Recommendation for awards Level 3–Level 4
Level 2
Level 3
Action owner
List of activities
Level 4
Process flow created by EY US is based on:
► PCS document OP 571 RFP Contract Procedures_FINAL 07-30-218.doc published 31 July 2018.
► Interview with HHSC employees.
► Purple text indicates areas of risk.
Page 242Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Procurement and contract services process overview
PCS Purchaser
► Finalized evaluation and reward
► Contract record
► Vendor notification
► Formal approval routing
► the digital signature tool
► Post-execution
Finalized evaluation and award
Purchaser enters the finalized evaluation into CAPPS and award to
the respective respondents.
Post-execution
After execution, the Purchaser posts the award notice on the ESBD
using Google Chrome.
Note: Approvals are needed for documents requiring external
reviews, such as QAT, CMS and OAG.
Contract record
The Purchaser will create a contract record in CAPPS and
collaborates the contract template to the HHSC Agency/Program
and HHSC system contracting.
Vendor notification
The Purchaser notifies vendor of potential award and requirement
to file Form 1295 as applicable, for contracts valued at $1m or
more.
Formal approval routing
The Purchaser will:
► Finalize the contract packet for all potential awardees;
► Receive the PCS 515–Routing Request Form from the HHSC
Agency/Program
► Send the final contract packet for formal approval routing in
CAPPS to PCS Procurement QA
► Support that contracts valued at $10m or more have an
attestation letter completed by the Agency/Program and are
included in the final contract packet for signature
the digital signature tool
Once fully approved, the Purchaser sends the contract packet, the
PCS 515, the request document and the requisition to Procurement
QA for execution through the digital signature tool.
Execution, SCOR and funding
Once the contract is fully executed, the assigned contract manager
will load the contract document into SCOR. If the awarded contract
is encumbered, the HHSC Agency/Program enters the CAPPS
funding requisition(s) with current fiscal year funding.
There are three points of entry before information is sent to SCOR
(follow up with Charles E.).
Purchase order
The Purchaser copies the requisition to a purchase order and
attaches it to the contract record in CAPPS Financial.
HHSC Agency/Program – Contract Manager
► Execution, SCOR and funding
PCS Purchaser
► Purchase order
► Completes procurement file
PCS Manager
► Final review
Completes procurement file
The Purchaser completes uploading all documents’
correspondence and other documentation to the procurement file
and signs the PCS 160–HHSC Solicitation Checklist – RFPs,
RFAs, RFQs and RFOs to certify that the file is complete.
Final review, PCS Manager
The PCS Manager reviews the procurement file and
the completed PCS 160–HHSC Solicitation Checklist
– RFPs, RFAs, RFQs and RFOs and signs to certify
that the file is complete.
Step 12: Contract award phase Level 3–Level 4
Level 2
Level 3
Action owner
List of activities
Level 4
Process flow created by EY US is based on:
► PCS document OP 571 RFP Contract Procedures_FINAL 07-30-218.doc published 31 July 2018.
► Interview with HHSC employees.
► Purple text indicates areas of risk.
Page 243Proprietary and confidential. Reliance restricted. Does not constitute assurance or legal advice. Please refer
to limitations and restrictions on page 2.
Procurement and contract services process overview
Agency/Program
► Change in ownership and final formalities
PCS Purchaser
► Debriefing request
Debriefing requestIf a respondent requests a debriefing, the Purchaser coordinates with
the Program Manager/Contract Manager and HHSC System
Contracting or the appropriate HHSC Agency/Program legal division in
accordance with PCS OP 578-Debriefings for Solicitations.
Now contract becomes contract manager’s responsibilityDo monitoring
► Monitor deliverables
► Review invoices
► Send to AP to cut the check
► Can send with cover sheet or AP voucher► Info with payment terms
► Assign account code
► Comptroller pays
► May amend/extend
► Contract ends► Contract manager closeout process
► Complete PCS closeout form
Step 13: After contract award phase Level 3–Level 4
Level 2
Level 3
Action owner
List of activities
Level 4
Process flow created by EY US is based on:
► PCS document OP 571 RFP Contract Procedures_FINAL 07-30-218.doc published 31 July 2018.
► Interview with HHSC employees.
► Purple text indicates areas of risk.
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PCS solicitation checklist
The solicitation process requires multiple different forms to be completed outside of CAPPS. The process involves
manually completing the form, emailing it and/or and uploading it back into CAPPS. Cycle time is not tracked. Below are
some examples of forms that may be completed outside of CAPPS.
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Historically underutilized business (HUB) checklist
All solicitations of more than $100k must be reviewed and submitted with a HUB checklist. There is a
minimum of three active HUB vendors per solicitation. The HUB program operates in a similar process
as other states.
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PCS approval process
Based on the dollar value of the requisitions, a certain number of approvals and level of approvals must
take place, regardless of the spend level, slowing down CAPPS and backlogging other requisitions.
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Evolution of the traditional supply chain to the supply chain of the future
Degree of Taylorism/distribution of value-creating processes on multiple entities within partner ecosystem
Le
ve
l of syste
m a
nd
data
inte
gra
tio
n/u
sag
e o
f clo
ud
-base
d IT
syste
ms
Cloud-based
SW platforms
External
systems
integration
On-premise
IT systems
Internal
business functionsCollaboration with
partners
Service and
platform-based
businesses
The old world: value creation within entities,
on-premise IT
Traditionally, creators have been selling products and
services through linear value chains. Companies
were owning a dedicated part of the value chain,
competing with competitors.
The new world: ecosystems on cloud-enabled
platforms
Digital ecosystems do not work linearly; they are
shaping market networks and support hybrid forms
of cooperation and competition: coopetition.
Ecosystems create and serve communities while
harnessing their creativity and intelligence. Entities
may play multiple roles in an ecosystem.
CustomersSuppliers
Innovation and Product Lifecycle Management
Manufacturer
OEM
Finance and Controlling
Sales and
Marketing
Service and
Spare Parts
Management
Supply Chain and Operations
Pro-duction
Ware-housing
Logis-tics
Distri-bution
OrderMgmt
Plan-ning
QualityMgmt
Mainte-nance
Sourcing and
Purchasing
Supplier
Customer
Customer
Retail/
consumer
Customer
Connector
SC as
a service
For-
warder
Eng.
contractor
Logistics
contractor
Supplier
Platform-based
business model
SC Planning
Supplier mgmt.
Risk management
Coopetition
Retail/
consumer
OEM
Contract
manufact.
Engineering
collaboration
PLM in the cloud
co-creation
Competitor
Supply chain of the future
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PCS evaluation tool review
Since June 2018, PCS has begun to address issues in the evaluation tool related to the evaluator, score
sheet migration and the aggregation of formulas. The weighting of the scores remains inconsistent as it
varies by RFx evaluation and by agency.
Source: 20180807 TTOR Score Sheet.xls.
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17.0%
26.6%
29.5%
31.0%
44.6% (121 votes)
52.0% (141 votes)
57.6% (156 votes)
0% 20% 40% 60% 80% 100%
Goal setting and performance measurement
Onboarding / training
Subject matter expertise
Ongoing training and development
Role definition and clarity
Staffing and workload levels
Communications within and outside of PCS
Results based on 271 total votes of 301 participants.
‘Of the seven options listed below, what are the top three people and organizational issues that you feel need to be prioritized?’(voting and free response ThinkTank activity)
As we analyzed the qualitative results of our interviews and ThinkTank sessions, the issue of competence rose as a
priority area for PCS. The three separate options in the red box below address competence in three different ways: new
hire competence, ongoing skill development, and development and accessibility of deep skills.
Co
mp
ete
nc
e
Subject-matter expertise
Onboarding/training
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When the three competence areas are combined, they rise to the top of the priority list
The new competence category combines: 1) Ongoing training development
2) Subject-matter expertise
3) Onboarding/training
Results based on 271 total votes of 301 participants.
17.0%
44.6%
52.0%
57.6%
87.1%
0% 20% 40% 60% 80% 100%
Goal setting and performance measurement
Role definition and clarity
Staffing and workload levels
Communications within and outside of PCS
Competence
“Develop standard training sessions for PCS job
duties required at hire and annually.
Supplement with monthly or quarterly refresher
training opportunities, or outside training”
“There should be training manuals that address
each functional area and should be updated as
needed! Management should be in charge of this
and actual on-going trainings”
“Put all new employees in a training room with
computers to learn and practice. Other
employees should not have to take time from their
work to train. It puts them behind in their own work”
“First, there needs to be standard procedures that
are followed by everyone and everyone has to
buy into learning and applying what is offered in
the training; then, management has to follow up to
be sure that their people are following those
procedures and becoming proficient in their job
duties”
What we heard
Learning has become a differentiator in an ongoing search to find
great talent. Organizations recognize that continuous development
drives employee engagement and is a reason employees seek and
stay with an organization.
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With the new groupings, communications becomes the second priority area for both PCS and non-PCS employees
17.0%
44.6%
52.0%
57.6%
87.1%
0% 20% 40% 60% 80% 100%
Goal setting and performance measurement
Role definition and clarity
Staffing and workload levels
Communications within and outside of PCS
Competence
“There needs to be open dialogue between
management and employees so trust can be
built”
“Create a communication board internally and
externally. There are policies and procedures
that do not get communicated clearly to
external customers that creates confusion as to
how a procurement needs to be initiated. Create
purchase liaisons throughout the divisions to
help communicate these policies and procedures
so there is not so much frustration at the end of the
procurement cycle”
“Provide HONEST and FREQUENT communication
to staff regarding what is happening and where
things are going. Don't keep the ‘plan’ only among
management. Provide org charts to see who is
doing what – positions and individuals”
Communication with and outside PCS
Results based on 271 total votes of 301 participants.
PCS leadership has already implemented some of these ideas. PCS
Ambassadors have been named to liaise with the programs. There
are regular Tuesday leadership meetings to share organization
changes and policy/procedure changes; however, that information is
not consistently cascaded.
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Both PCS and non-PCS employees identified staffing and workload levels as areas that need to be addressed
17.0%
44.6%
52.0%
57.6%
87.1%
0% 20% 40% 60% 80% 100%
Goal setting and performance measurement
Role definition and clarity
Staffing and workload levels
Communications within and outside of PCS
Competence Staffing and workload
Results based on 271 total votes of 301 participants.
Creating an effective organization to support the strategic, business
or cultural goals can improve efficiencies, drive desired behavior,
spark innovation and distribute responsibility
“Analyze current FTEs and realign staff to fit
workload and peak times”
“Align staff with their areas of expertise in which
they excel”
“Develop processes to assist in effectively defining
the role of the employee and hire the actual
number of staff needed to the do the work”
“Distribute workload to staff that have been hired to
fill vacancies. Unfortunately, the staff that have
been hired to fill vacancies do not have the
experience to do the work so existing staff
continue to be dumped on”
“We email our manager weekly our queue. Some
people’s queue never goes down. You might
have 500 and reduce it by 80, but the next day that
same person will get 120. Then there are some
employees that stay at 75 and the manager never
evenly distributes the work load. Nor does the
employee help the ones with a lot in their queue. I
think the work load should be distributed
evenly across the team”
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PCS organization chart findings
► Although PCS has made great strides in hiring recently, 23.5% of the jobs were still
vacant or filled with temps and interns as of September 2018, and several of the people
filling senior leadership positions are new.
► Interviews revealed that there was a lack of clarity regarding the responsibilities of the
Contract Administration and the Contract Oversight & Support (COS) groups.
► Additionally, due diligence indicated that COS is currently reporting to Contract
Administration, which can potentially blur the stated responsibilities of COS, as COS
reports to an area that COS would investigate.
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HHSC’s description of procurement and contracting functions
HHSC job descriptions provide some differentiation within the general description; however, the
examples of work performed do not differentiate as clearly.
Functions Description
PCS QA/QC –
Internal quality
assurance Specialist
III
Performs advanced (senior-level) Internal quality assurance work. Work involves coordinating the planning, development
and administration of internal quality assurance and compliance activities. May supervise the work of others. Works under
limited supervision, with considerable latitude for the use of initiative and independent judgment.
Contract
Administrator
Manager II
Performs highly advanced (senior-level) contract administration work. Work involves overseeing the execution and
administration of contracts for large scope or high-dollar contracts by defining requirements and negotiating, awarding,
developing and monitoring contracts. May plan, assign and/or supervise the work of others. Works under minimal
supervision, with extensive latitude for the use of initiative and independent judgment.
Legal – Attorney III Performs moderately complex (journey-level) attorney work. Work involves planning and organizing work, interpreting laws
and regulations, preparing legal documents, rendering legal advice and counsel, consulting with trial attorneys, conducting
hearings and assisting in preparing cases for Agency hearings and/or trials. May train others. Works under general
supervision, with moderate latitude for the use of initiative and independent judgment.
Budget Analyst III Performs highly complex (senior-level) budget preparation and analysis work. Work involves coordinating budgetary
activities, reviewing and analyzing budgets and performance measures, and providing technical advice and assistance on
budgetary matters. May supervise the work of others. Works under limited supervision, with considerable latitude for the
use of initiative and independent judgment.
PCS Purchaser III Performs complex (journey-level) purchasing and procurement work. Work involves purchasing and procuring
commodities, equipment and services using guidelines, rules, policies and laws. May train others. Works under general
supervision, with moderate latitude for the use of initiative and independent judgment.
Source: http://www.hr.sao.texas.gov/CompensationSystem/JobDescriptions/.
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Compensation benchmarkingHealth and Human Services published survey competitive market analysis –actual total compensation (dollars stated in 000s) (part 1 of 2)
HHSC provided competitive compensation for the financial analyst position; however, the other job
functions were not as competitive.
Salary for Administrative Assistant III
US
D
$46.50
$41.90
$39.20
$37.90
35
37
39
41
43
45
47
49
Top Median Bottom HHSC
US
D
US
D
US
D
US
D
Salary for Auditor IV Salary for Financial Analyst II
Salary for Manager V Salary for Director IV
$95.80
$86.50
$76.90
$63.60
60
65
70
75
80
85
90
95
100
Top Median Bottom HHSC
$77.00
$67.90
$60.80
$68.10
60
62
64
66
68
70
72
74
76
78
80
Top Median Bottom HHSC
$114.30
$100.20
$90.00
$93.40
90
95
100
105
110
115
Top Median Bottom HHSC
$219.70
$200.60
$173.30
$124.30120
130
140
150
160
170
180
190
200
210
220
Top Median Bottom HHSC
(1) Generally, a level of pay that is between 85% and
115% of the market consensus is considered
competitive. This assumes that the incumbent has a
moderate level of experience and is performing as
expected
(2) Total cash compensation = market consensus base
salary + market consensus annual incentive (actual).
(3) HHSC salary is based on salary range midpoint from
http://www.sao.texas.gov/reports/main/17-701.pdf.
Source: EY Internal Benchmark 2017 and 2018 (includes
public, not-for-profit and commercial companies).
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Compensation benchmarkingHealth and Human Services published survey competitive market analysis –actual total compensation (dollars stated in 000s) (part 2 of 2)
HHSC was benchmarked to a compilation of nonprofit, private and public companies, as attracting
procurement personnel has been challenging across the state of Texas.
Salary for Purchaser II
$55.70
$49.30
$41.90
$45.00
40
42
44
46
48
50
52
54
56
58
60
Top Median Bottom HHSC
Salary for Purchaser IV Salary for Purchaser VI
$64.20
$57.90
$49.70
$52.00
45
47
49
51
53
55
57
59
61
63
65
Top Median Bottom HHSC
$99.80
$87.80
$79.30
$68.00
65
70
75
80
85
90
95
100
Top Median Bottom HHSC
Salary for Contract Specialist IV
$85.60
$78.00
$68.20
$61.5060
65
70
75
80
85
90
Top Median Bottom HHSC
Salary for Contract Specialist IV is
based on Program Specialist IV.
US
D
US
D
US
D
US
D
(1) Generally, a level of pay that is between 85% and
115% of the market consensus is considered
competitive. This assumes that the incumbent has a
moderate level of experience and is performing as
expected
(2) Total cash compensation = market consensus base
salary + market consensus annual incentive (actual).
(3) HHSC salary is based on salary range midpoint from
http://www.sao.texas.gov/reports/main/17-701.pdf.
Source: EY Internal Benchmark 2017 and 2018 (includes
public, not-for-profit and commercial companies).
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ThinkTank
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Overview
► Nine ThinkTank sessions were held with 301 team members
from 7 August to 10 August.
► Four of the sessions included only PCS team members,
and five included individuals outside of PCS. This report
includes combined results from all nine sessions.
► Clear and consistent themes from the sessions include:
► Insufficient communication within the Agency
► Undocumented and inconsistent policies and
procedures
► Significant gaps across onboarding, training and
development
► Workload levels and fairness issues
► Insufficient technology and reporting capabilities
► The input we received helped identify quick win
opportunities.
► The comments in the ThinkTank section are the opinion of
anonymous HHSC participants and do not reflect opinions of
EY
58%
48%
56%
of participants identified
communications within
and outside of PCS as a
top issue.
of participants stated that they
“frequently” or “very frequently”
use workarounds to get
around processes or
inadequate technology.
of participants identified clarity
of roles and responsibilities
between Program and PCS as
a top issue.
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Recommended quick wins
► Middle-level PCS management should increase frequency of
communication to increase transparency and keep staff more
informed.
► Executive through middle-level PCS management could increase face
time and interaction with staff to help them feel more recognized and
heard.
► Improve the lighting in the PCS work areas, which is deemed to be
too dim; brighter working environment is needed.
► Increase cleaning of office bathrooms and break areas.
► Plan and execute a social event (e.g., quarterly) for all staff possibly
tied to the end of “crunch” period.
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“This is the first time anyone at any
job has asked my opinion. I really
liked having a voice”
“Would love to know the results of
this exercise and the
recommendations that are made
to management”
“The session was good, but
honestly it’s not going to matter;
management is going to do what
they want”
“This was a great way to
know others feel similarly to
what I experience at work”
“This was really interesting and
enjoyed doing it. Felt like I was
able to say whatever I wanted
without feeling hesitant”
“Leaving this with
hopes that we are
making progress and
heading in the right
direction”
“I think this is great and it
shows people do care and in
asking for our opinions. I
hope that this is truly taken
and heard. Looking forward
to more clarity, training and
streamlining the processes of
our jobs better”
“Looking forward to the report
and recommendations to
make our jobs better”
Session feedback from participants (free response anonymous comments from PCS participants)
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“Nice to know that agency
is wanting to know issues
we are experiencing and
looking forward to changes
that will make the
procurement process more
effective and efficient”
“Great opportunity to gather
feedback. And really gains
confidence that something will
be done to better this process”
“Enjoyed this! Go do great work
synthesizing and make results
happen!!!”
“I’m thankful that the agency decided to hold this
session. I hope someone uses the results. It
would be great if the agency publicizes HOW they
addressed the concerns mentioned and where
improvements will be made”
“Will the results be shared?
Who is responsible for
making actual changes?”
“Asking our input is great, but
executive management has done this
many times over the years. And to
what effect???”
“Loved it! It's the first
time that I’ve felt
completely free to
express my thoughts”
“We need
continuous
mechanisms
to SAFELY
offer input”
Session feedback from participants (free response anonymous comments from PCS participants)
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‘If you could improve only one thing about the environment/culture, what would it be?’ (free response ThinkTank question)
Improve salaries
Clearly defined roles
and responsibilities
Communication
Training
Increase telework
opportunities
Career track for
promotionIncreased
transparency
Increased automation
Physical work
environment
Morale
Improved
retention
Break down silos
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17.0%
26.6%
29.5%
31.0%
44.6% (121 votes)
52.0% (141 votes)
57.6% (156 votes)
0% 20% 40% 60% 80% 100%
Goal setting and performance measurement
Onboarding / training
Subject matter expertise
Ongoing training and development
Role definition and clarity
Staffing and workload levels
Communications within and outside of PCS
Results are based on 271 total votes.
‘Of the seven options listed below, what are the top people and organizational issues that you feel need to be prioritized?’ (voting and free response ThinkTank activity)
Subject-matter
Onboarding/training
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In total, HHSC participants made 1,215 freeform comments within this section of ThinkTank. Note: these do not reflect the opinions or statements of EY
‘Of the seven options listed below, what are the top people and organizational issues that you feel need to be prioritized?’(voting and free response ThinkTank activity)
► “It is unclear who staff should turn to
for assistance and who the decision
makers are. Clarifying roles and
responsibilities also assists with
accountability”
► “Figuring out who does what is always a
challenge”
► “Need RACI charts for PCS, Legal, and
Program”
► “Staffing in PCS are normally in the dark
on new processes ... It’s very sad”
► “There has been so much change, roles
remain unclear”
Role definition and clarity
► “Open communication needs to be established
within all levels of PCS, we can work together
if we all know what is expected”
► “Create a communication board internally and
externally”
► “Processes continually change but no one is made aware - it needs to be addressed and
documented”
► “PCS Management has to be serious about
creating an atmosphere where real dialogue can take place without retaliation and really
develop a strategy to address the real
issues”
► “Information doesn’t seem to flow at all”
► “It’s a challenge to actually speak with
someone in PCS”
► “From the outside, it seems like things go into
a ‘black hole,’ requiring extensive follow-up on
status of reqs”
► “Seem to get passed around a lot; when
people do not know the answer, they just pass
you to someone else”
► “There should be a published
process/manual/flow chart that describes who
is responsible for what and when”
Communications within and
outside of PCS
► “The ‘producers’ are awarded more work –
workload needs to be kept equal”
► “The experienced staff needs to mentor inexperienced staff”
► “Need more experienced team members;
promotions and merit raises would help retain experienced employees”
► “New hires come in with no experience but
at higher pay grades”
► “Managers should closely follow workloads to
identify who is assigned multiple tasks and
who has very little to do”
► “No secret that PCS is understaffed, and this
is creating delays and satisfaction issues
within an already stressed dept.”
► “Automation needs to be the priority”
► “PCS needs a recruitment and retention plan”
► “People are overwhelmed and not
appreciated”
► “Create an environment that makes people want to stay, not run”
► “Need for project management function within
HHSC”
Staffing and workload levels
► “Training is minimal at best; essentially you
get thrown into the deep end of the pool”
► “The train the trainer method for CAPPS and SCOR was lacking”
► “Designate 'Mentors' to provide individualized
guidance, to support that procedure is fully understood”
► “Overhaul entire onboarding process to also
include 6-8 weeks training. Stop relying on
PDF manuals for everything to address the issues”
Ongoing training and development
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‘Of the 11 options listed below, what are the top process issues that you feel need to be prioritized to address first?’(voting and free response ThinkTank activity)
9.9%
11.4%
15.0%
15.4%
15.8%
19.8%
28.9%
30.8%
37.0% (101 votes)
42.1% (115 votes)
55.7% (152 votes)
0% 20% 40% 60% 80% 100%
Dashboard summarizing overall activities and performance
Evaluation and scoring process
Controls to mitigate the risk of non-compliance
Automating certain workflows
Managing ‘work arounds’
Quality Assurance of processes
Visibility and transparency in the process (status)
Prioritization and funneling of procurements (one size fits all)
Review and approval process for procurements and contracts
Documented policies and procedures by role
Clarity of roles and responsibilities between program and PCSProgram
assurance
Managing workarounds
noncompliance
Results are based on 271 total votes.
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► “Too many approvals required. There
should be distinctions between types of
activities and associated risk”
► “Need to identify duplicate steps/approvals.
Identify who really needs to approve as part of
‘value-added’ reviews”
► “More transparency is needed and crucial”
Review and approval process for procurements
and contracts
► “PCS = Black hole”
► “Need reporting mechanism that does not
require staff to search individual contract actions”
► “ ‘The Abyss’ is the nickname for the PCS
funnel of work. We submit items and never know where it goes nor can we see what the
status is from either CAPPS financials, SCOR,
or any other avenue”
Visibility and transparency in the process
(status)
‘Of the 11 options listed below, what are the top process issues that you feel need to be prioritized to address first?’(voting and free response ThinkTank activity)
Clarity of roles and responsibilities between
Program and PCS
► “The job description I was hired for is 100%
not what I am doing today”
► “It seems processes are being made up as we go along”
► “I’m never sure if I’m doing something right
because things can change daily”
► “Executives and upper management should
consult the people who actually do the work
before revising policies”
► “Develop a policy handbook”
Documented policies and procedures
by role
► “This just needs to be revamped period”
► “We are forced to come up with
workarounds to make up for Program's errors. Enforcing accountability and
planning would drastically reduce non-
compliance issue”
► “Controls seem to be circumvented and there
does not appear to be a method to support the
system of records are maintained”
Controls to mitigate the risk of noncompliance
► “There is always some kind of confusion
between program and PCS”
► “Hold program responsible instead of changing our policies and procedures to
accommodate”
► “Provide additional training to the program to help them understand what their responsibility
is”
► “Need Liaisons for each Program and
assigned PCS team to effectively and efficiently procure for that Program”
► “It is never clear what area is supposed to do
what”
► “Never know who to contact when problems
arise”
► “Need clear processes and role definitions.
Publish processes. Be transparent and
accountable”
► “RACI would be super helpful to define roles
and responsibilities”
► “Provide training to all staff that touch the procurement process”
In total, HHSC participants made 1,057 freeform comments within this section of ThinkTank. Note: these do not reflect the opinions or statements of EY
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Strongly disagree
Disagree Neutral Agree Strongly agree
Average rating is based on 270 votes.
2.44
1 2 3 4 5
70 votes 73 votes
Rate your level of agreement from strongly disagree (1) to strongly agree (5):
Anonymous HHSC participant comments provided in ThinkTank sessions:
► “There are too many overly complex procedures. Things
need to be simplified”
► “P&Ps are out of date and not published anywhere
(anywhere easy to find, at least)”
► “Policies and especially procedures need input from
customers. Current P&Ps are unclear and complicated”
► “There are no policies and procedures that I have seen.
Ever since CAPPS went live, no one seems to know how
the process works like they did in HHSAS”
► “There are a lot of policies and procedures; however, they
need to be broken down per area, the PCS manuals are too
broad and at times unhelpful for specific needs for your
area”
► “No clue where to find anything other than asking co-
workers. You may get several answers depending on who
you ask”
► “It seems contracting and procurement staff are unclear
where to locate or identify requirements for procurement
and contracting”
► “Depends on which area of PCS you work in”
► “All stakeholders should be involved when developing
these. They are being updated without including
everyone that is involved”
► “Procedures are constantly changing”
‘I believe there are sufficient policies and procedures governing the procurement and contracting processes in place today’(ThinkTank voting assessment)
HHSC participants made optional freeform comments within this section of ThinkTank. Note: these do not reflect the opinions or statements of EY
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to limitations and restrictions on page 2.
Strongly disagree
Disagree Neutral Agree Strongly agree
2.49
1 2 3 4 5
56 votes 77 votes
Rate your level of agreement from strongly disagree (1) to strongly agree (5):
Anonymous HHSC participant comments provided in ThinkTank sessions:
► “CAPPS is a hindrance to getting work done
efficiently”
► “The learning curve has been extraordinary difficult,
especially for CAPPS”
► “Technology should be implemented with the input of the
users”
► “System sometimes runs very slow but I make it work”
► “We are wayyyy behind the times technology wise. It’s
really sad. We are one of the largest agencies in the
state and do not have adequate technology”
► “CAPPS implementation has stalled contracting and
purchasing significantly. Incorrect mapping, approvers
out of office, users not knowing what to do or how to
use it”
► “Training for the technology is not sufficient to provide a
certain level of competency”
► “Too many systems which do not communicate or
share with one another. Retrieval of information is
painful and wasteful”
► “We have IT problems constantly and sometimes systems
shut down for days. This is a serious issue”
► “The systems are consistently down. Users don’t seem to
know their roles/responsibilities in the systems (CAPPS,
SCOR)”
‘The Agency’s technologies allow me to complete the duties of my job effectively’(ThinkTank voting assessment)
Average rating is based on 278 votes.
HHSC participants made optional freeform comments within this section of ThinkTank. Note: these do not reflect the opinions or statements of EY
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to limitations and restrictions on page 2.
Anonymous HHSC participant comments provided in ThinkTank sessions:
► “CAPPS has left us unable to perform simple contract
actions without moving mountains”
► “Without workarounds nothing would ever get done”
► “I have to jump through hoops just to print a PO. CAPPS
requires a lot of redundant information and steps that are
not necessary to complete the task”
► “Lack of understanding system causes the perception that a
workaround is needed”
► “I don’t even know. I think almost everything is a
workaround”
► “Daily. Never know where our procurements or
contracts are. Must use offline tracking as the systems
are not effective (e.g., have to request PCS to push a
button to keep workflow going)”
► “I rely on my personal relationships with staff to help me
with things”
► “Almost every requisition requires a different strategy
to achieve the same goal, execution of a contract”
► “We have to keep our own spreadsheets and records to
keep track of reqs and funding”
Very frequently
Frequently Very rarely Never
2.61
1 2 4 5 6
Occasionally Rarely
3
58 votes 69 votes
Choose a level of frequency from very frequently (1) to never (6):
Average rating is based on 267 votes.
‘How often do you use workarounds to get around processes or inadequate technology?’(ThinkTank voting assessment)
HHSC participants made optional freeform comments within this section of ThinkTank. Note: these do not reflect the opinions or statements of EY
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Management Friendly staff Flexibility
► “I think everyone knows that we need to make changes,
and that most people are open to change”
► “The passion people have for the type of work we do in
public health”
► “Most people are supportive and knowledgeable. There
is always an opportunity to learn from teammates,
whether it be policy and procedure, or historical
perspective”
► “Responsiveness and open to constructive criticism”
► “Support of management and the true sense that we
are trying to make things better”
► “Employees are willing to help each other and their external
customers”
► “Dedicated staff who want to make a positive difference”
► “Seems like new management listens and wants to
improve”
► “Relaxed atmosphere/dress code”
► “Opportunity to help others”
► “Flexibility”
► “Most people here are friendly and helpful”
► “No micromanagement”
► “Dedicated staff”
► “Managers understanding of life outside of work”
► “Diligent in remaining in compliance with procurement and
contract management activities”
► “We are all in this together and want to help each other
succeed”
In recognizing the recent changes in PCS leadership, process and approach, we wanted to understand early indicators to the department –‘What do you appreciate the most about the current environment/culture within the organization?’
HHSC participants made optional freeform comments within this section of ThinkTank. Note: these do not reflect the opinions or statements of EY
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“Boost staff morale in these challenging times”
“If you want to retain talent, allow merit pay increases and pay people in vital positions what they deserve”
“Communicate! Communicate! Communicate!” “Promote from within”
“Stop the favoritism”
“Know your staff, respect your staff, praise your staff, reward your staff and you’ll see the results”
“Communication, presence, transparency”
“Level employee pay to recognize experience and hard work”
“Increase accountability throughout”
“Stop leading from the top of the mountain and get in the trenches with the people doing the work”
‘If you could give leadership one piece of advice to preserve, improve or change the culture, what would it be?’(free response ThinkTank question)
HHSC participants made optional freeform comments within this section of ThinkTank. Note: these do not reflect the opinions or statements of EY
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“Ease the current fear based culture. For awhile, it seems that PCS staff was afraid to do anything for fear of being fired”
“Need automation to make things faster and easier”
“Recognize employees that consistently perform well as well as hold those who do not accountable”
“Transparency and consistency would increase morale. Provide adequate training so that PCS staff is not worried about repercussions if mistakes are made.”
“Break down the silos”
“Talk to the staff in the trenches doing the work”
“Be open and honest and reward employees that deserve it”“Acknowledge past failures and set a clear
path to improving all aspects of HHSC”
“Communicate all the way down -not just to the level just below you”
‘If you could give leadership one piece of advice to preserve, improve or change the culture, what would it be?’(free response ThinkTank question)
HHSC participants made optional freeform comments within this section of ThinkTank. Note: these do not reflect the opinions or statements of EY
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Operating model and strategy considerations
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Critical issue: converting strategy into operating model
An operating model is the foundation for successful execution, which delivers on
an organization’s strategic intent.
What is our core mission?
► Service populations
► Equity, access, accountability
► Transparency, integrity and trust
Who are our customers/constituents?
► Citizens
► Medical providers and researchers
► State leadership
What is our service delivery strategy?
► Products and services
► Client and provider engagement
► Education and outreach
How do we operationalize our strategy?
► Business process structure
► Organizational structure
► Governance and decision-making
► Performance metrics and accountability
► Operating locations
► Technology enablement
How will we allocate resources and
measure results?
► Budget allocation
► Performance scorecard
► Service delivery vendor scorecards
Agency strategy Operating model
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to limitations and restrictions on page 2.
Document list
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to limitations and restrictions on page 2.
Data request list
Document(s) requested
Organizational chart for the Agency
Organizational chart for Procurement and Contracting Services
Lines of defense – is there a formal structure in place for first, second and third lines of defense along with roles and responsibilities? If yes, please advise
State procurement statute/rules
Policy, procedures and process manuals for procurement, budgeting, contracting (pre-award and post-award) and subcontracting processes/functions (with all
amendments)
Internally or externally published Contract Administration Guides and (if available) HHSC contract manual
Process flowcharts showing procurement process (if available)
Any reports used to track and report performance internal to HHSC procurement or external to management and leadership
All assessment reports (Texas State Auditor’s Office, HHSC OIG, HHSC IA, etc.)
Training – need details for formal or informal training programs run by the department along with the content
List of governance/user groups related to procurement and the procure to pay life cycle
Tools and systems used – need list of all technology solutions/tools deployed by the department in the process, with the purpose and high-level functionality
Any other documents in addition to the above that may help provide foundational knowledge of the department and the procurement function
List of spend categories along with value and % of spend
Spend by vendors
Three effective complex contracts that occurred in the last 12 months
Three complex contracts that were found in fault by the audit reports
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to limitations and restrictions on page 2.
Data request list
Document(s) requested
Process for black-listing/removing vendor from the approved list
Number of incidents or protest/complaints log by vendor and status
Number of contracts terminated early with reason in the last 12 months
Latest contract management reports (vendor scorecards/contract health status/compliance status/cost savings)
Survey results (user function, vendor, subcontractors) in the last year
Percentage of cases where liquidated damages/penalties that were levied by/on the Agency in the last 12 months
Documents for sample transactions (end to end)
Salary compensation by job/role plus any additional compensation information
Number of contracts/bids pulled back/canceled based on internal issues (incorrect scope, evaluation, etc.) within the last 12 months
PCS plan to meet 31 August timeline (prioritized list of contracts to achieve 31 August deadline)
Revised procurement guide
Summarized deltas between previous procurement guide requirements and the new procurement guide requirements
Sunset report (2014)
Rider from last session that prohibits contract extensions beyond three years
Support service agreements draft (from transformation office)
Bid evaluation criteria from Jimmy Ramirez (a few examples)
Bid evaluation criteria from other programs for all major categories of spend (a few examples from each (grants, open enrollment, RFx))
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to limitations and restrictions on page 2.
Data request list
Document(s) requested
Obtain access to Medicaid performance dashboard
Form 515 for approval
IT portfolio rubric
IT (CAM, QAM, SAM)
C046 – Delegation of Authority Document
Compliance/QA – all documents, checklist, desk procedure (draft or final)
Volume of contracts that come through budget office
MSS CM Guide/HDIS CM Guide
PCS 160 – HHSC Solicitation Checklist
Aging report example
Sample of Excel monitoring tool
Delegation of authority (or equivalent document defining who is required to approve what for requisitions and contracts)
Mapping of system workflow for approvals in CAPPS
Process for adding vendors to the masterfile
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