2
Recent Changes in State Purchasing Policies Agenda
Welcome / Session Overview
Putting Procurement in Context
Roadmap to Excellence in Contracting Audit Report
Center for Efficient Government
Recent Rule Changes
Questions
3
Recent Changes in State Purchasing Policies Agenda
Welcome / Session Overview
Putting Procurement in Context
Roadmap to Excellence in Contracting Audit Report
Center for Efficient Government
Recent Rule Changes
Questions
4
Putting Procurement in Context The Lawyer’s View The Lawyer’s View
• Chapter 287 (Purchasing (also 255, 337))
• Chapter 120 (APA)
• Chapters 119 and 286 (Public Records and Sunshine Law)
• Chapter 215 (Payment and Audit)
• Chapters 671 and 672 (UCC)
• Chapter 112 (Ethics)
• Chapters 838 and 839 (Criminal Misconduct)
5
Putting Procurement in ContextThe Business View (FYE 6/30/03)
• $48.3 billion in expenses
• We’d be 25th on the Fortune 500 list (by revenue)
– Bank of America is just ahead of us
– Just behind us are Pfizer, JP Morgan Chase, Time Warner, and Proctor & Gamble
6
Putting Procurement in ContextGov. Agencies’ FY 03-04 Spend ($ millions)
Other Structures/Improvements 1,700
Independent Services not classified 1,500
Engineering 754
Consulting 246
Medical Services 206
MRO Services 240
Medical Supplies 204
Construction 179
IT Services 166
Telephone 142
7
Putting Procurement in ContextFla. Financial Management Info. System (215.91, FS)
• Primary means by which state government managers acquire and disseminate the information needed to plan and account for the delivery of services to the citizens in a timely, efficient, and effective manner.
• Coordinate fiscal management information and information that supports state planning, policy development, management, evaluation, and performance monitoring.
• Primary information resource that provides accountability for public funds, resources, and activities.
8
Putting Procurement in Context 21st Century Challenges
Stand-alone legacy management information systems
• LAS/PBS (Budgeting - EOG)
• FLAIR (Accounting - DFS)
• COPES (Personnel and Payroll - DMS)
• SPURS (Purchasing - DMS)
• CMS (Cash Management - DFS)
9
Putting Procurement in Context 21st Century Challenges
• Lack of standards among subsystems
• Lack of complete and efficient integration
• Duplication of data input and maintenance
• Insufficient management information to support decision making
• Incomplete reporting capabilities
• Lack of single chart of accounts
• Complex external interfaces
• High maintenance and modification costs
• Inconsistent data
10
Putting Procurement in ContextOverview of Major FFMIS FFMIS Initiatives
Human Resources – People First
DMS working with Convergys/SAP to modernize the personnel system, leave and attendance and benefits management (http://dms.myflorida.com/workforce/people_first_initiative)
Purchasing – MyFloridaMarketPlace
DMS working with Accenture/Ariba to integrate purchasing activities for all State buyers and for vendors doing business with the State (http://marketplace.myflorida.com)
Financial Management – Aspire
DFS working with Bearing Point/PeopleSoft to replace the legacy accounting and financial system (FLAIR) with an integrated enterprise resource planning system(http://aspire.dfs.state.fl.us)
11
Putting Procurement in Context Pre-FFMISPre-FFMIS Purchasing Systems
Vendor BidSystem
(Bidding)
SPURS(Purchasing)
FLAIR
SPURSView
(Reporting)
ManualProcess forMatching
Web-basedRegistration
ManualProcess for
Invoicing
Agencycontractsystem
Agencycontractsystem
Agencycontractsystem
Agencycontractsystem
Agencycontractsystem
12
Putting Procurement in Context FFMISFFMIS Purchasing Subsystem Goals
FLAIR / Aspire
RegistrationPurchasing
BiddingContractsInvoicingMatchingReporting
13
Putting Procurement in ContextPutting Procurement in Context
Lifecycle of SpendLifecycle of Spend
Planning &
AnalysisSource Contract Req’n Order
Interact & Receive
Invoice Payment
• Capture company-wide spend• Adequate data integrity• Identify & monitor savings• Measure ROI of procurement• Fulfill reporting requirements
• Standardized sourcing processes • Deep commodity & market
knowledge• Disseminate best practices
• Optimal pricing & terms
• Decrease time and cost of complex negotiation
• Facilitate multiple collaboration across the organization
• Apply negotiated pricing & terms
• Track supplier performance ratings
• Track rebate and volume agreement compliance
• Manage contract renewals
• Minimize cost to track and transmit orders to suppliers
• Enforce compliance with contract pricing
• Minimize time and cost to requisition, approve, receive & reconcile invoices
• Automate payment and link P.O. to payment authorization in one record
(Ariba Buyer)
•Capture early payment discounts
•Timely capture of payments information
14
Putting Procurement in ContextThe Sourcing Process
Fast Track to Value
Validate & Profile
Category
Conduct Industry Analysis
Build Total Cost of
Ownership Model
Develop Category Strategy
Conduct Supplier Analysis
Build Supplier Selection Decision
MatrixConduct Auctions
Complete Prepare Fact-
Based Negotiation “Packages”
Negotiate Value
Propositions
Category Profile
Industry Profile
TCO Model
Category Strategy
Value Propositions
Benefits Realization
Develop
Measure Results & Trends
High-Level Data
Collection & Analysis
Fast Track to Value
Segment Purchases
Validate & Profile
Category
Conduct Industry Analysis
Build Total Cost of
Ownership Model
Develop Category Strategy
Conduct Supplier Analysis
Build Supplier Selection Decision
MatrixConduct Auctions
Complete Prepare Fact-
Based Negotiation “Packages”
Negotiate Value
Propositions
Auctions
FormCross-
Functional Sourcing
Teams
Develop
Measure Results & Trends
High-Data
Collection & Analysis
Fast Track to Value
Segment Purchases
Validate & Profile
Category
Conduct Industry Analysis
Build Total Cost of
Ownership Model
Develop Category Strategy
Conduct Vendor Analysis
Build Vendor
Selection Decision
MatrixConduct Auctions
Complete ITB/ITN/
RFQ/RFP
Develop Value
Proposition Around Options
Make Award
Decision
In-ScopeCategories
CFSTs(Cross-FunctionalSourcing Teams)
Selection Decision Matrix
ITB/ITN/RFQ/RFP
Continual Vendor
Improvement
Profile Internally & Externally
Develop Strategy
Screen Suppliers &
Selection Factors
Conduct Auctions &
Shape & Negotiate
Value Propositions
Implement AgreementsAssess
Opportunities
Profile Internally & Externally
Develop Strategy
Screen Suppliers &
Selection Factors
Conduct Auctions &
Shape & Negotiate
Value Propositions
Kick-Off &
Profile Internally
& Externally
Develop Strategy
Develop Selection Factors &
Screen Vendors
Conduct Competitive
Event
Prepare Value
Proposition & Award
Implement Agreements
Kick-Off & Assess
Opportunities
-
FormCross-
Functional Sourcing
Teams
Develop Vendors
Measure Results & Trends
ToolsAriba ContractsAriba Analysis
Ariba Sourcing
Ariba Sourcing
Ariba Contracts
Ariba Analysis
Award Decision (ITA)
Ariba Analysis
Typical Deliverables
Key Worksteps
- and / or -
15
Recent Changes in State Purchasing Policies Agenda
Welcome / Session Overview
Putting Procurement in Context
Roadmap to Excellence in Contracting Audit Report
Center for Efficient Government
Recent Rule Changes
Questions
16
Roadmap to Excellence in Contracting EOG Inspector General Report No. 2003-03
• Reviewed approximately 100 audits conducted by seven agencies, AG, and OPPAGA, between July 1999 and June 2002
• Extracted 494 audit findings related to procurement, contracting, and outsourcing
• Identified six core activities instrumental to outsourcing
17
Roadmap to ExcellenceDistribution of the 494 Findings
• Performance monitoring (45%)
• Procurement methodology (20%)
• Contract writing (17%)
• Payment (10%)
• Needs assessment (7%)
• Contract closure (1%)
18
Roadmap to Excellence Factors Contributing to Recurring Problems
• Lack of statewide guidance
• Lack of expertise in negotiating contracts
• There is no statewide system to train or certify agency contracting personnel, nor are there incentives to encourage professional development
• The state’s corporate culture does not foster the sharing of best contracting practices among agencies
19
Roadmap to Excellence Factors Contributing to Recurring Problems
• Agencies’ use of different processes and procedures in awarding and managing contracts causes the contract documents to vary considerably in format and content
• Inadequate systems exist for monitoring and rating vendor performance
• A formal procedure for agencies to perform and document needs assessments has not been developed by DMS
• Piecemeal statutes and rules
20
Roadmap to Excellence Recommended Solution to Recurring Problem
Lack of statewide guidance
We recommend that DMS accept the mantle of leadership bestowed by Florida Statute. Most deficiencies could be readily addressed and resolved by requiring that DMS embrace its statutory mandate.
21
Lack of GuidanceAction to Date
• Reorganization of State Purchasing
• New hires of experienced purchasing managers
• All of the other actions listed!
22
Roadmap to Excellence Recommended Solution to Recurring Problem
Lack of expertise in negotiating contracts
We recommend that legislation be proposed similar to the Truth in Negotiations Act to assist contract negotiators in determining whether the contractor’s proposal is reasonable.
We also recommend that DMS immediately begin to offer a negotiating training program for state employees.
23
Contract NegotiationsAction to Date
• Bills introduced last session (HB 1819 / SB 2932)
• DMS developed and delivered training and certification (more below)
24
Roadmap to Excellence Recommended Solution to Recurring Problem
No statewide training or certification
We recommend a statewide training initiative led by DMS be undertaken using the foundation developed in some agencies. In addition, we recommend incentives to encourage professionalism and certification for contract administrators, negotiators, monitors and managers.
26
Roadmap to Excellence Recommended Solution to Recurring Problem
The state’s corporate culture does not foster the sharing of best contracting practices
We recommend that DMS create and foster user groups of professional procurement staff that meet on a regular basis to share best practices and common problems.
28
Roadmap to Excellence Recommended Solution to Recurring Problem
Agencies’ use of different processes and procedures in awarding and managing contracts causes the contract documents to vary considerably in format and content
We recommend DMS, with the assistance of other agencies, develop standard contract formats for use by all state agencies.
29
Standardize Contract FormatsAction to Date
• New forms PUR 1000 and 1001
• Also, MyFloridaMarketPlace will help drive processes and procedures
30
Roadmap to Excellence Recommended Solution to Recurring Problem
Inadequate systems exist for monitoring and rating vendor performance
We recommend a uniform vendor monitoring and rating system be created which incorporates links to contract monitoring reports, vendor websites, closeout evaluations, and a method for other agencies to access performance evaluations.
31
Vendor Rating SystemAction to Date
• Surveyed existing agency systems
• Exploring MyFloridaMarketPlace possibilities
• Exploring third-party solutions
• In the meantime, training on best practices and forms
32
Roadmap to Excellence Recommended Solution to Recurring Problem
Piecemeal statutes and rules
We recommend an initiative, led by DMS and a core group of procurement staff, to monitor outsourcing practices for inadequacies and inconsistencies, and propose improved legislative and regulatory changes. This process, over time, could replace the myriad of overlapping and conflicting statutes and guidelines with one unified, effective system of controls.
33
Piecemeal Statutes and RulesAction to Date
• Ch. 2002-207 (eff. July 2002)
• Bills introduced last session (HB 1819 / SB 2932)
• Center for Efficient Government (more below)
• Major rule revision (more below)
34
Recent Changes in State Purchasing Policies Agenda
Welcome / Session Overview
Putting Procurement in Context
Roadmap to Excellence in Contracting Audit Report
Center for Efficient Government
Recent Rule Changes
Questions
36
Governor’s Center for Efficient Government Authority and Oversight Board
Authority Executive Order 2004-45
Oversight Board MembersSecretary Bill Simon, DMS
Dr. Jim Zingale, Department of Revenue
Secretary José Abreu, Department of Transportation
Dr. John Agwunobi, Department of Health
Director Susan Pareigis, Agency for Workforce Innovation
37
Governor’s Center for Efficient GovernmentInitial Goals
• Develop statewide outsourcing standards and a business case template applicable to any proposed outsourcing project.
• Review existing outsourcing plans within the state agencies to ensure compliance with Center standards and business case, execution of effective contract language with vendors and implementation of successful change management.
• Propose for the Governor’s consideration by July 1 an initial list of specific outsourcing projects and initiatives that can be developed over the next 3 years.
38
Business Case
Gate 1
Procurement
Gate 2 Gate 3 Gate 4
Change Management
Contract Management
Post Implementation
Governor’s Center for Efficient GovernmentProject Gate Management Process
Stage 1 Stage 4 Stage 5Stage 3Stage 2
Monitor
Current Projects
New Projects
39
Recent Changes in State Purchasing Policies Agenda
Welcome / Session Overview
Putting Procurement in Context
Roadmap to Excellence in Contracting Audit Report
Center for Efficient Government
Recent Rule Changes
Questions
40
• Update – bring the rules into line with statutory changes
• Single Subjects – create smaller rules that each focus on one subject
• Reorganization – order the rules in a more logical manner
• See separate materials, and see overview on web
Recent Rule ChangesMajor Goals
43
Recent Changes in State Purchasing Policies Agenda
Welcome / Session Overview
Putting Procurement in Context
Roadmap to Excellence in Contracting Audit Report
Center for Efficient Government
Recent Rule Changes
Questions
44
Questions or CommentsContact Information
http://dms.myflorida.com/purchasing
Fred SpringerDirector, State [email protected] 487-1898
Rich BrownOperations Manager, [email protected] 488-3049
Al DominguezGeneral [email protected] 488-0229