November 8, 2011

Oklahoma House of RepresentativesGovernment Modernization Committee

Four Phases of Purchasing

1. Determining a contract need

2. Solicitation and acquisition of the need

3. Management of the contract performance

4. Contract close-out and lessons learned

Review practices from TX, KS, AR, NV, FL, and private sector

Current State of State Government Purchasing

• Decentralized procurement at agency-level

• Lack consistency across bids– Terms & Conditions– Scope of work (especially large bids)– Methodology– Evaluation criteria determined post-vendor response

• Oversight is spotty

• Lack expertise into different bid types (e.g. IT, Construction)

• Contract performance management rarely occurs

• Vendors learn the “personality” of the bidding entity

• Lack historical performance trending across state and/or states

General Best Practices

• Centralized Purchasing with specific focus– Consistent terms & conditions across agencies– Consolidate and cooperative purchasing power– Assign bid type-specific experts (IT, Construction)– Standards for sections—project management, performance, status

reporting, technical – Capture cost and schedule benchmarks—internal and external to the

State

• Establish and communicate a consistent Purchasing methodology– Agency to Purchasing process

• Bid Requirements, Feasibility studies• Internal review for approval to bid• Solicitation development best practices• Vendor target list

– Purchasing to Vendor process• Communication of solicitation process and bid status• Clarification of evaluation criteria• Timing between solicitation, award, and initiation• Establish contract performance management process

IT Solicitation Best Practices - Content

• Distinguish between project types– Software Implementation– Desktop/Server Licensing– Hardware– Establish project requirements to solicit by type– Consider RFI’s for complex, large or new efforts

• Vendor Solicitation and Engagement– Seek consistency in solicitations– Establish specific evaluation criteria prior to bid release– State project management based on risk assessment– Leverage scenario-based reviews in addition to paper response– For complex projects, establish engagement period first

• Time & materials, with not to exceed amount• Implementation could be stopped if engagement fails

– Upon finalists, engage in open discussions regarding• Scope• Risks• Cost• Schedule

– Identify opportunities for collaborative solicitations

IT Solicitation Best Practices - Retainage

• Software project licenses: – 40/40/20 or 30/30/40 splits– Contract, Installation, 90- or 180-day post

implementation

• Services: – Hold back 10% until project completion– Tie to deliverable

• Acceptance and Penalty clauses • 10% penalty if rejected more than 2 times• 10% bonus is accepted first time