Purchasing Directors’Meeting
December 15, 2011
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• State Purchasing Leadership and Organization – Kelly Loll, DMS
• DFS Statewide Contract Reporting System Update – Elwood McElhaney, DFS
• PPIP Update & Survey – Hal Houston, DMS• Hot Topics
– W-9 Update – Eric Swanson, DMS – Review of Proposed Bills – Dick Chatel, DMS– eQuote Update – MFMP team members– MFMP December release – MFMP team members
Agenda
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– Spikes-Cavell pilot – Cliff Chroust, DMS– Database clean-up – Kelly Loll, DMS– State Purchasing Marketing and
Communications – Linda McDonald, DMS• Other Submitted Topics – PDs and DMS • Purchasing Directors’ Meeting Frequency and
Format – Kelly Loll, DMS
Agenda
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Division Leadership & Organization
• Kelly Loll, State Purchasing Director Effective December 7
• Reorganization within Division of State Purchasing
–Group Category Managers (Bureau Chiefs)
–Category Managers
–Associate Category Managers
–Contract Managers
5ClassClass GroupGroup FamilyFamily CategoryCategory SubCategorSubCategor
yy
Key
Division Leadership & OrganizationCategory Tree
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Division Leadership & Organization
• Welcome Cliff Chroust and Dick Chatel
• Also part of State Purchasing:
Office of Supplier Diversity
Private Prison Monitoring Bureau
Fleet Management Bureau and Federal Property Assistance
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Statewide Contract Reporting System Elwood McElhaney, DFSDivision of Accounting and Auditing
•2011 Florida Legislature enacted Senate Bill 2090 to amend section 215.985, Florida Statutes
•Creates “Transparency Florida” Web portal –Provides visibility to state contracts procured by both executive and cabinet agencies–Gives Floridians increased visibility in how state government is doing business
•DFS and DMS discussing ways to maximize the MFMP system–Support this important transparency project–Leverage efficiencies already in place in MFMP
Stage One – Need Identification
Florida Best Practice Gap AnalysisProcurement Process
Improvement Plan
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Stage One – Gap Analysis Overview
• The aim of this document is to provide an overview of the gaps between the current process used by State Agencies to identify a sourcing need and industry best practices.
• This Stage One Assessment includes:– A review of State Agency’s current competitive
sourcing processes– A summary of best practice in exploring a competitive
procurement opportunity– The identification of gaps and opportunities to better
align current processes with best practices– A recommendation of standard templates to apply to
the current stage
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Florida Strategic Sourcing Methodology
Profile Internally & Externally
Develop Strategy
Screen Vendors &
Selection Factors
Conduct Auctions &
Shape & Negotiate
Value Propositions
Implement AgreementsAssess
Opportunities
Profile Internally & Externally
Develop Strategy
Screen Vendors &
Selection Factors
Conduct Auctions &
Shape & Negotiate
Value
Kick-Off &
Stage Two: Pre-
Solicitation
Stage Three: Solicitation Preparation
Stage Four: Solicitation
Stage Five: Evaluation
Process
Stage Six: Award
Process
Stage Seven:Contract Process
Stage One: Need
Identification
-
Outcomes
Identify Need
Need Documented in Sourcing Tool
Determine Applicable Sourcing Exceptions
Establish Approach
High-Level Identify internally/externally the need for purchase or establishment of a new
contract.
Identify procurement exceptions as per Florida
Statute.
Analyze existing contract sources by applying the
Decision Tree.
Determine whether a sourcing event is required.
Review special approvals or restrictions applying to
certain purchases.
S1.1
S1.2
S1.3
S1.4
S1.5
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Stage One – Current State SummarySteps:
• Approach varies greatly amongst State Agencies • Sourcing process can be seen by requisitioners as a roadblock or
‘necessary evil’ to make a purchase
• In pursuing a sourcing event, team size and engagement can be limited based on the size and bandwidth of the procurement office
• Some customers develop their own internal teams, excluding Purchasing
Observations
High-Level Identify internally/externally the need for purchase or establishment of a new
contract.
Need Identification
Identify procurement exceptions as per Florida
Statute.
Analyze existing contract sources by applying the
Decision Tree.
Determine whether a sourcing event is required.
Review special approvals or restrictions applying to
certain purchases.
• Special approvals and restrictions vary by State Agency and can be dependent on the commodity or service being sourced, the origin of funding (e.g., grants often have specific purchasing restrictions), and the amount of the purchase.
• Decision trees are not often formally documented and vary by State Agency.
S1
S1.1
S1.2
S1.3
S1.4
S1.5
• While many procurement decisions / restrictions are outlined in statute or rule, the application of these decisions vary by State Agency.
• When approaching the end of a current agreement, the rebid/renewal process more often follows a similar approach
• When a new need is identified, the customer often handles this step with little to no involvement from Procurement
OutcomesNeed Documented in
Sourcing Tool
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Stage One – Best Practice
• Conduct a preliminary assessment of the opportunity and confirm appropriate sourcing/procurement approach
• Identify and document the procurement need• Internal need identified through means such as spend assessment
or contract expiration • External need identified through customer request
PurposeSteps:
• Clearly documented procurement exceptions enables the procurement professional quickly identify the best course of action based on the procurement need
• A Decision Tree provides an illustrative breakdown of the procurement options based on the established hierarchy
• Based on the Decision Tree recommendation and other information collected during this stage, the procurement professional can determine whether a solicitation is required to meet this procurement need
• When entering a solicitation process, it is important to identify and plan for any special approvals or restrictions which may apply
High-Level Identify internally/externally the need for purchase or establishment of a new
contract.
Need Identification
Identify procurement exceptions as per Florida
Statute.
Analyze existing contract sources by applying the
Decision Tree.
Determine whether a sourcing event is required.
Review special approvals or restrictions applying to
certain purchases.
S1
S1.1
S1.2
S1.3
S1.4
S1.5
OutcomesNeed Documented in
Sourcing Tool
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Stage One – Gap Analysis• Standardize the process for sourcing competitive procurement opportunities • Encourage customers to engage Procurement team early in the process,
especially when a new need is identified• Promote the sharing of spend data and reports amongst agencies
• Develop Spend Assessment Job Aid to enable State Agencies to observe trends in Purchasing
• Encourage customers to engage Procurement earlier in the needs identification process to enable proactive versus reactive collaboration (communication to include benefits to customer)
• Develop a decision tree for determining how an opportunity should be pursued based on key indicators (e.g., price, funding, existing agreements)
• Leverage Sourcing Tool project timeline to assign owners and due dates to key project activities
Opportunities for Improvement
Steps:
High-Level Identify internally/externally the need for purchase or establishment of a new
contract.
Need Identification
Identify procurement exceptions as per Florida
Statute.
Analyze existing contract sources by applying the
Decision Tree.
Determine whether a sourcing event is required.
Review special approvals or restrictions applying to
certain purchases.
S1
S1.1
S1.2
S1.3
S1.4
S1.5
• Develop a Procurement Exceptions Table documenting all procurement exceptions by Agency, as per Florida Statute
• Develop a list of Special Approvals or Restrictions which apply to certain purchases
• Provide guidance through the Decision Tree as to when sourcing events are required
OutcomesNeed Documented in
Sourcing Tool
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Stage One – Proposed Process Flow
Sourcing Lead
Internal Customer
Purchasing Manager
Purchasing Data
Analyst
*Identify a need not
currently met by an existing
Agreement
Identify a need not
currently met by an existing
Agreement
Notify relevant Purchasing Manager of
potential opportunity
Notify relevant Purchasing Manager of
procurement need
*Anticipate the end of a
current contract period
This diagram illustrates the proposed collaboration between State Agencies and their Customers in identifying a competitive strategic sourcing opportunity.
*Conduct an annual
Customer Survey
*Conduct an annual Spend Assessment
Assign appropriate Purchasing
Lead
*Note: Any one of these actions can trigger the
beginning of this process.
A
Support Completion of Fact Finding
Agenda
Support Completion of Fact Finding
Agenda
Support Completion of Fact Finding
Agenda
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Stage One – Proposed Process Flow
Sourcing Lead
Internal Customer
Purchasing Manager
Purchasing Data
Analyst
This diagram illustrates the proposed collaboration between State Agencies and their Customers in identifying a competitive strategic sourcing opportunity.
Determine whether a sourcing event is required.
Review special
approvals or restrictions.
AMove to
Stage 2: Pre-Solicitation
Use Decision Tree to analyze existing contract sources
Review procurement
exceptions, as per Florida
Statute
Approve sourcing
event decision
Assign Team Members based on approval
requirements
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Stage One – Recommended Templates• Annual Customer Survey to identify opportunities at the
‘grass-roots’ level• Annual Spend Analysis a Job Aid to enable State Agencies
to run analysis in MFMP, ‘sample reports’ from State Purchasing
• Stakeholder Notification Process / Communication to engage Procurement team early in the process
• Procurement Exceptions Table a comprehensive documentation of all procurement exceptions by Agency, as per Florida Statute
• Decision Tree to determine determining how an opportunity should be pursued based on these key indicators with reference to forms
• Special Approvals or Restrictions a list of known and recommended approvals and restrictions which apply to certain purchases (agency specific)
• Fact Finding Agenda for meeting with internal customers who initiated the sourcing requirements to understand the need, who needs it, why it is needed, and who needs to be involved in the sourcing process
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Best Practices ‘Dictionary’
• Internal Customer is the person / team initiating the future spend
• Sourcing Lead manages the procurement event (may also be the Purchasing Manager)
• Purchasing Manager is the Agency Purchasing Lead• Purchasing Data Analyst provides analysis and
reporting support including analyzing spend reports and other information to inform the sourcing team
Stage Two – Pre-solicitationFlorida Best Practice Gap
AnalysisProcurement Process
Improvement Plan
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Stage Two – Gap Analysis Overview
• The aim of this document is to provide an overview of the gaps between the current process used by State Agencies to research and develop a preliminary business case for a competitive sourcing event and industry best practices.
• This Stage Two Assessment includes:– A review of State Agency’s current competitive
sourcing processes (including process flow diagrams)– A summary of best practice in research a competitive
procurement opportunity and developing a preliminary business case
– The identification of gaps and opportunities to better align current processes with best practices
– A recommendation of standard templates to apply to the current step
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Florida Strategic Sourcing Methodology
Develop Strategy
Screen Vendors &
Selection Factors
Conduct Auctions &
Shape & Negotiate
Value Propositions
Implement AgreementsAssess
Opportunities
Develop Strategy
Screen Vendors &
Selection Factors
Conduct Auctions &
Shape & Negotiate
Value
Kick-Off &
Stage Three: Solicitation Preparation
Stage Four: Solicitation
Stage Five: Evaluation
Process
Stage Six: Award
Process
Stage Seven:Contract Process
Stage One: Need
Identification
-
Identifying scope, stakeholders and critical business requirements.
Conducting market analysis to identify available goods,
services and suppliers.
Estimating expected contract award value or purchases for
the fiscal year.
Addressing market and budget constraints.
Identifying the best solicitation method.
S2.1
S2.2
S2.3
S2.4
S2.5
Stage Two: Pre-
Solicitation
S2.6Addressing delegated purchasing authority.
S2.7 Planning the solicitation.
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Stage Two – Current State Summary
Key Worksteps
• Approach varies greatly amongst State Agencies • This step is often done, although much less formally than spelled out here• Consider how this process varies for a legislative directive or spend thresholds
• Internal spend profiles based on various data sources (FLAIR, SPURS, NIGP)
• When investigating existing agreements, the DFS Statewide Contract Reporting System (SCRS) will provide insight in the future (not yet built)
• RFI’s are often conducted by State Agencies, but no standardization exists for the layout or announcement of these events at the moment
• RFI’s can also be used to indicate and support a Single Source approach
• Ask probing to questions to help prepare a risk assessment and even review business processes if risks are too high
• Sample business cases are available from SP and DOR• Most State Agencies have some a Business Case review
meeting/approval process• At State Agencies, Business Cases are very focused on funding
(and may have specific requirements based on funding type)
Observations
• External commodity / vendor profiles are sometimes conducted using various data sources, including Consumer Reports
• For some agencies, market research of possible revenue generation is an integral part of the analysis
Identifying scope, stakeholders and critical business requirements.
Conducting market analysis to identify available goods,
services and suppliers.
Estimating expected contract award value or purchases for
the fiscal year.
Addressing market and budget constraints.
Identifying the best solicitation method.
S2.1
S2.2
S2.3
S2.4
S2.5
Stage Two: Pre-
Solicitation
S2.6Addressing delegated purchasing authority.
S2.7 Planning the solicitation.
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Stage Two – Best Practice• Gain deeper insight into the category, both internally through current
customers, vendors, and statewide spend, as well as externally via market trends, potential new vendors, and distribution channels.
• Lays the foundation for the category strategy and helps the team start to identify savings opportunities.
• Gain insight into the category through hosting an RFI, a pre-solicitation meeting with vendors, or contracting with an expert.
• Collect information from existing contracts to better understand pricing and category-specific terms and conditions
• Internal Profile should include vendor spend details, current top vendors, vendors’ share of the category, levels of vendor fragmentation, a list of high spend items, and current contract terms.• External profile pulls together industry trends, market size, and distribution channels to show how a more complete picture of the category beyond customers and vendors in Florida.
• A risk assessment includes a disaster recovery plan to address issues during the procurement process and contract life including ethics requirements, protests, and possibly redesign of business processes if very limited competition.
Purpose
• The business case pulls together all the information that has been gathered for the category and presents an action recommendation for management review and approval (e.g., conduct ITB/ITN/RFP, establish ACS, do nothing).
• Examples of these deliverables can be found in the PPIP Step Two Overview Presentation
Key Worksteps
Identifying scope, stakeholders and critical business requirements.
Conducting market analysis to identify available goods,
services and suppliers.
Estimating expected contract award value or purchases for
the fiscal year.
Addressing market and budget constraints.
Identifying the best solicitation method.
S2.1
S2.2
S2.3
S2.4
S2.5
Stage Two: Pre-
Solicitation
S2.6Addressing delegated purchasing authority.
S2.7 Planning the solicitation.
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Stage Two – Gap Analysis• Standardize the process for sourcing competitive procurement opportunities • Encourage State Agency Procurement professionals to communicate more on
new opportunities / improve awareness of existing agency agreements• Investigate the opportunity to develop an internal communication tool /
discussion group linking State Agency Procurement professionals
• Develop a set of standard RFI notification templates (one for goods, one for services)
• Develop a set of standard RFI templates (one for goods, one for services)
• Enhance Spend Assessment Job Aid to enable State Agencies to use as input in the Internal Profile
• External Profile to include Total Cost of Ownership (TCO), specific to customer needs
• Develop a job aid to guide State Agencies in developing and understanding the benefits of an External Profile
• Agree on a standard template for a preliminary business case• Revisit the decision tree to confirm MOP after developing business
case• Develop Sourcing Templates to capture output of the Internal and
External Profiles and Preliminary Business Case• Leverage Sourcing Tool project timeline to assign owners and due
dates to key project activities
Opportunities for Improvement
• Compile advice of experienced procurement professionals on mitigating risks
Key Worksteps
Identifying scope, stakeholders and critical business requirements.
Conducting market analysis to identify available goods,
services and suppliers.
Estimating expected contract award value or purchases for
the fiscal year.
Addressing market and budget constraints.
Identifying the best solicitation method.
S2.1
S2.2
S2.3
S2.4
S2.5
Stage Two: Pre-
Solicitation
S2.6Addressing delegated purchasing authority.
S2.7 Planning the solicitation.
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Stage Two – Current Process Flow This diagram illustrates the current collaboration within State Agencies to internally and externally research a competitive sourcing opportunity and develop a preliminary business case.
Sourcing Lead
Internal Sourcing
Team
Internal Customer
Develop RFI to collect
more information
from supplier community
Post RFI notification on
VBS
Send e-mail to identified
supplier community
Review RFI Responses
Develop Preliminary Business
Case
Present Business Case to
Review Board
Support RFI development ,
as needed
Support RFI development ,
as needed
Determine whether the procurement needs an RFI
Optional as a courtesy to suppliers
Complete research
through other sources
Determine if procurement
indicates single source
or non-competitive
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Stage Two – Proposed Process Flow
Sourcing Lead
Internal Sourcing
Team
Internal Customer
This diagram illustrates the proposed collaboration within State Agencies to complete Step Two of the Seven Step Sourcing Methodology for competitive sourcing opportunities.
To Be Completed
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Stage Two – Recommended Templates• RFI Posting template intended to notify the public that you
have issued a Request for Information (RFI)• RFI template capturing the key content recommended for
inclusion in an RFI• Internal Profile to identify current top customers and
vendors, understand spend behavior and distribution across current vendors, and better understand current agreement pricing and category-specific terms and conditions (if any)
• External Profile includes category analysis of pricing and vendor profiles at the local, regional, and national levels
• Preliminary Business Case pulls together all the information gathered for the category and presents an action recommendation for management review and approval (e.g., conduct ITB/ITN/RFP, establish ACS, do nothing); a small, medium, and large Business Case depending on the spend
• Sourcing Project Workplan with a comprehensive list of key activities to complete this step of the sourcing methodology
• Decision Tree to determine determining how an opportunity should be pursued based on key indicators including spend thresholds, statutory requirements, etc.
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Best Practices ‘Dictionary’
• Internal Customer is the person / team initiating the sourcing request
• Sourcing Lead manages the procurement event• Purchasing Manager is the Agency’s Purchasing Lead• Internal Sourcing Team where applicable, based on
size and complexity of the event, this team is identified by the Sourcing Lead and consists of one or more procurement professionals within the State Agency who will play a key role in developing / managing the procurement event
• Purchasing Data Analyst provides reporting and analysis support throughout the procurement event (e.g., developing spend reports, analyzing survey results, etc.) to help the Sourcing Lead make informed decisions
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PPIP Survey
Stage One and Stage Two PPIP Survey
•Open through 6 p.m. Eastern time, Dec. 20•16 responses as of Dec. 14•Still time to give us your feedback•Any questions, contact [email protected]
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Purchase Order (PO) data:• 85 percent of POs are associated to vendors
that currently have a valid W-9 status in October, this was 71 percent
• Of the 15 percent of POs that are associated to vendors without a valid W-9:
– Department of Health represents 42 percent– Department of Corrections represents 11 percent
Hot Topics – W-9 Update
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Hot Topics – W-9 Update
Invoices:• 90 percent of paid IRs are associated to vendors
that currently have a valid W-9 status in October, this was 79 percent
• Of the 10 percent of paid IRs that are associated to vendors without a valid W-9:
– Department of Health represents 33 percent– Department of Corrections represents 20 percent
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Purchasing Related Bills • Tracking a total of 29 Bills, so far• Domestic Call Centers (SB 678, HB 649)
– Affects section 287.058, Florida Statutes– Requires contracts exceeding Category 2 that include call
centers must be staffed by persons within the United States– Applies to subcontracts as well
• Minority Business Certification Taskforce (HB 4103, SB 1112)– Affects section 287.0943, Florida Statutes– Deletes requirement to convene task force to assist minority
business in procurement or development of government-sponsored programs
• Task force proposed uniform criteria and procedures for qualifying businesses to participate in procurements as CMBEs
Review of Proposed Bills
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Purchasing Related Bills • Wartime Veterans (SB152, SB 922, HB 221, HB977)
– Affects 295.187, Florida Statutes• Renames Act to Florida Veterans Business Opportunity Act• Includes Service–Disabled Veterans Enterprise Program and Wartime
Veterans– Wartime veteran who served in a campaign or expedition for which
a campaign badge has been authorized or served during Spanish-American War; Mexican Border period; World War I; World War II; Korean Conflict; Vietnam Era; Persian Gulf War; Operation Enduring Freedom; Operation Iraqi Freedom.
– A veteran of a period of war, as used in 38 U.S.C. sesttion1521, who served in the active military, naval, or air service:
o For 90 days or more during a period of war; o During a period of war and was discharged or released from such service for
a service-connected disability;o For a period of 90 consecutive days or more and such period began or ended
during a period of war; oro For an aggregate of 90 days or more in two or more separate periods of
service during more than one period of war.
Review of Proposed Bills
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Purchasing Related Bills – Florida Business Preference
• Affects 283.35, Florida Statutes, ITB for printing must include preference for vendors with a principal place of business with Florida. If out-of-state business has low (responsive/responsible) bid add 5 percent for evaluation purposes only.
• Affects 287.084, Florida Statutes, ITBs for Personal Property must include preference for vendors with a principal place of business within Florida.
– If out-of-state business has low (responsive/responsible) bid add 5 percent for evaluation purposes only.
Review of Proposed Bills
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Hot Topics – eQuote Update
MFMP Sourcing 3.0 eQuote
•eQuote available for agencies to useInformal solicitationsQuotes off State Term Contracts
•Completed buyer training sessions at MatchMaker in November and two webinars in December•Will schedule additional vendor webinars for early 2012
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Agency eQuote Access• Twelve agencies to date requested accounts for
eQuote– Sixty eQuote customers throughout these agencies
• APD• DOE• DEP• DOH• DJJ• DMS• DOR• DOT• DVA• DOAH• FWC• State Courts
MFMP Sourcing eQuote Update
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Hot Topics – MFMP Release 9.2.0
MFMP technical team implements release tonight
•Maintenance window from 7 p.m. to midnight•Addresses several known issues from the MFMP 3.0 upgrade:Customers will not receive an error when submitting an
invoice where the first line item has more split accounting lines than subsequent line items (SIR 1593).
Fully approved requisitions will no longer show in the "To Do" section of your Dashboard (SIR 1610).
An "Invoice" button now displays on Contract Requests and Contracts so customers can invoice against contracts in all statuses. The status of contracts that are “Closed,” but still available for invoicing will now be "Inactive" rather than "Closed” (SIR 1619).
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• DCF Spend Analysis Pilot – Drilling down on Spend– Comparing Agencies and Entities (Observatory: 1000+
public entities)• Looking at percentage of spend in category• Contract opportunities (identify large spend off contract)• Relative size of supplier base on a given category of spend
– Enriched data on vendors• Employee count• Total revenue• Incorporation date• Basket of goods provided
– Geographic spend data• Which cities get the spend• Helps highlight spend in Florida
– RFI & other vendors
Spend Analytics Pilot – Spikes Cavell
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Spend Analytics Pilot – Spikes Cavell
• Brief Overview:
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Hot Topics – Database Clean-up
• Guidelines for adding and removing commodity codes
• Vendor database cleanup
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Hot Topics – Communications
Expanded Marketing and Communications role
•State Purchasing and MyFloridaMarketPlace•E-mails and Newsletter•Contract Marketing WebinarsState Agency CustomersFlorida Local Government Customers (OEUs)
•PPIP survey feedback
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Hot Topics – Submitted Topics
•Practical use of “Present-value methodology – Dick Chatel and Dave Callaway•Others?
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Evaluation using Net Present Value (NPV) • Required by section 287.0572, Florida Statutes • Rule 60A-1.063, Florida Administrative Code, repealed
in October 2011• Requires comparative evaluation using NPV
– Used to help identify relative value of offers when different payment schemes are offered by vendors(unequal payment streams or differing payment periods)
– MS Excel includes NPV functionality up to 254 events.• Actual Formula available in help feature
– Rate is specified by Federal Reserve• Apparent title change• DMS has requested assistance from Federal Reserve to identify new title
and location
Hot Topics – Purchasing Policy
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Hot Topics – Meeting Frequency/Format
Planning for 2012•Collaborative Format•Increased interaction and participation•Meeting Frequency
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Happy Holidays!
Thanks for attending today!
See you in 2012!
Top Related