March 31, 2009

March 31, 2009

Department of Administrative Servicesand the

State Purchasing Processes

American Recovery and Reinvestment Act:Accountability and Transparency

Tim Gibney, Assistant Commissioner

Georgia Department of Administrative Services

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http://doas.ga.gov/Pages/Home.aspx


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Asst. CommissionerState Purchasing

Provide support activities to category teams and special projects

Support procurement applications Manage procurement training Assist agencies in improving process Manage communications to enhance

agency/vendor relations

Director, Knowledge CenterKelly Loll-Jones

Cust./Vendor SatisfactionHugh Farley

Professional DevelopmentMirna Barker

Strategic Support

Katherine Briody

Procurement Applications

Kristine Splieth

Process Improvement

Donna File

Conduct category management, strategic sourcing and supplier development for categories managed by State Purchasing

Provide guidance to category teams that reside within agencies

Manage procurement of goods/services that have no established category teams

Good and Supplies

Clarence Ingram

Director, Strategic SourcingTerry Doumkos

Special Projects

Debra Blount

Infrastructure Darryl Mitchell

ITBrian Wirpsa

Statewide Cards Manager

Paul Kurtz

Director, Customer Advocacy

Gina Tiedemann

Organizational Structure


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The Procurement Transformation will be delivered while operating within the context of open and fair competition

Transformation InitiativeFairness ConsiderationsOpen Competition

Drivers of Competition Broad participation Clear and effective

processes that provide open transparency into the procurement processes and criteria

Effective documentation of results and approach

Factors for Consideration Leverage for minority

vendor and small business Establish business

practices to achieve fairness and equity

Effective and Balanced Approach to Drive Results Competition and fairness

used to drive the strategic sourcing approach to achieve savings and preserve policy priorities

Develop internal capabilities to further sustain procurement excellence

Performance Management

Human Resources Management

Sourcing & Category

Management

Supplier Relationship Management

Operating Process

Management

Knowledge and InformationManagement

Supply Management

Strategy

Organizational Alignment

Performance Management

Human Resources Management

Sourcing & Category

Management

Supplier Relationship Management

Operating Process

Management

Knowledge and InformationManagement

Supply Management

Strategy

Organizational Alignment

A.T. Kearney’s House of Procurement


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The Training page allows you to obtain information on:• Course Descriptions• Course Schedules

• Registration Information

Professional Development


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Georgia Purchasing Curricula & Certifications


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P-Card CertificateP-Card Certificate

Negotiations Certificate

Negotiations Certificate

Contract Management Certificate

Contract Management Certificate

RFPRFPCertificateCertificate

RFPRFPCertificateCertificate

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4 S

5 S

S

Employees who need more advanced understanding of State procurement tools, procedures, and policies as they relate to RFPs and Negotiations

More specifically, employees responsible for writing and managing the RFP process as well as being the facilitator or responsible for finalizing

negotiations or for leading the negotiation process

Employees who need more advanced understanding of State procurement tools, procedures, and policies as they relate to Contract Management

More specifically, employees responsible for writing and administering the contracts

Employees whose responsibilities include managing the P-Card Program at their facilities

Employees who need basic understanding of State procurement tools, procedures, and policies

Professional Development


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Contract processContract process

The procurement process can be summarized with seven major stages

Award ProcessAward ProcessEvaluation Process

Evaluation Process

Solicitation process


Solicitation PreparationSolicitation PreparationPre-SolicitationPre-SolicitationNeed

IdentificationNeed

Identification

• Identify Internally/externally need for purchase

• Decide on Ownership of category

•Identify sourcing team

•Decide on required analysis

•Develop category profile

•Generate Vendor Portfolio

•Identify most appropriate purchasing method

•Develop Sourcing strategy

•Generate technical evaluation criteria

• Include standard language for RFx

• Incorporate standard contract terms and conditions based on category

• Post eRFX

advertisement or bid notice on GPR

• Conduct Q&A session

• Conduct offeror conference

• Select Implementation path

•Develop Evaluation/ negotiation plan

• Receive bids

•Issue intent to award

•Handle vendor protests

•Operationalize new agreement

•Issue notice of award

•Document and store contract/purchase details

•Select Vendors

•Conduct administrative review

•Evaluate technical proposal

•Analyze cost proposal (TCO calculation)

•Conduct Negotiation

Overview of Procurement stages

Key Steps

•Create contract administration plan

•Sustain results

•Track contract performance

•Track vendor performance


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• Provides the necessary process and techniques to improve procurement operations

• Provides a consistent method to process information and defines a structure for each step of the process and standardizes the way all events are conducted

• Facilitates the adoption of communication technology that lead to increase in efficiencies, effectiveness, and accountability

7-Stage Methodology


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Need Identification

The identification of the need involves the broad identification of what is required As part of this process, the agency will identify stakeholders, may carry out

some stakeholder analysis or surveys, and undertake spend and demand analysis

Following this activity APOs/UPOs will have some preliminary views on the required services and solutions

Partnership with the State Purchasing Division may enhance the APOs/UPOs’ comprehensive knowledge of the market, as it is necessary to perform an appropriate level of market research to develop a good business case and to make a good decision on the specific procurement methodology to follow

Contract processContract processAward ProcessAward ProcessEvaluation

ProcessEvaluation

ProcessSolicitation

processSolicitation

processSolicitation PreparationSolicitation PreparationPre-SolicitationPre-SolicitationNeed

IdentificationNeed

Identification


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Planning Your Procurement

• “The critical importance of the Recovery Act…require heightened management attention on acquisition planning.” (Peter Orszag Letter, 2/18/09)


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Lead Measure 5:Reduce Average Cycle Time For RFXs (# of days) by 10%

• Early engagement and customer relationship management

• Increasing training

• Introducing standard templates• Include metrics for SWC’s in 4th Quarter

Drivers and what we’re doing to address them:

RFQ Goal RFP Goal

2008RFX Goals

106

161


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Pre-Solicitation


Evaluation Process




IdentificationNeed

Identification

•Identify sourcing team

•Decide on required analysis

•Develop category profile

•Generate Vendor Portfolio

•Identify most appropriate purchasing method

Key Step

s


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Pre-Solicitation• Research is conducted to help write the requirements/

specifications and identify the sources that provide the goods or services required

• A cross functional team is assemble in order to conduct the research, write the requirements, and help identify what is needed

• If necessary, an evaluation team is assembled together in order to perform the evaluation of the proposals

• The best method of solicitation is identified


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Pre-Solicitation

• Helps identify, examine, select and implement sourcing alternatives for a specific Sourcing Group (SG).

• Encompasses the whole process for evaluating, selecting and aligning with supplier(s) to achieve operational improvements and support overall strategic objectives.

• Focuses on total costs and not just the purchase price

• Assists an organization by gaining a good understanding of its requirements, knowing how it must map to the existing supply market, and then develop a plan for both short and long-term objectives.


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Evaluation Process




IdentificationNeed

Identification

•Develop Sourcing strategy

•Generate technical evaluation criteria

•Include standard language for RFx

•Incorporate standard contract terms and conditions based on category


Key Step

s


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Solicitation Preparation

• Identify the method of solicitation• Finalize the requirements • Write the RFx• Create an evaluation methodology for the RFx – Assign points

to each Proposal Factor and each question/requirement within each proposal factor

• Create the cost methodology• Have the cross functional team review and edit the RFx to

ensure that it addresses the requirements


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Vendor Registration

• Importance of contacting prospective bidders to register on the Georgia Procurement Registry

http://doas.ga.gov/TGM/Pages/TGMSuppliers.aspx

Registration Determine whether your company is a Sourcing Bidder or a Supplier Sourcing Bidder - If your company

provides goods or services but has never had a purchase order, received a remittance, or been awarded a contract by the State of Georgia, you need to register as a sourcing bidder. Your company may fit into this category even if it was active in our current Vendor Registration System. Supplier - If your company has had a purchase order, received a remittance, or has been awarded a contract by the State of Georgia, you need to register as a supplier. A company in this category will have a PeopleSoft vendor number in our Financials system. After reading the definitions, if you are unsure whether you are a bidder or supplier, try registering as a supplier first. If you are a supplier, your company information will pop up when after you've added all the required fields and click in the Vendor ID box. If no record is found, register as a bidder.

Read and Print the Quick Reference Guides Register as a Sourcing Bidder Register as a Supplier

Register in Team Georgia Marketplace New Hours: Team Georgia Marketplace is available 24 hours a day, 7 days a week, except between 7:00 PM and 7:30 PM daily when the system is down for routine maintenance. If you are registering, you must complete the process prior to 7:00 PM or you will lose it.


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Evaluation Process




IdentificationNeed

Identification

• Post eRFx advertisement or bid notice on GPR

• Conduct Q&A session

• Conduct offeror conference

• Select Implementation path

• Develop negotiation plan

• Receive bids


Key Step

s


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Solicitation Process

During this Stage, the procurement staff is responsible for the following:

•Post the solicitation – This begins the Solicitation Process stage•Conduct offerors’ conferences, if appropriate•Respond to any offerors’ questions in writing. Questions could be received directly from the offeror or documented as part of the offerors’ conference. Post these answers for all offerors to see•Define a negotiation methodology•Receive the bids or proposals from the suppliers/offerors – This marks the end of the Solicitation Process stage


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Sourcing teams have several options to complete a competitive bidding process

Competitive Bid Process Options Applicability

(e)RFQ, Award • Sourcing of standard commodity with clear understanding of specifications

• Procurement is relatively small with limited potential for savings

(e)RFQC, eAuction, Award • Appropriate for sourcing groups with the following criteria

–compelling spend–competitive marketplace–credible switching threat–clear category definition–clear product specification

• Invitation to auction requires pre-screening of suppliers through RFQC to gather qualitative data

(e)RFP, Award (e)RFP, Negotiations/Multiple Revision to

Cost and Technical, Award (1) (2)

(e)RFP, Negotiations/Multiple Revision to Cost Only, Award (1) (2)

• Sourcing of complex categories and/or compelling spend • Used to gather qualitative, technical and cost information from

suppliers • Negotiations with multiple offerors can be conducted during the

RFP process to increase savings opportunities

Note: (1) Authorized to disclose information derived from (but not contained in) the proposals to competing offerors such as overall rankings and overall scores for the purpose of soliciting ongoing revisions to cost proposals via an auction process or meetings

(2) Depending on existing code, the use of negotiations may be restricted


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Evaluation Process




IdentificationNeed

Identification

•Select Vendors

•Conduct administrative review

•Evaluate technical proposal

•Analyze cost proposal (TCO calculation)

•Conduct Negotiation


Key Step

s


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Solicitation Evaluation

• Conduct the Administrative review to ensure all necessary documentation was submitted and all offerors passed the requirements

• Evaluate the proposals based on the evaluation methodology, if appropriate

• Evaluate the cost proposal• Combine the cost and proposal evaluations to arrive to the

combined evaluation in order to select the best supplier• Conduct negotiations based on the negotiation methodology• Evaluate new submittals from the offerors involved in the

negotiation process

During this Stage, the procurement staff is responsible for the following:


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Suppliers are ranked and a competitive range is used to determine a final list of suppliers for award or further negotiations

This Is The Most

Challenging Step

RFPResponse

RFPResponse

RFPResponse +

Ranking#1 Supplier#2 Supplier

#3 Supplier

Analysis

Predetermined Vendor Criteria

Cost/ Technical

Criteria Weight

Cost Price 30%

Technical Capabilities

Terms

Value added

Supplier Status

Quality

15%

20%

20%

10%

5%


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In Summary, how to embed the sourcing process?

ProfileSourcing Group

SelectSourcingStrategy

GenerateSupplierPortfolio

SelectImplementation

Path

SelectCompetitive Supplier (s)

Implement

SuppliersBenchmark Supply

Market

• Understand internal spend and external market

• Open supply base and identify all viable suppliers

• Create “go to market” approach

• Decide most appropriate execution strategy

• Evaluate proposal and select suppliers

• Operationalize supplier agreements

• Monitor market and supplier performance

1 2 3 4 5 6 7

Planning Issue Bid & Select Suppliers On-going Category

Management

Implement Suppliers

Purchasing

• Plan, manage, and complete key milestones• Share milestones with selected stakeholders and ensure buy-in• Contact stakeholders to profile spend and fully understand end-

user requirements• Collect supplier spend (i.e., line item detail)• Standardize specs • Lead bidding/negotiation process• Plan implementation activities• Monitor implementation• Monitor savings tracking and compliance

Selected Department Stakeholders

• Support Purchasing in profiling spend (i.e., validate spend data and submit specs/requirements)

• Support development of key milestones and support bidding process

• Comply with supplier communication requirements and ensure engagement of department end-users as needed

• Fully support new supplier implementation and compliance• Track department savings and monitor implementation progress

Roles and Responsibilities – Strategic Sourcing Initiatives Led

by Purchasing


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Georgia Procurement Manual

http://pur.doas.ga.gov/SPDportalDocs/GeorgiaProcurementManual.pdf

The State Purchasing Division is currently working on a project that will combine the Georgia Procurement Manual (GPM) and the Georgia Vendor Manual (GVM). Release date set for April, 2009

This document contains the state’s sources of policy and guidance for procurement issues.


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Templates – RFP, RFQ and eQuote

Link to RFP templatePaper/Non-PeopleSoft template

http://statepurchasing.doas.georgia.gov/vgn/images/portal/cit_1210/25/58/136580221SPD-SP018StateEntityRFPTemplate.doc

Electronic template

http://statepurchasing.doas.georgia.gov/vgn/images/portal/cit_1210/25/59/130530897SPD-SP020StateEntityeRFPDocument.doc

Link to RFQ templatehttp://statepurchasing.doas.georgia.gov/vgn/images/portal/cit_1210/25/51/136593068SPD-SP022StateEntityeRFQTemplate.doc

Link to eQuote templatehttp://statepurchasing.doas.georgia.gov/vgn/images/portal/cit_1210/58/32/76605811SPD-SP005_Request%20For%20Quote.doc


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Language in Our DOAS Agency and Statewide Contract Templates Regarding Auditing – Agreement to Cooperate (Vendor)

“Record Retention and Access. The Contractor shall maintain books, records and documents in accordance with generally accepted accounting principles and procedures and which sufficiently and properly document and calculate all charges billed to the State throughout the term of the Contract for a period of at least five (5) years following the date of final payment or completion of any required audit, whichever is later. Records to be maintained include both financial records and service records. The Contractor shall permit the Auditor of the State of Georgia or any authorized representative of the State, and where federal funds are involved, the Comptroller General of the United States, or any other authorized representative of the United States government, to access and examine, audit, excerpt and transcribe any directly pertinent books, documents, papers, electronic or optically stored and created records or other records of the Contractor relating to orders, invoices or payments or any other documentation or materials pertaining to the Contract, wherever such records may be located during normal business hours.


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The Contractor shall not impose a charge for audit or examination of the Contractor’s books and records. If an audit discloses incorrect billings or improprieties, the State reserves the right to charge the Contractor for the cost of the audit and appropriate reimbursement. Evidence of criminal conduct will be turned over to the proper authorities.”

CAUTION

As discussed, DOAS contract templates are not mandatory; therefore, not all contracts established by SPD on behalf of other state agencies will contain the same auditing language. In addition, not all DOAS contracts are established utilizing these contract templates as they are only required for purchases of $100,000 or more (which generally covers all of our multi-year agreements where we would have multiple purchases as opposed to a single payment for our less expensive purchases).”

Note

For ARRA funds this language should be used irregardless of the dollar amount of the purchase.


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Complying With Federal Law Regarding Use of ARRA Funds

• Federal law regarding the appropriate use of ARRA funds has several implications for the state procurement process, including:▪ Building solicitation specifications and requirements so

that they adhere to ARRA regulations such as the Buy American provision,

▪ Ensuring the evaluation and award process correctly implements the ARRA regulations, and

▪ Utilizing effective contract administration tools to ensure the goods and services delivered by the awarded vendors are in compliance with the contracts.


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Key Action to Ensure These Goals Are Met Include:

• Issue a communication alert to state entities requesting these entities receiving ARRA funds to contact DOAS

• Begin discussions with GSFIC (DOAS’ partner for establishing public works contracts) as well as BOR and GDOT to address the need to draft compliance provisions and or policy regarding ARRA funded contracts

• Partner with GSFIC and individual state agencies to ensure appropriate evaluation and award of contracts utilizing ARRA funds


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Buy American Provision

• DOAS understands Section 1605 of the ARRA imposes a mandate that certain manufactured products must be produced in the United States.

• During discussions with state entities establishing public works contracts, DOAS will address this mandate and its correct application, including the definition of US-made products as well as cost-based waivers to this requirement.


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“In today’s edition of the Federal Register, the General Services Administration (GSA) posted six new documents relating to the Federal Acquisition Regulations (FAR) within the American Recovery and Reinvestment Act (ARRA). While the postings only affect federal agencies, the Office of Management and Budget (OMB) has stated in previous conversations that the FAR regulations would likely be similar to the OMB issued regulations for Title 2 regarding federal assistance to states. OMB is anticipating publishing these regulations as early as Friday, April 3. The six FAR postings cover the following topics:

Publicizing Contract Actions

Reporting Requirements

Whistleblower Protections

GAO Access to Contractor Employees

Buy American Requirements for Construction Material

GAO/IG Access”


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http://ies/doas/images/activedit/policies/Policies/301-soc.pdfStandards of Conduct

http://ies/doas/images/activedit/policies/Policies/ethics-govt.pdfCode of Ethics for Government Service

Ethics Policy

In order to maintain public trust and transparency in State Purchasing, DOAS has implemented policies and procedures on standards of conduct for its employees and contractors. Below you can access these policies.


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Ethics Policy

In order to maintain public trust and promote

transparency in government, an ethics policy has been

established by Governor Perdue to ensure the highest

ethical standards within the State of Georgia

Link to State Ethics Policy

http://gov.georgia.gov/gov/exorders/2003/jan/01_13_03_01.pdf

Office of Inspector General directive

IG Directive - FINAL VERSION 3-24-09 (3).doc


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Ethical Standards

Ethics-govt.pdf Code of Ethics for Government Service

Standards of Conduct Policy.pdfState Purchasing Standard of Conduct

White House Memo 3-20-2009.pdfEnsuring Responsible Spending of Recovery Act Funds


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Accountability & AuditingAudit Risk Alert 2.doc

American Recovery and Reinvestment Act of 2009 (ARRA)Audit Risk Alert #2 – Responsible Spending of Recovery Act Funds

March 24, 2009

On March 20, 2009, President Obama issued a memorandum to heads of Executive Departments and Agencies emphasizing responsible spending and transparency of Recover Act Funds.Recovery Act funds are to be used to stimulate the Nation’s economy, and are not intended to fund projects for special interest.

To that end, please be advised of the following:

1. Limit on Funds – Section 1604 of the Recovery Act states that none of the Recovery Act funds may be sued by any State or local government for:

“any casino, or other gambling establishment, aquarium, zoo, golf course, or swimming pool.”Consequences of Noncompliance: In the event of a recipient has not complied with Section 1604, appropriate corrective action

may include, but not be limited to:a) Disallowing or otherwise recovering improperly spent amounts.b) Imposing additional requirements on the recipient.c) Initiating a proceeding for administrative civil penalties.d) Initiating a proceeding for suspension and debarment.

2. Transparency of Registered Lobbyist Communications – An executive department or agency official shall not consider the view of a registered lobbyist concerning particular projects, applications, or applicants for funding under the Recovery Act unless such views are in writing.All written communications form a registered lobbyist concerning the commitment, obligation, or expenditure of Recovery Act funds for particular projects, applications, or applicants shall be posted publicly by the receiving agency or governmental entity on its recovery website within 3 business days after receipt of such communication.


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Monitoring SystemBest Practices_Contract Monitoring.pdf


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EthicsIG Directive - FINAL VERSION 3-24-09 (3).doc

Issue Date: 3/24/09 – v1

Applicability: This OIG Directive applies to all agencies, departments, commissions, councils, boards, universities, colleges, authorities, associations, and other organizations that fall under the Executive Branch of State Government (hereinafter referred to as “State Organizations.”) Background:

The OIG was created on January 13, 2003, by Executive Order of Governor Sonny Perdue.

OIG is charged with fostering and promoting accountability and integrity in state government. OIG has the authority to investigate complaints of fraud, waste, abuse and corruption in all executive branch agencies, departments, commissions, authorities and any entity of state government that is headed by an appointee of the Governor. Excluded from our jurisdiction are the General Assembly and any Courts.

General Directive: Each State Organization shall require its contracting officer to insert in full in each contract, subcontract, grant and bid solicitation financed with funds obtained by the American Recovery and Reinvestment Act and entered into with outside contractors, subcontractors or consultants the following provision:

RIGHT TO INSPECT

It is hereby agreed that the Office of the State Inspector General shall have access to all records, information, data, reports, plans, projections, matters, contracts, memoranda, correspondence, and any other materials of [insert State Organization name] and shall be deemed to be an authorized representative and agent of [insert State Organization name] for the purposes of examining and investigating the records of all contractors,

Office of the State Inspector General (OIG) Right to Inspect Contract/Grant Directives

Regarding Stimulus Funds


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Audit Language for Vendors(contained in “Best Practices in Government, Components of an Effective Contract Monitoring System” from the State Auditing Office

Access to Records/Right to Audit Clauses

The right to audit the vendor’s books is a standard contract clause and a fundamental concept of contract administration. When government services are contracted out, the vendor represents the state in providing the service. Agencies have a responsibility to verify the information that the vendor reports to them and to ensure that funds are expended properly. This is especially important when there is a high degree of risk involved due to the type of contract or service, a high degree of liability exists for the state, or the potential for severe consequences in the event of poor vendor performance. Because the records are the property of the vendor, the contract must include an agreement that the agency has access to and can audit those records. The ability of agencies to audit vendor records should also extend to the records of any

subcontractors.

Other States’ Use of Access to Records/Right to Audit:

Access to vendor records and the right of the state to audit the contractor is present either

through existing law or as a standard contract clause in five of the six states surveyed by the

audit team. The clause is used only for some contracts in the remaining state.

Georgia’s Use of Access to Records/Right to Audit:

• The survey of 25 state agencies found that 23 of the agencies (92%) reported that

access to vendor records and the ability to audit those records was a contract

management tool. This was the most frequent practice used, according to the surveyed

agencies.

• Contract file reviews found that 17 of 20 contracts (85%) contained clauses related to

the right of access of vendor records and the ability to audit those vendors. The three

remaining contracts (15%) either addressed access to confidential information or

stated that the vendor’s records would become the agency’s property at the end of the

contract.

• The Georgia Procurement Manual does not require an access to records/right to audit

clause but does reference it.


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