Public Purchasing in Florida Purchasing Organization September 14, 2005 State Purchasing.
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Transcript of Public Purchasing in Florida Purchasing Organization September 14, 2005 State Purchasing.
Public Purchasing in Florida Purchasing Organization
September 14, 2005
State Purchasing
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Public Purchasing in Florida Public Purchasing in Florida Purchasing Organization - Agenda Purchasing Organization - Agenda
Welcome / Session Overview
Challenges and Trends
Florida’s Back Office
Evolution of State Purchasing
State Purchasing’s Role
Questions
More Information
3
Objectives Increase Understanding of …
• Challenges and trends in organizational theory, particularly government
• Organization of Florida government, particularly the “back office”
• Changes in State Purchasing over the past decade
• Organization, powers, purpose, and functions of State Purchasing
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Public Purchasing in Florida Public Purchasing in Florida Purchasing Organization - Agenda Purchasing Organization - Agenda
Welcome / Session Overview
Challenges and Trends
Florida’s Back Office
Evolution of State Purchasing
State Purchasing’s Role
Questions
More Information
5
Ageless ChallengesKing of Prussia (1740)
He did not altogether approve of the administrative system that he inherited. From the beginning he correctly identified it as a bureaucratic machine whose ministers and officials were far too restrictive and unimaginative, bogged down in minutiae, caring only for personal comforts and advancement, dissolute and corrupt, frequently no more than indolent, careless “idiots” whose irresponsible actions daily alienated subjects, who formed the true wealth of the kingdom.
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Ageless Challenges Sound Familiar?
A hundred people can veto a project but no one person or office can move it forward
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Ageless ChallengesSo What’s the Solution?
Should government be run like a business?
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Ageless ChallengesOur Government System
• “We have consciously designed an inefficient government, to keep man free” – James Madison
• The cost of preventing tyranny was a fragmented, separated government system in which everyone seems to check everyone else
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Ageless Challenges J.H. Newman (1855)
A government is [people’s] natural foe; they cannot do without it altogether, but they will have as little of it as they can. They will forbid the concentration of power; they will multiply its seats, complicate its acts, and make it safe by making it inefficient. They will take care that it is the worst-worked of all the many organizations which are found in their country. As despotisms tend to keep their subjects in ignorance, lest they should rebel, so will a free people maim and cripple their government, lest it should tyrannize.
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How Does this Apply to Purchasing?What Are Our Objectives?
• Economy (good prices)
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How Does this Apply to Purchasing?What Are Our Objectives?
• Economy (good prices)
• Openness
• Fairness
• Accountability
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Current TrendsDoing Well Despite Constraints
• Government can be more businesslike. Separation of powers is no excuse for…
– Shoddy quality
– Low productivity
– Inattention to result
– Fiscal irresponsibility
– Non-responsiveness
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Recent DevelopmentsPrivate Sector Practices and Influences
• In Search of Excellence: Lessons from America’s Best Run Companies (1982)
• Reinventing Government: How the Entrepreneurial Spirit Is Transforming the Public Sector (1992)
• Banishing Bureaucracy: The Five Strategies for Reinventing Government (1997)
• Good to Great: Why Some Companies Make the Leap and Others Don’t (2001)
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Recent DevelopmentsFederal Law Changes
• Government Performance and Results Act of 1993
• National Performance Review, Reinventing Federal Procurement (1993)
• “Section 800 Panel,” Streamlining Defense Acquisition Laws: Report of the Advisory Law Panel (1993)
• Federal Acquisition Streamlining Act of 1994
• Clinger-Cohen Act of 1996
• Federal Acquisition Regulation (FAR) rewrite (1997)
• Federal Activities Inventory Reform (FAIR) Act of 1998
• President’s Management Agenda (FY 02)
• Services Acquisition Reform Act of 2003
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FAR 1.102(b)Federal System Objectives
(1) Satisfy the customer in terms of cost, quality, and timeliness of the delivered product or service by, for example –
(i) Maximizing the use of commercial products and services;(ii) Using contractors who have a track record of successful past
performance or who demonstrate a current superior ability to perform; and
(iii) Promoting competition;
(2) Minimize administrative operating costs;
(3) Conduct business with integrity, fairness, and openness; and
(4) Fulfill public policy objectives.
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Recent Federal DevelopmentsPMA Excerpts
“Government likes to begin things – to declare grand new programs and causes. But good beginnings are not the measure of success. What matters in the end is completion. Performance. Results. Not just making promises, but making good on promises.
“[T]here is an understandable temptation to ignore management reforms in favor of new policies and programs. However, what matters most is performance and results. In the long term, there are few items more urgent than ensuring that the federal government is well run and results oriented.”
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Recent Federal DevelopmentsPMA Excerpts
Government should be:
• Citizen-centered, not bureaucracy-centered
• Results-oriented
• Market-based, actively promoting rather than stifling innovation through competition
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Public Purchasing in Florida Public Purchasing in Florida Purchasing Organization - Agenda Purchasing Organization - Agenda
Welcome / Session Overview
Challenges and Trends
Florida’s Back Office
Evolution of State Purchasing
State Purchasing’s Role
Questions
More Information
19
Florida’s Back OfficeWhat Are We Talking About?
Back Office (general management): the administrative staff of a company who do not have face-to-face contact with the company’s customers
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State Financial InformationFiscal Year Ended 6/30/03
• $48.3 billion in expenses
• We’d be 25th on the Fortune 500 list
– Bank of America is just ahead of us
– Just behind us are Pfizer, JP Morgan Chase, Time Warner, and Proctor & Gamble
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How Does Purchasing Fit?
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Florida Financial Management Information SystemPurposes (§ 215.91, F.S.)
• 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.
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FFMISInformation Subsystems
• Planning and Budgeting (EOG)
• Accounting (DFS)
• Cash Management (DFS)
• Purchasing (DMS)
• Personnel (DMS)
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Pre-FFMIS Subsystem 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
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FFMISFFMIS Overview of Major 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)
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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
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FFMISFFMIS Purchasing Subsystem Goals
FLAIR / Aspire
RegistrationPurchasing
BiddingContractsInvoicingMatchingReporting
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MyFloridaMarketPlaceMyFloridaMarketPlace System Functions System Functions
Vendor ToolsBuyer Tools
MyFloridaMarketPlace UsersInitial Users -
Pilots
Initial Users - Exec Agencies
Eligible Users - Other State Agency
State Term Contract Vendors
Minority Businesses
Agency/ Dept. Contract Vendors
Eligible Users – Univ, City, County
General Public
Small Businesses
• Vendor search
• State term contract items
• Requisitions/Purchase orders
• Online workflow approvals
• Informal solicitation (quotes < $25,000)
• Sealed bids (ITN, ITB, RFx > $25,000, auctions, reverse auctions)
• Receipt of Goods
• P-Card
• Contract development and administration
• Reports
• Self registration
• E-mail notification of formal and informal solicitations
• Online quoting on informal solicitations (< $25,000)
• Online submission of sealed bids (> $25,000)
• Electronic purchase order receipt
• Electronic submission of invoices
• Catalog creation and updates for State term contracts
• Reports
Business Support and Operations• Buyer Help Desk
• Vendor Help Desk
• Strategic Sourcing
• Procurement Assistance
• Catalog Enablement
• Training and Education
“I want to buy” “I want to sell”
Buyers Vendors
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Public Purchasing in Florida Public Purchasing in Florida Purchasing Organization - Agenda Purchasing Organization - Agenda
Welcome / Session Overview
Challenges and Trends
Florida’s Back Office
Evolution of State Purchasing
State Purchasing’s Role
Questions
More Information
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Evolution of State Purchasing
What We Looked Like 10 Years Ago…
• 100 Employees
• Director’s Office
• Bureau of Standards
• Bureau of Procurement
• SPURS
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Evolution of State Purchasing
What We DID 10 years ago…
• Spec-based contracts
• Contracted for agency specific goods & services
• Supported agency purchases through SPURS
• Utilized ITB as primary solicitation process
• Produced and distributed all information on paper
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Evolution of State Purchasing High Level Changes Affecting Us
• Internet
• Shrinking State Budget
• Administrative Transitions
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Evolution of State Purchasing
What We Look Like Today…
• 41 Employees
• Director/Operations
• Two Bureaus of Buyers (state term contracts)
• MyFloridaMarketPlace
• State Purchasing Agreements (SPA)
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Evolution of State Purchasing Our Functions/Focus Points Today…
• No more paper!
• High-level strategic sourcing
• Training
• Customer Service
• Performance Objectives
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Public Purchasing in Florida Public Purchasing in Florida Purchasing Organization - Agenda Purchasing Organization - Agenda
Welcome / Session Overview
Challenges and Trends
Florida’s Back Office
Evolution of State Purchasing
State Purchasing’s Role
Questions
More Information
36
State Purchasing State Purchasing Our MissionOur Mission
To deliver innovative, resource-saving purchasing services in order to provide effective program support to all state agencies.
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State PurchasingState PurchasingDMS Purpose and PowersDMS Purpose and Powers
287.032, F.S. Purpose of the department
(1) To promote efficiency, economy, and the conservation of energy and to effect coordination in the purchase of commodities and contractual services for the state.
(2) To provide uniform commodity and contractual service procurement policies, rules, procedures, and forms for use by agencies and eligible users.
287.042, F.S. Power, duties, and functions
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State PurchasingState PurchasingDMS/Agency RelationshipDMS/Agency Relationship
• 287.042, F.S. Power, duties, and functions
– (1)(a) To contract for … all commodities and contractual services required by any agency under this chapter
– (6)(a) To govern the purchase by any agency of any commodity or contractual service and to establish standards and specifications for any commodity.
– (6)(b) Except for the purchase of insurance, [DMS] may delegate to agencies the authority for the procurement of and contracting for commodities or contractual services.
• Rule 60A-1.002(d) – Conditional delegation of authority to agencies (except insurance)
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Putting Procurement in Context
Lifecycle 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
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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
Award Decision (ITA)
Typical Deliverables
Key Worksteps
- and / or -
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State PurchasingState Purchasing Strategic Sourcing/State Term Contracts
Leverage State-Wide Volume
Obtain Best Prices & Value
Obtain State-Wide Savings
Increase Demand / Volume on STCs
Identify New STC Opportunities
Reduce State-Wide Supply Base
Manage Compliance
Strategic sourcing is a proactive process to leverage demand and select vendors that offer the best value.
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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 (Pre-7/05)
Stage 1 Stage 4 Stage 5Stage 3Stage 2
Monitor
Current Projects
New Projects
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Public Purchasing in Florida Public Purchasing in Florida Purchasing Organization - Agenda Purchasing Organization - Agenda
Welcome / Session Overview
Challenges and Trends
Florida’s Back Office
Evolution of State Purchasing
State Purchasing’s Role
Questions
More Information
44
Public Purchasing in Florida Public Purchasing in Florida Purchasing Organization - Agenda Purchasing Organization - Agenda
Welcome / Session Overview
Challenges and Trends
Florida’s Back Office
Evolution of State Purchasing
State Purchasing’s Role
Questions
More Information
45
More Information
State Purchasing’s website:
http://dms.myflorida.com/purchasing