State Purchasing Public Purchasing in Florida Purchasing Organization September 14, 2005
Public Purchasing in Florida Purchasing Organization - Agenda § Welcome / Session Overview § Challenges and Trends § Florida’s Back Office § Evolution of State Purchasing § State Purchasing’s Role § Questions § More Information 2
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 3
Public Purchasing in Florida Purchasing Organization - Agenda § Welcome / Session Overview § Challenges and Trends § Florida’s Back Office § Evolution of State Purchasing § State Purchasing’s Role § Questions § More Information 4
Ageless Challenges King 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. 5
Ageless Challenges Sound Familiar? A hundred people can veto a project but no one person or office can move it forward 6
Ageless Challenges So What’s the Solution? Should government be run like a business? 7
Ageless Challenges Our 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 8
![Ageless Challenges J. H. Newman (1855) A government is [people’s] natural foe; they cannot](https://present5.com/presentation/ec8ebc68ad4e73f14a196ce4195b31d2/image-9.jpg "Ageless Challenges J. H. Newman (1855) A government is [people’s] natural foe; they cannot")
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 worstworked 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. 9
How Does this Apply to Purchasing? What Are Our Objectives? • Economy (good prices) 10
How Does this Apply to Purchasing? What Are Our Objectives? • Economy (good prices) • Openness • Fairness • Accountability 11
Current Trends Doing 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 12
Recent Developments Private 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) 13
Recent Developments Federal 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 14
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. 15
Recent Federal Developments PMA 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. ” 16
Recent Federal Developments PMA Excerpts Government should be: • Citizen-centered, not bureaucracy-centered • Results-oriented • Market-based, actively promoting rather than stifling innovation through competition 17
Public Purchasing in Florida Purchasing Organization - Agenda § Welcome / Session Overview § Challenges and Trends § Florida’s Back Office § Evolution of State Purchasing § State Purchasing’s Role § Questions § More Information 18
Florida’s Back Office What 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 19
State Financial Information Fiscal Year Ended 6/30/03 • $48. 3 billion in expenses • We’d be 25 th 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 20
How Does Purchasing Fit? 21
Florida Financial Management Information System Purposes (§ 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. 22
FFMIS Information Subsystems • Planning and Budgeting (EOG) • Accounting (DFS) • Cash Management (DFS) • Purchasing (DMS) • Personnel (DMS) 23
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 24
FFMIS 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 – My. Florida. Market. Place 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/People. Soft to replace the legacy accounting and financial system (FLAIR) with an integrated enterprise resource planning system (http: //aspire. dfs. state. fl. us) 25
Pre-FFMIS Purchasing Systems Manual Process for Matching Web-based Registration Manual Process for Invoicing Vendor Bid System (Bidding) SPURS (Purchasing) FLAIR Agency contract system SPURS View (Reporting) Agency contract system 26
FFMIS Purchasing Subsystem Goals FLAIR / Aspire Registration Purchasing Bidding Contracts Invoicing Matching Reporting 27
My. Florida. Market. Place System Functions Initial Users Pilots Eligible Users Other State Agency Initial Users Exec Agencies Eligible Users – Univ, City, County General Public Buyers Buyer Tools Minority Businesses Small Businesses Vendor Tools • Vendor search • Self registration • State term contract items “I want to buy” State Term Contract Vendors Agency/ Dept. Contract Vendors My. Florida. Market. Place Users • E-mail notification of formal and informal solicitations • Requisitions/Purchase orders • Online workflow approvals • Online quoting on informal solicitations (< $25, 000) • Informal solicitation (quotes < $25, 000) • Sealed bids (ITN, ITB, RFx > $25, 000, auctions, reverse auctions) “I want to sell” • Online submission of sealed bids (> $25, 000) • Electronic purchase order receipt • Electronic submission of invoices • Receipt of Goods • P-Card • Contract development and administration • 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 28
Public Purchasing in Florida Purchasing Organization - Agenda § Welcome / Session Overview § Challenges and Trends § Florida’s Back Office § Evolution of State Purchasing § State Purchasing’s Role § Questions § More Information 29
Evolution of State Purchasing What We Looked Like 10 Years Ago… • 100 Employees • Director’s Office • Bureau of Standards • Bureau of Procurement • SPURS 30
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 31
Evolution of State Purchasing High Level Changes Affecting Us • Internet • Shrinking State Budget • Administrative Transitions 32
Evolution of State Purchasing What We Look Like Today… • 41 Employees • Director/Operations • Two Bureaus of Buyers (state term contracts) • My. Florida. Market. Place • State Purchasing Agreements (SPA) 33
Evolution of State Purchasing Our Functions/Focus Points Today… • No more paper! • High-level strategic sourcing • Training • Customer Service • Performance Objectives 34
Public Purchasing in Florida Purchasing Organization - Agenda § Welcome / Session Overview § Challenges and Trends § Florida’s Back Office § Evolution of State Purchasing § State Purchasing’s Role § Questions § More Information 35
State Purchasing Our Mission To deliver innovative, resourcesaving purchasing services in order to provide effective program support to all state agencies. 36
State Purchasing DMS 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 37
State Purchasing DMS/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 60 A-1. 002(d) – Conditional delegation of authority to agencies (except insurance) 38
Putting Procurement in Context Lifecycle of Spend • Capture company-wide spend • Adequate data integrity • Identify & monitor savings • Measure ROI of procurement • Fulfill reporting requirements • Apply negotiated pricing & terms • Minimize cost to track and transmit orders to suppliers • Track supplier performance ratings • Track rebate and volume agreement compliance • Capture early payment discounts • Timely capture of payments information • Manage contract renewals Planning & Analysis Source Contract • 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 Req’n Order Interact & Receive • Enforce compliance with contract pricing • Minimize time and cost to requisition, approve, receive & reconcile invoices Invoice Payment • Automate payment and link P. O. to payment authorization in one record (Ariba Buyer) 39
Putting Procurement in Context The Sourcing Process Kick-Off & & Assess Opportunities Level High Data Collection & Analysis Key Worksteps Segment Purchases Profile Internally & & Externally Develop Strategy Develop Screen Selection Suppliers Factors & & Selection Screen Factors Vendors Fast Track to Value Validate & Profile Category Build Total Cost of Ownership Model Build Supplier Vendor Selection Decision Matrix Form Cross Functional Sourcing Teams Typical Deliverables Conduct Industry Analysis Develop Category Strategy Conduct Supplier Vendor Analysis In-Scope Categories Category Profile Industry Profile TCO Model Category Strategy Selection Decision Matrix CFSTs (Cross-Functional Sourcing Teams) Conduct Competitive Auctions & Event Complete ITB/ITN/ RFQ/RFP - and / or Conduct Auctions ITB/ITN/RFQ/RFP Auctions Prepare Shape & Value Negotiate Proposition Value & Award Propositions Implement Agreements Develop Prepare Fact Value Based Proposition Negotiation Around “Packages” Options Measure Results & Trends Make Negotiate Award Value Decision Propositions Develop Vendors Value Propositions Award Decision (ITA) Benefits Realization Continual Vendor Improvement 40
State Purchasing Strategic Sourcing/State Term Contracts Leverage State. Wide Volume Obtain Best Prices & Value Obtain State. Wide Savings Increase Demand / Volume on STCs Manage Compliance Reduce State. Wide Supply Base Identify New STC Opportunities Strategic sourcing is a proactive process to leverage demand select vendors that offer the best value. 41
Governor’s Center for Efficient Government Project Gate Management Process (Pre-7/05) Current Projects Gate 1 Business Case Stage 1 Gate 2 Procurement Stage 2 Gate 3 Contract Management Change Management Stage 3 Stage 4 Gate 4 Post Implementation Monitor Stage 5 New Projects 42
Public Purchasing in Florida Purchasing Organization - Agenda § Welcome / Session Overview § Challenges and Trends § Florida’s Back Office § Evolution of State Purchasing § State Purchasing’s Role § Questions § More Information 43
Public Purchasing in Florida 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
More Information State Purchasing’s website: http: //dms. myflorida. com/purchasing 45
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