public purchasing in florida purchasing organization september 14, 2005 state purchasing

Public Purchasing in Florida Purchasing Organization

September 14, 2005

State Purchasing

2

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

4







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.

6

Ageless Challenges Sound Familiar?

A hundred people can veto a project but no one person or office can move it forward

7

Ageless ChallengesSo What’s the Solution?

Should government be run like a business?

8

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

9

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.

10

How Does this Apply to Purchasing?What Are Our Objectives?

• Economy (good prices)

11

How Does this Apply to Purchasing?What Are Our Objectives?

• Economy (good prices)

• Openness

• Fairness

• Accountability

12

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

13

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)

14

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

15

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.

16

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.”

17

Recent Federal DevelopmentsPMA Excerpts

Government should be:

• Citizen-centered, not bureaucracy-centered

• Results-oriented

• Market-based, actively promoting rather than stifling innovation through competition

18







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

20

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

21

How Does Purchasing Fit?

22

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.

23

FFMISInformation Subsystems

• Planning and Budgeting (EOG)

• Accounting (DFS)

• Cash Management (DFS)

• Purchasing (DMS)

• Personnel (DMS)

24

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

25

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)

26

Pre-FFMISPre-FFMIS Purchasing Systems

Vendor BidSystem

(Bidding)

SPURS(Purchasing)

FLAIR

SPURSView

(Reporting)

ManualProcess forMatching

Web-basedRegistration

ManualProcess for

Invoicing

Agencycontractsystem





27

FFMISFFMIS Purchasing Subsystem Goals

FLAIR / Aspire

RegistrationPurchasing

BiddingContractsInvoicingMatchingReporting

28

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

29







Questions

More Information

30


What We Looked Like 10 Years Ago…

• 100 Employees

• Director’s Office

• Bureau of Standards

• Bureau of Procurement

• SPURS

31


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

32

Evolution of State Purchasing High Level Changes Affecting Us

• Internet

• Shrinking State Budget

• Administrative Transitions

33


What We Look Like Today…

• 41 Employees

• Director/Operations

• Two Bureaus of Buyers (state term contracts)

• MyFloridaMarketPlace

• State Purchasing Agreements (SPA)

34

Evolution of State Purchasing Our Functions/Focus Points Today…

• No more paper!

• High-level strategic sourcing

• Training

• Customer Service

• Performance Objectives

35







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.

37

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

38

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)

39

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

40

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


Build Total Cost of

Ownership Model


Conduct Supplier Analysis

Build Supplier Selection Decision


Complete Prepare Fact-

Based Negotiation “Packages”

Negotiate Value

Propositions

Auctions

FormCross-

Functional Sourcing

Teams

Develop


High-Data

Collection & Analysis

Fast Track to Value

Segment Purchases

Validate & Profile

Category


Build Total Cost of

Ownership Model


Conduct Vendor Analysis

Build Vendor

Selection Decision


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


Award Decision (ITA)

Typical Deliverables

Key Worksteps

- and / or -

41

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.

42

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

43







Questions

More Information

44







Questions

More Information

45

More Information

State Purchasing’s website:

http://dms.myflorida.com/purchasing

public purchasing in florida purchasing organization september 14, 2005 state purchasing

Documents

public purchasing

information slide

forward slide

reinventing government

inefficient government

constraints government

separated government

understanding of challenges