Presentation on theme: "Effective Immediately The Procurement Forum will be held quarterly. January 15, 2015 April 23, 2015 July 16, 2015 October 15, 2015."— Presentation transcript:
Effective Immediately The Procurement Forum will be held quarterly. January 15, 2015 April 23, 2015 July 16, 2015 October 15, 2015
PCS Process for $10K to $50K - Royce Brown Split Purchasing - Lee Costley Illegal Immigrant Form Change - Randy Wright Writing Specifications - Jan Roberts
REPORT ONLY All PCS contracts which are between $10, and $50, must be reported on the PCS Website. This includes the initial contract term and each time a renewal/extension places the contract in this value range. OSP will place the report submission into the $10, to $50, Monthly Report that is looked at (but not “Reviewed”) at the Arkansas Legislative Council Monthly Meeting.
OSP-1 FORM SUBMISSION If the Total Amount of the PCS contract is PROJECTED to be over $50, AT ANY TIME DURING THE CONTRACT DURATION (7 years max), the agency should ALSO submit the OSP-1 Form. This is for history purposes only so that all documentation from the beginning of the contract is placed in OSP's electronic files. Once a renewal is issued that places the contract over $50,000.00, all of the documents on file will be sent to Legislative Review. OSP will check the form and the attachments for correctness of procurement criteria, and once placed into the OSP electronic files, these submissions will be notated as "Executed" in the online PCS Portal. If an agency does not submit the OSP-1 form (and any necessary amendment OSP-1A forms) for a PCS contract, and that contract goes over $50, at any time during the contract duration, the agency will be required to submit ALL PCS forms since the initial award of the contract. All of these forms will be required BEFORE the contract can go to Legislative Review.
Extra Procurement items for PCS Contracts include the following: Legal Services – Must have an Attorney General’s Letter approving the hiring of legal counsel attached to the OSP-1 form. Request for Qualifications (RFQ) – Must have an approval by the OSP Director before advertising the solicitation. This approval document must be attached to the OSP-1 form. Sole Source (SS) Awards – Must have an annual approval by OSP Director or Deputy Director prior to starting the contract. This approval document must be attached to the OSP-1 form. When entered in AASIS: The Outline Agreement Type for PCS must be “PV”. For sole source justifications, Our Reference must be “SS” for contracts between $10K to $50K. If over $50K, this code must be PSC (Professional Service Contract).
THE PERRILS OF SPLIT PURCHASING
SPLIT PURCHASING Small procurements. (a) Any procurement not exceeding the amount under § (13), which refers to small procurements, may be made in accordance with small procurement procedures promulgated by the State Procurement Director. (b) However, procurement requirements shall not be artificially divided so as to constitute a small procurement under this section.
SPLIT PURCHASING (d) Repeated small quantity procurements to circumvent the competitive bid limits or failure to obtain competitive bids without justification shall constitute a violation of these procedures and shall result in withdrawal of the state agency’s competitive bid privileges.
Split Procurement or Not? Scenario # 1 On 7/5/14, a PO is issued to X Company in the amount of $5,500 for parts needed to repair the A/C in #1 Barracks. On 7/23/14, another A/C unit needs repair and another requisition for parts is made to the same company in the amount of $5,700. Both of these purchases total more than $10,000 and were issued to the same company in less than 30 days. Is this considered split procurement? Why or why not?
Conclusion In this case, it appears that the breakdowns were unrelated incidents. Therefore, this would not be considered a split purchase.
Split Procurement or Not? Scenario # 2 On 8/1/14, a PO is issued to Y Company in the amount of $9,900 for miscellaneous plumbing stock items. On 9/1/14, a PO is issued to Y Company in the amount of $9,900 for miscellaneous plumbing stock items. On 10/1/14, a PO is issued to Y Company in the amount of $9,900 for miscellaneous plumbing stock items. Is this considered split procurement? Why or why not?
Conclusion In this case, there are two areas of concern. (1) Because of the regularity of the purchases, this appears to be an attempt to circumvent the bid process by split purchasing, using dollar amounts just under the $10,000 limit. (Better planning) (2) This gives the appearance of impropriety, and a possible ethical breach by steering business toward one particular vendor (d) (loss of ADC’s purchasing authority.) Better planning and following proper procedures would result in a quote bid for the combined amount or possibly a term contract for plumbing stock items.
Split Procurement or Not? Scenario # 3 a Miscellaneous material is needed to install HVAC units on a State owned building as budgeted below by commodity group: HVAC Supplies $35, Plumbing Supplies 2, Electrical Supplies 4, Total$41, What is the best method of procurement? Method A: Bid all items together as all or none by sealed bid method through OSP?
Conclusion All or none, in this case, would not be the best solution. It is unlikely any one company will carry all of these unrelated items.
Split Procurement or Not? Scenario #3 b HVAC Supplies $35, Plumbing Supplies 2, Electrical Supplies 4, Total$41, Method B: Bid all items on one bid with each group as all or none by sealed bid method through OSP.
Conclusion This is a workable method that might result in a multiple award with better pricing & easier coordination of shipping & receiving than the previous example.
Split Procurement or Not? Scenario # 3c HVAC Supplies $35, Plumbing Supplies 2, Electrical Supplies 4, Total$41, Method C Bid HVAC supplies through sealed bid method through OSP. Process plumbing supplies & electrical supplies as 2 separate small order purchases.
Conclusion This is another workable method. Send HVAC to OSP for sealed bid. Take multiple quotes for each of the small purchases. Document all vendors contacted, keep records of all quotes received.
Split Procurement or Not? Scenario # 3d HVAC Supplies $35, Plumbing Supplies 2, Electrical Supplies 4, Total$41, Method D: Bid all items together on sealed bid method through OSP and award to lowest responsive vendor per line item.
Conclusion This would be the least desirable method. Increased shipping costs from multiple vendors would add to the total project cost. In addition, it would be difficult to track all shipments and record arrival of all items required to complete the project.
Split Procurement or Not? Scenario #4 Five different building & roofing projects were needed at the same unit over a six month period. All were awarded to the same vendor. 2 were awarded by small order method & 3 were competitively bid. 7/22/09SOMetal Roofing$ 9, /10/09CBMetal Containers & Bldg Sply$10, /2/09SOMetal Roofing$ 6, /7/09CBMetal Structural Frame$10, /28/10CBMetal Roofing$24, TOTAL $52, Is this considered split procurement? Why or why not?
Conclusion This could be considered split purchasing because the combined total of the two small orders was over the $10,000 limit, because of the short time between the two purchases and the fact that both purchases were made from the same vendor for the same commodity. There is no problem with the 3 competitive bids, but money could have been saved by bidding all projects with one competitive sealed bid and the split purchase could have been avoided. By awarding as a term contract, deliveries could be timed so that storage of materials would not have been an issue. Better planning and combining these purchases could have saved money.
Correct Procedure or Not? Scenario #5 Is it okay to accept bids if a vendor provides a courtesy quote - vendor can’t fulfill request because location is out of their jurisdiction but they provide a high quote as a favor only? NO! Anyone can respond to a bid, but to accept a quote from a vendor who cannot fill the request would be a breach of ethics on the part of the buyer. Quotes must be obtained from sources that can & will deliver the goods or services that you are requesting. Always get a minimum of 3 quotes from vendors who are responsible and responsive. Auditors are trained to verify that buyers are doing due diligence to maximize competition. If a buyer cannot get quotes their efforts must be documented thoroughly in order to not give the appearance of impropriety. Lack of documentation could make it appear that you are steering business toward one vendor. See Competitive bidding.
Correct Procedure or Not? Scenario #6 Is it okay to accept bids..... if all 3 vendors are under the same franchise, same name - different location, but provide independent pricing?
Conclusion This would certainly give the appearance of impropriety & could foster collusion. There is a difference between accepting bids and soliciting bids. The buyer should document all vendors contacted and make an effort to maximize competition. Could this be a sole source purchase? Exceptions…?
USING STATE-WIDE CONTRACTS TO AVOID SPLIT PURCHASING Making use of State Contracts, listed on the Office of State Procurement website, can eliminate the possibility of making a split purchase. All of these contracts have been competitively bid and awarded and may be used for any dollar amount. You are not committing a split purchase if you are using an established state contract. You can find a list of all available State Contracts at: contracts/Pages/default.aspx
The Illegal Immigrant Disclosure form has been updated. This form is used by vendors who intend to do business with the State. It is required for professional services, technical and general services contracts and any category of construction over $25,000. The form now will be valid for one year from date of the most current submittal. New features include a validity date range and the last four digits of the vendor tax ID number. The vendor and Office of State Procurement both receive this confirmation when submitted.
WRITING SPECIFICATIONS The variety of commodities and services purchased by the State require attention to specification writing. Writing specifications can be challenging. Be prepared to begin with a rough draft. Definition: A concise statement of a set of requirements to be satisfied by a product, material or a process showing, whenever appropriate, the procedure that will determine whether the requirements have been satisfied.
Preparing specifications constitutes a large portion of a procurement professional’s daily work. To be successful, the process must be a cooperative effort between the requester and the buyer. The review process should detect whether the specifications are adequate for competition and if they call for a quality level that is suitable for the items intended use(s). The agency purchasing authority must be responsible for final review and approval. Specifications also serve to keep state government purchasing transparent.
Specifications serve as the basis for obtaining goods and services which are adequate and suitable for the using agency’s needs in a cost effective manner. Products are constantly being improved, new products are introduced, and the needs of the agency change. Do not continue to use old solicitations or specifications without verifying their accuracy. Specifications seldom remain static and there is no assurance they will be suitable for future purchases. The function of preparing and updating specifications must be ongoing.
Documents should look professional. Always be careful of correct spelling, proper grammar and punctuation. Specifications provide for quality control, by assuring that the quality of a commodity or service suites its intended use. Specifications should not include unnecessary features or service responsibilities that cause price increases.
Include in Every Procurement Specifications Include the 5 Rs – Right Quality Right Quantity Right Time Right Place Right Price
Where Do I Begin? There are many available sources that can be of assistance to you when you are developing specifications. Check to see if standard specifications already exist and are current. Use the internet and for research.
Specifications may be in the form of a description of the physical, functional or performance characteristics of goods and services, a reference brand name, or all of the above! REMEMBER: If an essential detail or service requirement is left out of the specification, the misunderstanding will result in the procurement of a commodity or service that does not meet the needs of the agency. FEAR NOT!! A solicitation may be amended, cancelled or not awarded.
A good specification should: Identify minimum requirements. Allow for a competition Provide for an equitable award List methods of assuring contract compliance
A good specification should be: Simple, consistent and exact, but not so specific that a loophole will allow a bidder to evade any of the provisions and thereby take advantage of his competitors or the buyer. Identified, when possible, with some brand specification already on the market. (Custom goods are expensive) Reasonable in its tolerances. Unnecessary precision is expensive.
Complete in the stipulation of all requirements, either directly or by reference to other specifications, publications, or drawings. (plans and specifications from a plans house) Flexible. Inflexible specifications defeat progress. If possible, invite vendors to suggest cost saving alternatives or substitutes.
Specification requirements should include: Basic design Physical dimensions Weights/units of measure Percent and type of ingredients Types/grades of materials, if applicable Include a description of any required inspection, testing, preparation or condition of delivery.
Capable of being verified A specification which cannot be verified is of little value and will result in confusion and possible a no award.
That Sounds Easy! Specifications are clear, accurate, and concise. Specifications are as flexible as possible and reasonable in its tolerances. Specifications are capable of being verified. The specifications are broad enough to attract multiple bidders and allow for competitive bidding.
Types of Specifications Standard specification: A specification that is to be used for all or most purchases of an item; describes all required physical and functional characteristics of goods, services or construction.
Keep Specifications Current Specifications seldom remain static and there is no assurance they will be suitable for future purchases. Do not continue to use old solicitations or specifications without verifying their accuracy.
Brand Name Specifications Brand Name specifications are the most restrictive type of specifications. They have the effect of limiting bidding to a single product and are only used when only one product will meet an intended need. Brand name specifications cite a brand name, model number, or some other designation that identifies a specific product of a manufacturer.
Brand Name Specifications An example might be when a particular brand name item must be purchased in order to be compatible with existing equipment. The use of NO SUBSTITUTES should be kept to a minimum for the sake of maximizing competition and saving tax dollars.
Brand Name “or Agency Approved Equal” The State often uses manufacturers' brand or model designations to establish the desired quality and/or minimum performance requirements. When using brand names and models, include language such as "or agency approved equal" to communicate to the bidders, that other brands that meet the minimum acceptable quality and performance specifications may be considered for award.
Brand Name “or Agency Approved Equal” The State reserves the right to determine equivalency. The buyer and the end user are responsible for verifying that any product bid other than the designated brand name meets or exceeds the desired quality and performance requirements. I Can’t Believe Kerrygold Brand Butter It’s Not Butter
Functional or Performance Specifications Performance specifications describe a requirement in relationship to a function, task or desired accomplishment without materially indicating a physical means, dimension, specific details or design as to how to perform the desired result. They allow flexibility because the supplier has latitude in performing the desired results.
Design Specifications Design specifications describe a requirement by use of specific conditions, physical means, dimensions, and details. Generally they are not flexible and the supplier has little latitude. The requirements for the items to be purchased detail the characteristics how the product is fabricated or constructed. Contracting for buildings, highways and other public works use design specifications.
Combination Design/ Performance Specifications These specifications incorporate, to the degree required, the attributes of both performance and design. A specification can successfully include both design and performance requirements. Often characteristics of both are used as prerequisites and limiting factors in developing qualified products lists. This type of specification is probably the most commonly used.
Critical Ingredients of Specification Writing Clear, Simple language Free of vague terms Consistent and free of contradictions Easy to read and understand Organized format Categorized Numbering System- REVISIONS ARE EASY IF THE FOUNDATION IS LAID
Specification Writing It can be difficult to determine exactly where some of the information would best be placed. One thing should be quite clear, however, never integrate specifications with: The General Terms and Conditions Instructions to bidders
How to Develop Specifications Consideration should be given to the specification as to the suitability and to overall cost effectiveness in addition to acceptability and initial price. Specifications by their nature, set limits and thereby eliminate or restricts items that are outside the boundaries drawn. Specifications should be written to encourage, not discourage competition, consistent with seeking overall economy for the purpose intended. The function of specification is to provide a basis for obtaining a commodity or service that will satisfy a particular need at an economical cost.
Sources of Information Call on other “experts” in the purchasing community for assistance. The National Institute of Governmental Purchasing (NIGP) maintains a library of specifications developed by federal, state, and local government purchasing entities in the U.S., and Federal, Provincial, and local entities in Canada.
Specifications Avoid over specifying or under specifying. Requiring unnecessary features can result in specifications so restrictive that they can defeat competition and increase the cost of the item. If a specification allows both fair and open competition, the specification is serving its intended purpose. A straightforward and fair evaluation based on good specifications will persuade vendors to bid competitively.
Basic Information The following information is presented as basic information required for writing a solicitation with good specifications. Sections may be added or deleted as required by the goods or services specifications being developed.
Inform Yourself Research to acquire basic understanding of the commodity or service Collect as much information as possible from the end user as to the function and performance of the requested commodity or service. Use their expertise and knowledge, however be resourceful. Collect product information from the industry (brochures, catalogs, specs, etc.). Many manufacturers list their catalogs and product specifications on the internet. Look for standards and test information from professional societies where available.
Watch Your Language! KNOW YOUR AUDIENCE. Use words that are descriptive and understandable to the audience you are speaking to. Make use of grammar check and spell check.
Choosing the Right Word Consumption- use Circumvented – avoided Nevertheless – but Activate – start Cooperation – help/aid Erroneous – false Initiate – start Expedite – rush Incinerate – burn Prioritize – rank Modification – change Necessitate - require Exemplifies – shows Compensation – pay
Avoid Vague Phrases and Words a great number of times at regularly intervals in most cases a small number of it is recommended please often regularly usually few later soon normally
Definition of Terms The necessity for definition of terms can usually be avoided with good specifications. However, in those cases where proper interpretation is necessary for agreement as to the definition of terms is a key part of the specifications, such definitions should be included in the beginning of the document. Shall, Must, Will, May, or Should, ? Use shall, must and will to express a requirement binding on the contractor or the purchaser. Use may or should to express non-mandatory provisions.
Writing Principles Regardless of the types of specifications being developed, some factors should be common in the process. The text should be in an orderly format, using clear and concise language, free of vague terms or those subject to multiple interpretations. The use of abbreviations should be restricted to those in common usage and not subject to possible misunderstanding.
List of Requirements Requirements should identify measurable physical, functional, and quality characteristics that meet the requirements. This may include a detailed list of characteristics, such as: Sizes, physical dimensions, weights, percent and type of ingredients, types and grades of materials, standard of workmanship, basic design for goods ; acceptable performance outcomes, service locations and frequency of service.
Measurements All terms relating to measurements (gauge, capacity, volume, etc.) should be used in accordance with established precedent and trade practice. Review the document and make every effort to clarify by replacing words with numbers or use words and numbers in combination (one (1) two (2) ). Whenever you use numbers instead of words, communication is truly enhanced. All measuring and testing equipment is designed to provide specific numerical answers.
Packaging and Delivery Information – Units of Measure Where specifications differ from standard commercial- sized packages, this should be clearly defined. Custom packaging may increase the cost of the product. Special or unusual delivery dates or delivery points should be listed. Many times, items need to be shipped to multiple locations within the State. Provide a complete list of delivery addresses within the specifications so that a bidder can take delivery costs into account.
Graphic Illustrations Figures, illustrations, graphs, etc. can often describe the item more clearly and accurately than text. They should be used as needed.
Group Terms Group terms are designations with established precedent and trade practice, such as type, grade, class, and composition. These terms are defined as follows: Type: Implies design, model, shape, etc. of commodities. Grade: Implies quality of a commodity. Class: Implies mechanical or other characteristics that are not in quality of grade. Composition: Implies chemical differences in commodities. Other: Other terms such as: style, color, form, weight, size, etc., are also used as group terms.
Sampling, Inspection and Test Procedures When samples are required, it should be clearly identified as a requirement in the specifications. All samples and test results should be retained for delivery compliance of products ordered. When possible, a test inspection plan should be developed and included in the specification.
Specifications Checklist Specifications should include: – Quantities, – Quality Desired, – Invoice Information, – Length of Contract, – Price Information, – Delivery Instructions, – Standard Terms & Conditions, – Information for Insurance Certificates, – Performance Bonds, and – Consequences the vendor will experience if he should default.
USEFUL AASIS TRANSACTIONS To access simplified transactions in AASIS, select PRD – GuiXT – Server. See the example on the next slide. If you do not have this client to select, call AASIS at and ask for the logon pad with GuiXT for PRD.
Create a Purchase Order The following screen displays the simplified form used to create a purchase order. AASIS transaction ME21N
CREATE A PURCHASE REQUISITION The following screen displays the simplified form used to create a purchase requisition. AASIS transaction ME51N If you experience any problem using these or other AASIS transactions, or if you know of other AASIS transactions that are in need of simplification, call Randy Wright at