Centralization vs Decentralization County General Services Association April 3, 4 and 5, 2013

Agenda Why Me? Look at Decentralized, Centralized and Center Led Models Transition process in Butte County Questions and Answers

Agenda Why Me? Some wanted DecentralizationSome wanted CentralizationSome Didn’t Know.... so we changed models.... often

Why Me? Budget Cuts of 2008 – 22% reduction in staff I was a Property Manager and Management above and below departed Nationwide search for a Director took 7 months In the end, I was left holding the bag Finance decided to start allocating costs to departments Hope my experience through this can help others

Decentralization What is it? Each Department responsible for their own purchases Policies & Procedures Task Processing PROCESSPROCESS

Decentralization What is it? Each Department responsible for their own purchases

Decentralization Why? Departments demand it Often speedier process Increases accountability

Decentralization Why Not? Less leveraged procurement Costs are typically higher – multiple purchasing agents Lack of internal control Lack of consistency

Centralization All procurement functions are centralized in one Department Policies & Procedures Task Processing PROCESSPROCESS What is it?

Centralization All procurement functions are centralized in one Department What is it?

Centralization Why? Allows for leveraged procurement – better prices and services Reduced processing costs through economies of scale Strong base of knowledge and easy to change process Increased internal control and consistency

Why Not? Disagreements with other Departments Slow processing - bottlenecks Lack of technical nuances known by departments One size does not always fit all Centralization

Center Led What is it? A Hybrid – Centralized and Decentralized Components Policies & Procedures Center Core Of Excellence: -Strategic Planning -Best Practices / Polices Task Processing Departments: -Tactical Execution -Feedback Task PROCESSPROCESS

Center Led Why? Best of both Decentralization and Centralization models Can implement long range strategic plans when it makes sense Quick turnaround at the Departmental level Cost Savings – Recent Aberdeen Group Study 5% to 20% cost savings Higher Spend Under Management Rate Improved working relationships between Departments

Center Led Why Not? It is a lot of work! Staff must be confident leaders

Transition to Center Led Necessary Components The Teams Authority Proper Delegation Systems

Transition to Center Led The Teams Overall Organizational Structure Steering Committee CAO County Counsel Auditor/Controller HR Director GSD Director Sheriff General Services Staff Contracts/Procurement Staff Supporting Admin Staff Pilot Team DESS Director and AD PH Director and AD Treasury/Tax Director and AD GSD Director and C/P Manager

Transition to Center Led The Teams General Services Staff Contracts/Procurement Staff Supporting Admin Staff Pilot Team Proper Job Classifications – Training, Auditing, etc Confident Leaders – Task Transition Agents of Change Heavy Administrative Support - Documentation Roles Administer and coordinate the meetings Document Control Added 2 Limited Term Positions

Transition to Center Led The Teams Pilot Team DESS Director and AD PH Director and AD Treasury/Tax Director and AD GSD Director and C/P Manager Diverse in opinions High volume and Low volume Departments Buy in from the top Assurance of success Roles Detail review of material Present alternative concepts Develop and Test Process Think of other Departments

Transition to Center Led The Teams Steering Committee CAO County Counsel Auditor/Controller HR Director GSD Director Sheriff Pilot Team Internal Control Departments HR – Job Classifications and Discipline Sheriff – Represents Departments Roles: Dispute resolution Sets overall direction

Transition to Center Led Authority - Informal What is it? Given by people that WANT to follow The ability to influence people to do things they don’t have to do Not bound by traditional lines of communications Not documented anyplace

Transition to Center Led Authority - Informal Why do you need it? Powerful – allows you to get things done Others outside of your formal authority will have to work for you To ease internal control concerns and challenges

Transition to Center Led Authority - Informal How do you get it and keep it? Listen, listen, listen, listen Reach out Be positive Be Confident and allow challenges Be a good LEADER

Transition to Center Led Authority – Formal Ordinance Allowed deviation from policy and increased pilot teams spending authority Sunset in 18 months Oaths for Departments required modification

Transition to Center Led Proper Delegation Departments (individuals) shall be trained Documentation (Policy) must be clear Departments (Individuals) shall be certified Transactions shall be audited Department Heads are responsible

Transition to Center Led Systems Alternative Authorizations Structure More significant coordination than originally anticipated Common access to scanned contracts for auditing Audit Processing Training Documentation

Transition to Center Led Next Steps Final recommendation to the Board Policy Procedures Ordinance Update Role out to all departments Determine levels of authority Training Become more proficient in completing new tasks: Strategic planning instead of buying Speak to the vendor community as a common voice Solicitation and Negotiation support Re-Evaluate Cost Allocation methodology

Transition to Center Led You Survived!!!!! Questions???