1. ITS Finance Team Penn State University Purchasing Services Joyce Haney Meg Harpster Steve Blazer May 31, 2007

2. Topics Purchasing Overview  Competitive bidding  Justifications – Price and Source Sole source justifications (the good and the bad) Contracts and Computer Bulk Buy Purchasing Card eBuy Agreements Reverse Auctions ITS add-ons

3. Purchasing Methods Purchase order / Standing order Purchasing card e-procurement system Limited order  Subcontract

4. Purchase order justification Justify the source  Competitive bidding  Contracts  Single/Sole source Justify the price  Competitive price  Comparable pricing  Price lists  Contract pricing  Price analysis

5. Bidding Requirements

6. Single/Sole Source Procurements Justification required in writing Purchasing has final decision as to SSJ acceptability Purchasing must still justify the price

7. Sole Source Justifications Acceptable  Technical reasons  Compatibility reasons Unacceptable  No time to bid  Supplier gave the lowest price  We like this supplier  We used this supplier before  Supplier is local or close  Supplier already put in time and effort

8. SSJ Do’s and Don’ts Don’t just rave about the source you want If technical comparisons were done…  What other brands did you look at?  What was wrong with other sources?  Are the bells and whistles needed? Do provide factual information Do identify research that was done  Internet searches, trade shows, conferences, demos, colleagues, etc. Don’t do your own bidding.

9. Contracts Established Contract pricing is considered competitive and provides best value  PSU Master Contracts  State Contracts  GSA Contracts  E&I and/or Big 10 Contracts

10. Computer Bulk Buy 3rd formal year Improvements year to year Lessons learned (i.e. configurations) Cooperative effort ITS and Purchasing initiate activity Invitations to participate via IT-Purchasing and Network of People listserves Good representation (including c. campuses) Pricing good for 3 months  covers both fiscal year end and new fiscal year

11. Feedback and Input Bulk Buy Team  ITS Jonathon Holman Kevin Morgan Janda Hankinson  Purchasing Services Meg Harpster John Ake

12. Bulk Buy 2006 Dell Desktop Summary Base UnitQuantityBulk Buy Price % Savings from Contract / Premier % Savings from Retail Savings from Contract Hi End Optiplex GX620 1276$84125%39%$360,495 Low End Optiplex GX620 1180$64020%35%$185,260 TOTAL 2,456$545,755 Base Units do not include monitors

13. Bulk Buy 2006 Dell Laptop Summary Base UnitQuantityBulk Buy Price % Savings from Contract / Premier % Savings from Retail Savings from Contract Hi End Latitude D820 74$1,55429%37%$46,028 Low End Latitude D620 324$1,14027%34%$136,404 Total 398$182,432 Base Units included the following: Complete Care – Accidental Damage Protection 3 Year NBD Parts and On-site Labor

14. Purchasing Card Make good choices Protect your card, your account number and always review your statements. Know your suppliers Report any suspected misuse immediately Don’t answer any inquiries (phone or email) about your credit cards unless you confirm they are legitimate. Purchasing card website:  http://guru.psu.edu/p-card/ http://guru.psu.edu/p-card/ Lisa Steinbugl, Purchasing Card Coordinator

15. On-line shopping Tools  Search  Compare  Favorites  History Electronic order placement Electronic settlement On-line information

16. Incentives Over the P-Card and PO More purchasing power  Access to multiple catalogs  Better, more competitive Penn State pricing  Higher pre-approved limits than the purchasing card Faster  Order direct from the supplier  Order 24X7, anytime, anywhere  Electronic submittal of your order directly to the supplier  Pre-approvals eliminate the multi-step approval process Less paperwork  No receipts to turn in  No receiving reports  Purchase order history on-line with line item detail More information at your finger tips  Detailed product information  Search capabilities by key word, part #, category & supplier

17. Active Suppliers Computer: PSU Computer Store, Dell, Apple & Lenovo Office Supplies & Janitorial: PSU General Stores Furniture: Supply Source (Herman Miller) & Corbett (KI) Electrical: Hite Electronics: Newark in One Industrial: Grainger Scientific: VWR, Fisher, Sigma & EMSCO

18. Agreements - Contractual agreement between 2 parties. - It’s important to get it right. Various types of agreements:  Purchasing Agreements  Software License Agreements  Beta Test Site  Leases or rentals  Maintenance Agreements – Hardware and software  Professional Services  Consulting

19. Signing authority Purchasing  Joyce and Meg get nervous  Department and end-users’ compliance Understand Agree (and can comply) May require disposition of information  Consult with Legal, Risk Management and Privacy Office as required Controller’s Office VP of Finance and Business

20. Agreements ……. Who, what, when, where, why, how and how well? Defines each party’s responsibilities Each party has responsibilities, rights, protections, and risks. Terms & Conditions Written word takes precedent over all verbal agreements Schedule Term – (time period, extensions, cancellation, price escalation, price protection) Payment Security and privacy issues Disputes and Non-performance (dispute resolution, default, cancellation, arbitration, legal system, laws, penalties, etc.)

21. Agreements – Who, what, when where, how, and why? Terms and conditions of use Faculty? Students? Guests? Locations? Security? Specific location, college, department or unit? Educational? / Commercial? / Government? Instruction? Research? Profit/nonprofit? Updates and upgrades How often? Price? Price increases/caps? Support? Warranty, liability, infringement & protection Safety and security Insurance coverage Maximum liability caps - Personal injury & property damage Third party lawsuits? Damages?

22. Develop a good specification or “Scope of Work” Clearly define who, what, when & where What are the deliverables? Clearly identify criteria to identify if the product is acceptable Clearly identify criteria to determining if services were completed to our satisfaction Define what is acceptable

23. Reverse Auctions/Online Competitive Bidding PSU specifications available online for competitive bidding for X minutes. Multiple suppliers bid their price on line View low bid price and/or rank Suppliers adjust their price accordingly if desired

24. Reverse Auction Success at PSU Over 20 auctions since 2003 Over $2 million saved Average savings 19 – 22% Commodities: Audio visual, janitorial, paper, residence hall furniture, micro-fridges, paint, vehicles, business forms, etc. Looking for opportunities in computer area

25. Sample Reverse Auction Results ItemReserve $Final $Savings # Bidders # Bids projectors104,90091,431$13,46913%333 furniture1,200,000982,931$217,06918%321 micro fridges549,150417,354131,79624%351 A / V equip428,175335,22092,95522%783 A / V equip372,446293,86178,58521%6100

26. Additional Resources Purchasing Financial Officer GURU  http://guru.sp.psu.edu/ http://guru.sp.psu.edu/ Purchasing Card  http://guru.psu.edu/p-card/ Purchasing  http://www.purchasing.psu.edu/ http://www.purchasing.psu.edu/ eBuy  http://www.ebuy.psu.edu/ http://www.ebuy.psu.edu/