Win, Place, or Show: Best Practices in Purchasing by Jack Beacham and Mike Ryan

Pictured Mike Ryan and Jack Beacham

At the GFOAT Fall Conference in Corpus Christi, Jack Beacham and Mike Ryan gave an outstanding presentation on the Best Practices in Public Purchasing. Mr. Beacham is a Certified Purchasing Manager and an Accredited Purchasing Practitioner. He has more than 36 years of public purchasing experience and is currently the Purchasing Agent for Tarrant County Texas. Mr. Ryan has worked for the City of Plano since 1977 but has been the chief purchasing officer for the City since 1990 and is currently the Director of Community Affairs. Mr. Ryan was honored with the Carlton N. Parker Award in 2005 from the National Purchasing Institute for his “Lifetime Achievement and Leadership” in the public procurement field.

Obviously, this presentation of Purchasing Best Practices was packed with valuable information and years of knowledge and experience but was also full of great interaction between the presenters and the audience. Let us look at some of the major areas addressed by the speakers:

E-Procurement Usage:With the expansion and usage of the web, purchasing opportunities are endless. The web can save entities time and money and often provide better results as communications are with the world and not just those who receive the local advertisements for bids or proposal opportunities. The web can and, often, should be used for all facets of procurement starting with the posting of bid information opportunities, tab sheets, contacts, contracts, and calendar of procurement events. The web use can also be expanded to include bid distribution, bid receipts, bid compilations as well as analysis. The presenters noted numerous package and services including Onvia Demandstar and RFPDepot (http://www.demandstar.com/ and http://www.rfpdepot.com/).

Online Property DisposalFor both surplus property and confiscated property, entities can still have on site auctions and garage sales for disposal but consider EBay (http://www.ebay.com/)and on-line sales. Third party auctioneers are very popular and often times can be procured through interlocal agreements with other entities. A tried and true success tip of property disposal includes the presentation of clean property whether on-line or at a live sale and often results in higher bid prices. Tips for live sales include good advertising, more than one entity selling at one time, and timing consistency. If buyers know that every first week of October three to five entities are going to have a sale they will look for the event as well as plan to attend the event.

Mandatory Training ProgramsThere appear to be no rules as to whether an entity has to have centralized purchasing or decentralized purchasing functions. The best method is what works for the entity. However, a best practices rule is to verify that any employee of the entity that has any purchasing authority knows the entity procurement laws, policies, procedures, how to write, or at least knows what to put into, bid specifications, how to evaluate bids, and how to manage a signed contract. If an entity does not currently have a formal training program it is imperative that every employee who does have purchasing authority be trained in at least the areas noted above and training sessions held periodically (i.e. semi-annually) to cover any newly hired employees. Generally, the more centralized the purchasing function the more “Procurement 101 Classes” can be used for the various departments within the entity however more advanced purchasing training will be required for the various departments of a decentralized purchasing function and for any centralized purchasing agents.

Cooperative PurchasesEntities can often save both time and money by utilizing cooperative purchasing agreements. Using a cooperative purchasing agreement is basically authorizing another entity or agency to perform procedures for your entity. Some times cooperatives are referred to as “piggybacking”. Numerous options are available to entities in Texas. Interlocal agreements can be created for regional

cooperatives. Such cooperatives can be from city to city, countywide, or even for a metropolitan area. State wide cooperatives include such examples as:

TXMAS State of Texas contracts(http://www.window.state.tx.us/procurement/prog/txmas/),

HGAC (https://www.hgacbuy.org/default.html), Buyboard (http://www.buyboard.com/header_redirect.html), and TCPN (http://www.tcpn.org/).

One of the larger nationwide cooperatives includes U.S. Communities (http://www.uscommunities.org/). Some of the major advantages of using a cooperative can include shared cost of procurement, time savings, and leveraged buying power. Care should be taken when using cooperatives to make sure your entity fully understands the bid specifications and if charges or fees are required to use the cooperative contracts.

Best Value BidsBest Value Bids were authorized in the 77th Texas Legislature in 2001. This made it possible for entities to advertise for “Best Value” to the entity and therefore select the vendor that was the lowest responsive responsible bidder or best value to the entity. Best value considerations can include:

Purchase Price Reputation of Bidder Quality Extent Meet City Needs Past Relationship

Impact of HUB Laws Long-term Cost Any other relevant Criteria

listed in specifications Public Works Contract are

EXCLUDED

AEPThe Achievement of Excellence in Procurement (AEP) was established by the National Purchasing Institute (NPI) in 1995 to recognize organizational excellence in public procurement.  It is referred to as a “benchmark for organizational excellence in procurement”. Criteria to win the award include innovation, professionalism, productivity, e-procurement, and leadership attributes of the procurement organization.

Sole Source VendorsAttendees of the presentation did ask the presenters about sole source vendors. The presenters suggested that Finance and Purchasing staff not blindly believe in sole source vendors. Perform the research. Another vendor can often be found on the internet or through another resource. InventoryAnother question asked at the workshop was about warehousing or keeping inventories. The presenters stated that with so many items being delivered within a business day or two, the only items that need to be kept in inventory or warehoused would be those items that require long lead times for delivery.

P-CardsPurchasing cards were also brought up by the audience. The presenters stated that such cards could be useful if handled properly and are very important during a time of emergency. However, the presenters gave strong warnings to controlling purchasing cards, constant auditing of usage, and “teeth” when something goes wrong or cards are improperly used. Immediate and clear action must be taken if any improper use of purchasing cards occurs.

ResourcesThe presenters also gave the audience many other sources of information for purchasing including:PPANCT – Public Purchasing Association of North Central Texashttp://www.ppanct.org/TXPPA – Texas Public Purchasing Association http://www.texaspma.org/pdf/TxPPA-NewOrganization.pdfNPI - National Purchasing Institutehttp://www.nationalpurchasinginstitute.org/home/index.htmNIGP – National Institute of Governmental Purchasing http://www.nigp.com/

As well as certification programs including:CPM – Certified Purchasing Managerhttp://www.ism.ws/certification/content.cfm?ItemNumber=4674CPPB – Certified Professional Public Buyer http://www.uppcc.org/become_certified/Certification_Handbook.pdfCPPO – Certified Professional Public Buyerhttp://www.uppcc.org/become_certified/Certification_Handbook.pdf

Review by Janina Jewell