FLORIDA DEPARTMENT OF HEALTH ANNUAL WORKSHOP

Orlando, FloridaNovember 21, 2003

UPDATE ON STATE PURCHASINGRuss Rothman, CPPO

Chief Purchasing Operations Officer

Florida Dept of Management Services

russ.rothman@myflorida.com

TOPICS

• ROAD MAP TO EXCELLENCE IN CONTRACTING

• STATE PURCHASING ORGANIZATION• STATE PURCHASING MISSION• EPROCUREMENT• STRATEGIC SOURCING• NEW APPROACH TO EQUITY IN

CONTRACTING & OTHER OBJECTIVES• THE FUTURE OF SNAPS• ETHICS AND THE LAW

ROAD MAP TO EXCELLENCE IN CONTRACTING

ROAD MAP TO EXCELLENCE IN CONTRACTING

Inspector General Derry Harper, 6/03• Need legislative and regulatory changes to address inadequacies and

inconsistencies in statutes and rules• DMS should accept and implement the leadership role required by

Florida Statute– develop formal procedures for needs assessments, standard formats for

contracts – foster user groups to share best practices and common problems.

• Undertake a statewide training initiative, and include incentives to encourage professionalism and certification.

• Include training in contract negotiation and contract management.• Create a uniform vendor rating system to include links to websites,

closeout evaluations, and a method for other agencies to access performance evaluations.

• Propose legislation to enact a law similar to the federal Truth in Negotiating Act.

DMS shortcomings in leading contract management

• Inadequate management of contracts by agencies due to abdication of leadership.

• No collection of information on contractor performance.

• Failure to share information on contractor performance among agencies.

• Missed opportunity to use performance information in contracting decisions.

UNIFORM VENDOR RATING SYSTEM

Performance Measures under consideration:• Deliverables, Tasks or Requirements

– Outputs - a definite or indefinite quantity/quality of goods to be delivered and/or services to be performed, and 

– Outcomes - goals, objectives or purpose to be attained.  Outcomes can also apply to schedule, budget and customer service.

• Schedule - milestones, completion• Budget - Contract delivered within original budget.

Accuracy, adequacy and timeliness of invoices.• Customer Service - Communication, reliability,

flexibility, problem resolution, change order negotiation, exceptions, complaints

TRAINING PROGRAMS

UNDER CONSIDERATION:

In cooperation with NIGP, • General Purchasing, Purchasing Management,

Contract Negotiation & Contract Management, eProcurement

• A combination of NIGP and Florida-specific course content, leading to NIGP and Florida certification. Examples of Fla. content

STATE

PURCHASING

ORGANIZATION

STATE PURCHASING ORGANIZATION

Since June, 2003 –

75% NEW LEADERSHIP

25% NEW CONTRACTING STAFF

75% NEW LEADERSHIP

• Fred Springer, Director of Purchasing – Attorney for State Purchasing 18 months

• Russ Rothman, CPPO, Chief Purchasing Operations Officer – founding member of NIGP Tallahassee Chapter, 22 years purchasing experience.

• Elaine Atwood –Bureau Chief leading Teams 1-3. Eight years state contracts/purchasing and supervisory experience with two different agencies.

25% New Contracting Staff

• Stu Potlock, B.S., CPPB – new Purchasing Analyst. Eight years state experience, seven in purchasing, with two different agencies.

• Mark Lovell, B.S., CPPB – new Purchasing Analyst. Five years state purchasing experience. Thirteen years private sector management experience.

• Ommet Mbiza, M.B.A – new Purchasing Specialist. Has started and managed business in Africa and the U.S. FSU COB, with emphasis on Purchasing & Materials Management

• Renee Gregory – new Purchasing Specialist. Six years state purchasing experience with three different agencies.

• Chris Kincaid, B.S. – new Purchasing Specialist. Graduate of FSU COB with emphasis on Purchasing & Materials Management

Contracting staff reorganized

• Director’s Office & Operations Team• Two contracting bureaus• Team concept for customer focused service delivery• Seven teams of three• Lead purchasing analyst, purchasing analyst,

purchasing specialist

STATE

PURCHASING

MISSION

Our Mission at State Purchasing flows from the Governor’s top priorities:

1. Reducing Violent Crime and Drug Use2. Creating a Smaller, More Effective, and

Efficient Government3. Building Economic Opportunity for All4. Helping the Most Vulnerable5. Improving Quality of Life and the

Environment6. Improving Student Achievement

And From Our Secretary Bill Simon’s Mission:

To become a customer focused agency providing effective and efficient services in order to better enable state agencies and employees to deliver the Governor’s priorities to the people of Florida.

Director of Purchasing Fred Springer’s Mission:

To gladly deliver useful and innovative purchasing services in order to become a customer focused agency providing effective and efficient customer services.

Chief Purchasing Operations Officer Russ Rothman’s Mission:

To deliver effective and efficient support services, governance processes and professional training to State Purchasing and agency purchasing staffs in order to deliver useful and innovative purchasing services.

What Do These Missions Mean?

For DMS and State Purchasing, we see our role as driving down both your administrative costs and the prices you pay for goods and services by delivering…

DELIVERING…

• (1)   Purchasing statutes, rules and policies that support economical, efficient and effective purchasing on behalf of the State and its subdivisions.

• (2)   An effective and efficient electronic purchasing system, MyFloridaMarketPlace.

DELIVERING (continued)…

• (3)   State term contracts, strategically sourced, administratively easy to use, with the best value (prices, item/service quality, terms and conditions) obtainable by a customer of our stature.

DELIVERING (continued)…

(4)   Training and support to State Purchasing, state agency and subdivision purchasing professionals in key skills, including general purchasing, contract negotiation, contract management, eProcurement and management of purchasing operations.

EPROCUREMENT

MyFloridaMarketPlace

MyFloridaMarketPlace will help to streamline the processes for doing business with the State.

What’s Different?Electronic creation, routing, and review or

requisitions and issuance of e-purchase orders

Electronic quotes and bids, including reverse auctions

Online vendor registration

Ability for vendors to maintain company information online

MyFloridaMarketPlace will help to streamline the processes for doing business with the State

(continued).

What is to some extent the same?Vendors relationship with agencies

Use of contracts

Subject to same purchasing statutes and rules

Moving to advanced business technology benefits all vendors. The MyFloridaMarketPlace system

provides:

Quick and easy access to marketing opportunities: single portal, email notifications

Opportunity to shorten order-to-cash cycle and improve cash flow

Initial Users – Pilot Agencies (July – August 2003)1. Department of Transportation 2. Department of Management Services 3. State Technology Office

Initial Users – Executive Branch Agencies (September – April 2004)Department of Children and Families Department of EducationDepartment of Health Department of CitrusDepartment of Corrections Department of Law

EnforcementDepartment of Juvenile Justice Department of Military

AffairsDepartment of Environmental Protection Department of RevenueDepartment of Business & Professional Reg. Agency for Workforce InnovationDepartment of Lottery Department of Community AffairsAgency for Health Care Administration Executive Office of the

GovernorDepartment of Highway Safety & Motor Vehicles Department of Veteran’s

AffairsDepartment of Elder Affairs

Other Eligible Users (beginning May 2004)

Legislature

Educational Institutions (K-12, State Univ.)

Judicial

Local Governments

Project Highlights

27,000 vendors registered in MyFloridaMarketPlace, including over 8,000 minority business enterprises

Over 3,000 Purchase Orders for over $60,000,000 to date

Completed Activities

Continued Vendor Information Sessions combined with targeted phone calls

Developed Sourcing toolkit

Completed Model Office Sessions

Office Supplies Reverse Auction (32% savings)

MRO Supplies(13.2% savings)

Upcoming Activities

Continued Vendor Information Sessions combined with targeted phone calls

Continue to monitor MyFloridaMarketPlace activities of DOT, DMS, and STO

Provide post-implementation support to Citrus, DOAH and DOH

Continue support for next wave of agencies, DJJ, DOC, DCF

Began testing FLAIR on 10/1Online encumbrance and disbursements go-live in

November

STRATEGIC

SOURCING

New Strategy: STRATEGIC SOURCING

• INTERNAL PROFILE: Analyze where significant funds are spent, by whom, on what, and what are the usage trends

• EXTERNAL PROFILE: Analyze industry trends & vendors

• SOURCING STRATEGY: Determine what procurement method, what to include, contract terms, evaluation criteria

INTERNAL PROFILE

This includes a review of data from state systems, including FLAIR and SPURS, and surveys of agencies and eligible users

EXTERNAL PROFILE

This includes surveys of vendors, and review of information available on the Internet, such as from industry associations, Bureau of Labor Statistics (PPI), and business sites, Requests for Information.

SOURCING STRATEGY

This includes what items to list in a solicitation, and how to group them, the type of solicitation (ITB, RFP, ITN, reverse auction), the terms and conditions, including contract length, evaluation criteria, and use of price indexes.

NEW APPROACH

EQUITY IN CONTRACTING

(ONE FLORIDA)

AND FOUR OTHER STATE OBJECTIVES

REQUIRE PLAN ADDRESSING STATE

OBJECTIVES

BIDDERS/RESPONDENTS INCLUDE PLAN ADDRESSING

• EQUITY IN CONTRACTING

• RECYCLED CONTENT & POLLUTION CONTROL

• PRIDE

• RESPECT

• DRUG FREE WORKPLACE

PLAN

• MUST BE INCLUDED FOR BID/PROPOSAL TO BE CONSIDERED RESPONSIVE

• SUBJECT TO RENEGOTIATION PRIOR TO CONTRACT SIGNING

• INVOLVES NO PRICE PREFERENCE OR POINTS

THE FUTURE OF SNAPS

(State Negotiated Agreements and Price Schedules)

HISTORY OF SNAPS

• DEVELOPED IN 1996-97 TO FACILITATE CONTRACTING WITH INNOVATIVE TECHNOLOGY VENDORS, AND FOR ENVIRONMENTALLY FRIENDLY COMMODITIES AND SERVICES

• SEEN AS POSSIBLE INCUBATOR FOR FUTURE STATE TERM CONTRACTS

HISTORY OF SNAPS (continued)

• LIMITED TO PURCHASES UP TO $25,000 (CATEGORY 2) PER TRANSACTION AND $150,000 (CATEGORY 4) PER CONTRACT, PER AGENCY, PER YEAR

• AUTHORITY IN 287.042 and 287.056, Florida Statutes, although the term “SNAPS” is not used in either section, and 60A-1.008(2), Florida Administrative Code.

HISTORY OF SNAPS (continued)

• SNAPS AGREEMENTS HAVE BEEN RELATIVELY EASY TO GET

• STATE PURCHASING WORK LOAD IS SUBSTANTIAL, WITH HUNDREDS OF SNAPS AGREEMENTS PROCESSED

• SAVINGS ARE QUESTIONABLE, AS SNAPS AGREEMENTS ARE NEGOTIATED, NOT COMPETED

• AGENCIES FREQUENTLY BEAT SNAPS PRICES THROUGH INFORMAL BIDS

HISTORY OF SNAPS (continued)

• FIVE SNAPS AGREEMENTS BECAME STATE CONTRACTS

• MANY SNAPS AGREEMENTS ARE NEVER USED

PRINCIPAL CONCERNS WITH SNAPS

• MOST AGREEMENTS ARE VENDOR-DRIVEN, THAT IS, RATHER THAN PROCEEDING FROM AN IDENTIFIED GOVERNMENT REQUIREMENT, THEY PROCEED FROM VENDOR DESIRES FOR A MARKETING TOOL

• EXAMPLE: OF 800 CURRENT SNAPS AGREEMENTS, MORE THAN HALF REFLECT NO REPORTED PURCHASES

PRINCIPAL CONCERNS WITH SNAPS (continued)

• PRICING FOR MANY PURCHASES IS NOT COMPETITIVE

• PROCESSING WORKLOAD IS HEAVY

• MANY AGENCIES AND ELIGIBLE USERS WILL NOT USE SNAPS FOR SIGNIFICANT PURCHASES

SNAPS POSSIBILITIES

1. CONTINUE WITH SNAPS “AS IS”2. DISCONTINUE SNAPS ALTOGETHER3. ALLOW SNAPS TO CONTINUE, BUT

RESTRICT USE TO AGENCIES AND ELIGIBLE USERS NOT ONLINE WITH MYFLORIDAMARKETPLACE AND ITS “EQUOTE” CAPABILITY

4. RE-ENGINEER TO MAKE SNAPS PRICE-COMPETITIVE AND BUYER (NOT VENDOR) DRIVEN

LEADING “SNAPS III” CONCEPT

ISSUANCE OF A SNAPS AGREEMENT WILL BE CONTINGENT UPON:

1. REQUEST FOR AN AGREEMENT BY A BUYER (AN AGENCY OR OTHER ELIGIBLE USER), WITH AN INTENTION TO MAKE A PURCHASE OF A COMMODITY OR SERVICE NOT ON STATE TERM CONTRACT2. SPECIFICATIONS/STATEMENT OF WORK PROVIDED BY THE REQUESTING BUYER,

LEADING “SNAPS III” CONCEPT (continued)

3. THE REQUESTING BUYER WILL BE ENCOURAGED TO IDENTIFY ANY KNOWN VENDORS WHO COULD MEET THE NEED

4. THE DMS SNAPS TEAM WILL ATTEMPT TO REGISTER ANY NON-REGISTERED SOURCES IDENTIFIED, AND WILL CONDUCT A COMPETITIVE SOLICITATION USING THE “EQUOTE” TOOL IN MYFLORIDAMARKETPLACE

LEADING “SNAPS III” CONCEPT (continued)

• 5. AGREEMENTS WILL BE ESTABLISHED FOR A TWELVE MONTH PERIOD WITH NO RENEWAL. IF A SPECIFIC NEED JUSTIFYING A SNAPS AGREEMENT IS IDENTIFIED AFTER THAT TIME, ANOTHER EQUOTE COMPETITIVE SOLICITATION WILL BE CONDUCTED

LEADING “SNAPS III” CONCEPT (continued)

• 6. SNAPS PURCHASES PER CONTRACT WILL BE REVIEWED QUARTERLY, WITH A VIEW TO ESTABLISHING A STATE TERM CONTRACT WHERE $1 MILLION SNAPS PURCHASES COMBINED WITH OTHER NON-STATE-TERM-CONTRACT PURCHASES OF LIKE ITEMS COULD YIELD SAVINGS >$100K ANNUALLY

BUYERS WILL PROVIDE STATE PURCHASING SNAPS TEAM

A REQUEST FOR SNAPS AGREEMENT FORM SHOWING:•AGENCY OR SUBDIVISION NAME AND CONTACT INFO•SPECIFICATIONS/STATEMENT OF WORK•LOCATION, SCHEDULE, BUDGETARY LIMITATIONS, ENTITY PAYMENT PROCESS•AGREEMENT TO PROVIDE SUPPORT IN THE INFORMAL BID EVALUATION PROCESS AS REQUESTED

VENDORS RESPONDING TO THE EQUOTE WILL PROVIDE

• AGREEMENT THAT THE NEW SNAPS AGREEMENT WILL SUPERSEDE ANY AND ALL EXISTING AGREEMENTS WITH ANY RESPONDING VENDOR, COVERING SUBSTANTIALLY THE SAME COMMODITIES/SERVICES, AND AGREEING TO THE CANCELLATION OF ANY SUCH AGREEMENTS

VENDORS RESPONDING TO THE EQUOTE WILL PROVIDE (continued)

A LIST OF ALL SNAPS AGREEMENTS HELD BY THE RESPONDING FIRM, WITH THE UNDERSTANDING THAT FAILURE TO SUBMIT A COMPLETE LIST WILL RESULT IN REJECTION OF THEIR EQUOTE AS NON-RESPONSIVE

VENDORS SELECTED WILL GET…

• A SNAPS AGREEMENT THAT WILL HAVE AT LEAST ONE CUSTOMER

• THE ONLY SNAPS AGREEMENT FOR THE SPECIFIED REQUIREMENTS FOR THE NEXT 12 MONTHS

• AN OPPORTUNITY TO SELL MORE THAN THE QUOTED AMOUNT TO OTHER (or the same) SNAPS USERS

MEASURING SUCCESS: TARGET OUTCOMES

1.% OF SNAPS AGREEMENTS PUT IN PLACE AND CONTINUING WITHOUT A BUYER: ~0% (FROM CURRENT ~50%)2.% OF SNAPS PRICES DECREASED EACH TIME A CURRENT SNAPS II AGREEMENT IS REPLACED BY AN “EQUOTED” SNAPS AGREEMENT: ~100%3.% OF SNAPS AGREEMENTS WITH SPEND > $1 MILLION ANNUALLY REPLACED BY A STATE TERM CONTRACT: ~100%

A SHOW OF HANDS PLEASE…

1. CONTINUE WITH SNAPS “AS IS” __2. DISCONTINUE SNAPS ALTOGETHER __3. ALLOW SNAPS TO CONTINUE, BUT

RESTRICT USE TO AGENCIES AND ELIGIBLE USERS NOT ONLINE WITH MYFLORIDAMARKETPLACE AND ITS “EQUOTE” CAPABILITY __

4. RE-ENGINEER TO MAKE SNAPS PRICE-COMPETITIVE AND BUYER (NOT VENDOR) DRIVEN __

ETHICS AND THE LAW

GOVERN YOURSELVES ACCORDINGLY

STANDARDS OF CONDUCTS.112.323(2) SOLICITATION OR ACCEPTANCE OF GIFTS--No public officer, (or) employee of an agency…shall solicit or accept anything of value…including a gift, loan, (or) reward…based upon any understanding that the … official action, or judgment of the public officer, (or) employee…would be influenced thereby.”

STANDARDS OF CONDUCT continued

S. 112.323(4) Unauthorized Compensation.—No public officer, (or) employee of an agency…shall, at any time, accept any compensation, payment, or thing of value when such public officer, (or) employee…knows, or…should know, that it was given to influence…action in which the officer, (or) employee…was expected to participate in his or her official capacity.

BRIBERY, MISUSE OF PUBLIC OFFICE

S.838.022 IT IS UNLAWFUL FOR A PUBLIC SERVANT, WITH CORRUPT INTENT TO OBTAIN A BENEFIT FOR ANY PERSON…TO FALSIFY, OR CAUSE ANOTHER PERSON TO FALSIFY, ANY OFFICIAL RECORD OR OFFICIAL DOCUMENT; CONCEAL, COVER UP DESTROY…OR ALTER ANY OFFICIAL RECORD OR DOCUMENT…”

BID TAMPERINGS.838.22 IT IS UNLAWFURFOR A PUBLIC SERVANT, WITH CORRUPT INTENT TO INFLUENCE OR ATTEMPT TO INFLUENCE THE COMPETITIVE BIDDING PROCESS…TO DISCLOSE MATERIAL INFORMATION CONCENTING A BID…WHEN SUCH INFORMATION IS NOT PUBLICLY DISCLOSED

BID TAMPERING continuedS.838..22 IT IS UNLAWFUL FOR A PUBLIC SERVANT TO…ALTER OR AMEND A SUBMITTED BID, DOCUMENT OR OTHER MATERIALS SUPPORTING A SUBMITTED BID, OR BID RESULTS FOR THE PURPOSE OF INTENTIONALLY PROVIDING A COMPETITIVE ADVANTAGE…

BID TAMPERING continued

S.838.22 IT IS UNLAWFUL FOR A PUBLIC SERVANT, WITH CORRUPT INTENT …TO CIRCUMVENT A COMPETITIVE BIDDING PROCESS…BY USING A SOLE-SOURCE CONTRACT…

ANY PERSON WHO VIOLATES THIS SECTION COMMITS A FELONY…

PUBLIC RECORDS FRAUD

S.839.13 FS: “…if any…public officer, or employee…of…a public agency, shall falsify…any record…or shall knowingly and willfully…conceal any issue, or shall…falsify any document…or be in anywise concerned therein, the person…shall be guilty of a misdemeanor…punishable as provided in s. 775.082 or s.775.083.”

OFFICIAL MISCONDUCTS.839.25 FS: “(1) Official misconduct means the commission of the following act by a public servant, with corrupt intent to obtain a benefit for himself or herself or another or to cause unlawful harm to another: knowingly falsifying, or causing another to falsify, any official record or official document. (2) Corrupt means done with knowledge that act is wrongful and with improper motives. (3) Official misconduct …is a felony…”

AT YOUR SERVICE

A HANDOUT IS AVAILABLE LISTING ALL STATE PURCHASING PERSONNEL, THEIR ROLES AND TELEPHONE NUMBERS. PLEASE DO NOT HESITATE TO CONTACT US.

YOU ARE OUR CUSTOMER, AND WE INTEND TO TREAT YOU AS SUCH.

Fred.springer@myflorida.com Director of State Purchasing

Russ.rothman@myflorida.com Chief Purchasing Operations Officer