Public Purchasing On A Shoestring
As local government budgets and staffs get smaller and smaller
, we purchasing professionals, have had to learn to do more with less for so long that some days I feel like I am expected to do everything with nothing. Seriously, I thought of using that for the title of this paper, because it is very close to being the truth, but it is obviously to long. And while this is written from the Public purchasing point of view, much of it is still applicable to the private sector. Ok enough venting, so what is the answer, do we all just have to get leaner and meaner? It would be easy to say yes, but realistically, it is more like leaner and smarter. What then does that look like?It starts with having a comprehensive plan. That in it self is saying a lot. In my whole career I have not worked for a single agency public or private that had a plan for Purchasing beyond how it was going to get to the end of the fiscal year, and if they did it was at least five or more years old. The problem is that writing comprehensive operational plans take a lot of time and thought, a luxury that most shrinking departments dont have; so what do you do? You find a model and follow it. If another City has a plan that is working and they are willing to share, ask them for a copy. I am a firm believer in not reinventing the wheel. In the public sector, one of the best models you could ask for is the AEP (Achievement of Excellence in Procurement) Award. The award is broken down into a 200-point spread of policy and operational goals, 100 points being the minimum threshold for recognition. While it is true that not every agency can achieve every milestone, as some are more comprehensive and/or expensive than others, nevertheless, the beauty of it is that it is also a road map of Best Practices for just about any organization. The award covers everything from the organizational, such as rewriting your municipal code to the operational, such as starting a procurement card program. These are only two of the many stepping-stones to a modern, streamlined, accountable, and efficient procurement operation.
Lets take a look at that first and all important stepping stone, the Municipal Code, or Charter, or Purchasing Policies and Procedures, depending on the nature of your organization; what ever you call it it is the strategic plan, the legal dos and donts that govern your day to day operation. If your code hasnt been updated in the last five years, its time. I believe the best model is the American Bar Association Model Procurement Code. But again, you dont have to start from scratch. Check with a neighboring city, related agency, or a similar business. Most authors take pride in their work and are usually willing to share. Find one that is based on the ABA Code and then adapt it to fit your particular situation, of course being careful not to violate any laws. If you dont have a regular working relationship with your Legal Department, start one. Keep your code simple, while you certainly want to parallel the ABA code, avoid legalese, and keep it short, 15 to 20 pages tops. Remember, the more complicated you make it the more motivated the rest of the staff will be to find ways around it.
In shrinking organizations control is always a problem. The National Association of State Procurement Officials tells us that The public procurement structure of the future will be flatter, less hierarchical. Procurement personnel will be distributed within the governmental structure and they will work in cross-functional teams they further state that procurement leadership and responsibility will continue to be centralized but automation of the procurement process will permit buying decisions to be made at the internal user level. There you have it, someone has to provide the resources, make the rules and act as watchdog to make sure the troops follow them. I like to think of it as train and release. In all honesty, the success or failure of centralized control with decentralized or partly decentralized operations will depend on the kind of support you get from management. Even a clearly defined well written program will be hard to manage if you dont have the support of management.
Look for and use tools that increase your purchasing power while decreasing or streamlining the purchasing process. Co-op and Piggyback purchasing are just such tools. First make sure your code allows for them. If it doesnt, thats a change you really want to make. In purchasing, volume controls price and terms. Therefore, the more volume you can aggregate the better the deal you will get. I often piggyback the purchases of larger organizations such as larger cities and/or counties. Because I know that no matter how well I write that RFP for a copier, that it is just one copier, while the county has a contract for 3000 who do you think is going to get better price and terms? As to terms, I realize that you do have to be careful and check to be sure. Nevertheless, most agencies are pretty sophisticated, and have legal advisors, so that now a days most public agencies terms are pretty standardized and cover all the basics such as acceptance, payment, warranties, indemnification and insurance, just to name a few. The point is dont sweat the small stuff and piggyback or co-op where ever possible to achieve price and process savings. Remember, volume controls price and terms.
Wherever possible streamline and standardize. Do you have a library of standardized templates for all your bid and contract types? How about for standard letters and notices? This takes some work and some coordination with your legal department, but it pays dividends when it comes to putting together a contract, bid package, or award notice. If you work from old previously tailored documents it is easy to leave something out. Our standard templates are based on the Handbook For Writing Bids & RFPs by Karen Theriault, Esquire and are very thorough. When putting together a package we always start with a fresh template and cut out the parts we dont need. It is a lot easier to cut out the parts you dont need than to think up the parts you do.
Do you have a procurement card program? If you dont, consider starting one. Procurement cards are the fastest easiest way to procure low dollar repetitive commodities and/or services. I personally think the State of California Department of General Services (DGS) CAL-Card program is the best one out there. It is run by US Bank, the largest provider of procurement card services in the country. DGS has all of the generic forms, processes, and procedures you need to start a program of any size. All you need to do is adjust the program to fit the specifics of your city. US Bank will even steer you to similar agencies who are willing to help you and will share their personalized programs with you. It couldnt be easier, and the cost savings in terms of man-hours is truly amazing. It also makes low dollar purchases of this type very visible; another plus.
This same dont reinvent the wheel philosophy holds true when it comes to writing RFQs, IFBs, and RFPs. Anything that can be bought, has been bought by someone out there. If you are not in the California Association of Public Purchasing Officers (CAPPO) consider joining. It is a great educational opportunity as well as an excellent resource. CAPPO members are readily willing to share bid specs for all sorts of purchases.
Ok, in summary: have a comprehensive plan, modernize and streamline your governing regulations, move towards flatter organizations with centralized control and decentralized or partly decentralized operations, look for and use tools that increase your purchasing power while decreasing or streamlining the purchasing process. Co-op and Piggyback. Wherever possible streamline and standardize. Consider starting a procurement card program for low dollar repetitive purchases. And last but not least, dont reinvent the wheel, build on the knowledge and experience of those who have come before you and adjust it to fit your particular circumstances.
Copyright 2009
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