Everything you wanted to know about Procurement and never wanted to ask The games people play The vendors goal is to make as much money off of you as possible Your goal is to limit the amount of money they are making off of you ID: 752109
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Slide1
Procurement Review Hawaii 2017
Everything you wanted to know about Procurement and never wanted to ask. Slide2
The games people play…
The vendor’s goal is to make as much money off of you as possible.Your goal is to limit the amount of money they are making off of you.
. Slide3
. Slide4
TYPES OF FORMAL BIDS:
IFB- Invitation For Bid
YOU TELL THE VENDOR WHAT YOU WANT
You
tell them what product, time of delivery, day of delivery, pack size, how you will pay, etc.
YOU MUST AWARD TO LOWEST VENDOR – NOT ON SERVICE OR IF YOU LIKE THEM OR NOT!
Can rarely go with 2
nd
lowest bidder. If you do, you have to provide justification and put in writing first.
Slide5
TYPES OF FORMAL BIDS:
RFP- Request For Proposal
YOU WORK WITH THE VENDOR ON WHAT YOU WANT
You tell them what product, time of delivery, day of delivery, pack size, how you will pay, etc. Then they tell you want they will do.
You score final-final with evaluation committee.
YOU MUST SCORE PRICE AS THE HIGHEST OF ALL CRITERIA
EX:
PRICE 25%,
WILL PUT ON SHELVES 20%, MON. & THUR. DELIVERY 15%, WILL
ALLOW CHANGES 24 HRS. BEFORE DELIVERY 10%, Computer Ordering 10%, No
Re-shelving charges 10%, FILL RATE OF 9% -10%
Slide6
Action Items – Common Findings
CODE OF CONDUCT
Must have a written Code of Conduct
Protects employees from engaging in
unethical and unallowable behavior
Provides disciplinary actions for violations
Protects SFA’s reputation Slide7
Conflict of Interest
No employee should be involved in the procurement process if they have a conflict of interest.
CALLED “AT ARMS LENGTH“Slide8
Action Items – Common FindingsSlide9
Action Items – Common Findings
CODE OF CONDUCT
REAL
Professional judgement is compromised because of a financial personal benefit.
VS
PRECEIVED
A reasonable person would think that the professional’s judgement is likely to be compromised.
Newspaper/Stink TestSlide10
Conflict of Interest or Not?
Sheldon Cooper is the Principal for a Charter School. He awarded a one year contract to his brother who owns a company that vends meals. Slide11
Conflict of Interest or Not?
Amy Farrah Fowler is the Cafeteria Manger for a Public Charter School. She regularly has dinner with her friend, the owner of a vended meals company, but she always pays for her own dinner. She followed proper procurement procedures and awarded the vending contract to her friend. Slide12
Action Items – Common Findings
DISCIPLINARY ACTION FOR VIOLATIONS
Must provide disciplinary actions for violations
Examples:
Verbal warning
Written warning
Fines
Suspension or Termination
Police/Legal Action Slide13
Action Items – Common Findings
DISCIPLINARY ACTION FOR VIOLATIONS
Soliciting Gifts Is Prohibited
2 CFR 200.318 (c) (1)- The Officers, employees and agents of the non-Federal entity must neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties of subcontractors. Slide14
Action Items – Common Findings
DISCIPLINARY ACTION FOR VIOLATIONS
Gratuities, Favors or Gifts
2 CFR 200.318 (c) (1)-Non Federal entities may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value.Slide15
Conflict of Interest or Not?
Bernadette Rostenkowski-Wolowitz is the Cafeteria Manger for a Public Charter School. Her School’s Code of Conduct allows her to accept up to $25 annually.
Leonard Hofstadter owns Tasty Meals (vendor) and sends Bernadette a box of candy at Christmas worth $20. During the summer, Leonard breaks a leg and can’t go to a MLB baseball game and gives the box seat tickets to Bernadette. Slide16
Why Written Procurement Procedures?
Written Procurement Procedures
1. Ensures purchases made are in compliance with federal, state, and local rules.
2. Provides purchasing staff with a guide on proper procuring which will create a decrease in unallowable transactions. Slide17
Why Written Procurement Procedures?
Written Procurement Procedures
1. Document containing specific information and processes for procurement transactions.
2. Update as procedures change
3. Unique to each SFA
4
. Follow your procurement procedures
5
. Don’t forget a Emergency Procurement Plan.
Slide18
Action Items – Common HCNP Findings
RECORDS
2 CFR 200.318(i)- The non Federal entity must maintain records sufficient to detail the history of the procurement.
Rational for procurement method
Selection of contract
Vendor selected or rejected
Basis for contract price Slide19
Action Items – Common HCNP Findings
What NEEDS to be in your
r
ecords:
5. Evaluation
6. Protests
7. Disputes
8. Claims
Keep all written records/notes/phone calls…Slide20
Action Items – Common HCNP Findings
OVER RESTRICTING COMPETITION
Placing unreasonable requirements on vendors.
Requiring unnecessary experience or excessive bonding. Slide21
Action Items – Common Findings
CONTRACTOR CANNOT:
Be involved in writing ANY Specifications on any IFB or RFP, etc.
Vendor must be excluded from competing for a procurement if they helped developed a draft. Slide22
BUY AMERICAN
Still being developed for Hawaii by USDA
Should still be in all Solicitations until clarified.
Clause is not applicable to HI due to:
1. Product not produced or manufactured in Hawaii in sufficient
quantities
per 7CFR210.21 (d) (3).
2. Competitive bids reveal the cost of the US product is significantly higher than non-domestic
. Slide23
Action Items – Common Findings
What is a Micropurchase ???
New to procurement world
. Most don’t
know:
helps
the
small SFA’s
with limited vendors.
Can procure product without soliciting competitive quotes.
No documentation
needed
.
Price must be reasonable. HCNP will
use internet to prove pricing. Slide24
Action Items – Common Findings
What is a Micropurchase ???
4. Distributed
equitably among suppliers
.
Must be roughly distributed
to:
A.)
different vendors
B.)
money
spent at each vendor
5. Must
be under $3,500.
Save all receipts.
Slide25
HCNP Suggestions
:
ALL food, paper, services, chemicals must be under a procurement procedure.
Once you bid out an product or service, then you must do a contract.
Give more time than you think for writing a bid (X10!).
Bids should be written for 1 year; but can be extended for 4 – one year extensions. NO MORE THAN 5 YEARS- TOTAL. Slide26
HCNP Suggestions:
Did I mention that ALL food, paper, services, chemicals must be under a contract or procurement procedure.
If you roll a bid, make sure you have an escalation clause. Recommend tying it to a National index such as the CPI - Consumer Price Index (Dept. of Labor). Use National Average for food away from home.
Bids must be signed by legal authority from SFA. Slide27
HCNP Suggestions
:
Are you sure I mentioned ALL food, paper, services, chemicals must be under a contract or procurement procedure.
Piggy Back - legal if written into the bid and contract.
All items/products are “or equal” in the procurement world.
Taste tests can help get product you wantSlide28
Action Items – MOST Common Finding
MONITORING
1. Bids Must be monitored: For example: One milk bid in a SFA had 13 price changes (up and down) over the last school year. They claimed they had none
and didn’t realize the price changes over the year.
2. Monitoring is making sure invoices are correct and charged according to
bid/contract.
3. Have a written procedure on how to send product back.
4. Document who monitors your bid prices and how often. Document,
document and document…
Slide29
PROCUREMENT VIOLATIONS:
USDA still working on standardized penalties for SFAs.
May
require SFA to re-solicit bid.
May disallow procured items/pay for items with non-food service food accounts
.
Slide30
Action Items – Common Findings
1.
Solicitations
must be advertised when out to bid. Save proof of advertisement.
2
. SFA can talk
to vendor UNTIL THE BID IS OUT. If correction is needed then everyone gets the same info.
3. Accurate Data- state approximately for volume usage but make sure you are credible and make sure you say it’s approx. or you might be liable for buying any unused product at end of bid.
4
. Be flexible- work with your vendor- i.e. delivery window of all day for any day of the week. Slide31
Action Items – Common Findings
Award bid on lowest unit price- must be apples to apples.
Example:
Pizza 1 = 32 count for $10.
Pizza 2 = 15 count for $10. Slide32
Action Items – Common Findings
To Rebid or Make an Addendum?
Material Change- Subjective; how much it effects the total bid.
Based on the money amount in bid change. Look at % change in total price of bid.
Based on other variables- Is the change
significant to bid to cause other vendors to want to
re-bid. Slide33
What Drives COSTS UP:
Since
most procurement problems can be attributed to human error, these issues can usually be resolved fairly easily. Make sure that your procurement system takes these mistakes into account and ensure your partnership with a supplier is based on mutual understanding.Slide34
HCNP AUDIT
Vendor/Contract Management Review 2016
Need for better oversight and accountability at the school level.
Need for better tracking and monitoring of contracts and vendors.
Need for strengthening controls over vendors.