Everything that you ever wanted to know about public procurement but were afraid to ask!

1. Everything that you ever wanted to know about public procurement but were afraid to ask! Mike Wenzel Kevin Scheirer Mark Lutte Maine Division of Purchases Department of Administrative and Financial Services

2. Public Procurement Origins • It is likely someone served as the Pharaoh's purchasing agent to buy stone for the pyramids. (actually the first form of concrete) • The Continental Congress awarded commissions to individuals to purchase everything necessary to support the Revolution against the British Empire. • Court cases as early as 1823 established the authority of the government to contract. • In the present day there are institutions that guide public procurement such as: • National Institute of Governmental Purchasing • National Association of Public Procurement Officials • Federal Acquisition Institute • Defense Acquisition University Excerpts taken from Introduction to Procurement, Third Edition, Copy right 2009

3. Public Procurement on a Global Level • Procurement, in general, involves two primary components: commodities and services. • Commodities are something useful that can be turned to commercial advantage anything that can be processed or resold. (NIGP) • Services are any professional or general service work performed which does not result in the delivery of goods or materials, e.g. repairs, surveys, consulting, etc. (NIGP) • Government spending is 38.9 percent of the national GDP. http://en.wikipedia.org/wiki/Government_spending • Government procurement typically comprises 10 percent to 15 percent of a country’s GDP. http://www.ustr.gov/trade-topics/government-procurement

4. The Value of Centralized Public Procurement • When functioning properly, a centralized procurement program reduces the cost of government by: • Eliminating inconsistent practices and procedures that confuse vendors and discourage them from competing. • Reducing the need for duplicative resources by developing a capability and expertise that most other agencies cannot afford to develop. • Inspiring public confidence in government by placing someone in charge of a system that spends vast amounts of public funds. • Serving as the government's meaningful link to the business community.

5. The Value of Centralized Public Procurement • Centralized public purchasing programs such as the Maine Division of Purchases generate substantial cost savings by: • reducing administrative costs and lowering prices through competition • leveraging the consolidated needs of all state public entities • allowing industry to benefit from the accompanying economies of scale • reducing the number of competitive processes conducted • Centralized public purchasing programs facilitate participation in a competitive process that often involves a significant financial investment on behalf of vendors. • The business community's willingness to risk that investment depends on its confidence in the fairness of a competitive processthat stems largely from a well-developed set of rules administered by a strong central procurement entity.

6. The Procurement Process • Phase I: Strategic Procurement Planning • End user requirements and specifications • Phase II: Solicitation Development and Supplier Selection • Write RFP, Advertise, Evaluate, and Award and let’s not forget Appeal • Phase III: Contract Administration • Interaction and monitoring of the contract(s) by the state agency

7. Purchasing in the State of Maine • There are three major areas where procurement takes place in the State of Maine. • Department of Transportation • Debbie Farrell • DAFS/Planning, Design, and Construction Division • Joseph Ostwald • DAFS/Division of Purchases • Mike Wenzel, Kevin Scheirer, Mark Lutte, Kathy Paquette, and Terry Demerchant (among others)

8. Purchasing in the State of Maine Some public entities that perform their own procurement processes outside of the Division of Purchases: • Legislature • Maine Public Employee Retirement System • Baxter State Park Authority • University of Maine System • Technical College System

9. How Procurement Works in Maine: The Division of Purchases • Our primary function is to procure materials, supplies, equipment, and services that represent the BestValue to the State of Maine. • “Best Value” considers cost, but is not determined by cost alone. • Accompanying services, • Life-cycle cost, etc.

10. The Division of Purchases • Responsible for the procurement of goods and services for all state departments • Open Market Limit: $5,000 • Discretionary spending limit for State agencies, with some limited exceptions • Purchases’ Procurement Managers and Buyers handle purchases over the Open Market Limit.

11. What does Maine buy? • The State of Maine buys a wide variety of commodities and services. • In Fiscal Year 2012, we purchased: • More than $143,574,000 in commodities • More than $517,872,000 in services

12. Who can be a Vendor to the State? • Virtually anyone • Corporation • Partnership • Non-profit Organization • Independent Contractor • Must Register to Bid • On our e-Procurement System

13. Purchase of Commodities:Vendor Self Service • Go to: http://www.Maine.gov/purchases • Click on “Vendors and Bid Opportunities”, then “New Contract Vendors” • Register for specific commodities • Receive email notifications of opportunities • Respond to solicitations online

14. Purchase of Services:Requests for Proposals (RFP) • Go to: http://www.Maine.gov/purchases • Click on “Vendors and Bid Opportunities”, then “Requests for Proposals” • View legal ads for all open RFPs • Contact issuing department for copy of RFP • Deliver proposals to Division of Purchases

15. Geekie Information About Procurement: How Many Types of Contracts Can Be Written? • Blanket Contracts / Master Agreements • Term Contracts • Firm Fixed Price Contract • Firm Fixed Price with Economic Adjustments Contract • Fixed Price with Redetermination Clause • Cost Plus Fixed Fee • Time and Materials • Performance Based Contracts • Cost Plus Award Fee • And more…….

16. Selling to Political Subdivisions and Schools through the State of Maine • The Division of Purchases provides procurement opportunities to municipalities and school districts by providing access to our contracts. • We consider a bidder’s willingness to extend their State pricing to these entities in making award decisions. • We encourage municipalities and schools to access our contracts.

17. Questions?