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PURCHASING DIRECTORS’ MEETING

PURCHASING DIRECTORS’ MEETING. TAMPA, Florida Sept. 25, 2003. TOPICS . STONE COLD, ETHICS & THE LAW THE FUTURE OF SNAPS OTHER ISSUES. STONE COLD WEBSITE www.stonecoldchem.com.

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PURCHASING DIRECTORS’ MEETING

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  1. PURCHASING DIRECTORS’ MEETING TAMPA, Florida Sept. 25, 2003

  2. TOPICS • STONE COLD, ETHICS & THE LAW • THE FUTURE OF SNAPS • OTHER ISSUES

  3. STONE COLD WEBSITEwww.stonecoldchem.com “With this spirit in mind, a deep rooted love of music, and a long staring gaze at the moon rising over Stone Mountain, a group of friends banded together contemplating their future….”

  4. ARREST BY STATE POLICE • Thomas David Stone, Racketeering, Conspiracy, Unlawful Compensation, Telemarketing Without a License • Glynn “Barney” Barnard, ditto • Barnard’s wife Marilyn Meek,ditto • And seven others

  5. STONE COLD CHEMICALS FOX5ATLANTA SEPT 18, 2003: VENDOR REPS CALLED GOVT SUPERVISORS, AND OFFERED “PREMIUMS”

  6. Some govt. workers called the company and solicited “premiums” • Products cost 2-3 times competitors’ prices, sometimes even more (Fox) • Products were sometimes inappropriate to the intended use (Fox) • Nationwide, at least 2,000 public employees in 48 states accepted kickbacks…(CNN)

  7. STONE COLD WEBSITEwww.stonecoldchem.com “They learned how to take care of their customers better than any other company around….Stone Cold Chemicals was born and customer care was elevated to new heights.”

  8. ARRESTS (FDLE press release) • Sherell Lee Collins, Highlands County SO • Tammie Jean Sapp, Bradford County SO • James Floyd Hill, Punta Gorda Public Works • Glenn Richard Perry, Clearwater Parks & Beau • Glenn Nicholas Scott, Altamonte Springs • Jackson D. Chestnut, DOC, Gulf Correctional • Alice Fay White, DOT, Jacksonville • Glenn Carlton McAnelly, DOT, Defuniak Spr • Samuel Melvin Sheppard, Jr., DOT, Gainesville

  9. BOTH THE NATIONAL INSTITUTE OF GOVERNMENTAL PURCHASING AND THE INSTITUTE OF SUPPLY MANAGEMENT HAVE CODES OF ETHICS THAT FORBID THESE CORRUPT PRACTICES

  10. NIGP CODE OF ETHICS • “(A member) is governed by the highest ideals of honor and integrity in all public and personal relationships in order to merit the respect and inspire the confidence of the organization and the public being served.”

  11. NIGP CODE OF ETHICS (continued) • “(A member) believes that personal aggrandizement or personal profit obtained through misuse of public or personal relationships is dishonest and not tolerable.”

  12. NIGP CODE OF ETHICS (continued) • “(A member) believes that members of the Institute and its staff should at no time, or under any circumstances, accept directly or indirectly, gifts, gratuities, or other things of value from suppliers, which might influence or appear to influence purchasing decisions.”

  13. ISM Principles & Standards of Ethical Supply Management Conduct • “Avoid any personal business or professional activity that would create a conflict between personal interests and the interests of your employer.”

  14. ISM Principles & Standards (continued) • “Avoid soliciting or accepting money, loans, credits, or preferential discounts, and the acceptance of flights, entertainment, favors, or services from present or potential suppliers that might influence, or appear to influence, supply management decisions.”

  15. FLORIDA STATUTES EXPRESSLY PROHIBIT THE BEHAVIOR WE’VE SEEN IN THIS CASE

  16. S.112.313 Florida Statutes: Standards of conduct for public officers, employeesof agencies, and local attorneys. • “(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.”

  17. S.112.313 Florida Statutes: Standards of conduct for public officers, employees of agencies, and local attorneys (continued) • “(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”

  18. IN ALL ACTS • MAKE DECISIONS BASED UPON THE LAW AND THE BEST INTERESTS OF THE AGENCY AND THE PUBLIC • DISREGARD PERSONAL RELATIONSHIPS AND PREFERENCES, AND AVOID PERSONAL GAIN • ACT IN WAYS YOU WOULD BE COMFORTABLE SEEING IN THE PRESS, DISCUSSING WITH YOUR FAMILY, AND DEFENDING BEFORE A JUDGE

  19. THE FUTURE OF SNAPS (State Negotiated Agreements and Price Schedules)

  20. 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

  21. 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.

  22. 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

  23. HISTORY OF SNAPS (continued) • HIGH USE AGREEMENTS NEVER SEEM TO MAKE IT TO STATE TERM CONTRACT STATUS • MANY SNAPS AGREEMENTS ARE NEVER USED

  24. 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 700 CURRENT SNAPS AGREEMENTS, MORE THAN HALF REFLECT NO REPORTED PURCHASES

  25. PRINCIPAL CONCERNS WITH SNAPS (continued) • PRICING FOR MANY PURCHASES IS NOT COMPETITIVE • PROCESSING WORKLOAD IS HEAVY • MANY AGENCIES AND ELIGIBLE USERS WILL NOT USE FOR SIGNIFICANT PURCHASES

  26. SNAPS POSSIBILITIES • CONTINUE WITH SNAPS “AS IS” • DISCONTINUE SNAPS ALTOGETHER • ALLOW SNAPS TO CONTINUE, BUT RESTRICT USE TO AGENCIES AND ELIGIBLE USERS NOT ONLINE WITH MYFLORIDAMARKETPLACE AND ITS “EQUOTE” CAPABILITY • RE-ENGINEER TO MAKE SNAPS PRICE-COMPETITIVE AND BUYER (NOT VENDOR) DRIVEN

  27. 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 CONTRACT 2. SPECIFICATIONS/STATEMENT OF WORK PROVIDED BY THE REQUESTING BUYER,

  28. 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

  29. 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

  30. LEADING “SNAPS III” CONCEPT (continued) • 6. SNAPS PURCHASES PER CONTRACT WILL BE REVIEWED ANNUALLY, 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

  31. BUYERS WILL PROVIDESTATE 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

  32. 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

  33. 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

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

  35. OTHER ISSUES • STATUS OF CURRENT STRATEGIC SOURCING INITIATIVES (OFFICE SUPPLIES, MRO, PRINTING, FURNITURE, FACILITIES SERVICES) • PURCHASING REORGANIZATION • UPCOMING EVENTS (NIGP WORKSHOPS, FAPPO CONFERENCE) • NEXT PURCHASING DIRECTORS’ MEETING • ANY NEW BUSINESS

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