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Maverick Spending

Maverick Spending. Presented by : County of Sacramento Contract & Purchasing Services Division Craig Rader, Purchasing Agent John Finney, Contract Services Manager Johnnie Terry, Contract Services Manager. CAP$. Agenda. Define Maverick Spending Your Organizational Structure

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Maverick Spending

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  1. Maverick Spending Presented by : County of Sacramento Contract & Purchasing Services Division Craig Rader, Purchasing Agent John Finney, Contract Services Manager Johnnie Terry, Contract Services Manager CAP$ California General Services Association 2007 General Services Academy

  2. Agenda • Define Maverick Spending • Your Organizational Structure • Why does it occur? • Why is it important? • How does it affect your agency? • Why can’t we do “it” this way? • Why do I have to adhere to Purchasing Policies? • How can you reduce or eliminate it? • Examples • Q&A California General Services Association 2007 General Services Academy

  3. POP Quiz #1 • Why is he called “Maverick”? California General Services Association 2007 General Services Academy

  4. What is “Maverick Spending”? • Purchasing goods/service in non-compliance with your policies • Off-contract spending • Processing “paperwork” after the fact: retroactive contracting • Splitting Orders • Recurring Orders • What “issues” is your agency experiencing? California General Services Association 2007 General Services Academy

  5. Your Organizational Structure • Org Structure • Centralized • Easier to control • Decentralized • Very difficult to control • Hybrid/Combination of Both • How is Your Agency Structured? California General Services Association 2007 General Services Academy

  6. Why does it occur? • Many causes: • Ignorance of policies and procedures • Burdensome procurement process • Not aware item was on contract • Willful disregard for policies and procedures • Inevitable part of a decentralized purchasing approach California General Services Association 2007 General Services Academy

  7. Why is it Important? • Opportunity for Cost Savings • Compliance • Process Improvement • Liability • Public Scrutiny California General Services Association 2007 General Services Academy

  8. POP Quiz #2 • What is the average % of increased costs of a typical “Maverick Purchase”? California General Services Association 2007 General Services Academy

  9. How Does it Affect Your Agency? • Costs (typically 2-5% higher) • Examples later • Time (How much time did you spend when you could have been doing other things?) • Governing Body (Board, Council) approval for retroactive. • Delay vendor payment • Risks • Insurance • Reputable Firm • Licensing • Limiting Vendor Pool California General Services Association 2007 General Services Academy

  10. Why Cant We Do “It” this way? • State Law • Agency Policy • Public Scrutiny of Purchasing habits California General Services Association 2007 General Services Academy

  11. Why do we have to adhere to Purchasing policies? • We all have Policy • For Non-purchasing folks: • What is your most “abused” policy? • What are the ramifications of not adhering to policy? • Why are they important? • Guardians of Taxpayer Dollars • Allow fair and open competition California General Services Association 2007 General Services Academy

  12. How can you reduce or eliminate it? • Management “Buy in” • Purchasing Management • Finance • Counsel • Executive Management • Review Purchases • Enforce Policy • Willingness to take corrective action • Training & Education • Formal • Classroom • Informal • Whenever you “touch” your customers • Phone conversations or impromptu meetings • Include Purchasing staff • Newsletters • Division, Department, Agency • Emails California General Services Association 2007 General Services Academy

  13. Examples • Office Supplies from non-contracted vendor • User spent $6,765.56 • Would have paid $4,504.95 if used Corporate Express • OVERPAID $2,044.71 (30%) • Forms Burster Contract • User signed contract for List Price • Purchasing renegotiated • User would have OVERPAID $3,328 (19%) • Envelopes • $4,060 (18%) savings on envelope • Matching Orders to Contracts • Retroactive Contracts • Must be ratified by Governing Board (County Supervisors, City Council, District Board, etc.) California General Services Association 2007 General Services Academy

  14. What Have We Learned? • Maverick Spending is define as…. • It occurs because… • It is important because… • It affects my agency in the following ways… • It cannot be done this way because… • I must adhere to Purchasing Policies because…. • I can reduce or eliminate it by…… California General Services Association 2007 General Services Academy

  15. Questions and Answers California General Services Association 2007 General Services Academy

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