ITS Finance Team Penn State University Purchasing Services

1. ITS Finance TeamPenn State UniversityPurchasing Services Joyce Haney Meg Harpster Steve Blazer May 31, 2007

2. Topics • Purchasing Overview • Competitive bidding • Justifications – Price and Source • Sole source justifications (the good and the bad) • Contracts and Computer Bulk Buy • Purchasing Card • eBuy • Agreements • Reverse Auctions • ITS add-ons

3. Purchasing Methods • Purchase order / Standing order • Purchasing card • e-procurement system • Limited order  • Subcontract

4. Purchase order justification • Justify the source • Competitive bidding • Contracts • Single/Sole source • Justify the price • Competitive price • Comparable pricing • Price lists • Contract pricing • Price analysis

5. Threshold Requirement 0 - $9 ,999 Determination of price reasonableness $9 ,999 - $24,999 Evidence of competition $25,000 – and up Formal bidding Bidding Requirements

6. Single/Sole Source Procurements • Justification required in writing • Purchasing has final decision as to SSJ acceptability • Purchasing must still justify the price

7. Sole Source Justifications • Acceptable • Technical reasons • Compatibility reasons • Unacceptable • No time to bid • Supplier gave the lowest price • We like this supplier • We used this supplier before • Supplier is local or close • Supplier already put in time and effort

8. SSJ Do’s and Don’ts • Don’t just rave about the source you want • If technical comparisons were done… • What other brands did you look at? • What was wrong with other sources? • Are the bells and whistles needed? • Do provide factual information • Do identify research that was done • Internet searches, trade shows, conferences, demos, colleagues, etc. • Don’t do your own bidding.

9. Contracts • Established Contract pricing is considered competitive and provides best value • PSU Master Contracts • State Contracts • GSA Contracts • E&I and/or Big 10 Contracts

10. Computer Bulk Buy • 3rd formal year • Improvements year to year • Lessons learned (i.e. configurations) • Cooperative effort • ITS and Purchasing initiate activity • Invitations to participate via IT-Purchasing and Network of People listserves • Good representation (including c. campuses) • Pricing good for 3 months • covers both fiscal year end and new fiscal year

11. Feedback and Input • Bulk Buy Team • ITS • Jonathon Holman • Kevin Morgan • Janda Hankinson • Purchasing Services • Meg Harpster • John Ake

12. Bulk Buy 2006Dell Desktop Summary • Base Units do not include monitors

13. Bulk Buy 2006Dell Laptop Summary • Base Units included the following: • Complete Care – Accidental Damage Protection • 3 Year NBD Parts and On-site Labor

14. Purchasing Card • Make good choices • Protect your card, your account number and always review your statements. • Know your suppliers • Report any suspected misuse immediately • Don’t answer any inquiries (phone or email) about your credit cards unless you confirm they are legitimate. • Purchasing card website: • http://guru.psu.edu/p-card/ • Lisa Steinbugl, Purchasing Card Coordinator

15. On-line shopping • Tools • Search • Compare • Favorites • History • Electronic order placement • Electronic settlement • On-line information

16. Incentives Over the P-Card and PO • More purchasing power • Access to multiple catalogs • Better, more competitive Penn State pricing • Higher pre-approved limits than the purchasing card • Faster • Order direct from the supplier • Order 24X7, anytime, anywhere • Electronic submittal of your order directly to the supplier • Pre-approvals eliminate the multi-step approval process • Less paperwork • No receipts to turn in • No receiving reports • Purchase order history on-line with line item detail • More information at your finger tips • Detailed product information • Search capabilities by key word, part #, category & supplier

17. Active Suppliers • Computer: PSU Computer Store, Dell, Apple & Lenovo • Office Supplies & Janitorial: PSU General Stores • Furniture: Supply Source (Herman Miller) & Corbett (KI) • Electrical: Hite • Electronics: Newark in One • Industrial: Grainger • Scientific: VWR, Fisher, Sigma & EMSCO

18. Agreements - Contractual agreement between 2 parties.- It’s important to get it right. • Various types of agreements: • Purchasing Agreements • Software License Agreements • Beta Test Site • Leases or rentals • Maintenance Agreements – • Hardware and software • Professional Services • Consulting

19. Signing authority • Purchasing • Joyce and Meg get nervous • Department and end-users’ compliance • Understand • Agree (and can comply) • May require disposition of information • Consult with Legal, Risk Management and Privacy Office as required • Controller’s Office • VP of Finance and Business

20. Agreements ……. Who, what, when, where, why, how and how well? • Defines each party’s responsibilities • Each party has responsibilities, rights, protections, and risks. • Terms & Conditions • Written word takes precedent over all verbal agreements • Schedule • Term – (time period, extensions, cancellation, price escalation, price protection) • Payment • Security and privacy issues • Disputes and Non-performance (dispute resolution, default, cancellation, arbitration, legal system, laws, penalties, etc.)

21. Agreements – Who, what, when where, how, and why? • Terms and conditions of use • Faculty? Students? Guests? Locations? Security? • Specific location, college, department or unit? • Educational? / Commercial? / Government? • Instruction? Research? Profit/nonprofit? • Updates and upgrades • How often? Price? Price increases/caps? Support? • Warranty, liability, infringement & protection • Safety and security • Insurance coverage • Maximum liability caps - Personal injury & property damage • Third party lawsuits? • Damages?

22. Develop a good specification or “Scope of Work” • Clearly define who, what, when & where • What are the deliverables? • Clearly identify criteria to identify if the product is acceptable • Clearly identify criteria to determining if services were completed to our satisfaction • Define what is acceptable

23. Reverse Auctions/Online Competitive Bidding • PSU specifications available online for competitive bidding for X minutes. • Multiple suppliers bid their price on line • View low bid price and/or rank • Suppliers adjust their price accordingly if desired

24. Reverse Auction Success at PSU • Over 20 auctions since 2003 • Over $2 million saved • Average savings 19 – 22% • Commodities: Audio visual, janitorial, paper, residence hall furniture, micro-fridges, paint, vehicles, business forms, etc. • Looking for opportunities in computer area

25. Sample Reverse Auction Results

26. Additional Resources • Purchasing • Financial Officer • GURU • http://guru.sp.psu.edu/ • Purchasing Card • http://guru.psu.edu/p-card/ • Purchasing • http://www.purchasing.psu.edu/ • eBuy • http://www.ebuy.psu.edu/