March 31, 2009

1. Department of Administrative Servicesand the State Purchasing ProcessesAmerican Recovery and Reinvestment Act:Accountability and TransparencyTim Gibney, Assistant Commissioner March 31, 2009

2. http://doas.ga.gov/Pages/Home.aspx

3. Organizational Structure Asst. CommissionerState Purchasing Director, Strategic Sourcing Terry Doumkos Director, Knowledge Center Kelly Loll-Jones Director, Customer Advocacy Gina Tiedemann IT Brian Wirpsa Strategic Support Katherine Briody Process Improvement Donna File Procurement Applications Kristine Splieth Good and Supplies Clarence Ingram Special Projects Debra Blount Cust./Vendor Satisfaction Hugh Farley Professional Development Mirna Barker Statewide Cards Manager Paul Kurtz Infrastructure Darryl Mitchell

4. The Procurement Transformation will be delivered while operating within the context of open and fair competition Open Competition Fairness Considerations Transformation Initiative A.T. Kearney’s House of Procurement Drivers of Competition • Broad participation • Clear and effective processes that provide open transparency into the procurement processes and criteria • Effective documentation of results and approach Factors for Consideration • Leverage for minority vendor and small business • Establish business practices to achieve fairness and equity Effective and Balanced Approach to Drive Results • Competition and fairness used to drive the strategic sourcing approach to achieve savings and preserve policy priorities • Develop internal capabilities to further sustain procurement excellence

5. Professional Development • The Training page allows you to obtain information on: • Course Descriptions • Course Schedules • Registration Information

6. Georgia Purchasing Curricula & Certifications

7. Basic Procurement Certificate 1 Professional Development Employees who need basic understanding of State procurement tools, procedures, and policies Employees who need more advanced understanding of State procurement tools, procedures, and policies as they relate to RFPs and Negotiations More specifically, employees responsible for writing and managing the RFP process as well as being the facilitator or responsible for finalizing negotiations or for leading the negotiation process RFP Certificate 2 S Negotiations Certificate 4 S Employees who need more advanced understanding of State procurement tools, procedures, and policies as they relate to Contract Management More specifically, employees responsible for writing and administering the contracts Contract Management Certificate 5 S P-Card Certificate Employees whose responsibilities include managing the P-Card Program at their facilities S

8. The procurement process can be summarized with seven major stages Overview of Procurement stages Need Identification Pre-Solicitation Solicitation Preparation Solicitation process Evaluation Process Award Process Contract process Key Steps • Identify Internally/externally need for purchase • Decide on Ownership of category • Identify sourcing team • Decide on required analysis • Develop category profile • Generate Vendor Portfolio • Identify most appropriate purchasing method • Develop Sourcing strategy • Generate technical evaluation criteria • Include standard language for RFx • Incorporate standard contract terms and conditions based on category • Select Vendors • Conduct administrative review • Evaluate technical proposal • Analyze cost proposal (TCO calculation) • Conduct Negotiation • Issue intent to award • Handle vendor protests • Operationalize new agreement • Issue notice of award • Document and store contract/purchase details • Create contract administration plan • Sustain results • Track contract performance • Track vendor performance • Post eRFX advertisement or bid notice on GPR • Conduct Q&A session • Conduct offeror conference • Select Implementation path • Develop Evaluation/ negotiation plan • Receive bids

9. 7-Stage Methodology • Provides the necessary process and techniques to improve procurement operations • Provides a consistent method to process information and defines a structure for each step of the process and standardizes the way all events are conducted • Facilitates the adoption of communication technology that lead to increase in efficiencies, effectiveness, and accountability

10. Need Identification Need Identification Pre-Solicitation Solicitation Preparation Solicitation process Evaluation Process Award Process Contract process • The identification of the need involves the broad identification of what is • required • As part of this process, the agency will identify stakeholders, may carry out some stakeholder analysis or surveys, and undertake spend and demand analysis • Following this activity APOs/UPOs will have some preliminary views on the required services and solutions • Partnership with the State Purchasing Division may enhance the APOs/UPOs’ comprehensive knowledge of the market, as it is necessary to perform an appropriate level of market research to develop a good business case and to make a good decision on the specific procurement methodology to follow

11. Planning Your Procurement • “The critical importance of the Recovery Act…require heightened management attention on acquisition planning.” (Peter Orszag Letter, 2/18/09)

12. Lead Measure 5:Reduce Average Cycle Time For RFXs (# of days) by 10% 2008 RFX Goals 161 106 RFP Goal RFQ Goal Drivers and what we’re doing to address them:

13. Pre-Solicitation Need Identification Pre-Solicitation Solicitation Preparation Solicitation process Evaluation Process Award Process Contract process Key Steps • Identify sourcing team • Decide on required analysis • Develop category profile • Generate Vendor Portfolio • Identify most appropriate purchasing method

14. Pre-Solicitation • Research is conducted to help write the requirements/ specifications and identify the sources that provide the goods or services required • A cross functional team is assemble in order to conduct the research, write the requirements, and help identify what is needed • If necessary, an evaluation team is assembled together in order to perform the evaluation of the proposals • The best method of solicitation is identified

15. Pre-Solicitation • Helps identify, examine, select and implement sourcing alternatives for a specific Sourcing Group (SG). • Encompasses the whole process for evaluating, selecting and aligning with supplier(s) to achieve operational improvements and support overall strategic objectives. • Focuses on total costs and not just the purchase price • Assists an organization by gaining a good understanding of its requirements, knowing how it must map to the existing supply market, and then develop a plan for both short and long-term objectives. 

16. The procurement process can be summarized with seven major stages Overview of Procurement stages Need Identification Pre-Solicitation Solicitation Preparation Solicitation process Evaluation Process Award Process Contract process Key Steps • Develop Sourcing strategy • Generate technical evaluation criteria • Include standard language for RFx • Incorporate standard contract terms and conditions based on category

17. Solicitation Preparation • Identify the method of solicitation • Finalize the requirements • Write the RFx • Create an evaluation methodology for the RFx – Assign points to each Proposal Factor and each question/requirement within each proposal factor • Create the cost methodology • Have the cross functional team review and edit the RFx to ensure that it addresses the requirements

18. Vendor Registration • Importance of contacting prospective bidders to register on the Georgia Procurement Registry http://doas.ga.gov/TGM/Pages/TGMSuppliers.aspx Registration   Determine whether your company is a Sourcing Bidder or a Supplier   Sourcing Bidder - If your company provides goods or services but has never had a purchase order, received a remittance, or been awarded a contract by the State of Georgia, you need to register as a sourcing bidder. Your company may fit into this category even if it was active in our current Vendor Registration System.   Supplier - If your company has had a purchase order, received a remittance, or has been awarded a contract by the State of Georgia, you need to register as a supplier. A company in this category will have a PeopleSoft vendor number in our Financials system.   After reading the definitions, if you are unsure whether you are a bidder or supplier, try registering as a supplier first. If you are a supplier, your company information will pop up when after you've added all the required fields and click in the Vendor ID box. If no record is found, register as a bidder. Read and Print the Quick Reference Guides    Register as a Sourcing BidderRegister as a Supplier Register in Team Georgia Marketplace   New Hours: Team Georgia Marketplace is available 24 hours a day, 7 days a week, except between 7:00 PM and 7:30 PM daily when the system is down for routine maintenance. If you are registering, you must complete the process prior to 7:00 PM or you will lose it.

19. The procurement process can be summarized with seven major stages Overview of Procurement stages Need Identification Pre-Solicitation Solicitation Preparation Solicitation process Evaluation Process Award Process Contract process Key Steps • Post eRFx advertisement or bid notice on GPR • Conduct Q&A session • Conduct offeror conference • Select Implementation path • Develop negotiation plan • Receive bids

20. Solicitation Process During this Stage, the procurement staff is responsible for the following: • Post the solicitation – This begins the Solicitation Process stage • Conduct offerors’ conferences, if appropriate • Respond to any offerors’ questions in writing. Questions could be received directly from the offeror or documented as part of the offerors’ conference. Post these answers for all offerors to see • Define a negotiation methodology • Receive the bids or proposals from the suppliers/offerors – This marks the end of the Solicitation Process stage

21. Sourcing teams have several options to complete a competitive bidding process Note: (1) Authorized to disclose information derived from (but not contained in) the proposals to competing offerors such as overall rankings and overall scores for the purpose of soliciting ongoing revisions to cost proposals via an auction process or meetings (2) Depending on existing code, the use of negotiations may be restricted

22. The procurement process can be summarized with seven major stages Overview of Procurement stages Need Identification Pre-Solicitation Solicitation Preparation Solicitation process Evaluation Process Award Process Contract process Key Steps • Select Vendors • Conduct administrative review • Evaluate technical proposal • Analyze cost proposal (TCO calculation) • Conduct Negotiation

23. Solicitation Evaluation During this Stage, the procurement staff is responsible for the following: • Conduct the Administrative review to ensure all necessary documentation was submitted and all offerors passed the requirements • Evaluate the proposals based on the evaluation methodology, if appropriate • Evaluate the cost proposal • Combine the cost and proposal evaluations to arrive to the combined evaluation in order to select the best supplier • Conduct negotiations based on the negotiation methodology • Evaluate new submittals from the offerors involved in the negotiation process

24. Suppliers are ranked and a competitive range is used to determine a final list of suppliers for award or further negotiations RFP RFP RFP + Response Response Response Analysis This Is The Most Challenging Step Ranking #1 Supplier #2 Supplier #3 Supplier

25. ProfileSourcing Group SelectSourcingStrategy GenerateSupplierPortfolio SelectImplementation Path SelectCompetitive Supplier (s) Implement Suppliers Benchmark Supply Market 1 2 3 4 5 6 7 • Understand internal spend and external market • Create “go to market” approach • Open supply base and identify all viable suppliers • Decide most appropriate execution strategy • Evaluate proposal and select suppliers • Operationalize supplier agreements • Monitor market and supplier performance In Summary, how to embed the sourcing process? Planning Implement Suppliers On-going Category Management Issue Bid & Select Suppliers Roles and Responsibilities – Strategic Sourcing Initiatives Led by Purchasing

26. Georgia Procurement Manual http://pur.doas.ga.gov/SPDportalDocs/GeorgiaProcurementManual.pdf The State Purchasing Division is currently working on a project that will combine the Georgia Procurement Manual (GPM) and the Georgia Vendor Manual (GVM). Release date set for April, 2009 This document contains the state’s sources of policy and guidance for procurement issues.

27. Templates – RFP, RFQ and eQuote Link to RFP template Paper/Non-PeopleSoft template http://statepurchasing.doas.georgia.gov/vgn/images/portal/cit_1210/25/58/136580221SPD-SP018StateEntityRFPTemplate.doc Electronic template http://statepurchasing.doas.georgia.gov/vgn/images/portal/cit_1210/25/59/130530897SPD-SP020StateEntityeRFPDocument.doc Link to RFQ template http://statepurchasing.doas.georgia.gov/vgn/images/portal/cit_1210/25/51/136593068SPD-SP022StateEntityeRFQTemplate.doc Link to eQuote template http://statepurchasing.doas.georgia.gov/vgn/images/portal/cit_1210/58/32/76605811SPD-SP005_Request%20For%20Quote.doc

28. Language in Our DOAS Agency and Statewide Contract Templates Regarding Auditing – Agreement to Cooperate (Vendor) “Record Retention and Access.  The Contractor shall maintain books, records and documents in accordance with generally accepted accounting principles and procedures and which sufficiently and properly document and calculate all charges billed to the State throughout the term of the Contract for a period of at least five (5) years following the date of final payment or completion of any required audit, whichever is later.  Records to be maintained include both financial records and service records.  The Contractor shall permit the Auditor of the State of Georgia or any authorized representative of the State, and where federal funds are involved, the Comptroller General of the United States, or any other authorized representative of the United States government, to access and examine, audit, excerpt and transcribe any directly pertinent books, documents, papers, electronic or optically stored and created records or other records of the Contractor relating to orders, invoices or payments or any other documentation or materials pertaining to the Contract, wherever such records may be located during normal business hours. 

29. The Contractor shall not impose a charge for audit or examination of the Contractor’s books and records.  If an audit discloses incorrect billings or improprieties, the State reserves the right to charge the Contractor for the cost of the audit and appropriate reimbursement.  Evidence of criminal conduct will be turned over to the proper authorities.” CAUTION As discussed, DOAS contract templates are not mandatory; therefore, not all contracts established by SPD on behalf of other state agencies will contain the same auditing language.  In addition, not all DOAS contracts are established utilizing these contract templates as they are only required for purchases of $100,000 or more (which generally covers all of our multi-year agreements where we would have multiple purchases as opposed to a single payment for our less expensive purchases).”   Note For ARRA funds this language should be used irregardless of the dollar amount of the purchase.

30. Complying With Federal Law Regarding Use of ARRA Funds • Federal law regarding the appropriate use of ARRA funds has several implications for the state procurement process, including: • Building solicitation specifications and requirements so that they adhere to ARRA regulations such as the Buy American provision, • Ensuring the evaluation and award process correctly implements the ARRA regulations, and • Utilizing effective contract administration tools to ensure the goods and services delivered by the awarded vendors are in compliance with the contracts.

31. Key Action to Ensure These Goals Are Met Include: • Issue a communication alert to state entities requesting these entities receiving ARRA funds to contact DOAS • Begin discussions with GSFIC (DOAS’ partner for establishing public works contracts) as well as BOR and GDOT to address the need to draft compliance provisions and or policy regarding ARRA funded contracts • Partner with GSFIC and individual state agencies to ensure appropriate evaluation and award of contracts utilizing ARRA funds

32. Buy American Provision • DOAS understands Section 1605 of the ARRA imposes a mandate that certain manufactured products must be produced in the United States. • During discussions with state entities establishing public works contracts, DOAS will address this mandate and its correct application, including the definition of US-made products as well as cost-based waivers to this requirement.

33. “In today’s edition of the Federal Register, the General Services Administration (GSA) posted six new documents relating to the Federal Acquisition Regulations (FAR) within the American Recovery and Reinvestment Act (ARRA). While the postings only affect federal agencies, the Office of Management and Budget (OMB) has stated in previous conversations that the FAR regulations would likely be similar to the OMB issued regulations for Title 2 regarding federal assistance to states. OMB is anticipating publishing these regulations as early as Friday, April 3. The six FAR postings cover the following topics: Publicizing Contract Actions Reporting Requirements Whistleblower Protections GAO Access to Contractor Employees Buy American Requirements for Construction Material GAO/IG Access”

34. Ethics Policy In order to maintain public trust and transparency in State Purchasing, DOAS has implemented policies and procedures on standards of conduct for its employees and contractors. Below you can access these policies. http://ies/doas/images/activedit/policies/Policies/301-soc.pdf Standards of Conduct http://ies/doas/images/activedit/policies/Policies/ethics-govt.pdf Code of Ethics for Government Service

35. Ethics Policy In order to maintain public trust and promote transparency in government, an ethics policy has been established by Governor Perdue to ensure the highest ethical standards within the State of Georgia Link to State Ethics Policy http://gov.georgia.gov/gov/exorders/2003/jan/01_13_03_01.pdf Office of Inspector General directive IG Directive - FINAL VERSION 3-24-09 (3).doc

36. Ethical Standards Ethics-govt.pdf Code of Ethics for Government Service Standards of Conduct Policy.pdf State Purchasing Standard of Conduct White House Memo 3-20-2009.pdf Ensuring Responsible Spending of Recovery Act Funds

37. Accountability & Auditing Audit Risk Alert 2.doc • American Recovery and Reinvestment Act of 2009 (ARRA) • Audit Risk Alert #2 – Responsible Spending of Recovery Act Funds • March 24, 2009 • On March 20, 2009, President Obama issued a memorandum to heads of Executive Departments and Agencies emphasizing responsible spending and transparency of Recover Act Funds. • Recovery Act funds are to be used to stimulate the Nation’s economy, and are not intended to fund projects for special interest. • To that end, please be advised of the following: • 1. Limit on Funds – Section 1604 of the Recovery Act states that none of the Recovery Act funds may be sued by any State or local government for: • “any casino, or other gambling establishment, aquarium, zoo, golf course, or swimming pool.” • Consequences of Noncompliance: In the event of a recipient has not complied with Section 1604, appropriate corrective action may include, but not be limited to: • a) Disallowing or otherwise recovering improperly spent amounts. • b) Imposing additional requirements on the recipient. • c) Initiating a proceeding for administrative civil penalties. • d) Initiating a proceeding for suspension and debarment. • 2. Transparency of Registered Lobbyist Communications – An executive department or agency official shall not consider the view of a registered lobbyist concerning particular projects, applications, or applicants for funding under the Recovery Act unless such views are in writing. • All written communications form a registered lobbyist concerning the commitment, obligation, or expenditure of Recovery Act funds for particular projects, applications, or applicants shall be posted publicly by the receiving agency or governmental entity on its recovery website within 3 business days after receipt of such communication.

38. Monitoring SystemBest Practices_Contract Monitoring.pdf

39. EthicsIG Directive - FINAL VERSION 3-24-09 (3).doc

40. Audit Language for Vendors(contained in “Best Practices in Government, Components of an Effective Contract Monitoring System” from the State Auditing Office Access to Records/Right to Audit Clauses The right to audit the vendor’s books is a standard contract clause and a fundamental concept of contract administration. When government services are contracted out, the vendor represents the state in providing the service. Agencies have a responsibility to verify the information that the vendor reports to them and to ensure that funds are expended properly. This is especially important when there is a high degree of risk involved due to the type of contract or service, a high degree of liability exists for the state, or the potential for severe consequences in the event of poor vendor performance. Because the records are the property of the vendor, the contract must include an agreement that the agency has access to and can audit those records. The ability of agencies to audit vendor records should also extend to the records of any subcontractors. Other States’ Use of Access to Records/Right to Audit: Access to vendor records and the right of the state to audit the contractor is present either through existing law or as a standard contract clause in five of the six states surveyed by the audit team. The clause is used only for some contracts in the remaining state. Georgia’s Use of Access to Records/Right to Audit: • The survey of 25 state agencies found that 23 of the agencies (92%) reported that access to vendor records and the ability to audit those records was a contract management tool. This was the most frequent practice used, according to the surveyed agencies. • Contract file reviews found that 17 of 20 contracts (85%) contained clauses related to the right of access of vendor records and the ability to audit those vendors. The three remaining contracts (15%) either addressed access to confidential information or stated that the vendor’s records would become the agency’s property at the end of the contract. • The Georgia Procurement Manual does not require an access to records/right to audit clause but does reference it.