Procurement Reform Risk Assessment Pilot

Procurement Reform Risk Assessment Pilot 2013 DES Training Conference & Trade Show Presented by Roselyn Marcus, Jim Schnellman, Tammie Wilson and Jay Field October 30, 2013

Panel Presentation Presenters: • Roselyn Marcus, Assistant Director Legal and Legislative Affairs, OFM • Tammie Wilson, Contracts Administrator, L&I • Jim Schnellman, Chief, Office of Admin Resources, DSHS • Jay Fields, C.P.M., Purchasing and Contracts Manager, Evergreen State College

Topics • Risk Assessment Pilot Overview • Risk Assessment Pilot Value • Risk Assessment Pilot Lesson Learned • Post Risk Assessment Pilot – Going Forward • Questions

Procurement Reform • 2SHB 2452 - Signed March 30, 2012 • Created Chapter 39.26 RCW • Governs all state procurements for goods and services. • Went into effect January 1, 2013

Intent of Procurement Reform • Promote open competition • Promote transparency • Centralize oversight • Centralize location of contract data in a searchable manner • Encourage/facilitate participation by Washington small businesses • Increase accountability RCW 39.26.005

Delegation of Authority • The director has the authority to delegate to agencies authority to purchase goods and services. • The authority must specify restrictions as to dollar amount or to specific types of goods and services. • The authorization must be based on a risk assessment process developed by the department. • The director may not delegate the authority if the agency is not in substantial compliance with overall procurement policies as established by the director. RCW 39.26.090(5)

Delegation of Authority Policy

Pilot Timeline • November 2012 – Scope the pilot, draft a project charter, and finalize the January 2013 risk matrix/risk factors and develop parameters for delegation and oversight as related to the assessed level of risk • January 2013 - Conduct the assessments and reach agreement on February 2013 agency risk level, delegation and oversight • March 2013 DES & pilot agencies start operating with their delegation and oversight authorities • March 2013 Monthly meetings between DES and pilot agencies to assess the pilot • October 2013 DES & pilot agencies review project success factors and challenges and make recommended changes. • December 2013 Prepare and issue final report on pilot and the policy on the risk assessment, delegation and oversight. Provide a schedule for rolling this out to all state agencies. • January 2014 Begin implementation to all state agencies in accordance with the schedule.

Pilot Participants

Risk Assessment Tool

Areas of Consideration There are 7 areas of consideration: • Leadership (4) • Procurement Resource Needs (3) • Procurement Process (9) • Contract and Supplier Management (4) • Purchasing & Procurement Systems (5) • People (3) • Performance Management and Post Procurement/Competitive Processes (6)

Risk Assessment Tool

L& I Sample Response L-4 How often and when does your agency’s internal audit function review your agency’s internal control systems for procurements? Current Process - L&I’s Internal Audit performs an annual enterprise-wide risk assessment. Internal Audit uses the risk assessment to build an agency audit plan that may include audit or consultation services focused on the procurement process. A portion of the procurement cycle is included in the plan at least once every three years. In the event that an external auditor, such as the State Auditor’s Office (SAO), performs an audit of the procurement process, Internal Audit may rely on the external auditor’s work to fulfill that portion of the Agency Audit Plan requirement. Additionally, L&I’s Internal Audit reviews all corrective action plans to determine if previously identified deficiencies have been addressed. The last audit was performed by the SAO in 2010. L&I received two management letters, connected with procurement. The first resulted in three corrective action plans The three items in need of corrective action were: 1) No documentation that an eligible proposal for an IT contract was considered. 2) The department improperly reimbursed a contractor for a piece of equipment when the contract stated the contractor would provide the equipment. 3) Methods used to score two contracts were not consistent with methods outlined in the request for proposal. To address the corrective action plans, a checklist was implemented on November 29, 2010 and training was provided to the agency on April 17 and 26, 2012. The second identified four issues for correction in the procurement system. The result was a modification to the purchasing system to ensure all revisions to field orders required an electronic re-route for approval. The final system changes were implemented in May 2013 and are scheduled for testing by L&I’s Internal Audit early in FY14.

L& I Sample Response Continued • Future State - Development of statewide contract training requirements to provide consistency throughout all state agencies. • Mitigation Plan - L&I’s Internal Audit team is scheduled for May 2014 to test the procurement system changes that were implemented in May of 2013.

L&I Sample Response • PPS-4 How does the agency use uniform tools/templates (task schedules) to facilitate its procurements? • Current Process – L&I has a library of standard templates approved by the AAG, as well as sample language that is housed in L&I's shared drive. The shared drive is used to create folders for draft word and excel contract documents, allowing access by all procurement staff. Procurement staff use calendars and tasks in outlook to help prioritize the procurement schedules. Purchasing staff cross trains staff on designated commodities and contract management duties. The Contracts Office uses ECMS to track contract end dates. This is a driving force for contract renewal. ECMS will notify contract managers and contract consultants at 120, 90, 60, 30 days prior to contract end. This allows time for future contract planning. Purchasing uses an Access database to track field order term dates.

DSHS Sample Response P-3 How does the agency provide training and development support systems for its procurement professionals? Current Process: CCS offers a series of regularly scheduled contracts and ACD classes throughout each year. They include Basic ACD Training, Basic Contracts Training, ACD Styles Training, Advanced Contracts Certification, and Managing Individual Provider Contracts. Basic ACD and Basic Contracts are offered approximately monthly, while ACD Styles and Managing Individual Provider Contracts are offered quarterly. Advanced Contracts is offered twice a year. Registration is available through the DSHS Learning Management System and class schedules and materials are available on the CCS Intranet Share Point site. CCS offers these classes at no charge to participants. CCS also considers special requests to offer specific classes in locations other than DSHS headquarters provided the program requesting the class is able to provide an appropriate classroom and/or computer training room as needed. These special trainings are generally scheduled several weeks in advance based on instructor and participant availability. On an ad hoc basis, the ACD Administrator will also offer training to DSHS contracts staff around building and managing reports using the ACD Online Reporting tool. …

DSHS Sample Response Continued Central Purchasing Unit (CPU) for Operational Goods and Services: Internal CPU employees undergo supervisor and peer training on the current DES delegated authority, DES policy requirements, DSHS Annual Delegated Authority Memo (see Exhibit A – FY13AnnualDelegationMemo.docx), and the Tracks e-Purchasing purchase order (PO) process when beginning their position. New Contract Specialist 2 (CS2) and Contract Specialist 3 (CS3) also complete the Central Contract Services (CCS) Basic Contracting, Advanced Contracting, and Agency Contract Database (ACD) classes. …

DSHS Sample Response Continued • Future State (Planned improvements to process, if any): • CCS is currently developing an online training module for the Managing Individual Provider Contracts class. This will allow those who need the class to register for it and take it in the DSHS Learning Management System when it more convenient for them. The online version will include a quiz that must be passed to show proficiency in the material. CCS plans to develop additional online training modules for the Basic Contracts class as well. • The CPU FY14 business plans include enhanced online and WebEx training options for general DSHS staff who initiate a purchase request (PR) on the Tracks e-Purchasing system, and management level fiscal and directors who approve PRs. In addition to system instructions, trainings will include an awareness of rules and policies which field purchasing groups and CPU must follow.

Panel Discussion – Topic 1 What value did you get from participating in the pilot process, developing the risk assessment tool, and implementing the tool in your agency?

Panel Discussion – Topic 2 What lessons did you learn by participating in the risk assessment pilot?

Panel Discussion – Topic 3 What do you see as the future of the risk assessment tool and the impact of this pilot?

Questions • Procurement Reform Questions: • desprocurementreform@des.wa.gov • Procurement Reform Website: http://des.wa.gov/about/pi/ProcurementReform/Pages/default.aspx • Roselyn Marcus (360) 902-0434 Tammie Wilson (360) 902-5814 • roselyn.marcus@ofm.wa.govtammie.wilson@lni.wa.gov • Jim Schnellman (360) 664-6101Jay Field (360) 867-6356 • james.schnellman@dshs.wa.gov fieldj@evergreen.edu

Procurement Reform Risk Assessment Pilot