DE State Contracts

STATE OF DELAWARE STATE OF DELAWARE INFORMATION ON INFORMATION ON

CONTRACTS & PURCHASING CONTRACTS & PURCHASING

PRESENTED BY:PRESENTED BY:SANDRA L. DAVID & SANDRA L. DAVID &

JANET SCHUKOSKEJANET SCHUKOSKE

DIVISION OF SUPPORT DIVISION OF SUPPORT SERVICESSERVICES

OCTOBER 27, 2004OCTOBER 27, 2004

OVERVIEW FOR TODAYOVERVIEW FOR TODAY

SMALL PURCHASE PROCEDURES/ SMALL PURCHASE PROCEDURES/ THRESHOLD CHANGESTHRESHOLD CHANGES

USER COMMITTEESUSER COMMITTEES CONTRACTING’S NEW ROLECONTRACTING’S NEW ROLE RFP PROCESS & PROCESS CHECKLISTRFP PROCESS & PROCESS CHECKLIST ANSWER/QUESTION TIMEANSWER/QUESTION TIME

Division of Support Services

Contract Services

Food Services

Surplus Property

Delaware Helpline

Fleet Services

Printing & Publishing

Messenger Services

Fleet link

Commercial Printing

Copy Management

Department of Administrative Services

THRESHOLD DEFINITIONSTHRESHOLD DEFINITIONS

FORMAL BID:FORMAL BID:

Work must be performed under a Work must be performed under a contract entered into according to contract entered into according to Delaware Law. (Formal Sealed ITB/RFP, Delaware Law. (Formal Sealed ITB/RFP, public advertising in public newspaper public advertising in public newspaper in all three counties).in all three counties).

PURCHASING THRESHOLDPURCHASING THRESHOLDDEFINITIONSDEFINITIONS

MATERIEL & NON-PROFESSIONAL MATERIEL & NON-PROFESSIONAL SERVICES:SERVICES:

Any material or work of a Any material or work of a nonprofessional nature required by a nonprofessional nature required by a State Agency.State Agency.


OPEN MARKET:OPEN MARKET:

If it’s not on the contract, go buy it.If it’s not on the contract, go buy it.

WRITTEN QUOTES:WRITTEN QUOTES:

Must obtain three written quotes from Must obtain three written quotes from three sources/vendors as to the prices three sources/vendors as to the prices (Can be faxed, electronic mail, and (Can be faxed, electronic mail, and U.S. mail).U.S. mail).


PROFESSIONAL SERVICES:PROFESSIONAL SERVICES:

Any contract for services of a Any contract for services of a professional nature required by a State professional nature required by a State Agency, (Generally requires Agency, (Generally requires specialized education, training or specialized education, training or knowledge, i e. Consultant, Engineers). knowledge, i e. Consultant, Engineers).


PUBLIC WORKS: PUBLIC WORKS:

Any contract for the construction, Any contract for the construction, reconstruction, alteration or repair of reconstruction, alteration or repair of any public building, road street, etc. any public building, road street, etc. (Paid by public funds)(Paid by public funds)

THRESHOLD DOLLAR THRESHOLD DOLLAR AMOUNTS OF CONTRACTSAMOUNTS OF CONTRACTS

MATERIEL & NON-PROFESSIONAL MATERIEL & NON-PROFESSIONAL SERVICES:SERVICES:

Less than $ 10,000.00 Open Less than $ 10,000.00 Open MarketMarket

$10,000.00 - 24,999.00 Written $10,000.00 - 24,999.00 Written QuotesQuotes

More than $25,000.00 - Formal BidMore than $25,000.00 - Formal Bid

DOLLAR AMOUNTS CON’TDOLLAR AMOUNTS CON’T

PROFESSIONAL SERVICES:PROFESSIONAL SERVICES:

Less than $50,000.00 Open MarketLess than $50,000.00 Open Market Over $50,000.00 Formal BidOver $50,000.00 Formal Bid

*ALL CONTRACTS ISSUED BY THE *ALL CONTRACTS ISSUED BY THE DIVISION OF SUPPORT SERVICES ARE DIVISION OF SUPPORT SERVICES ARE MANDATORY FOR AGENCIES. MANDATORY FOR AGENCIES. Title 29, Title 29, Section 6902 (f)Section 6902 (f)

DOLLAR AMOUNTS CON’TDOLLAR AMOUNTS CON’T

PUBLIC WORKS:PUBLIC WORKS:

Less than $25,000.00 Open Less than $25,000.00 Open MarketMarket

$25,000.00 – 49,999.00 Letter Bid$25,000.00 – 49,999.00 Letter Bid

(letter sent for pricing)(letter sent for pricing) Over $50,000.00 Formal BidOver $50,000.00 Formal Bid

SILVER OAKS PARTNER CONSULTANTS’ SILVER OAKS PARTNER CONSULTANTS’ SOURCING LIST SPEND AND SAVINGSSOURCING LIST SPEND AND SAVINGS

SOURCING CATEGORIESSOURCING CATEGORIES

UniformsUniforms DefibulatorsDefibulators Network ServicesNetwork Services Janitorial ServicesJanitorial Services Paper (computer)Paper (computer)

SOURCING CATEGORIES SOURCING CATEGORIES CONTINUEDCONTINUED

CellularCellular Computer HardwareComputer Hardware CopiersCopiers Electrical SuppliesElectrical Supplies FurnitureFurniture

SOURCING CATEGORIES SOURCING CATEGORIES CONTINUEDCONTINUED

Lab SuppliesLab Supplies Long DistanceLong Distance Office SuppliesOffice Supplies SoftwareSoftware

SILVER OAKS SOURCING SILVER OAKS SOURCING SPENDSPEND

• DELAWARE SPEND:

• TOTAL FOR FISCAL YEAR 2004 $ 85,424,108

Silver Oaks ( P2) Cumulative Silver Oaks ( P2) Cumulative Savings BreakoutSavings Breakout

June 2004FY '04 to

Date Total P2 To Date

Executive 473,264 4,162,356 6,459,786 DOT 49,334 447,292 545,703 Schools 82,249 1,041,451 1,394,537 Other 102,094 802,027 1,150,204 Total 706,941 6,453,126 9,550,230

P 2 SAVINGSP 2 SAVINGS

TOTAL SAVINGS FOR FISCAL YEAR TOTAL SAVINGS FOR FISCAL YEAR 20042004

$ $ 9,550,230

CONTRACTING’S ROLECONTRACTING’S ROLE

The Contracting Section within the The Contracting Section within the Division of Support Services, manages Division of Support Services, manages all statewide contracts for goods and all statewide contracts for goods and non-professional services.non-professional services.

Manage Agency ContractsManage Agency Contracts Consult and Assist other Agencies with Consult and Assist other Agencies with

their contract needs. their contract needs.

CONTRACTING ROLE CONTRACTING ROLE CONTINUED CONTINUED

Clearinghouse for information on Clearinghouse for information on central purchasing by two or more central purchasing by two or more organizationsorganizations

Agent for common purchases of Agent for common purchases of supplies or contractual servicessupplies or contractual services

Collector and furnisher of information Collector and furnisher of information on market prices and other data useful on market prices and other data useful in making purchasing decisionsin making purchasing decisions

CONTRACTING ROLE CONTRACTING ROLE CONTINUEDCONTINUED

Clearinghouse for information on bid Clearinghouse for information on bid for supplies, material or contractual for supplies, material or contractual servicesservices

Perform other services and/or duties Perform other services and/or duties necessary to encourage economical necessary to encourage economical and cost effective methods of and cost effective methods of purchasing by participating purchasing by participating organizationsorganizations

CONTRACTING ROLE CONTRACTING ROLE CONTINUED CONTINUED

Utilize Agency input into the structure of Utilize Agency input into the structure of contracts by way of contracts by way of User CommitteesUser Committees

Contract specifications and or Contract specifications and or ConsultationsConsultations

Periodic review of Contract VendorPeriodic review of Contract Vendor Life Cycle Costing(SB 307)*Life Cycle Costing(SB 307)* Energy Star *Energy Star * Cost Savings – Negotiations*Cost Savings – Negotiations* Cost Avoidance Technique*Cost Avoidance Technique*

USER COMMITTEESUSER COMMITTEES

MANDATED BY MANDATED BY DELAWARE LAWDELAWARE LAW

VITAL AND VITAL AND IMPORTANT ASPECT IMPORTANT ASPECT OF OUR QUALITY OF OUR QUALITY CONTROLCONTROL

AND OUR AND OUR CUSTOMER SERVICECUSTOMER SERVICE

USER COMMITTEES USER COMMITTEES DEVELOPMENTDEVELOPMENT

Develop by SpendDevelop by Spend Top Spend Agencies Top Spend Agencies

participation participation requiredrequired

Procedures initiated Procedures initiated by Contracting by Contracting OfficersOfficers

USER COMMITTEESUSER COMMITTEES

Agency input into the structure of Agency input into the structure of contracts by way of User Committeescontracts by way of User Committees

Contract specificationsContract specifications Agency review of AwardAgency review of Award Periodic review of Contract VendorPeriodic review of Contract Vendor

NEW CONTRACTING PROCESSNEW CONTRACTING PROCESS

Contracting New EnhancementsContracting New Enhancements– Analyzing the commodityAnalyzing the commodity

– Selecting a Bidding Approach (only RFPs)Selecting a Bidding Approach (only RFPs)

– Initial Bid Analysis Initial Bid Analysis

– Negotiation StrategyNegotiation Strategy

Industry and Industry and Supplier AnalysisSupplier Analysis

Objective: Determine how current trends in a given industry.

i. Conduct Industry Analysis ii. Conduct Supplier Analysis

PRIMARY GOALSPRIMARY GOALS

To understand implications of industry To understand implications of industry trends for sourcing processtrends for sourcing process

To identify key suppliersTo identify key suppliers

How Benefit is AchievedHow Benefit is Achieved

Improved Quality/Service LevelsImproved Quality/Service Levels• Detailed specification of service levels Detailed specification of service levels

requiredrequired• Willingness of suppliers to meet Willingness of suppliers to meet

requirements to win high-volume requirements to win high-volume businessbusiness

How Benefit is Achieved How Benefit is Achieved ContinuedContinued

Purchasing of the Right" Purchasing of the Right" Products/ServicesProducts/Services

Development of new product/service Development of new product/service specifications aligned with user needs specifications aligned with user needs

How Benefit is AchievedHow Benefit is Achieved Continued Continued

Cost ReductionCost Reduction Purchasing the correct product or Purchasing the correct product or

service at the best priceservice at the best price Delivering the best total cost solution Delivering the best total cost solution

to the stateto the state

How Benefit is Achieved How Benefit is Achieved ContinuedContinued

Better Management of Spending Better Management of Spending and Budgetingand Budgeting

Better understanding of internal Better understanding of internal sources of demand, and ability to sources of demand, and ability to forecast and control spending going forecast and control spending going forwardforward

Researching Industry and Researching Industry and SuppliersSuppliers

POTENTIAL RESEARCH RESOURCESPOTENTIAL RESEARCH RESOURCES

Reports:Reports:-Industry reports-Industry reports

-Analyst reports-Analyst reports

-Regulatory/government reports-Regulatory/government reports

Researching Industry and Researching Industry and Suppliers ContinuedSuppliers Continued

Internet:Internet:-Hoovers, S&P reports-Hoovers, S&P reports-Lexis-Nexis, Dow Jones-Lexis-Nexis, Dow Jones-Dun & Bradstreet-Dun & Bradstreet-Trade publications, Purchasing -Trade publications, Purchasing

magazinemagazine

Suppliers Researching Industry Suppliers Researching Industry ContinuedContinued

Interviews:Interviews:

-End-users-End-users-Purchasing organization members-Purchasing organization members-Suppliers-Suppliers-Trade organizations-Trade organizations

Conducting the Initial BidConducting the Initial Bid (RFP and/or Auctions) (RFP and/or Auctions)

COMMUNICATION IS THE KEY

• Communication to the User Groups: In all things, keep the user group informed of developments with the process, the supplier, etc. The more they are informed, the less they are surprised by changes (and there are always changes).

Conducting the Initial BidConducting the Initial Bid (RFP and/or Auctions) (RFP and/or Auctions)

Communication to Suppliers: It is vital that you speak with one, unified voice to suppliers during the process.

Communicate these points in both written and verbal correspondence, and make sure it is documented – Suppliers can and will claim that they weren’t informed, and it reflects badly on the state if you can’t prove otherwise!

Negotiation and TechniquesNegotiation and Techniques

Negotiation is “the art of letting them have your way” ~Daniele Vare

Negotiation and TechniquesNegotiation and Techniques

OBJECTIVEOBJECTIVE Provide a framework for Provide a framework for

approaching/conducting a negotiationapproaching/conducting a negotiation Discuss common negotiations tacticsDiscuss common negotiations tactics To be successful, a process requiring

analysis, empathy and game theory Discuss basic methodologies to estimate Discuss basic methodologies to estimate

supplier economicssupplier economics Review basic negotiations skillsReview basic negotiations skills

PROCESS CHECK LISTPROCESS CHECK LIST

Determine Source able BaselineDetermine Source able Baseline– Incumbent data/past biddersIncumbent data/past bidders– Prism ReportPrism Report– Review past Usage ReportReview past Usage Report– Speak to current vendor to discuss Speak to current vendor to discuss

concernsconcerns

PROCESS CHECK LISTPROCESS CHECK LISTCONTINUEDCONTINUED

Benchmark Pricing to Assess OpportunityBenchmark Pricing to Assess Opportunity

-Compare pricing using the internet-Compare pricing using the internet

-Compare pricing using the trade magazines-Compare pricing using the trade magazines


INDUSTRY AND MARKET ANALYSISINDUSTRY AND MARKET ANALYSIS

-Used the Internet-Used the Internet

-Use the Trade magazines & -Use the Trade magazines & NewspapersNewspapers

-Spoke with Vendors-Spoke with Vendors

-Spoke with other purchasing -Spoke with other purchasing entities. entities.


Reviewed potential sourcing categories Reviewed potential sourcing categories Establish comparative rankingEstablish comparative ranking Select initial categories to sourceSelect initial categories to source Meet/coordinate with User Group to discuss Meet/coordinate with User Group to discuss

negotiationsnegotiations


Conduct Best and Final rounds and Negotiate*Conduct Best and Final rounds and Negotiate* Conduct additional best and final rounds*Conduct additional best and final rounds* Determine Savings*Determine Savings* Cost Avoidance for Extending for Re-bidding*Cost Avoidance for Extending for Re-bidding*

QUESTIONS AND REVIEWQUESTIONS AND REVIEW

DELAWARE ON LINEDELAWARE ON LINEADDRESSADDRESS

WWW.STATE.DE.USWWW.STATE.DE.US//PURCHASE PURCHASE (Contracts)(Contracts)

[email protected]@STATE.DE.US 302-739-1635302-739-1635

[email protected]@STATE.DE.USUS

302-739-5569302-739-5569

mailto:[email protected]



STATE OF DELAWARE STATE OF DELAWARE CONTRACTINGCONTRACTING

THANK YOUTHANK YOU

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