The Minnesota State Colleges and Universities system is an Equal Opportunity employer and educator.

IT Purchasing

Sorting out the mess…

April 22, 2011 MnSCU IT Conference

Nathan Jay Sorensen, MBA

Office of the Chancellor

ITS Contract & Purchasing

Slide 2

Today’s Objectives

• Procurement Strategy

• Review of Compliance

• MnSCU Collaborative Sourcing

Slide 3

COMPLIANCE

» STATE STATUTES

» MnSCU BOARD POLICIES

» VENDOR REQUIREMENTS

PROCUREMENT

» FINANCE

» DELEGATED AUTHORITY

» BID PROCESS

» NEGOTIATIONS

COOPERATIVE PURCHASING

» BUYING POWER

» SOLICIATION PROCESS

CONVENIENCE

» VENDOR MANAGEMENT

AND COMPLIANCE

IT Procurement Strategy Procurement

Strategy

Slide 4

Purpose of IT Procurement

• Buy the right technology

• At the right price

• At the right time

• And on the right terms

Procurement Strategy

Slide 5

MnSCU IT FY 2010 Expenditures

OBJECT CODE DESCRIPTION EXPENSES

1710 Computer Production & Maintenance $1,120,863

1725 Information Technology Maintenance and Support $2,491,963

1730 Software rental/license/subscription $5,091,541

1740 Software Purchase (under $30K per unit) $1,491,643

1745 Major Software Purchase (over $30k per unit) $140,733

1750 Software Maintenance $1,419,154

1755 On-line subscription/system access fee $1,719,219

2020 Network Services $4,665,515

3000 Supplies & Materials (Not for Resale) $47,074,168

3002 Equipment Purchased as Supplies $17,619,827

3004 Software Purchases $2,101,150

3006 Sensitive Equipment Purchased as Supplies $2,315,510

$87.3 Million *unaudited numbers for illustrative purposes only

Slide 6

IT FY 2010 Purchases

• $87.3 Million in IT Expenditures

• From > 900 Vendors

• $12 Million or 14% of Purchases from

State Master Contracts

• > $2.1 Million Purchase Cards

Procurement Strategy

Slide 7

Types of IT Purchases

• Supplies, Materials, & Equipment

– Software

– Hardware

– Network Devices

– Workgroup Printing

Procurement Strategy

Slide 8

Types of IT Purchases

• Professional/Technical Services

– Contractor’s are utilized for consultation,

analysis, evaluation, prediction, planning,

programming and/or recommendations.

– Contractor’s work results in the production of a

report or the completion of a task.

OGC June 7, 2010 Training: "Strengthening The

Contract Process"

http://www.ogc.mnscu.edu/events/workshops.html

Procurement Strategy

Slide 9

Procurement Methods

• Open Market

– A purchase of a good or service made by

soliciting from any available source.

• Quotations

– Obtained from two or more vendors in a

written form.

• Sealed Bids

– Bids are opened at a designated public seal-

bid opening. The contract award is made to

the lowest responsible bidder meeting the

specifications.

Procurement Strategy

Slide 10

Procurement Methods

• Request for Proposal’s

– Formal solicitation of vendors, through an

exact structure and format response, to submit

a proposal on a specific commodity or service.

– Responses may be negotiated with any

vendor other than the one with lowest cost.

• Request for Bid’s

– Solicitation describes the terms, conditions

and specifications, and responses are not

subject to negotiation.

Procurement Strategy

Slide 11

Procurement Methods

• State of Minnesota Department of

Administration

– Competitively awarded Master Contracts with

a variety of IT Vendors.

– Use Master Contract Number in ISRS

http://www.admin.state.mn.us/

• Office of Enterprise Technology

http://mn.gov/oet/

Procurement Strategy

Slide 12

Procurement Methods

• Cooperative Purchasing

– The combining of requirements of two or more

governmental units to obtain the benefits of

volume purchases and/or reduction in

administrative expenses.

– You may use any of the following means of

purchasing instead of undertaking the public

quote or bid process.

http://www.finance.mnscu.edu/contracts-

purchasing/purchasing/cooperative/index.html

Procurement Strategy

Slide 13

Cooperative Purchasing

• Western States Contracting Alliance (WSCA)

• Midwestern Higher Education Compact (MHEC)

• University of Minnesota (Joint Powers Agreement)

• Educational & Institutional Cooperative Purchasing (E&I)

• National Association of Educational Procurement (NAEP)

• US Communities Government Purchasing Alliance

• National Joint Powers Alliance (NJPA)

• The Cooperative Purchasing Network (TCPN)

• GSA Advantage (Federal)

*Request the contract number on the quote

Procurement Strategy

Slide 14

Vendor Management

• Don’t be afraid to share your priorities

• Create a competitive environment by

seeking credible alternatives

• Use vendors to help build a business case

• Always get competitive bids

• Negotiate with the top two

Procurement Strategy

Slide 15

Negotiations

• Essential part of the process

• Prepare, prepare, prepare…

• Don’t be afraid to ask

• Be persistent

• Listen

• Be patient (planning)

• Put it in writing

Procurement Strategy

Slide 16

Purchasing Authority

• Each college and university has a defined

delegation of authority and procedures for

making purchases.

• Check with your business office

• VC/CFO Approval Required

– Purchase > $100,000

– Contract ≥ 5 Years

Procurement Strategy

Slide 17

Compliance

• Board Policy 5.14

– Procurement and Contracts

– http://www.mnscu.edu/board/policy/514.html

• Procurement Dollar Thresholds

http://www.finance.mnscu.edu/contracts-

purchasing/docs/threshold_table.pdf

Procurement Strategy

Compliance

Slide 18

Supplies, Materials, & Equipment

Procedure 5.14.5 Purchasing

– Funds must be encumbered prior to making

an obligation to pay

– Purchases greater than $100,000 require Vice

Chancellor/CFO approval

– Sealed bid is not required for purchases from:

Dept. of Admin., OET, MnSCU master

contracts, and approved cooperative

purchasing agreements Procurement

Strategy

Compliance

Slide 19

Supplies, Materials, & Equipment

• <$25,000.00

– Quotations (prefer 2 or more) or Open Market

• $25,000.01 - $50,000.00

– Sealed Bids (RFB) or 2 or More Written

Quotes

• $50,000.01 - $100,000.00

– Sealed Bids (RFB)

Procurement Strategy

Compliance

Slide 20

Supplies, Materials, & Equipment

• $100,000.01 - $3,000,000.00

– Sealed Bids (RFB)

– Vice Chancellor/CFO Approval

• >$3,000,000.01

– Board of Trustees Approval

Procurement Strategy

Compliance

Slide 21

Software License Agreements

Types of Agreements

• Written

• Click Agreements

• Installment Agreements

• Shrink-Wrap Agreements

All Agreements Require

• Attorney General Review

• Patricia.Notle@state.mn.us Procurement Strategy

Compliance

Slide 22

Professional/Technical Services

• Intellectual in character and result in the

completion of a task or a specific report or

deliverable.

• Contractors are utilized for consultation,

analysis, evaluation, prediction, planning,

programming, and/or recommendations.

• Contractor is an “Independent Contractor”

not employee per IRS work classification. Procurement

Strategy

Compliance

Slide 23

Professional/Technical Services

• If individual, must not be current State

employee or have received an early

separation incentive under Minnesota

State Colleges and Universities Board

Policy 4.11, Board Early Separation

Incentive Program (BESI), during the one

year period prior to the effective date of

this contract.

Procurement Strategy

Compliance

Slide 24

Professional/Technical Services

Procedure 5.14.2 Consultant, Professional or

Technical Services

– Grants college/university authority to enter into

contracts up to $100,000

– A 2-week public notice of RFP’s shall be given for

contracts greater than $50,000

– Vice Chancellor/CFO approval required for contracts

greater than $100,000 or longer than 5-year term

– Vice Chancellor/CFO approval required for inter-

agency, intra-agency, joint powers agreements, and

master contracts in excess of $1 million Procurement

Strategy

Compliance

Slide 25

Professional/Technical Services

• < $50,000

– Open Market or Direct Negotiations

• $50,000.01 - $100,000.00

– Request for Proposals

• $100,000.01 - $3,000,000.00

– Request for Proposals

– Vice Chancellor/CFO Approval

• > $3,000,000.01

– Request for Proposals

– Board of Trustees Approval

Procurement Strategy

Compliance

Slide 26

OET Professional Services

• Accelerated Staff Augmentation Program

(ASAP-IT)

http://www.oet.state.mn.us/mastercontract/mcp1

0ats/mcp10ats.html

• Master Contract Program 902TS

http://www.oet.state.mn.us/mastercontract/mcp9

02ts/mcp902ts.html

Procurement Strategy

Compliance

Slide 27

ASAP-IT Program

• Temporary IT Staff Augmentation

• Engagement Request

– Select Eligible Vendor

– Engagements ≤ $100,000

• Call for Resumes

– Competitive Process (≥ 3 Vendors)

– Any dollar amount ≥ $100,000

• Requires Evaluation of Vendors performance for

any work that exceeds $50,000 Procurement

Strategy

Compliance

Slide 28

ASAP-IT Program

• Skill Sets - Basic and Senior Levels

– Architect

– Business Analyst

– Java Programmer

– .NET Programmer

– Project Manger

– Quality Assurance

– Security Analyst

– System Analyst Procurement Strategy

Compliance

Slide 29

OET Professional Services

• Master Contract Program – 902T

– The IT Professional Technical Services Master

Contract Program helps agencies to complete

Information Technology (IT) project work, or to

provide agencies with additional IT personnel

needed to assist in completing current IT

projects.

• Can be used for up to $2,000,000

• No need for formal RFP Procurement

Strategy

Compliance

Slide 30

Intra-Agency Agreements

• An Intra-Agency Agreement is a written

arrangement between or among MnSCU

components.

http://www.finance.mnscu.edu/contracts-

purchasing/contracts/forms/index.html

• Special Assignment of Personnel

http://www.hr.mnscu.edu/intra-

agency_agreement/index.html

Procurement Strategy

Compliance

Slide 31

MnSCU Collaborative Sourcing

• Mission Statement

– We collaborate to drive innovative strategic

sourcing solutions to achieve sustainability

and best value by leveraging the system’s

buying power.

http://www.finance.mnscu.edu/contracts-

purchasing/collaborative/index.html

Procurement Strategy

Collaborative Sourcing Compliance

Slide 32

Collaborative IT Sourcing

• Enterprise Software Agreements

– http://www.its.mnscu.edu/contracts/index.html

• Desk Top Hardware Purchasing

• IT Recycling Program

– http://www.finance.mnscu.edu/contracts-

purchasing/collaborative/docs/computer-

electronics_disposition.pdf

• MnSCU CDW-G Discount Program

– http://cdwg.com/mnscu Procurement

Strategy

Collaborative Sourcing Compliance

Slide 33

Enterprise Software Agreements

– Microsoft Campus Agreement ($1.4 M)

– Autodesk Academic Initiative ($280 K)

– Symantec Antivirus Agreement ($230 K)

– Novell Academic License Agreement ($130 K)

– Lumension ($50 K)

– Microsoft Premier Support ($60 K)

– WebEx ($180 K)

– VMware (???)

System Savings > $2 M Annually Procurement Strategy

Collaborative Sourcing Compliance

Slide 34

Desk Top Hardware Purchases

• Estimated Refresh Quantity

– > 3000 units annually

• Top Brands

– Dell

– HP/Compaq

– Lenovo

• Consolidating purchasing from April – July

to leverage volume for additional savings Procurement

Strategy

Collaborative Sourcing Compliance

Slide 35

IT Recycling Program

MnSCU Master Contract CST-125

http://www.finance.mnscu.edu/contracts-

purchasing/collaborative/index.html

Meets ITS Security requirements for disposal

• Asset Recovery Corp.

– Joy McClellan, 651-621-2680

http://www.assetrecoverycorp.com/

– MnSCU may receive a credit for the

disposition of computers and other

miscellaneous electronic equipment

Procurement Strategy

Collaborative Sourcing Compliance

Slide 36

MnSCU CDW-G Discount Program

• Cooperative Purchasing Agreement

– NJPA Contract #111309-CDW

– MnSCU Purchases > $5 Million Annually

http://cdwg.com/mnscu

• Cisco SMARTNet

– Currently negotiating with Cisco and CDW-G

on a system wide maintenance agreement. Procurement

Strategy

Collaborative Sourcing Compliance

Slide 37

MnSCU CDW-G Discount Program

CATEGORY DISCOUNT CATEGORY DISCOUNT

Accessories 8% Sound/Multimedia 6%

Battery Back-

up/Power/Surge 5% NetComm Products 7%

Desktop Computers 4% Office Equipment 7%

Data Storage/Drives 6% Printers 6%

Digital Imagining –

Camera/Scanner 6% Warranty/Installs 3%

Servers 4% Software 6%

Keyboard/Mice/Input

Devices 6% Telephony 7%

Laptops 3% Memory/System Components 11%

Companion PCs 1% Video/Monitors/Cards/Projector 8%

Mobile Devices 5% Cables 12%

Training (AT Services) 3% Books/DVD Movies 6%

Slide 38

MnSCU IT Research Subscriptions

• Burton Group

– Membership available to all IT staff

– Enter all of the required information, including

your MnSCU email to request access

– Login credentials will be sent via email

www.burtongroup.com/newuser

• Gartner

– CIO Access

– IT Staff Access Coming Soon Procurement Strategy

Collaborative Sourcing Compliance

Slide 39

Today’s Objectives

Procurement Strategy

Collaborative Sourcing Compliance

Slide 40

Questions

Slide 41

Employee Code of Conduct

• WHY IS EMPLOYEE ETHICAL

BEHAVIOR IMPORTANT?

• We are obligated to comply with law.

• Violations can result in

– Criminal penalties;

– Employment sanctions-including termination.

http://www.mnscu.edu/board/procedure/1c0p1.html

Slide 42

Business Office Resources

• Purchasing Web Page

http://www.finance.mnscu.edu/contracts-

purchasing/purchasing/index.html

• Contract Forms Web Page

http://www.finance.mnscu.edu/contracts-

purchasing/contracts/forms/index.html

• Contracts Web Page

http://www.finance.mnscu.edu/contracts-

purchasing/contracts/index.html

Slide 43

Resources

• MnSCU Finance Contracts Web Site

http://www.finance.mnscu.edu/contracts-

purchasing/contracts/index.html

• MnSCU Board Policies and Contract

Procedures

http://www.mnscu.edu/board/policy/index.html

Slide 44

Assistance for RFP,

Procurement & Tax

• Mike.Nordby@so.mnscu.edu

– Campus Assistance Supervisor

– 651-201-1723

• Steve.Gednalske@so.mnscu.edu

– System Director – Tax and Financial Services

– 651-201-1886

• Nathan.Sorensen@csu.mnscu.edu

– ITS Contract and Purchasing

– 651-201-1524

The Minnesota State Colleges and Universities system is an Equal Opportunity employer and educator.

Thank You!

IT Purchasing

Sorting out the mess…

April 22, 2011 MnSCU IT Conference

Nathan Jay Sorensen, MBA

Office of the Chancellor

ITS Contract & Purchasing