Southeast Evaluation Association

1
State Purchasing
Southeast Evaluation Association October 18, 2005
2
Southeast Evaluation Association October 18,
2005 Agenda (State Purchasing)

• Overview of the State Contracting Process
• Lessons Learned - Roadmap to Excellence in
  Contracting Audit Report
• Best Practices

3
Roadmap to Excellence in Contracting EOG
Inspector General Report No. 2003-03

• Reviewed approximately 100 audits conducted by
  seven agencies, AG, and OPPAGA, between July 1999
  and June 2002
• Extracted 494 audit findings related to
  procurement, contracting, and outsourcing
• Identified six core activities instrumental to
  outsourcing

4
Roadmap to ExcellenceDistribution of the 494
Findings

• Performance monitoring (45)
• Procurement methodology (20)
• Contract writing (17)
• Payment (10)
• Needs assessment (7)
• Contract closure (1)

5
Roadmap to Excellence Factors Contributing to
Recurring Problems

• Lack of statewide guidance
• Lack of expertise in negotiating contracts
• There is no statewide system to train or certify
  agency contracting personnel, nor are there
  incentives to encourage professional development
• The states corporate culture does not foster the
  sharing of best contracting practices among
  agencies

6
Roadmap to Excellence Factors Contributing to
Recurring Problems

• Agencies use of different processes and
  procedures in awarding and managing contracts
  causes the contract documents to vary
  considerably in format and content
• Inadequate systems exist for monitoring and
  rating vendor performance
• A formal procedure for agencies to perform and
  document needs assessments has not been developed
  by DMS
• Piecemeal statutes and rules

7
Roadmap to Excellence Project Gate Management
Process (Pre 7/05)
Current Projects
Gate 1
Gate 2
Gate 3
Gate 4
Business Case
Procurement Sourcing
Change Management
Contract Management
Post Implementation
Monitor
Stage 1
Stage 4
Stage 5
Stage 3
Stage 2
New Projects
8
Roadmap to Excellence New Constellation of
Integrated Systems
Contractor Performance Rating (?)
4
2
1
State Term Contract User Survey (Active)
MFMP Vendor Performance Tracking (Jan. 2006)
Contract Management Software (?)
3
9
Roadmap to Excellence (2) Proposed MFMP/VPT
System - Survey
Fails to Meet Some Requirements (2 Points)
10
Southeast Evaluation Association October 18,
2005 Agenda (State Purchasing)

• Overview of the State Contracting Process
• Lessons Learned - Roadmap to Excellence in
  Contracting Audit Report
• Best Practices

11
Best PracticesWhy Outsource?

• Know what you are trying to achieve
• Better Services
• Reduced Cost
• Both?
• Access to Greater Capabilities
• Accelerating Reengineering Benefits
• Focus on Core Competencies
• Maintain a Competitive Advantage

12
Best PracticesWhy Some Outsourcings Fail

• Lack of preparation for the transaction
• Lack of, or improper, metrics or KPIs
• Unfulfilled expectations of parties (BOTH)
• No defined lines of responsibility or
  accountability
• Customer does not manage the relationship

13
Best PracticesCritical Success Factors

• Dont Attempt Outsourcing If You Cannot
• Define your current costs
• Define your current operating metrics
• Define your current process
• Define your expected results

14
Best PracticesThree Key Issues You Must Control

• Time
• How long will it take
• Money
• How much will it cost?
• Quality
• What will the result look like?

15
Best PracticesContracting Critical Issues

• Performance
• Change Control/Scope Control
• Ownership
• Security
• Metrics/KPIs
• Warranties/Remedies
• Contract Management
• Dispute Resolution
• Termination Fee Schedule
• Termination Assistance Plan
• Path Back

16
Best PracticesPerformance Based Service Contracts

• Path of least resistance
• Ballpark things and correct as you go
• Feel-good outputs unrelated to business
  requirements
• Require vendor to give best effort and eventually
  get what you want (TM)
• Throw more money at problems if expected results
  missed
• Performance based contracting
• Understand and contractually mitigate risks
• Greater sophistication in outcomes and metrics
• Failure to achieve results means vendors process
  failed
• When performance isnt met, principled
  consequences

17
Southeast Evaluation Association October 18,
2005 Agenda (State Purchasing)
Questions or Comments? Fred
Springer Director, State Purchasing Fred.Springe
r_at_MyFlorida.com [phone]