Procurement
June 20, 2012

How effective are your practices?

What constitutes excellence in public procurement? How is it measured? You can evaluate your  agency by asking 19 questions.

In public procurement, there are long-established measures of efficiency such as the number of procurement staff per dollar of goods and services purchased or the cycle time for procurement processes.

Measuring effectiveness is more difficult and deals with questions such as:

•    Is the department working on the right things?
•    Is it emulating the behavior of procurement departments that are recognized as being excellent?
•    Is there an acknowledged standard of excellence?
•    Does its senior staff have the required skills?
•    Is there a plan for the function to increase its contribution to the agency’s mission?

The National Purchasing Institute in the U.S. has been leading the way in establishing criteria for excellence in public procurement. In 1995, they established a program designed to recognize organizational excellence. The Achievement of Excellence in Procurement is awarded annually and is earned by organizations that demonstrate excellence by obtaining a high score based on standardized criteria. The criteria are designed to measure innovation, professionalism, productivity, e-procurement and leadership attributes of the procurement organization.

The award is sponsored by nine U.S.-based organizations dedicated to public procurement including the National Institute of Governmental Purchasing, National Association of State Procurement Officials and National Association of Educational Buyers.

The criteria have been translated into a series of questions

Does the organization…
1.    Publish an electronic “how to do business” document on its website.
2.    Have a “procurement ethics” policy statement.
3.    Publish an electronic procurement manual for internal use.  
4.    Maintain a “continuous improvement” program comprised of: formal procurement customer surveys of internal and external customers; formal internal customer training and formal vendor training within the past year; performance measures specific to procurement function.
5.    Have a centralized procurement authority based in law.
6.    Place the procurement function at a high level in the organizational structure to ensure sufficient authority and independence to foster the goals and objectives of the procurement function. Having the procurement function report to the finance department is not acceptable; procurement must be at least on the same organizational level as finance.  
7.    Have internal procurement automation.
8.    Utilize electronic commerce (electronic transmission of data with the business community): Internet home page with link to purchasing activities; online electronic vendor registration; posting and distribution of solicitations; system email notification of formal solicitation to prospective registered bidders; acceptance of online interactive request for quotation (RFQ) process; acceptance of formal bids and proposals via the Internet; posting of IFB tabulations and award documentation on website; electronic purchase order to vendor; Internet auction system to dispose of surplus materials.
9.    Utilize a comprehensive procurement card (pCard) system and a formal procurement card program audit or review.
10.    Use term (annual or requirements) contracts for at least 25 percent of total dollar commodity and services purchases.
11.    Require professional certification of chief procurement officer and at least 65 percent of professional staff.
12.    Require university or college education of chief procurement officer and at least 65 percent of the professional staff.
13.    Have a procurement staff “professional development” program.
14.    Have a professional staff member with a leadership position in a purchasing association.
15. Participate at national, state or regional conferences or seminars as a presenter or panel member on a public procurement topic or author a published article on the topic.
16.    Have a statute or ordinance that allows for best value procurements for the agency.
17.    Follow environmental purchasing through a formal policy and publication of performance report on environmental purchasing.
18.    Lead in a cooperative purchasing contract.
19.    Have a procurement code, directive or policy to allow the chief procurement official to solicit and award competitively bid contracts for goods and non-professional (non A/E) services in an unlimited dollar amount, without agency governing body (e.g. mayor and council, board of supervisors, school board, etc.) approval for specific contract award (source selection). This criterion covers those procurements that have competitive specifications, multiple sources and formal bidding processes.    

For more Information see the National Purchasing Institute: www.nationalpurchasinginstitute.org

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