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Processing more complex RFPs with the same budget
Terry McKee, IT & Procurement Director at Knoxville’s (Tenn.) Community Development Corporation (KCDC), says lean-staffed purchasing departments are facing bigger workloads and completing more complex procurements. “In contrast to the old days when procurement mainly handled straightforward bids that took relatively limited time and effort, now public procurement officials are processing more and more highly complex and time-consuming RFPs.” McKee adds that procurement operations around the U.S. have not increased staff size, even as they process more RFPs.
Workloads and purchasing demands aren’t shrinking for procurement departments. Across the U.S., state and local government budgets are growing a little says a spring 2019 forecast from the IHS Markit research firm. According to the forecast, state and local government purchases of goods and services should grow about 4 percent from 2018 to 2019 and almost another 4 percent from 2019 to 2020. In 2019, state and local governments will spend a total of $2.26 trillion on consumption purchases and gross investment, IHS Markit predicts.
In the Volunteer State, finances and staffing at public procurement offices are steady. ”My perception in Tennessee is that our budgets are fairly stable for our new fiscal year that started on July 1st,” McKee says. The Tennessee Association of Public Purchasing (TAPP), a chapter of NIGP, posted a question about 2018-2019 government budget trends on behalf of McKee to chapter members statewide. “I received 13 responses (and I am guessing that is all that I will receive). Twelve respondents said that their budgets were staying roughly the same while one respondent said his department is adding a position. While not scientifically valid, I think it is likely very representative of entities in Tennessee,” McKee says.
To keep up with workloads, McKee says procurement departments can potentially save time by using cooperative purchasing agreements. The co-op deals, he says, can enable departments to bypass issuing their own solicitations. “However, it is important to note that all of that time is not recouped because effectively using cooperative purchasing agreements requires time to research the validity and usefulness of such contracts,” McKee says.
Term bids are another tool procurement departments can use to boost efficiencies, McKee says. “One thing that I have used a lot during my career is the establishment of ‘term bids’ so we are not repeatedly issuing bids for relatively small amounts of goods or services.”
Through term bids, which are also known as master contracts, annual bids, requirements contracts, or indefinite delivery/indefinite quantity (IDIQ) contracts, procurement administrators determine a recurring need that meets bid or quote thresholds. They issue a bid for a fixed timeusually a yearand arrive at a specific vendor and specific price. “Term bids can foster enhanced ‘spend management’ because you are assessing your volume and then, in fact, leveraging the volume to drive price and transactional costs lower,” McKee says.
To boost efficiencies, some purchasing departments institute catalog/punch-out ordering. Here, staffers at consuming agencies order off online catalogs of approved vendors. Once an award is made, staffers access the department’s own enterprise resource planning (ERP) system and the vendor’s webpage to shop. McKee spotlights the simplicity of the ordering setup: “Your agreed pricing shows when the user logs onto their webpage. Then once they finish shopping, the system pulls the data into their ERP and they finish the requisition, and it automatically converts to a purchase order.”
McKee lists the following other tools and techniques that procurement departments can use to become more efficient:
— Use P-card programs to handle low-dollar, one-off purchases,
— Raise quote/bid thresholds to appropriate levels to avoid bidding everything out, and
— Raise approval thresholds to appropriate levels to avoid slowing the procurement process. Purchasing transactions can get bogged down if too many contract awards need to be OK’d by executive and legislative branches.
KCDC is the public housing authority for Knoxville, Tenn., and Knox County. The organization manages and rents more than 3,700 units across more than 20 properties and manages the application process and distribution of 4,000 Section 8 vouchers. KCDC also serves as the redevelopment agency for Knoxville.
Is heading up procurement at a community development corporation-public housing authority similar to managing procurement at other public entities? “Indeed it is,” McKee says. “While there are some peculiarities, at all types of governments, procurement is procurement.”
Michael Keating is senior editor for American City & County and the GPN web site. Contact: [email protected]
