Public Procurement Practice

Transcription

1 Public Procuremet Practice STANDARD The placemet of Procuremet 1 should be operatioally distict from other departmets ad divisios withi the etity. The Chief Procuremet Office (CPO) should hold a actual ad distict positio at the C-level, executive level of maagemet (e.g., Chief Executive Officer (CEO), Chief Operatig Officer (COO), Chief Iformatio Officer (CIO)). Regardless of the size or structure of the etity, the CPO should maximize workig relatioships with other departmets, icludig Fiace, Huma Resources, Budget, Iformatio Techology, ad Legal. The professioal expertise of the CPO is critical to the success of the etity ad is best leveraged whe Procuremet is ivolved i the developmet of the strategic pla of the etity. Defiitio The Place of Procuremet refers to positioig Procuremet withi the etity to optimize the ifluece ad impact of Procuremet o iteral ad exteral stakeholders as recommeded i the America Bar Associatio (2000) Model Procuremet Code (MPC). The Place of Procuremet also refers to the horizotal separatio from other departmets, which esures orgaizatioal checks ad balaces ad reiforces the public trust. This best practice documet builds a case for the strategic placemet of the procuremet fuctio. This positioig maximizes the effectiveess of Procuremet withi the etity ad is critical for the etity to fully beefit from Procuremet operatios. The followig elemets equip procuremet professioals with support to establish a seat at the table with executive level positioig, resposibility, ad authority. Elemet 1: The CPO should hold procuremet award authority commesurate with a strategic C-level positio withi the etity ad should participate with other executives at the highest level. Procuremet s iclusio o a public etity s leadership team esures procuremet strategies are aliged with orgaizatioal goals ad eables procuremet to proactively idetify ad capitalize o opportuities that improve operatioal ad fiacial outcomes (Demel et al.). The C-level positio of Procuremet withi the etity: Provides Procuremet with cross-fuctioal kowledge of the challeges facig each departmet ad opportuities for effective collaboratio ad strategic plaig. Eables the developmet of procuremet strategies that alig with the strategic pla of the etity. Provides a strategic perspective ad authority to execute the resposibilities of Procuremet ad cotribute value to etity-wide plaig, budget resolutio, ad project executio. Eables Procuremet to leverage strategic kowledge of the etity to maximize efficiecy ad effectiveess through timely plaig of cost-effective purchases ad idetificatio of opportuities (e.g., ecoomics of scale, cooperative purchasig). Provides authority for Procuremet to make decisios that ca maage risk to the etity. 1 Procuremet refers to the procuremet departmet, group, or CEO 1 The Place of Public Procuremet withi the Etity

2 Public Procuremet Practice (Cot d) Article 2 of the MPC, Procuremet Orgaizatio, advocates a C-level positio for Procuremet ad recommeds the creatio of the Office of the Chief Procuremet Officer, headed by the Chief Procuremet Officer. The MPC Commetary asserts that statutes assigig those duties should esure that ay official to whom such duties are assiged has pleary authority over the [etity s] procuremet system, icludig or similar to the duties ad authorities set forth i this Part for the Chief Procuremet Officer. I 2-202, the MPC states that The Chief Procuremet Officer shall have relevat, recet experiece i public procuremet ad i the large-scale procuremet of supplies, services, or costructio, ad shall be a perso with demostrated executive ad orgaizatioal ability. The MPC suggests that Procuremet ad Procuremet Policy offices ad fuctios be separate from other departmets withi the etity. Elemet 2: The professioal expertise of the CPO is critical to the success of the etity ad best leveraged whe Procuremet is ivolved i the developmet of the strategic pla of the etity. Procuremet expertise cotributes practical kowledge of available optios for achievig the goals of the strategic pla (e.g., timig, competitio amog suppliers, alteratives for achievig sustaiable (gree) procuremet, cooperative purchasig opportuities). Procuremet kowledge of iteral ad exteral stakeholders helps i aligig the strategy of the etity with ed user eeds. Procuremet ifluece serves to commuicate ad assist i the achievemet of the strategic pla of the etity. Elemet 3: Procuremet should be positioed at the executive level of maagemet with a cetralized fuctio to allow for best practices ad stadardizatio. The Place of Public Procuremet withi the Etity Professioal procuremet associatios advocate for ad the private sector recogizes that Procuremet should be positioed at the C-level, where the ifluece withi ad usefuless to the etity ca be maximized. Examples iclude: Natioal Procuremet Istitute The Natioal Procuremet Istitute, Ic. s (NPI) Achievemet of Excellece i Procuremet (AEP) Award for best practices states: Cetralized procuremet is a cetral fuctio withi the orgaizatio ad may also operate other cetral services such as warehousig ad surplus. NPI s AEP award for best practices recogizes agecies that place the procuremet fuctio at a high level i the orgaizatioal structure. This esures sufficiet authority, idepedece, ad resources to foster the goals ad objectives of the procuremet fuctio. Procuremet reportig to the Fiace Departmet does ot meet this criterio. Procuremet must be at least o the same orgaizatioal level as Fiace. It is recogized that may agecies are structured differetly. I order to receive poits towards the award, a orgaizatioal chart showig where Procuremet ad Fiace are located i the orgaizatio is required. I additio, a arrative explaiig how your orgaizatio meets this criterio is ecessary. Procuremet departmets that have achieved C-level positioig ad cetralizatio ca achieve optimal procuremet fuctio ad further the etity s strategic pla by establishig stadard policies, procedures, formats, ad templates for all procuremet fuctios. 2

3 Public Procuremet Practice (Cot d) NIGP: The Istitute for Public Procuremet NIGP s Outstadig Agecy Accreditatio Achievemet Award (OA4) recogizes etities that lead the public procuremet professio through the implemetatio of best practices. Examples of these best practices iclude: CPO participatio i the developmet ad implemetatio of the strategic pla. Strategic positioig of the procuremet fuctio o more tha oe level below the CEO. Natioal Associatio of State Procuremet Officials (NASPO) ad the U.S. Govermet Accoutability Office (GAO) NASPO ad the GAO agree that the cetral procuremet office s effectiveess is clearly liked to its locatio i the govermet structure ad that placig the office at a high level is critical to esurig effective directio, coordiatio, ad cotrol over a govermet s procuremet sped. Whe that occurs, procuremet is rightly viewed as a strategic service fuctio withi the executive brach, with the Chief Procuremet Officer beig a key policy ad maagemet resource for the chief executive (NASPO, 15). Private Sector The private sector has log recogized the eed to seat Procuremet at the table. The Dutch compay ASML positios their CPO at the executive committee level to impact the strategic pla of the compay as a core busiess parter (Nowosel, Terrill, & Timmermas). The Associatio of Colleges states that i the private sector, procuremet is viewed as a strategic fuctio workig to improve the orgaizatio s profitability. Ideed, i may orgaizatios the importace of the procuremet fuctio is recogized by havig the head of the procuremet fuctio placed at the Executive Board level. A report by the Ecoomist Itelligece Uit states that curret CEOs expect that by 2015, 60% of corporatios will have a CPO reportig directly to the CEO (Jacoby). Elemet 4: The fuctio ad ageda of Procuremet should be distict from other departmets ad are ehaced whe Procuremet iterfaces with other departmets or divisios. Historically, Procuremet has bee located withi the Fiace Departmet (i.e., the departmet that hadles the budget ad other fiacial aspects of the etity). Although Procuremet works joitly with Fiace to esure that fuds ad authority are i place for procuremets, Procuremet does ot perform a fiace fuctio (i.e., the processig of fuds to support a procuremet). The fuctios of Procuremet are strategic ad operatioal, more aki to Huma Resources, Iformatio Techology, Legal, ad other departmets that work with the budget to achieve etity goals. Like those departmets, Procuremet maitais relatioships with iteral ad exteral stakeholders. Procuremet fuctios iclude sourcig, life-cycle costig, maagig cotracts, egotiatig, developig specificatios, ad maitaiig supplier relatioships. Fiace fuctios iclude aalyses, projectios, budgetig, ad accoutig. Although, Procuremet ad Fiace staff may receive comparable educatio i effective commuicatio, critical thikig, ad aalysis, procuremet traiig is specific to the professio ad may iclude supplier relatioship maagemet, supply chai maagemet, cotract law, specificatios, sourcig, ad evaluatio. I cotrast, fiace traiig may iclude budgetig, fiacig, ad accoutig procedures. The day-to-day operatios of Procuremet ecessitate: Iteractio with iteral ad exteral stakeholders such as the CEO, goverig board, elected officials, citizes, ad supplier commuity Protectio of the public trust Kowledge of codified processes 3 The Place of Public Procuremet withi the Etity

4 Public Procuremet Practice (Cot d) To achieve the dual role of iteractio with iteral ad exteral stakeholders ad protectio of the public trust, Procuremet must: Maximize workig relatioships with colleagues i other departmets, icludig Fiace, Huma Resources, Budget, Iformatio Techology, ad Legal Achieve separatio of duties the fuctio of Procuremet to solicit bids ad proposals must be separate from the fuctios of Fiace to ivoice ad process paymets Establish ad maitai procuremet procedures that support departmetal goals ad comply with laws ad policies Separatio of duties is a key cocept of iteral cotrols for protectio from fraud, errors, ad other potetial risks. Keepig the Fiace ad Procuremet Departmets separate ad positioig Procuremet with C-level authority help to esure that there is o udue ifluece o the ageda of Procuremet, which is to serve i the best iterest of the etity ad the public. Potetial risks from Procuremet reportig to Fiace iclude: Authority of Fiace to impose a ageda o Procuremet. Lack of checks ad balaces. Loss of potetial savigs or reveue geeratig opportuities. Reluctace to recogize procuremet best practices. The Fiace plaig fuctio determies the budget that the Procuremet, Huma Resources, Iformatio Techology, ad other operatioal departmets use to achieve best value. The Associatio of Certified Fraud Examiers (ACFE) Fraud Risk Assessmet ad geerally accepted accoutig priciples (GAAP) provide support for separatio betwee the Procuremet fuctio ad the Fiace fuctio. Elemet 5: A strategy should be developed to achieve the optimal positioig, resposibility, ad authority of Procuremet. The Place of Public Procuremet withi the Etity Although the best practices herei provide support for a pla ad desired outcome, each etity will eed to cosider the uique cotext of the etity (e.g., politics ad orgaizatioal culture). Before implemetig chage: Assess ad uderstad curret processes ad policies. Coduct a baselie assessmet of curret processes ad policies Estimate the impact of chage i resposibility ad authority Build iteral support (e.g., executive maagemet, departmet heads, directors, elected officials) for Procuremet. Establish, build, ad maitai a credible reputatio withi the etity that Procuremet is service-orieted towards cliets ad ed users Icrease awareess of procuremet educatio, expertise, professioal certificatio, ad experiece i deliverig best value Focus o the busiess case. At the executive level, Procuremet is positioed to: Maximize retur o ivestmet Approach procuremet matters strategically Leverage purchase volume Effectively lead stadardizatio efforts ad streamliig of processes Maximize the accoutability ad trasparecy of the procuremet process Backgroud Accordig to the MPC Commetary, State ad local public procuremet systems are the meas through which critical ad strategic services, supplies, ad costructio are purchased to support essetial public fuctios. To operate effectively, it is imperative i those systems that there be cetral leadership to provide directio ad cohesio. 4

5 Public Procuremet Practice (Cot d) Through the mid-20th cetury, Procuremet remaied a trasactioal fuctio reportig to lowerlevel fuctioal maagers. Public procuremet professioals have become icreasigly sophisticated i their uderstadig ad applicatio of methods to achieve best value, balacig multiple factors regardig costs, quality, risk, ad other values. To optimize purchasig decisios ad alig them with etity goals, public procuremet professioals ow look at the total cost of owership ad other strategic areas of public procuremet. Cosequetly, the procuremet practitioers of today must master a uderstadig of the practices ad methodologies that achieve best value outcomes. This chage has led to a higher-level public procuremet professioal with executive-level educatio ad traiig, as well as a higher level of operatio 2,3 for the procuremet fuctio. Public procuremet officers are icreasigly examiig the overall strategic eeds rather tha the strictly trasactioal eeds of the etity. This evolutio suggests ivolvemet of Procuremet i the developmet of the strategic pla of the etity. The first-had kowledge of the goals ad values of the etity will allow Procuremet to alig procuremet processes with the strategic pla. For example, if the goals ad values of the etity iclude evirometal sustaiability, the the expertise of Procuremet i the use of life cycle cost aalysis ad the applicatio of eco-labels ad stadards ca be traslated ito solicitatio documets ad specificatios that achieve evirometally resposible outcomes. Refereces Achievemet of Excellece i Procuremet. Natioal Procuremet Istitute. Natioal Procuremet Istitute, Ic. (NPI), Web. America Bar Associatio. The 2000 Model Procuremet Code for State ad Local America Govermets. America Bar Assoc., Web. Black, Elijah. Predictig procuremet's path: Survey charts the future of the professio. America City & Couty. Peto, 26 Feb Web. Demel, Steve M., T. Lucas, S. E. Clifford, H. A. Roberso, J.M. Walto. (2015). The Strategic Value of Procuremet i Public Etities (A positio paper from NIGP). NIGP, Web. Jacoby, David. The New Face of Purchasig. (A Ecoomist Itelligece Uit white paper sposored by SAP) The Ecoomist Itelligece Uit, Apr Web. Johso, Joel. Fidig Procuremet's Place i the Orgaizatioal Hierarchy Sped Matters. Azul Parters, 2 Dec Web. Khushalai, Samir & Byro Tatsumi. Busiess Effectiveess: Procuremet Reportig Aligmet. KPMG LLP, Web. Lucas, Theodore, et al. Procuremet Authority i Public Etities (A positio paper from NIGP). NIGP, Web. Natioal Associatio of State Procuremet Officials (NASPO). State ad Local Govermet Procuremet: A Practical Guide. 2d ed. Lexigto: NASPO, Prit. North Rizza, Mickey. Makig Procuremet Relevat. BravoSolutio,.d. Web. Nowosel, Kai, A. Terrill, & K. Timmermas. Procuremet s Next Frotier The Future Will Give Rise to a Orgaizatio of Oe. Acceture Strategy. Acceture, Web. Peterso, Steve, L. Webber, & D. Rosselli. Chief Procuremet Officer Study: Improvig competitive advatage through procuremet excellece. IBM, Walto, Jo M., et al. Best Value i Govermet Procuremet (A positio paper from NIGP). NIGP, Web. Wawasa Ope Uiversity. The Key Ifluecig Factors o the Orgaisatio of Procuremet Departmet. BLC 304/05 Procuremet Maagemet. Wawasa Ope: Web. Why is Procuremet Importat? Associatio of Colleges: Further Educatio Library of Procuremet. Crescet Purchasig Cosortium, 21 Ja Web. 2 Clark, Jea. (Aug. 2015) Pathway to a High Performace Orgaizatio. PowerPoit at NIGP Forum. 3 CIPS-NIGP Public Procuremet Profiler 2016 CIPS ad NIGP 5 The Place of Public Procuremet withi the Etity