Every pen, sheet of paper, office building or vast land holding used or belonging to the state of Oklahoma and its agencies must be documented, paid for and accounted for eventually. When an office chair or landing strip is needed, a purchase order or contract is arranged for procurement of the needed item through Central Purchasing Division and OMES.
How and when a document is generated to request an item or to generate a bill for it depends on a complex protocol for procurement. Some purchases by the state are somewhat routine, for those pens or paper for example. Others are “one-offs” or even emergency purchases. There are tiers that all purchases fit into, depending on the nature of the product or service requested and the cost.
“We’re all consumers. “ State Purchasing Director Ferris Barger explains. “So how are government agencies different when they are the consumer? Government procurement has guidelines. Basically, there are five ‘pillars’. We want to be open, fair, transparent, competitive and free from undue influence.
There’s some tension between procurement and finance functions. We aren’t comfortable giving anyone an open checkbook. We need internal controls.”
The rules for procurement, Barger explains, are simple but not familiar. Thus, the need to be open, fair and transparent. But the state also participates in markets that other business entities operate in. So, there’s a need to be competitive. Price is a key element so price is one way procurement is organized. There’s a tiered system of purchasing based upon the expenditure and what it’s for. General operating expenses are the entry-level purchases.
The Fair and Reasonable standard is used for products and purchases totaling under $5,000. Many purchases or procurement requests at an agency level that are considered small or routine fit into this category. It’s not difficult to imagine a $5,000 printer paper order for any office. The requests to purchase at this level are still subject to scrutiny, but are often routine. What about purchases that are $6,000 or just over the limit? It’s possible to break a request into two separate orders. So-called “split purchasing” is okay as long as there’s no intent to evade the purchasing guidelines.
Surprisingly, there’s an Amazon account set up for purchasing some of these small purchases. The result is that the reports from Amazon sometimes yield some puzzling purchases. Shampoo? Bongos? Toys, cell-phone cases; all might sound a little funny until one takes a good look. Prisons and municipal jails all need soap, shampoo and other hygienic items in bulk. The bongos and toys were legitimate purchases for children in need of rehabilitation or training. But what about chicken waterers?
“That’s a five-gallon bucket with spigots protruding all around it.” Barger reports. “It’s perfect and makes perfect sense for an operation feeding and watering chickens. There’s an agency doing that which really benefits from that purchase.”
And the Amazon account facilitates not only the purchases but accounting the results from the Amazon tracking and account narrative. In fact, Director Barger says, the Amazon system is something of a model that the whole purchasing effort in Oklahoma can benefit from.
“We can pull up a report anytime to show how much we save. We’ve got a saying; we are self-funded from the pennies.”
That is, state purchasing pays its own way, without legislative funding. Negotiated discounts on state contracts that run 7 – 10%. The economies of scale afforded state buying power are a big part of that. But the Amazon model demonstrates another important element for the state purchasing program.
“We want to let tech do the work.” He says. “We get a good price and track every purchase. “
Purchases up to $10,000 require three quotes and are usually evaluated on a “lowest and best” basis. An invitation to bid results in these quotes from vendors. But that doesn’t necessarily mean an award goes to the lowest price. It’s more of a best value proposition. Sometimes State Purchasing considers long-term and quality issues above short-term costs. In the long run, Barger says, this approach saves the state money.
When a contract is valued over $25,000, the top ten bids are considered. The winning bidder must be registered with Purchasing, at the award step at least.
When state agencies seek acquisitions valued over $50,000, these purchases go to Central Purchasing Division for evaluation. At this level, acquisitions may be needed for multiple agencies, multiple quantities or as of yet undetermined quantities that stretch far into the future.
Yet another category that drives procurement is IT. Everyone knows that IT systems make the world go round; it’s the same for Oklahoma government. Information management is so important to modern functioning and the threat of cyber-attack so challenging, special attention and control is applied to purchases that fund IT functions.
OMES Information Security Division, or ISD, is responsible for all acquisitions of information technology (IT) services and equipment as well as all telecom (wireless, cable and land-lines) for the entire state. HB 1304, also known as the Information Technology Consolidation and Coordination Act, transferred responsibility for IT and telecom purchases to ISD in May 2011.
Funds for IT purchases or leases are subject to oversight of the chief information officer. IT projects need prior written approval of the CIO.
“We have around 21 employees.” Says IT Procurement Manager Allen Cook. “We ‘re pretty lean. We have a lot to do and have to look to the future always. But we’re really lucky to have a visionary leader in Ferris Barger.”
Another important program, the State Use Program, is operated by Central Purchasing to facilitate contracts between the state and qualified not-for-profit agencies to provide long-term employment and training for persons with disabilities. State Use works in conjunction with Central Purchasing to review and approve proposed procurement of goods and services. The review is conducted by the State Use Committee, an eight-person panel comprised of public and state agency members to assure quality while also assuring fair pricing. But the central idea behind the program is to provide meaningful work for individuals who might otherwise rely on government assistance from the state or federal government, allowing them to benefit the state’s mission and cycle taxes back into the state’s treasury.
Vendors or potential vendors, the companies with goods and services hoping to sell to the state need a reliable system by which to find out about state needs, requests for proposals; valuable information about the how, what and when about getting a state contract. Remember the five pillars?
“We have to maintain that transparency pillar. We’re always documenting so we can have defensible awards.” Barger notes. “Vendors don’t want to feel the deck is stacked.” So, the Amazon model is still important. “The idea is to achieve an automated system that responds to documentation needs, provides accessibility to vendors and provides useful archives and real-time information to purchasing operatives.
The state is not always best for new vendors. Besides the tech solutions, there’s the human solutions – an outreach team. Right now, that team consists of Wendy Clark and Amanda Means. They work with vendors in an attempt to smooth the way.
“We’ve got to fix our website.” Barger says. “We need more notice access, vendor pages and a Wiki or open forum pages that help our vendors. We need a portal that vendors can find useful and that provides strategic sourcing. We need a true procurement system. “
Meanwhile, purchasing depends largely on human beings to provide resource to state agencies. For instance, OCI, Oklahoma Correctional Industries. If you’ve worked for the state for a while you’ve probably used their pens, or seen their trucks parked in front of your building, delivering office furniture.
There are lots of reasons OCI is the go-to source for state office furniture and supplies. Staffed by Department of Corrections offenders, OCI produces hardwood office furniture which is sturdy and warranted by OCI with guaranteed repairs and installation. Taken with the benefit of employing inmates gainfully for a big savings and the savings of taxes, OCI products are a great value for the state. OCI offers a deep catalogue of products too.
Taken together, the many programs administered by the Purchasing function of OMES provide the tools and the savings our state government needs to function efficiently and smoothly. OMES pays its own way, gets the paperwork done and delivers on time.