Does Decentralization of Procurement Work in Tight Budget Times?

According to one recent estimate, public agencies cutting 35,000 jobs a month as the Great Recession takes its continuing toll.  

Job Cuts in Procurement and Contracting:  As agencies eliminate jobs, the area of procurement and contracting is not exempt.  And yet the work of developing bids and solicitations, negotiating contracts, complying with grant requirements, and administering contracts continues - just with fewer centralized staff.

Impacts of Decentralization:  The economy has forced some agencies to decentralize parts of their procurement and contracting functions by delegating authority to departments who have the direct need for the services.  There are a number of risks associated with decentralization including the following:

• Increased Bid Protests:  Increased bid protests as inexperienced staff manage the process.

• Project Delays:  Delays in projects due to lack of familiarity with how to procure goods and services.

• Audit Findings:  Audit findings by state and federal auditors for failure of agencies to follow applicable procurement regulations.

• Loss of Accountability:  Unclear scopes of work written by department staff without the benefit of centralized review.  This may result in contractual problems of holding businesses accountable for the work contracted for.

• Higher Costs:  Higher costs for agencies who no longer have the strategic procurement and contracting experts to help get the best deal for the public agency.

• Ethical Issues:  Questionable ethical behavior by public sector employees not sensitized to, or aware of, the importance of maintaining a fair and transparent bidding and selection process.

What Work is Decentralized?  Some agencies have decentralized lower dollar value procurements back to departments.  Others have increased use of government issued credit cards as a means to deal with reduced staffing.

Managing the Decentralization:  As the economically driven decentralization continues, here are a couple of actions that agencies can take to help reduce negative consequences:

• Training:  Provide in-depth training to staff who have been delegated with responsibility for procurement and contracting.  The training should also include training on ethics in public contracting.

• Procedures:  Establish clear policies and procedures to deal with the new environment.

• Checklists:  Develop simplified checklists that can help those doing procurement and contracting with knowing how to follow the right steps.

• Check and Balances:  Ensure there are sufficient checks and balances in place to reduce risks of one person taking inappropriate procurement and contracting actions.

• Ongoing Pre-Audits:   Establish a process for regular pre-audits by either agency staff or outside experts to ensure the process is working properly, and to help make changes where necessary.

Mike Purdy's Public Contracting Blog 

© 2011 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

House Votes to Repeal 3% Withholding Tax

The House of Representatives voted overwhelmingly on Thursday, October 27, 2011 - by a vote of 405-16 - to repeal a 2005 law that would require federal, state, and local agencies with expenditures of $100 million or more to withhold 3% of every payment over $10,000 to all contractors, consultants, and vendors, and send the money to the IRS.  The 3% withholding was designed to help ensure that businesses pay income taxes to the IRS.

The rare bipartisan support of the legislation reflects concerns expressed by more than 140 business and government associations.  President Obama had proposed a one year extension (from January 1, 2013 to January 1, 2014) on the implementation of the 3% withholding tax in his American Jobs Act.  But the House went one step further, voting to repeal the law.  The House measure is supported by the President, and it is anticipated that the Senate will take up the very soon, where it is expected to pass.

Mike Purdy's Public Contracting Blog 

© 2011 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

When Should Bidding Documents be Made Available to Bidders?

Making bidding documents available to bidders early - or late - both have negative consequences to the bidding process.

Early Availability of Bidding Documents:  A public agency that provides bidding documents to some bidders prior to the advertisement in the newspaper, or prior to notification to contractors on a small works roster, gives those bidders a competitive advantage over the other bidders. The bidders who receive the bidding documents early have additional time in which to review the documents and prepare their bid.  

• Protests:  Providing bidding documents to some bidders early increases the risk that a public agency will receive a bid protest from other bidders who were not afforded the additional time.

• Transparency:  In public contracting, it is important that the process be fair and transparent, and that it builds the confidence of the contracting community and the public in the integrity of the process. Providing bidding documents early to some bidders creates a perception that the public agency is favoring some bidders over others, and that the process is not an open one

Late Availability of Bidding Documents:  When a public agency announces through an advertisement or a roster process that the bidding period has begun, the bidding documents should be available right away.  Failure to have documents available reduces the effective bidding period.

• Non-Compliance with Laws:  Reducing the time allowed for bidders to prepare their bids may result in a shorter time period for bidding than applicable laws may require.

• Fewer Bidders:  Not having the bidding documents availability immediately gives less time for bidders to actually prepare their bids.  As a result, some bidders may choose not to bid given the shortened time period.

• Higher Bid Prices:  Finally, reducing the bidding period by not having the bidding documents available when the project is publicized may result in bids that are not competitive.  If bidders do not have sufficient time to review the documents, understand the project, and assess the risks, they may increase their bid price to deal with these issues.

Mike Purdy's Public Contracting Blog 
© 2011 by Michael E. Purdy Associates, LLC 
http://PublicContracting.blogspot.com

Preventing Early Opening of Bids

When bids are submitted to a public agency there is a risk that a bid may simply go through the agency's normal process for opening and routing mail.  This may result in a sealed bid being inadvertently opened prior to the deadline and time established for opening and reading the bids, compromising the integrity and confidentiality of the bidding process.

Practical Tips:  The following are some steps that may help ensure that bids are opened at the appropriate time:

• Bidding Instructions:  Ensure that the agency's bidding instructions are clear about the information that must be identified on the face of the bid envelope.

• Staff Training:  Provide training to reception and mail room staff responsible for receiving deliveries and mail to the agency.  Make sure they understand they should not open mail that is indicated as including a bid inside the envelope.  This applies for whether a bid is received through the U.S. Postal Service, FedEx, UPS, another delivery service, or in person.

• Notice to Reception Staff:  Work with reception and mail room staff and provide them with an updated list and schedule of the deadlines for when bids for certain procurements are due.  Having this list can help alert them to slow down and not open these but to deliver them to the appropriate procurement staff.

• Managing a Bid Opened Early:  If a bid is accidentally opened early, do not remove the bid from the envelope, but re-seal the envelope immediately.  If the bid has already been removed from the envelope, put it back in the envelope and re-seal the envelope.  If the envelope is missing, put the bid in another envelope and seal it.  Regardless of the circumstances, document on the face of the envelope that the bid was inadvertently opened, along with the date and time you re-sealed it.  Initial or sign the statement.

Mike Purdy's Public Contracting Blog 

© 2011 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

Job Opening: King County (WA) Procurement Manager

King County (Washington)

• Position: Procurement Manager

• Location: Seattle, Washington

• Closing Date:  Open until filled

• Salary: $94,074.86 to $119,245.57 annually

• Job Summary: The position manages the Procurement and Contract Services Section which provides support to County agencies so that they can meet their ongoing purchasing and contract needs.  The section is comprised of 45 staff and supervisors divided into the following work units or programs:  goods and services; engineering and construction services; technical and consulting services; project controls; environmental purchasing program; and a purchasing card program.

• For More Information and To Apply: Click here.

Mike Purdy's Public Contracting Blog 

© 2011 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

Washington State's Minimum Wage to Increase in January 2012

The State of Washington's minimum wage will increase effective January 1, 2012 from $8.67 to $9.04 per hour, keeping it as the highest minimum wage in the nation.  

The wage rate is adjusted annually based on changes in the Consumer Price Index, according the the Department of Labor and Industries.

For most classifications and counties, the prevailing wage rates that must be paid to workers employed on public works construction projects, are higher than the minimum wage.

Mike Purdy's Public Contracting Blog 

© 2011 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com

Issues, Trends and the Value of Contracting Organizations

The South Sound Chapter of the NCMA (National Contract Management Association) will host an Executive Round Table Breakfast discussion on "Issues, Trends and the Value of Contracting Organizations."

When:  November 8, 2011 (7:30 a.m. to 9:30 a.m.)

Where:  Tumwater, Washington (River's Edge, 4611 Tumwater Valley Drive)

Panelists:

• Christine Warnock, Chief Procurement Officer, Washington State Department of Enterprise Services
• Ruth Van Sickle, Executive Vice-President, Mission Support Services, Cubic Corporation
• Ralph Lentz, Deputy Director, Management Services Center, General Services Administration

Information and Registration:  Click here.

Mike Purdy's Public Contracting Blog 

© 2011 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com