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What does the procurement policy of an entity reflects? - Answer- -The entity's legal system -The goals and values of the entity -Policies and practices federal-level entities use to acquire goods and services; this may not apply to state or local entities What should the overall purpose of a procurement policy manual be? - Answer- - Establish the legal authority of the procurement function within the entity. -Simplify, clarify, and reflect the laws governing procurement -Enable uniform procurement policies throughout the entity -Build public confidence in public procurement -Ensure the fair and equitable treatment of everyone who deals with the procurement system -Provide for increased efficiency, economy, and flexibility in public procurement activities and maximize to the fullest extent the purchasing power of the entity -Foster effective broad-based competition from all segments of the supplier community -Safeguard the integrity of the procurement system and protect against corruption, waste, fraud and abuse -Ensure appropriate public access to contracting information -Foster equal employment opportunities that are in line with legal requirements, in the policies and practices of suppliers and subcontractors wishing to do business with the entity What should policy and procedure manuals be? - Answer- They must be well organized and should contain a clear definition of the purpose of each manual and its intended use. What must be done to ensure proper organizational impact with a policy and procedure manual? - Answer- The Chief Executive Officer of the entity should endorse each manual and the manuals should be produced in a manner that facilitates revision as changes will surely happen through new legislation and increased efficiencies in processes. What are two examples of policies that represent entity objectives? - Answer- -a set- aside/goal that allows an established percentage of the business conducted with an entity to be excluded from the general competitive pool and purchased from a specialized class of business
-a policy that encourages and promotes a recycling program which includes procuring recycled goods What must Procurement professionals involved in the establishment of policy manuals be? - Answer- -be responsive and adaptive to their environments -act in the best interest of the entity -be well-informed about the information associated with regulations -provide the support to perform functions within established procurement policies and procedures How are procedure manuals written? - Answer- They are written at a finer level of detail that sets out processes, forms and steps. Who primarily uses procedure manuals? - Answer- They are primarily used by the end user and procurement staff, the procedures manual provides guidelines and steps for preparing purchasing requisitions, developing specifications, receiving and inspection, and reporting and documenting supplier performance. What do procedure manuals detail? - Answer- They detail the business processes of Procurement and describe the entity, duties of staff, signing authorities, procedures to be followed, and forms and filing systems to be used. What is a supplier manual? - Answer- A supplier manual provides formal and extensive information for suppliers seeking to do business with the entity. What should a supplier manual include? - Answer- -general information about the entity -key contacts and telephone numbers -how the solicitation process is conducted -how to receive an opportunity to participate in entity solicitations -a description of the need to be both a responsive and responsible supplier -how are are to be submitted, public openings of offers, and the policy regarding late submissions What are the characteristics of a supplier manual? - Answer- -well organized, clear and easy to understand -clear definition of the purpose and a consistent approach to decision making -framework for training -flexible -endorsed by the entity's Chief Executive Officer -supplier outreach information -transparent -facilitate revision Is Governmental power inherent? - Answer- Yes, they are inherent powers that are granted by a constitution, charter or act.
confirmed by court decisions, i.e., a collection of court decisions. Access to published judicial decisions is available through volumes called "reporters" in major law libraries. What social and economic problems have policy makers enacted because of the magnitude of state and local government spending which require contractors to do what? - Answer- -maintain fair employee practices -provide safe and healthy working conditions -pay fair wages -refrain from polluting the air and waters -give preference to contractors from the same state/province or locality -award to small or women owned businesses -promote the rehabilitation of prisoners and the disabled What other laws are applicable to public procurement? - Answer- -Criminal Law -Tort Law -Budget/Finance Laws Define Criminal Law - Answer- Imposes punishment such as imprisonment or fines for an act deemed to be criminal Define tort law - Answer- Permits parties to sue each other for damage to a person or property. Define Budget/Finance Laws - Answer- These laws prohibit an entity from spending funds beyond those that the legislative body appropriates. What is authority? - Answer- The right to perform certain acts or prescribe rules governing the conduct of others. What is Law of Agency? - Answer- The law of agency states that an agent is someone who acts on behalf of a principal. A product of common law that focuses not only on the creation of agent relationships but also the liability for losses suffered by others who deal with agents. What are the two ways an agency relationship by created? - Answer- -by agreement between principal and agent or -by law What is a principal? - Answer- A principal is one who employs an agent. A person who authorized another to act for him/her. What is an agent? - Answer- An agent is a person authorized by a superior, i.e., principal, to act for him or her. Individuals who act on behalf of an entity, such as a corporation, partnership, or any level of government as that entity conducts business. In public procurement, this designation is usually incorporated into statute and ordinance.
What is express authority? - Answer- Express authority is the authority that is explicitly given in direct language rather than inferred from conduct. It can be in writing or oral. Express authority can be very specific; for example, "the chief procurement officer is authorized to enter into a contract for less than $25,000." Express authority may also be generalized; for example, "the chief procurement officer has the authority to enter into all contracts according to the procurement needs of his/her government entity." What is implied authority? - Answer- Implied authority is not defined expressly, but is only determined by inferences and reasonable deductions that are necessary to perform the expressly authorized acts. Can consider the conduct of the principal regarding the historical actions of the agent. What is apparent authority? - Answer- Apparent authority is the reasonable impression that an agent is permitted to act on their principal's authority even though that authority has not been granted. What is inherent authority? - Answer- Inherent authority is based on an entity's sovereignty, to enter into contracts, although not explicitly authorized. What are some of the technologies that are currently available to procurement? - Answer- -E-Commerce; more specifically-e-sourcing, e-procurement, e-purchasing, e- auctions, e-tender -Electronic payment solutions -Marketplaces/Business exchanges -Contract registers/databases -Knowledge portals/supplier databases -Business intelligence -E-invoicing/e-payables -ERP (Enterprise Resource Planning) systems -MRP (Materials Resource Planning) inventory systems -EPOS (Electronic Point of Sales) -Barcoding/RFID (Radio Frequency Identification) -Intranets -Extranets What should be included on a checklist of best practices to implement the use of technology in procurement? - Answer- -Integration of financial system with procurement system to allow for verification of funds prior to the release of the order -Automated process flows for approvals -Enable the entity to receive electronic requisitions -Preparation of solicitations from requisition information -Utilization of "push technology" to notify potential offerors of available opportunities -Preparation of bid tabulations and bid analysis reports -Preparation of proposal evaluation reports -Preparation and distribution of notices of award -Use of a commodity/service code structure to group and track purchases
List circumstances in which the procurement cannot be conducted in full and open competition (FAOC) - Answer- -Only one responsible source and no other supplies or services will satisfy entity requirements: -no other source is available -the contract is a "follow-on" for the continued development or production of a major system or highly specialized services; therefore, if switching contractors would result in unacceptable delays or a substantially higher cost -the contract is in response to an unsolicited research proposal -There exists unusual and compelling urgency (e.g., delay in award would result in serious financial or other injury -In the case of industrial mobilization; or engineering, developmental, or research capability, if there is a need for: -maintaining a facility, producer or manufacturer, or supplier in case of a natural emergency or wartime industrial mobilization -essential engineering or research and development capability to be provided by educational or nonprofit institutions or federally funded research and development centers -The head of the contracting activity prepares a document that describes the terms of an agreement or treaty or the written directions, such as a Letter of Offer and Acceptance, that has the effect of requiring the use of other than competitive procedures for the procurement. -Other than Full and Open Competition is authorized or required by statute, as is the case when procuring from: -specified prison industries -qualified nonprofit agencies for the disabled -In the case of National Security, when it would be compromised by broad disclosure of needs. -In the case of public interest, when the entity head determines that FAOC would be contrary to it. What is an audit? - Answer- An audit is a formal examination or verification of financial accounts or other business operations by internal staff or independent experts, concluding with a a detailed report that may also include a management letter of findings. What are the four types of audits? - Answer- -Financial and compliance audits -Economy and efficiency audits -Program audits or evaluations -Performance audits
What is a Financial and compliance audit? - Answer- These are normally performed by an independent accounting firm to determine whether financial transactions are recorded and verify their accuracy. What is an economy and efficiency audit? - Answer- These audits are management or operational audits which examine an entity's managerial and administrative practices for economy and cost efficiency and strive to identify the cause of any cost inefficiencies. What are program audits or evaluations? - Answer- These monitor results to determine the extent to which an entity has achieved program objectives. They also evaluate the cost effectiveness of the alternatives that were employed. What are performance audits? - Answer- These review all of the operations of an entity and encompass the following types of audits: financial, economy, efficiency and program results. Performance audits are an increasingly common means of ensuring that those entrusted with management of public services and programs are held accountable. What are the three phases to any evaluation/audit process? - Answer- 1. planning
- data collecting 3.decision making based on findings and recommendations Define an intradepartmental audit report. - Answer- Intradepartmental reports are designed to inform the management concerning departmental matters. Define an interdepartmental audit report - Answer- Interdepartmental reports are for distribution to other departments on a need-to-know basis. Define a higher level management audit report. - Answer- Higher level management reports are issued to senior management and other key personnel. What should be the end result of an audit? - Answer- The improvement of the decentralized unit and ensured compliance with statutory requirements, policy and procurement procedures for the entity. The purpose of an audit to to ensure what? - Answer- -procurement policies and procedures are clearly defined, and end-users are in compliance regarding the solicitation process for the clients utilizing Procurement -purchase order are required and used for purchases -the proper use of the procurement card (pCard). the pCard purchases are always an area for audits and departmental/division reviews.
- The department/division has the means to make purchases (emergency) after hours -Procurement maintains that the suppliers list and goods and services are properly coded for commodity and service selections -Procurement determines the performance measures of the department/division and suppliers
Whose responsibility is it to determine the best value of sustainable goods, services and construction? - Answer- It is procurements responsibility. What are some environmentally safe goods and services? - Answer- -reuse and recycle of goods and resources -disposal of organic and other solid waste -conservation efforts in regard to transportation, energy and water -disposal of hazardous waste -maintenance -pollution reduction or avoidance -construction of buildings and infrastructure, using development practices and accepted performance criteria that focus on the environment A procurement professional with an environmental mandate should understand what terms? - Answer- -Reduce -Reuse -Recycle -Substitute Explain reduce in regards to environmental practices. - Answer- Reduction in the amount of waste by requiring certain commodities to be made with recycled content and reducing the amount of packaging. Explain reuse in regards to environmental practices. - Answer- The reuse of the items that can be repurposed (for example, wooden pallets, shipping containers, etc.) Explain recycle in regards to environmental practices. - Answer- The recycling of items that cannot be reused in their present form (paper, cans, toner cartridges) Explain substitute in regards to environmental practices. - Answer- To substitute is the use of less hazardous, more environmentally preferable goods whenever possible. When specifying and procuring recycle commodities, the procurement professional should be familiar with what terms? - Answer- -Post-consumer -Pre-Consumer What is the definition of post-consumer? - Answer- Post-consumer materials are those materials that are from commodities that have been used by consumers, recycled, and reprocessed back into a consumer product. What is the definition of pre-consumer? - Answer- Pre-consumer materials are those that are left over in manufacturing processes and then reused in a consumer product. Relationships with other entities and organizations. - Answer- -A procurement professional shall not use his/her position to exert leverage on individuals or firms for the purpose of creating a benefit for the entity or entities that he/she may represent
-All involvement and transaction shall be handled in a professional manner with the interest of the procurement professional's employer taking precedent. Relationships with professional procurement organizations and associations. - Answer- -It is the obligation and the responsibility of the procurement professional, through affiliation with professional organizations, to represent that entity in a professional and ethical manner. -A procurement professional shall not use his/her position to persuade an individual or supplier to provide a benefit to an entity. What are the basic factors to consider regarding procurement records retention? - Answer- -legal or statutory requirements -administrative requirements -historical requirements What does procurement involve? - Answer- The effective and efficient management of resources to determine the right good delivered at the right time, and at the right price to entity clients. What is strategic procurement planning? - Answer- It is the transformation of the entity's mission, goals and objectives into measurable activities to be used to plan, budget, and manage the procurement function within the entity. What is the ultimate goal of strategic procurement planning? - Answer- The ultimate goal of strategic procurement planning is to effectuate positive change in entity culture, systems and operational processes. What is the goal of strategic procurement planning? - Answer- The goal of strategic procurement planning is to establish a set of agreed-upon tactical goals and objectives within the operational context of the entity, thus linking resource allocation decisions in a priority-setting model. What will a thorough and well-crafted strategic procurement plan generate? - Answer- A thorough and well-crafted strategic procurement plan will generate an effective and efficient procurement system. What are some of the benefits associated with strategic procurement planning? - Answer- -focuses attention on the entity's mission and links tactical procurement decisions to entity strategy. -assists in designing future procurement strategies -assists in designing or redesigning the structure of the procurement functions and processes. -allows procurement professionals to verify the legitimacy of procurement strategy consistent with the entity's strategy -creates a framework for communicating with suppliers and cross-functional team members
What is the Pareto Principle? - Answer- Pareto theorized that 20% of the people (the vital few) yielded 80% of the production while 80% of the people (the trivial many) yielded only 20% of the production... 20% of what you do yields 80% of the results. The Pareto Principle or the 80/20 rule can be applied to supply management situations such as "80% of procurement cost is created by 20% of the purchase orders issued." What are performance metrics? - Answer- This is a term given to the measurement of performance. What does an analytical application of measurement allow? - Answer- It allows the comparison of performance against standards. What are the different types of performance metrics? - Answer- -Inputs -Outputs -Outcomes -Efficiency -Effectiveness Define inputs. - Answer- Inputs measure resources used. They include labor, materials, equipment and supplies. Demand for goods and services may also be considered an input metric. Define outputs. - Answer- Outputs record activity or effort that can be expressed in a quantitative or qualitative manner (e.g., total spend, total number of new contracts, total number of employees who obtained professional certification). Define outcomes. - Answer- Outcomes assess results of an activity and show whether expected results were achieved. (e.g., client service levels, improved performance of suppliers, employee retention). Outcomes must be benchmarked against other departments/divisions and outside entities. A benchmark is simply a point of reference that can be used as a standard to compare effectiveness and efficiency measurements. Define efficiency. - Answer- Efficiency measures represent the ratio of inputs to outputs or outcomes. When outputs are increased and inputs are decreased, more efficiency is generated (e.g., lowered purchase order administrative costs, reduced requisition to PO turnaround time). Define effectiveness. - Answer- Effectiveness measures reflect how long it takes to process a request for procurement (e.g., purchase orders, bids/proposals, etc.) or the turnaround time to receive goods or services. Effectiveness essentially measures quality and affects client satisfaction. It should be tied back to the key objectives. What helps to establish an expectation to measure against? - Answer- Setting performance targets.
What do quality metrics allow for? - Answer- They allow for the collection of meaningful data for trending analysis and rate-of-change over time. What should a procurement performance measurement system accomplish? - Answer- The performance measurement system should assess progress towards achievement of the strategic plan. Performance measurement is critical to any public sector activity, program or entity. How should performance measures be stated? - Answer- Performance measures need to be meaningful for all participants (procurement professionals, clients and suppliers) and stated in terms of Procurement's higher-level objectives, or else they will lose their impact. Describe the characteristics of a performance measure. - Answer- Performance measures should be: -fair -easy to collect -consistent -objective They must also lead to demonstrable action and they must be communicated to clients. Examples of methods used to measure performance include? - Answer- -performance reviews to share performance measures that identify accomplishments and areas for improvement -regular staff meetings to share performance measures and progress -benchmarking -performance indicators -performance targets -quality management tools (i.e., checklists, progress charts, graphs) How should performance measures be designed? - Answer- Performance measures should be designed to motivate staff at all levels to contribute to entity improvement. List some of the guiding principles of strategic sourcing. - Answer- Guiding principles of strategic sourcing include: -making procurements in a manner that reflect the greater good of the entity -cost-effective and efficient procurement methods -managing suppliers for performance -compliance with all statutes, regulatory provisions and entity policy and procedures What are performance audits? - Answer- Performance Audits are an increasingly common means of ensuring that those entrusted with management of public services and programs are held accountable. What are the three phases of any type of audit? - Answer- The three phases of an audit are:
What are some common performance indicators for supplier and industry development?
- Answer- -targets to identify potential local suppliers -numbers of suppliers involved in local supplier development programs -numbers of new sources of particular goods and services What are some common performance indicators for supplier performance? - Answer- - include a range of cost targets -gauge whether contract requirements, service and quality requirements are met What are some common performance indicators for the efficiency of internal procurement systems and processes, the volume of procurement spend transacted electronically, or through other transaction methods like pCards? - Answer- -volume of transactions transacted through aggregated or standing-offer arrangements -reduction in transaction and inventory management costs and distribution costs -internal client satisfaction with evolution of procurement processes and service levels -response time and perceived value for money -perceived degree of simplicity, convenience, and effectiveness of procurement decision making and authority lines, systems and processes What are some common performance indicators for client satisfaction? - Answer- - survey responses -regular client communications and meeting What is benchmarking? - Answer- The act of measuring a process, service or good against the characteristics of the recognized leaders in the given area of review. It is a study, review or process whereby Procurement identifies world-class entities with which to compare its practices, policies and performance outcomes. What must benchmarks be? - Answer- They must be quantifiable, attainable and realistic. With benchmarking, in what areas are the best procurement departments able to measure and demonstrate their performance in? - Answer- -the efficiency of their own internal operations -the savings and contributions made to the overall entity, including the measurement of client satisfaction How often should benchmarking be used? - Answer- Benchmarking should be used continually to ensure that the benefits of performing a process outweigh the costs. Management must establish benchmarks as what? - Answer- Management must establish benchmarks as a set of standards against which the process must be measured.
Why are benchmarks used by Procurement professionals? - Answer- Procurement professionals typically use benchmarking and best practices in many situations to determine a need and provide a more cost-effective means to accomplish a given task. Who should be placed in charge of, and made responsible for, the performance and changes in the process and for the success or failure of a process? - Answer- Management. What is a spend analysis? - Answer- Spend analysis is the process of collecting, cleansing, classifying and analyzing expenditure data from all sources within the entity (i.e., procurement card, eProcurement systems, etc.). What does the spend analysis process analyze? - Answer- The process analyzes the current, past and forecasted expenditures to allow visibility of data within the entity at various levels, e.g., by supplier, commodity, service or by department/division. How can a spend analysis be used to make management decisions? - Answer- By providing answers to such questions as: -what was bought -when was it bought -where it was purchased -how many suppliers were used -how much was spent with each supplier -how much was paid for the good What questions does a spend analysis answer? - Answer- -What am I really spending? -With whom am I spending it? -Am I getting what's been promised for that spend? Why is a spend analysis conducted? - Answer- Spend analysis is used to leverage buying power in an entity, reduce taxpayer and budget costs, improve supplier management and create a procurement strategy. What business goals may be accomplished by conducting a spend analysis as part of routine procurement practices? - Answer- -decrease costs in both the short and long term -increase effectiveness of the evaluation process -increase the value of the procurement function -increase efficiency -decrease process time -increase in the return on investment -increase in Procurement's value within an entity -improve internal client service -increase control over spending that leads to allocating money more strategically (the right places) -increase procurement effectiveness by bulk purchasing to save money
What is the purpose of the supply positioning tool? - Answer- Using supply positioning, goods and services can be plotted according to their relative difficulty in securing supplies and the relative expenditure. Supply positioning is a good management tool to determine where the procurement effort should be focused and where energy and resources should be directed. Quadrant I of the supply positioning matrix - Answer- goods and services with a low degree of risk and a low expenditure relative to total procurement spend Quadrant II of the supply positioning matrix - Answer- goods and services with a low degree of risk and a high expenditure relative to total procurement spend Quadrant III of the supply positioning matrix - Answer- goods and services with a high degree of risk and a low expenditure relative to total procurement spend Quadrant IV of the supply positioning matrix - Answer- goods and services with a high degree of risk and a high expenditure relative to total procurement spend What is the purpose of the supply positioning matrix? - Answer- One the risks of supply are identified and a reasonable estimate is provided regarding risk factors, the supply positioning matrix can be segmented for planning purposes. The goods and services in the easy-to-secure supply (low degree of difficulty to secure supply) and low-relative- expenditure category will demand substantially less attention than goods and services in the other categories. Goods and services in the high-expenditure and high-risk quadrants require different planning needs. Buying Plan - Answer- A buying plan should be developed for each major type of goods and services targeted for purchase, based on demand, market and supplier analyses. What should a solid buying plan consist of? - Answer- -Demand analysis -Market analysis -Supplier analysis -Value analysis Demand Analysis - Answer- A demand analysis is used to estimate annual requirements based on the previous year plus anticipated use for the upcoming year. Demand analysis utilizes the "ABC" system based on percentages. Applying the Pareto model, 80% of purchase dollars are expended on 20% of supply quantity. Demand is further categorized by ABC classification where A represents mission critical items, B represents routine purchases and C represents low value items. Market Analysis - Answer- A market analysis involves researching product availability, market volatility, supply and demand and price. This should be a continuous process so that buying schedules can be adjusted to achieve maximum availability and the best price.
Example of market analysis - Answer- The procurement professional uses market analysis to determine that manufacturers of left-handed widgets traditionally issue new distributor price lists on January 2nd of each year. The entity uses left-handed widgets throughout the year. In order to avoid the expected annual price increase taking place after January 2nd, the procurement professional and the internal client department/division make a business decision to move up the January purchase by one month to December 1st. This allows them to buy an additional quantity of left-handed widgets at the current price. Supplier Analysis - Answer- Evaluates potential new sources along with current providers. This technique is used to evaluate a supplier's performance relative to stated deliverables, and ensures that a supplier has the ability to meet specification and fulfillment requirements. Potential suppliers are evaluated to determine whether they offer attractive possibilities worth closer investigation. This type of analysis should be ongoing, as it represents a critical step to achieve maximum value for the entity. Value Analysis - Answer- Value Analysis is an organized effort directed at analyzing the functions of goods or services including specifications, standards, practices, and procedures with the intent to satisfy the required function at the lowest possible cost, and without impacting functional need and suitability. Therefore, when the procurement professional qualifies the best value of an item or process, a determination has been made that the item performs consistently for its required basic function and has the lowest total cost. The lowest total cost many not necessarily be the low bid price, but rather offers the best added value. What is the foal of a continuity of operations plan? - Answer- To ensure the continuation of essential functions. What is the object of the entity in regard to a continuity of operations plan? - Answer- The objective of the entity is to identify those essential functions and ensure that the functions can be continued throughout or resumed rapidly after a disruption of normal activities. What key elements are included in a Continuity of Operations Plan (COOP)? - Answer- -Essential functions -Orders of Succession -Delegations of Authority -Continuity Facilities -Continuity Communications -Reconstitution -Vital Records Management -Human Capital -Tests, Training and Exercise -Devolution of Control and Direction
