ITS Finance Team

Penn State UniversityPurchasing Services

Joyce Haney Meg HarpsterSteve Blazer

May 31, 2007

Topics Purchasing Overview

Competitive bidding Justifications – Price and Source

Sole source justifications (the good and the bad) Contracts and Computer Bulk Buy Purchasing Card eBuy Agreements Reverse Auctions ITS add-ons

Purchasing Methods

Purchase order / Standing order Purchasing card e-procurement system Limited order Subcontract

Purchase order justification Justify the source

Competitive bidding Contracts Single/Sole source

Justify the price Competitive price Comparable pricing Price lists Contract pricing Price analysis

Bidding Requirements

Threshold Requirement

0 - $9,999 Determination of price reasonableness

$9,999 - $24,999 Evidence of competition

$25,000 – and up Formal bidding

Single/Sole Source Procurements

Justification required in writing Purchasing has final decision as to SSJ

acceptability Purchasing must still justify the price

Sole Source Justifications Acceptable

Technical reasons Compatibility reasons

Unacceptable No time to bid Supplier gave the lowest price We like this supplier We used this supplier before Supplier is local or close Supplier already put in time and effort

SSJ Do’s and Don’ts Don’t just rave about the source you want If technical comparisons were done…

What other brands did you look at? What was wrong with other sources? Are the bells and whistles needed?

Do provide factual information Do identify research that was done

Internet searches, trade shows, conferences, demos, colleagues, etc.

Don’t do your own bidding.

Contracts

Established Contract pricing is considered competitive and provides best valuePSU Master ContractsState ContractsGSA ContractsE&I and/or Big 10 Contracts

Computer Bulk Buy 3rd formal year Improvements year to year Lessons learned (i.e. configurations) Cooperative effort ITS and Purchasing initiate activity Invitations to participate via IT-Purchasing and

Network of People listserves Good representation (including c. campuses) Pricing good for 3 months

covers both fiscal year end and new fiscal year

Feedback and Input

Bulk Buy Team ITS

Jonathon Holman Kevin Morgan Janda Hankinson

Purchasing Services Meg Harpster John Ake

Bulk Buy 2006Dell Desktop Summary

Base Unit Quantity Bulk Buy Price

% Savings from

Contract / Premier

% Savings

from Retail

Savings from

Contract

Hi End Optiplex GX620 1276 $841 25% 39% $360,495

Low End Optiplex GX620 1180 $640 20% 35% $185,260

TOTAL 2,456 $545,755

• Base Units do not include monitors

Bulk Buy 2006Dell Laptop Summary

Base Unit Quantity Bulk Buy Price

% Savings from

Contract / Premier

% Savings from Retail

Savings from

Contract

Hi End Latitude D820

74 $1,554 29% 37% $46,028

Low End Latitude D620

324 $1,140 27% 34% $136,404

Total 398 $182,432

Base Units included the following:• Complete Care – Accidental Damage Protection• 3 Year NBD Parts and On-site Labor

Purchasing Card Make good choices Protect your card, your account number and always

review your statements. Know your suppliers Report any suspected misuse immediately Don’t answer any inquiries (phone or email) about your

credit cards unless you confirm they are legitimate. Purchasing card website:

http://guru.psu.edu/p-card/ Lisa Steinbugl, Purchasing Card Coordinator

On-line shopping Tools

Search Compare Favorites History

Electronic order placement

Electronic settlement On-line information

Incentives Over the P-Card and PO More purchasing power

Access to multiple catalogs Better, more competitive Penn State pricing Higher pre-approved limits than the purchasing card

Faster Order direct from the supplier Order 24X7, anytime, anywhere Electronic submittal of your order directly to the supplier Pre-approvals eliminate the multi-step approval process

Less paperwork No receipts to turn in No receiving reports Purchase order history on-line with line item detail

More information at your finger tips Detailed product information Search capabilities by key word, part #, category & supplier

Active Suppliers

Computer: PSU Computer Store, Dell, Apple & Lenovo

Office Supplies & Janitorial: PSU General Stores Furniture: Supply Source (Herman Miller) &

Corbett (KI) Electrical: Hite Electronics: Newark in One Industrial: Grainger Scientific: VWR, Fisher, Sigma & EMSCO

Agreements - Contractual agreement between 2 parties.

- It’s important to get it right.

Various types of agreements: Purchasing Agreements Software License Agreements Beta Test Site Leases or rentals Maintenance Agreements –

Hardware and software Professional Services Consulting

Signing authority

Purchasing Joyce and Meg get nervous Department and end-users’ compliance

Understand Agree (and can comply) May require disposition of information

Consult with Legal, Risk Management and Privacy Office as required

Controller’s Office VP of Finance and Business

Agreements ……. Who, what, when, where, why, how and how well?

Defines each party’s responsibilities Each party has responsibilities, rights, protections, and risks. Terms & Conditions Written word takes precedent over all verbal agreements Schedule Term – (time period, extensions, cancellation, price escalation, price

protection) Payment Security and privacy issues Disputes and Non-performance (dispute resolution, default,

cancellation, arbitration, legal system, laws, penalties, etc.)

Agreements – Who, what, when where, how, and why?

Terms and conditions of use Faculty? Students? Guests? Locations? Security? Specific location, college, department or unit? Educational? / Commercial? / Government? Instruction? Research? Profit/nonprofit?

Updates and upgrades How often? Price? Price increases/caps? Support?

Warranty, liability, infringement & protection Safety and security Insurance coverage Maximum liability caps - Personal injury & property damage Third party lawsuits? Damages?

Develop a good specification or “Scope of Work”

Clearly define who, what, when & where What are the deliverables? Clearly identify criteria to identify if the

product is acceptable Clearly identify criteria to determining if

services were completed to our satisfaction Define what is acceptable

Reverse Auctions/Online Competitive Bidding

PSU specifications available online for competitive bidding for X minutes.

Multiple suppliers bid their price on line View low bid price and/or rank Suppliers adjust their price accordingly if

desired

Reverse Auction Success at PSU

Over 20 auctions since 2003 Over $2 million saved Average savings 19 – 22% Commodities: Audio visual, janitorial, paper,

residence hall furniture, micro-fridges, paint, vehicles, business forms, etc.

Looking for opportunities in computer area

Sample Reverse Auction ResultsItem Reserve $ Final $ Savings

#

Bidders#

Bids

projectors 104,900 91,431 $13,469 13% 3 33

furniture 1,200,000 982,931 $217,069 18% 3 21

micro fridges 549,150 417,354 131,796 24% 3 51

A / V equip 428,175 335,220 92,955 22% 7 83

A / V equip 372,446 293,861 78,585 21% 6 100

Additional Resources Purchasing Financial Officer GURU

http://guru.sp.psu.edu/ Purchasing Card

http://guru.psu.edu/p-card/ Purchasing

http://www.purchasing.psu.edu/ eBuy

http://www.ebuy.psu.edu/