state agencies purchasing council (sapc)...
TRANSCRIPT
STATE AGENCIES PURCHASING COUNCIL (SAPC) MINUTES May 18, 2011
Administration Building, St. Croix Room Officers:
Chair: Ruth Ginzberg, (608) 263-4379 [email protected] Vice Chair: Jessica Harlan (608) 267-8898 [email protected] Secretary: Kristen Schipper, (608) 224-4752 [email protected]
Attendees: DATCP (1), DFI (1), DNR (1), DOA (1), DOC (1), DWD (1), ETF (1),
UW Madison (1), UW SYSTEM (1), DOR (1), DPI (2)
1. Introductions/Announcements: Ruth Ginzberg, Chair, called the meeting to order at 8:31 a.m. Sign up sheet was passed around for attendance. Attendees introduced themselves.
2. Election: Kristen Schipper was elected Secretary. She will do minutes for this meeting.
3. Approval of minutes: All pending minutes will be attached to the agenda for the next meeting for review then.
4. OLD BUSINESS: A. State Bureau of Procurement (SBOP) Report—Jim Langdon via e-
mail a. State Budget. Joint Committee on Finance removed certain items
from the Executive Budget that it deems to be policy only (no fiscal effect). Two of the procurement reform measures in the budget were deemed policy only and will not be included in the Joint Finance version:
i. Thresholds. JFC will not include recommendations to increase the official sealed bid and waiver thresholds from $25,000 to $50,000.
ii. Cost Benefit Analyses. JFC will not include recommendations to repeal the CBA law passed in 2006.
b. Bureau Director Position. SBOP has interviewed several very good candidates for the State Bureau of Procurement Director position. SBOP has a short list of a few exceptional candidates and is considering the leading person among this group. SBOP hopes to make an announcement within the next couple of weeks.
c. IT Section Positions. Mary Durkin has hired Cort Hoel from UW-Milwaukee and Sara Redford from the SBOP Enterprise Sourcing Section to fill two vacancies in the IT Section. They will begin their new jobs shortly.
d. Question: Who will manage Sara’s contracts after she moves to IT? Barth Becker answered:
i. Flooring and Office Furniture = Barth Becker ii. EAP = Pete Ansay
iii. Office Supplies = Steve Slawny
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iv. P-card contract = Lynne Geroux e. Bureau Vacancies. SBOP has advanced recommendations to approve
three positions in Pam Viner's Enterprise Sourcing Section. These include two procurement specialists and a contract specialist that would take on State Use responsibilities following the retirement of Laura Rice.
f. Fuel Procurement. SBOP has agreed to take over certain fuel contracts from the Division of State Facilities. DSF has been delegated to conduct all state fuel procurements for many years. However, the retirement of two key DSF employees caused SBOP to reevaluate the situation. Going forward, DSF will procure fuel and related services needed to operate its heating plants; SBOP will manage fuel contracts related to the operation of motor vehicles (gasoline, ethanol, diesel, aviation fuel).
g. Question: When will the temporary help services contract be available? Jessica Harlan answered: Award letters are out for the SBOP contract. Also, DWD has a temporary help contract that will be re-bid soon. Call Jessica for more details on positions. The DWD contract includes mailroom staff positions. DWD may add a receptionist position.
B. Topic of the Month: Contract 11-93900-101 - Equipment Maintenance Cost Reduction Program Guests: Brian Ripp & Greg Buhr a. Presentation - handout is attached – “SU booklet”
i. Company is called Specialty Underwriters LLC (SU) ii. Based in Oak Creek, Wisconsin, where founder grew up
iii. Started 29 years ago iv. Used to sell insurance v. Now spreads risk on equipment maintenance
Example: Say the current maintenance contract on a copier is $1000/year. SU will turn the contract into a parts, labor, and travel contract rather than a yearly lump sum and charge agencies $800/year. SU is betting the copier will only break down to the tune of $600/year. If SU bets correctly, SU makes $200. If SU bets wrong, SU makes no profit. Either way, the agency achieves a cost reduction of $200 from $1000 down to $800.
vi. 8% of SU’s customers tend to leave after 7-8 years because they see SU’s profit and realize they can leverage the entire margin on their own.
vii. SU started with hospital equipment, then banks, then governments and colleges, and now also labs and pharmaceutical companies.
viii. SU works with 14 state governments, including: Alabama, Louisiana, South Carolina, Florida, Pennsylvania, Iowa, and Missouri
ix. State of Wisconsin contract was effective April 1, 2011.
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x. Can lock in a maintenance price for agencies for 5 years. xi. Can spread risk of equipment failure.
xii. On-boarding Process: 1) SU examines all equipment that plugs into a wall and looks at
the next expiration date for the maintenance contracts and the specific terms and conditions. (See SU booklet for equipment list – pg. 5. Note: Food service equipment is not listed, but SU covers it. SU does not cover HVAC, elevators, or vehicles).
2) SU presents agency with a proposal/quote to on-board equipment onto SU’s equipment maintenance management system. Proposal will show 27%-35% savings over current maintenance contract pricing and include the same level of service as the current maintenance contract.
3) If agency wishes, SU can negotiate a better service package. For example, say agency’s current contract requires repairs during normal business hours, but agency wants 24/7 on-call service. SU does not guarantee the 27%-35% savings in that instance.
4) Agency selects which equipment to on-board. Equipment that is going on SU’s equipment maintenance management system will be non-renewed on the current maintenance contract between the agency and the maintenance vendor. Maintenance vendor learns of non-renewal via written notice. SU’s contract with the maintenance vendor will then kick in to cover the equipment.
5) SU’s proposal may include switching maintenance contracts to parts, labor, and travel (time and materials, aka “pay-as-you-go”) rather than a guaranteed yearly lump sum payment. If maintenance vendors won’t agree to that, SU may leverage competitors. Or, SU will negotiate a contract for a lump sum maintenance payment that still provides agency with savings.
6) SU can on-board leased equipment as long as SU can tell what part of the contract is maintenance.
7) Once agency decides what equipment to on-board, SU will come and tag equipment with a blue tag. Tag shows SU’s phone number. Anytime equipment breaks down, end user calls or e-mails SU’s dispatcher in Oak Creek. Dispatcher will gather information and arrange for repair with the maintenance vendor. After work is done, maintenance vendor invoices SU. SU pays within 30 days.
8) Once equipment is part of the system, agencies can log-in to system and see what claims are made on what machines and what payments SU has made to the maintenance vendor on the agency’s behalf. Agencies can look at invoices SU has paid. Agencies can see how much profit SU made on a
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b. Questions i. Q: How would roll-out work in a big agency?
A: Agency determines how they want to be treated. SU can work with a central office or as many individual offices as agencies need. First, the quote would be delivered. Then, SU would set up a date to come tag the equipment. Then, SU would schedule a short 20-minute orientation for end-users about how to call in for service, or that could be done via e-mail also.
ii. Q: What is the road map for roll-out? A: SU is approaching big agencies and labs first - DOT, DOC, and the Department of Health Services. Labs have the most expensive equipment, and the most expensive maintenance plans. Therefore, they present a good possibility for cost savings and good margins.
iii. Q: What if the maintenance vendors refuse to negotiate
with SU? A: SU has a vendor relations group that recommends other maintenance vendors for the equipment. Or, the maintenance contract just stays as-is.
iv. Q: What is the out-of-scope report referred to on pg. 11 of
the booklet (attached)? A: If someone places a service call for equipment with a serial number that SU has no record of, SU knows that SU does not cover it. So, that claim would appear on the out-of-scope report. Or, if someone files a claim for toner, and the machine’s meter says the machine is over the usage allowed – then the claim may not be covered. Agencies could use that report to increase the allowed usage on that machine for the next year.
v. Q: How does SU deal with leased vs. owned equipment?
A: Maintenance for leased equipment is eligible for SU’s system if SU can tell what part of the lease cost is for maintenance. On some lease contracts, it is impossible to identify the maintenance cost. If SU can identify the maintenance cost, SU can write that equipment into the proposal. It is easier to identify what the maintenance cost is for equipment an agency owns outright.
vi. Q: Analogizing to health insurance: we want everyone to
pay for health insurance. This is the most effective way to spread the risk. Sick people really need it, but healthy
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A: SU will lose money on some agencies because some agencies will have chronically sick machines. But the healthy machines will cover the loss. SU has a good risk spread. SU is self-insured, which shows SU is financially stable.
C. Procurement Manual Suggestion of the Month: Standardize Sole
Source Criteria between Pro-C-38 and Pro-C-13 a. Issue: We have two lists of sole source criteria – not the same – in two
different places:
Pro-C-38 1. Vendor is unique in its ability to provide a product or service. 2. A public emergency exists which threatens the public safety or welfare
and the waiver is necessary to meet the emergency. 3. A need exists for integration or compatibility with an existing
infrastructure. 4. The product is proprietary to a vendor. 5. Substantial time pressure exists due to circumstances outside of an
agency’s control.
Pro-C-13 1. The service is unique or of a proprietary nature available from only one
source. 2. Grant monies are involved, that cannot qualify as an exemption, that
require subcontracts and specify the contractor. 3. A public emergency exists where the urgency for the required service will
not permit competitive solicitation. 4. Substantial time pressure exists beyond the agency's control. (This does
not include administrative delays or confusions in processing the necessary paperwork for purchasing approval.)
“A need exists for integration or compatibility with an existing infrastructure” is listed in Pro-C-38 but not Pro-C-13. “Grant monies are involved, that cannot qualify as an exemption, that require subcontracts and specify the contractor” is listed in Pro-C-13 but not Pro-C-38
b. Recommendation: Pro-C-38 and Pro-C-13 should cross-reference each
other.
After a discussion, SAPC decided to vote on this recommendation at the next meeting. The officers will draft a formal recommendation and
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distribute it to the members. While many would like to see one list go away completely – so there is only one list – consensus was that a cross-reference would be the most practical solution.
c. Discussion: included general comments about gray areas in the
manual – i. The manual doesn’t take account of cloud computing in general.
1) “Infrastructure” has caused confusion when it comes to cloud computing and the interface between existing web-based systems.
2) “Subscriptions” aren’t just magazines anymore. The annual waiver process now includes database subscriptions.
ii. We don’t want the manual so detailed that agencies have no discretion to apply it to our particular contexts. It is good to have different learned interpretations of the same words. Agencies need freedom to make a business case, within the manual’s general framework.
iii. Gray areas encourage people to “forum-shop” for the answer they like. Vendors exploit gray areas and cite gray areas to justify bid waivers. Answers to certain questions depend on when someone came to state service and when they took the DOA classes.
iv. Suggestion: Write a file memo and memorialize how the agency came to a decision.
v. Suggestion: Procurement courses should be held in larger rooms so that more people may attend – even as a refresher for a course they took many years ago.
5. New Business –
DOR: Replaced several copiers and has surplus toner left over from the old
models. DOR will ship the toner to anyone who wants it - free. First come, first
serve. Flyer attached. Contact Martin Wright – (608) 266-2221.
Jacque Gernetzke retires June 13, 2011. She will talk to her replacement at OCI to
see if that person can help us book our meeting room in future. We have the room
for this year at least. She has 2 boxes of SAPC archives and will bring them to the
next meeting.
Question: Why can’t we donate equipment to natural disaster relief?
Discussion:
SWAP is the usual route, or auction.
We can do a government to government donation.
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No one wants to pay freight or to have to vet who is getting the donation.
Most relief agencies would rather work with cash.
We are managing taxpayer dollars, so we have to be wary.
Federal government already has a program to donate equipment to schools –
federally funded equipment. May be a similar federal program to donate
federally-funded equipment to FEMA.
UW System has libraries who want to dispose of books. Can’t give them away
– must try to recover any market value. So, sell them for whatever price
people are willing to pay. Or give them to other libraries – but not non-profits.
The meeting was adjourned at 10:25.
