P U R C H A S I N G D E P A R T M E N T K R I S T E N J. S P I C O L A, CPPB A N N U A L R E P O R T P U R C H A S I N G A G E N T

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1 P U R C H A S I N G D E P A R T M E N T A N N U A L R E P O R T K R I S T E N J. S P I C O L A, CPPB P U R C H A S I N G A G E N T The mission of the Purchasing Department of the Board of Water Works of Pueblo, Colorado is to enhance the quality of the purchasing experience through exceptional delivery of services and efficient use of public funds. The department strives to provide: value added services, leadership in innovation, and high quality/cost effective approaches to meet and exceed our customer s expectations. 2014

2 Table of Contents E-Procurement 3 Solicitation Statistics 4 Value of Procurement 5-6 Purchasing Card (P-Card) 7-8 Revenue Generation 9 2

3 E-Procurement Rocky Mountain E-Purchasing System The Board of Water Works (Pueblo Water) utilizes the online procurement service Rocky Mountain E- Purchasing System (Bid Net) to facilitate its competitive bid process. Bid Net provides services to 132 agencies across Colorado s front range. There are approximately 5,487 registered Colorado vendors on the system and over 8,468 vendors registered nationally. The partnership with Bid Net encourages local competition by making solicitations and bid history easily accessible for search and download. It allows for increased visibility for specialty items such as chemicals or services through Bid Net s national bid library. E-Procurement encourages competition, and improves department efficiencies through the use of automatic notifications to vendors by . Bid Net increases transparency by serving as a vendor self service portal to access Pueblo Water s bid history for research and public records. Pueblo Water s formal bid threshold is among the lowest of Bid Net s participating agencies. Due to this threshold, Pueblo Water s formal bid activity is high, ensuring competitive pricing for products or services received. The high level of activity also makes the use of e-procurement even more important with limited resources. The following chart details bid threshold levels by Bid Net participating agencies. *Agency has not shared their formal bid threshold. 3

4 Solicitation Statistics Year Formal Bids RFI RFQ Intent to Award Award No Award In 2014, Pueblo Water s Purchasing Department issued 70 formal bids. Formal bids are generated for any material or service that exceeds $1,000. Pueblo Water did not solicit any Requests for Information or (RFI s) in RFI s are used to gather research and assist with the development of specifications. There was one Request for Qualification or (RFQ) issued in 2014 to develop a shortlist of qualified vendors for the La Vista Tanks Roof Drainage Improvement Project. When practical and applicable, Purchasing continues to use an evaluation committee for ranking proposals. This approach uses a ranking method consisting of 100 available points based upon criteria developed prior to the release of the specifications. This method continued to prove to have merit for evaluation of such projects as the Geotechnical Engineering Services RFP. The 24 Intent to Awards (IA) listed are items that exceeded the $25,000 threshold and required approval by the elected Board prior to proceeding with the purchase. It is important to note that not all Board agenda items are included with the 24 IA s; rather these involve situations in which vendors were notified of the intent to award prior to the final decision. In short, the purpose of an IA is to provide a timely response to vendors. Pueblo Water ranked 13 th out of the 132 participating agencies on Bid Net for the number of formal awards posted on the e- procurement site. The high level of bid activity is contributed to the low bid threshold policy for goods or services of $1,000. This chart details the level of formal bid activity by agency. Those with higher activity are larger entities such as cities, counties and school districts. Although the number of formal bids decreased in 2014 by 27 percent, the dollar amount of awarded bids increased from $3,143,332 in 2013 to $3,815,883 in This number can fluctuate each budget year. For example, in 2013, there were 21 items related to Fleet Maintenance including vehicles, truck bodies, fuel and equipment were formally bid. This number decreased to 6 in 2014 since the number of budgeted vehicles decreased and fuel purchases are now under a service contract with local fuel provider Acorn Petroleum and no longer routinely bid. 4

5 Value of Procurement The following chart demonstrates the value of the procurement process by examining the Board s average cost savings by purchase type. The amount of savings is calculated by comparing the average amount of non-awarded bids to the average amount of awarded bids. Spend by purchase type remained relatively similar to the prior year, however, the percentage of savings through the bid process increased from 2.07% in 2013 to 19.75% for chemical bids. Purchasing worked diligently in 2014 to ensure that chemical bid opportunities were seen on Bid Net s national library. Out of the eight chemical bids solicited in 2014, six received more than one response, which is up from three in This increase in competitive activity contributed to the percentage increase in savings. Total spend for services increased by 33 percent in 2014 and included a two-year contract for concrete repairs and installations, the 2014 Roof Replacement Project No and the Whitlock Treatment Plant Asbestos-Abatement Project No These three items accounted for 69 percent of the money spent on services. Infrastructure projects and chemicals continue to be the largest portion of awarded type of purchases followed by services and fleet. 5

6 Pueblo Water s Purchasing Department is committed to buying local whenever possible. When local businesses provide the most cost-effective solutions to Pueblo Water s needs, the citizens and taxpayers of Pueblo benefit by getting the most value for their dollar and those dollars are recycled within the community. The data below demonstrates how open competition practices best serve the needs of Pueblo Water. The amount awarded to local vendors increased from 37 percent to 54 percent in 2014 and amounted to $2,054,656 spent with local vendors. Value of Open Competition Analysis Amount Awarded to Non-Local Vendors $1,761,226 $1,973,335 Amount Awarded to Local Vendors $2,054,656 $1,169,997 Total Awarded $3,815,883 $3,143,332 Percent Awarded Locally 54% 37% Savings ($ awarded less lowest local bid) $322,683 $77,795 Average Percent of Savings 20.65% 17.50% The total savings is calculated by taking the amount awarded less the lowest local bid. This analysis shows that $322,683 was saved by awarding to the lowest-most responsible bidder. This practice didn t provide a preference to local vendors, but saved an average 20.65% on bids in This ensures that the department continues to utilize consistent, fair and costeffective methods to ensure the integrity of the bid process. This process guarantees the procurement of the best quality products and services and value for the citizens in which we serve. 6

7 Purchasing Card (P-Card) Pueblo Water established a Purchasing Card (P-Card) program in 2014 to streamline and simplify the requisitioning, purchasing and payment process for small dollar transactions. The program reduced the cost of processing small dollar purchases by reducing the number of field purchase orders and improved the delivery time of required goods. The traditional requisition process included over 30 steps. The P-Card process reduced this to fewer than 15 steps while reducing paperwork, improving cash flow and generating revenue through the P- Card rebate program. At this same time, the Accounting Department implemented an E-Payables program that assigned a credit card number to routinely paid vendors. This secure payment transaction processed invoices similar to a credit card, but allowed for the vendor s information to be kept on file for payment within three days of receiving an invoice. During the first year of the program, Pueblo Water had a total volume of spend for the two programs of $1,540, which provided a rebate of $27, This rebate exceeded expectations and is a testament to the diligent efforts of the department s working together for the success of the program. Pueblo Water assigned 44 employees cardholder privileges while 17 vendors were registered on the E-Payables program. The average purchase amount on P- Cards was $ with total utilization of 2,326 transactions. The top ten vendors who accepted P-Cards as payment are listed in the following chart. Itwas encouraging to see large non-local vendors such as Sungard H.T.E. utilizing P-Cards, but more so local vendors such as Larsen s Automotive and Pueblo Bearing taking advantage of this payment method and improving cash flow within Pueblo s small business community. 7

8 Processing field purchase orders and purchase orders can be costly. The P-Card and E- Payables program streamlined the payment process and reduced processing costs. In 2013, over 1,494 purchase orders were processed with a dollar value of $12,350, After implementing the P-Card program, this number was reduced by 22 percent to 1,163 purchase orders saving Pueblo Water both time and money. The processing of field purchase orders decreased by 50 percent by implementing the P-Card program. Field purchase orders processed dropped to 914 processed in 2014; down from 1,818 processed in The reduction of field purchase orders ensured that materials or services needed by Pueblo Water crews were received faster and with fewer processing steps and costs. 8

9 Revenue Generation The Purchasing Department helps to generate revenue for Pueblo Water through the sale of surplus inventory. An example is the process used to bid the annual contract for the sale and disposal of mixed metallic scrap. The following lists the revenue generated from the disposal of mixed metallic scrap and used motor oil in Vendor Amount American Iron & Metal $40, American Iron & Metal $3, American Iron & Metal $1, American Iron & Metal $ American Iron & Metal $2, Wise Recycling $16.00 Tri State Oil Recycling $ American Iron & Metal $ American Iron & Metal $ American Iron & Metal $3, American Iron & Metal $2, American Battery Corp $6.00 American Iron & Metal $3, American Iron & Metal $26, American Iron & Metal $2, American Battery Corp $20.00 $89, In 2014 Purchasing did not have an opportunity to utilize the online government surplus auction for the sale of heavy equipment. Purchasing did establish an internal program to promote the re-use of office furniture and supplies. Office supplies are stored in the Administration building s basement and available for use as needed. Office furniture replaced in conjunction with the first and second phases of the Administration building remodeling project was either distributed to departments for immediate use or stored in Pueblo Water s annex. Gently used office chairs were donated to local charity, Habitat for Humanity. 9

10 Closing The mission of the Purchasing Department of the Board of Water Works of Pueblo, Colorado is to enhance the quality of the purchasing process through exceptional delivery of services and efficient use of public funds. To follow that mission, Purchasing utilizes the following term contracts to ensure availability of materials and competitive pricing. Materials Services AMR Installation Supplies Asphalt Repairs and Installations Bedding Sand Armored Carrier Cast Iron Fittings Banking Services Concrete Meter Vaults Bulk Motor Fuel Delivery* Copper Fittings Concrete Repairs Corporation Stops Credit Card Merchant Services Fire Hydrants Electrical Services HD Polyethylene Pipe HVAC Maintenance Mechanical Joint Restraints Insurance Consulting Meter Lids & Meter Pit Covers Janitorial Services PVC Pipe Lock Box Services Ready-Mix Concrete & Flow Mix Mobile Radio and Installation* Repair Couplings Printing of Billing Inserts Resilient-Seated Gate Valves Purchasing Card* Road Base Removal of Scrap Metal Stainless Steel Repair Clamps Reservoir Cleaning & Maintenance Tapping Sleeves Transmountain Water System Maintenance Water Meters Waste and Recycling Removal Water Treatment Chemicals *New Contract in 2014 The Purchasing Department continued the dedication of streamlining processes through the development of standard templates for Request for Proposals (RFP), Invitations to Bid (ITB) and Professional Service Agreements (PSA). The standard templates are used by various departments and ensure consistent quality of service to our vendors. Future goals for the Purchasing Department include the continued exploration of e- Procurement opportunities through the use of online Request for Quotes for prompt vendor responses and quicker receipt of goods and the further development of the Purchasing Card and E-Payables programs. 10