County Courts Competition to Ensure Best-Value Purchases
County Courts Competition to Ensure Best-Value Purchases
In Miami-Dade County, FL, a Competitive Acquisition Unit spearheads strategies to reduce sole-source procurements and cut contracting costs
Members of Miami-Dade County’s Competitive Acquisition (CA) Unit include: (left to right) Dakota Thompson, Procurement Contracting Technician; Albert Falcon, Senior Contracting Agent; Carlos Plasencia, Procurement Contracting Officer and Supervisor of the CA Unit; Laura Romano, Procurement Contracting Technician; Robin DellaVecchia, Senior Contracting Agent; and Roma Campbell, Procurement Contracting Technician.
Across any level of government, public purchasers will attest that encouraging competition among vendors is vital. By embracing competition in the marketplace, government entities can obtain the best buy for products or services, as well as receive assurance that they are spending taxpayer dollars wisely. In addition, various legislation requires that public agencies establish a competitive climate to promote equal opportunity among vendors vying for government business.
One government agency, the Department of Procurement Management (DPM) for Miami-Dade County, FL, plays a leading role in supporting and advancing a competitive culture to increase sources of supply. The DPM buys nearly $1 billion in goods and services each year, on behalf of approximately 47 departments or agencies within the county.
A chief crusader for enacting pro-competition practices within the county is Theodore G. Lucas, CPPO, DPM Director. Lucas firmly believes that healthy competition among vendors creates a stronger economy and better value for customers. He emphasizes that a competitive vendor environment is paramount in establishing an agency’s credibility.
“It is important that your elected officials, your taxpayers, and the public have confidence in the fairness and honesty of your purchasing processes.” Lucas says. “That gives you the credibility to procure effectively and to generate competition and interest among vendors.”
Lucas adds that agencies can attain credibility through a professional staff, as well as through optimum purchasing procedures designed to enhance the “transparency” of government. This transparency relates to promoting openness by assuring equal access to both information and participation in the procurement process.
“One key point is simply to utilize competition as often as possible,” Lucas advises. “That alone is a remedy in and of its own self toward achieving credibility.”
Dedicated Unit Takes Form
Although public purchasers may believe that a competitive culture is beneficial in theory, agencies might find it easier and faster to waive competition in favor of a particular vendor or product.
“Sometimes, all too frequently, user departments have become comfortable with a particular product, or with a particular business or contractor, and they are persuaded one way or another that this is the best or the only way to go,” Lucas explains. He adds that by showing the user department that there are other alternatives, the department may reap the benefits of new technology, new methodology, and often better prices.
Lucas decided to take aggressive actions to ensure that procurements in Miami-Dade County capitalized on competition and saved tax dollars. He specifically centered on reducing the number of sole-source procurements, which waive competition because there is believed to be only one supplier that can provide a specific product or service. Custom-designed software is a prime example of a proprietary, sole-source product.
In addition, Lucas sought to reduce the number of bid waivers awarded by the county. A bid waiver allows procurements to bypass formal, competitive bidding, if it is determined to be in the county’s best interest.
To decrease non-competitive procurements throughout the county, Lucas launched plans to create a dedicated unit.
“In 2001 we conducted a national recruitment for a seasoned procurement professional,” Lucas says. “In December of that year, we hired Amos C. Roundtree as the county’s Procurement Competition Advocate. After just a few short months, we learned that to effectively reduce the number of non-competitive actions would require an enhanced emphasis, with a staff dedicated to that end. The Competition Acquisition (CA) Unit was formed in November 2002.”
The County Manager approved Lucas’ plan of creating the CA Unit, based on established goals of reducing sole-source procurements. In addition, a major selling point was that Lucas’ plan did not require hiring additional employees. Instead, Lucas transferred five employees from the Bids and Contracts Division to focus on non-competitive actions. The CA staff could then develop core competencies in the areas of market research and analysis, specification writing, and benchmarking.
The employees remaining in the Bids and Contracts Division could then center on procurements already deemed to be competitive.
Overall, the realignment benefited the DPM by enabling employees to focus on particular areas of expertise for greater efficiencies.
At the federal level, a competition advocate is required for procurement activities performed by executive-branches of government. Requirements are outlined in Section 20 of the Office of Federal Procurement Policy Act, as well as the Federal Acquisition Regulation (FAR).
However, the appointment of a competition advocate at the local level was a new concept for county government. The position was established to help the county identify and challenge barriers to competition, as well as to promote competitive opportunities among vendors, including small businesses.
“To my knowledge, we are the only non-federal entity that has the position of competition advocate,” says Roundtree, who serves as the county’s Procurement Competition Advocate, as well as Director of Miami-Dade County’s Purchasing Division, one of various divisions in the DPM. “Also, I don’t know of any jurisdiction that has a unit dedicated specifically to addressing noncompetitive actions.”
Assessing the Competition
Of the five employees in the county’s CA Unit, three procurement contracting technicians handle non-competitive actions less than $100,000, and two senior contracting agents address procurements over $100,000.
Duties of the CA staff include:
- Reviewing all requests for solesource and bid-waiver acquisitions.
- Evaluating specifications and Statements of Work to ensure that no artificial barriers or unnecessary restrictions prohibit or reduce vendor competition.
- Working closely with user departments to encourage that mini-requirements are expressed in terms of performance factors or functionality.
- Effectively negotiating contract terms and conditions, price, and quality, when a waiver is in the best interest of the county.
- Advising departments in preparing for future acquisitions.
- Performing both product and industry market research to determine if alternative sources of supply are available to meet the requirements.
Employees in the CA Unit do not approve purchases. Instead, they focus on identifying barriers to competition and determining if alternative sources of supply or solutions exist in the marketplace. Through in-depth market research, the CA staff determines whether specifications can be drafted to open up competition for a product or service.
If determining that alternative sources of supply exist, the CA Unit works closely with the user department to develop specifications that clearly describe expected outcomes of the purchase. The Unit will then perform all processes to handle the solicitation as a competitive action.
“The way that I describe it to my staff,” Roundtree says, “is that your intent is to see if you can support the justification to waive competition. The reason I want them to approach it that way is so that we forge a collaborative relationship with the endusers, as opposed to an adversarial one. I’m not trying to disprove what the user department has said. I’m simply trying to validate their justification. If I can validate it, I’ll support it as a non-competitive action.”
When collecting market research to determine if a procurement can be competitively bid, Roundtree suggests that the following factors be considered, whenever practical:
- Industry trends and customary terms and conditions regarding warranties, acceptance, and inspection.
- Buyer financing, including methods and best practices.
- Capable sources, including small businesses.
- Competitive factors such as quality, product features, speed of technology, and typical lead time.
- General pricing information and availability of products.
- Standard maintenance support.
- Practices by commercial firms or other government entities, as well as support capabilities of industry.
- Environmental issues ranging from recovery and disposal of products to energy-efficiency standards.
“The extent of market research may vary,” Roundtree notes, ” depending on factors such as urgency, the estimated dollar value, complexity, past experience, and the amount of information already available.”
Roundtree adds: “It is important to remember that market research is not a substitute for full and open competition. It is not to be used to determine which product or service, supplier, or proposer is best. Market research is conducted to determine the availability of products or services that meet the county’s minimum requirements and to ensure that specifications are not exclusionary or otherwise restrictive.”
To tap into sources of research data, CA employees sometimes start with the DPM’s own database of vendors. The database is set up to coincide with commodity codes established by the National Institute of Governmental Purchasing.
Roundtree also suggests the following sources to conduct market research:
- Subject-matter experts within the county, other governments, or private industry.
- Colleagues from other jurisdictions around the country.
- Publications and trade journals from industry.
- Marketing organizations, professional associations, and trade shows.
- Various Web sites (a sampling is listed at the bottom of this page).
Roundtree cautions that obtaining information from vendors may contribute a biased view. Vendors might intentionally tout their company’s products as being superior in order to obtain county business. In addition, sales people might emphasize the “pizzazz” or special qualities of their company’s products. This pizzazz might not be needed by the county to meet valid requirements and reasonable expectations of the specific procurement.
Rather, Roundtree advises that “more times than not, the [vendor’s] competitors will be honest with you. They’ll tell you exactly what they can and cannot do.”
Secrets to Success
If market research suggests that a procurement can be competitively handled, the CA Unit may suggest a short-term, temporary solution to satisfy the user department’s immediate needs and assure continuity of service. With certain product areas, such as elevators or water treatment plants, non-stop service is crucial, without undue time required to draft specifications for opening up competition.
“We learned that we had to be flexible in our approach,” Roundtree states. “We had to demonstrate that we were considerate and compassionate of the end-user’s needs. They had a functional responsibility to ensure that their operational units were functioning according to design. We had a responsibility to make sure that we did not impede that function, even in the name of competition.”
Thus, the CA Unit may suggest that a temporary, fixed-term contract (such as 12 months) be awarded to a vendor. Over this period, the CA staff will then work with the user department to develop specifications. Once specifications are drafted, a replacement contract can be awarded through competitive processes.
“We learned that much of the tendency by client departments to request waiver of the competitive process in favor of a particular vendor was based on two major factors: expediency and the inability to develop specifications suitable for competition,” Roundtree says. He adds that a temporary contract provides a solution by mitigating the impact of delays, while allowing time to develop specifications.
“If we do not have specifications suitable for competition,” Roundtree notes, “no real competition can happen.”
Although the process of developing specifications takes time, the CA Unit is continually making strides in streamlining the procedure to expedite procurements. In addition, Roundtree suggests that user departments work hand-in-hand with the CA Unit in early stages of planning the procurement to avoid delays in drafting specifications.
Roundtree also advises that performance-based specifications, which allow for the creativity and innovation of vendors, are preferred over detailed, technical specs.
Andrew S. Zawoyski, CPPO, CPPB, Chief Negotiator in the DPM, likewise recommends performance-based specifications because they offer measurable outputs.
“When you start writing your own specs, you might not be taking advantage of state-of-the-art technology that might exist in the marketplace,” Zawoyski says. “With performance-based specs, we’re going to tell [the vendor], ‘These are our needs, and this is what needs to get done. Tell me how you would do it.'”
Zawoyski also emphasizes the importance of negotiating with vendors to obtain the best deal. For bargaining power, he suggests finding out details about a specific contractor, such as knowing if the contractor is in a financial bind or is planning to phase out a specific product. Threatening the contractor with a shorter contract period to explore other alternatives may also result in the contractor offering better terms.
“Bottom line is if you just accept the vendor’s first offer,” Zawoyski says, “chances are that you left something on the table.”
Is lowest cost the most important criteria in evaluating vendors’ bids? “I do not believe low cost is a prime factor of competition,” Roundtree states. “It is a combination of many factors found in a competitive environment that typically yield positive results for a ‘quality purchase’ by our government. We define quality as the aggregated characteristics of a good or service that meet or exceed our valid requirements and reasonable expectations at the lowest possible price. This, in our view, is true value, and the competitive process typically will yield bestvalue purchases.”
Since establishing the CA Unit to reduce non-competitive procurements, results have been impressive.
“When the Unit was formed,” Roundtree notes, “about 37 percent of our active contracts were noncompetitive. To date, at last count, we were around 23 percent. We have been able to identify over 100 current bid waivers or sole-source contracts that can be competed.”
Roundtree estimates the value of these contracts at $22 million. Various product and service areas have reaped cost savings by opening up contracts to competition, especially those areas that combine a product and service (such as elevators with companion maintenance contracts to assure timely servicing).
“It’s a heck of a balance for purchasing professionals because we’re charged with the responsibilities of procuring goods and services at a reasonable and effective price,” Roundtree says. “We’re also charged with making sure we do so in a transparent manner. And, we’re charged with making sure that we have timely delivery to our endusers.”
To ensure that vendors have equal access to information, the county believes in developing supplierfriendly practices and using the latest e-procurement advances. For instance, vendors can log on to the DPM Web site, www.govinfo.bz/ 4356-118, and register to receive e-mail notices of upcoming solicitations, which can then be downloaded directly from the Internet.
The county also posts Advance Notices to Waive Competition on its Web site, and vendors can review tentative, non-competitive contracts to see if they qualify as potential suppliers.
“Our mandate is clear,” Roundtree states. “Miami-Dade County will purchase its goods and services through full and open competition, when practical and in its best interest to do so.”
Gateways to Market Research
In Miami-Dade County’s Competitive Acquisition Unit, employees often access Web sites to conduct market research, identify sources of supply, and determine if a product or service can be competitively bid. Amos Roundtree, Director of the county’s Purchasing Division and Procurement Competition Advocate, recommends the following sites for accessing a wealth of information:
VARIOUS GOVERNMENT AGENCIES AND ASSOCIATIONS: