State of Texas Procurement Overview Richard D. Ehlert, CTPM Texas Building & Procurement Commission Internal Procurement Manager

Training Overview Procurement Basics Explaining Exhibit A, HUB Subcontracting Plan Challenges for State of Texas Purchasers Value-Added Work Ethics Summary

TBPC Internal Procurement What does TBPC Internal Procurement do? Procure Goods/Services for TBPC use Anything from office supplies to new construction of State Office property Procure Goods/Services for other agencies as mandated by HB3042 Custodial, Security, HVAC Repair, MEP, A/E Services, etc… Uses all methods of procurement from term contracts to complex solicitations Co-sponsor (with Accounting) the P-Card program Administer the Procurement Databases Administer the TBPC HUB Program

TBPC Internal Procurement What does Internal Procurement do? Procurement Totals: Purchase Orders POCN’s Totals FY $125,497, FY06 1, $ 62,305,718.34

Procurement Basics Purchasing Dollar Thresholds $ $5, Spot Purchase ONE hard copy quote/bid required; HUB’s suggested $5, $25, Informal Bid Telephone allowed; THREE quotes/bids required; TWO of the bids must be HUB’s; hard copy quotes for po placement $25, UP Formal Bid Posting on ESBD & notification to all vendors registered under the applicable Class/Item code with minimum posting times (usually calendar days).

Procurement Basics (con’t) What is a Class/Item Code? This is the NIGP assigned code for the item and/or service your are procuring. These codes are listed in the NIGP Commodity Book. Example would be: Door Installation, Maint & Repair (Metal) Binoculars The ‘Class’ is a broad category The ‘Item’ is more specific Why is this important to me? This is your first clue as to where to look for a source to obtain your desired item. – CLUE – LEAD TIME The CMBL contains a list of vendors, including HUB’s, registered by Class/Item code.

Procurement Basics (con’t) How do I access the NIGP Commodity Book? From the TBPC website, of course. Search by alpha listing, and by description Living Code is available that provides detailed, standardized descriptions w/ 11-digit How do I access the CMBL? From the TBPC website, of course. Search by Class/Item code Defaults to ‘All Vendors’; choose a category

Procurement Basics (con’t) Purchasing Methods & Choices Surplus Property Anything valued at less than $ is free to State employees for State use Inventory updated and available on-line urplus/locations-and-inventory urplus/locations-and-inventory State of Texas Surplus Manager: Shannon Franklin,

Procurement Basics (con’t) Purchasing Methods & Choices (con’t) Procurement ‘Set-Asides’ These are purchases which, either according to statute or award, are exempt from competition. (this means – no competition required). Examples of these include TIBH / TCI.

Procurement Basics (con’t) Purchasing Methods & Choices (con’t) Automated Term Contracts These are awarded, on a Statewide level, by POCS at TBPC. All State agencies are to use term contracts whenever possible, if the product or service meets the requirement. Once you have determined your Class/Item Code, you may access the Term Contracts from the TBPC website, direct weblink below: Search by Class/Item code Determine if item description, cost, and lead time fit your needs.

Procurement Basics (con’t) Purchasing Methods & Choices (con’t) DIR Go Direct These are contracts and awards for AIS (Automated Information Systems) and technology based commodities and services. These are also exempt from competition. Go to the DIR website at Search by Vendor Name, Contracts, or by Class/Item Code/CISV Negotiation allowed

Procurement Basics (con’t) Purchasing Methods & Choices (con’t) CISV ‘Catalogue Information Systems Vendors’; if AIS item is not on DIR Go Direct, use these TBPC approved vendors for AIS items/services. Search by Class/Item Code Make sure vendor is a CISV Vendor Over $5K; three quotes required Negotiation allowed

Procurement Basics (con’t) Purchasing Methods & Choices (con’t) TXMAS These are contracts that are awarded to vendors that qualify, based upon the fact that the vendor has a Federal GSA contract in place. These are also exempt from competition. Access the TxMAS Schedule from the TBPC website; direct link below: Search by item or service description Determine if item description, cost, and lead time fit your needs. Negotiation is allowed; Internal Procurement Purchaser will assist. Additional two hour TXMAS training available Richard San Jose

Procurement Basics (con’t) Purchasing Methods & Choices (con’t) Interagency Contracts (IAC’s) Signed Contract/Memo with another agency Contract – over $50K Memo – under $50K When your agency pays for goods/services from another agency, a purchase order should be issued

Procurement Basics (con’t) Purchasing Methods & Choices (con’t) Internal Repairs Definition: When the extent of the repair cannot be reasonably determined until the equipment is disassembled. An internal repair must contain labor and may include parts. Example: Repair of an air conditioner that quit working. Proprietary Purchases Justification Form required Reference Government Code Must be solicited/advertised

Procurement Basics (con’t) Purchasing Methods & Choices (con’t) Emergency Purchases Justification Form Required Reference Government Code Competition Spot Purchase, Informal, and Formal

Procurement Basics (con’t) Purchasing Methods & Choices (con’t) Payment Card A business to business MasterCard credit card which allows designated employees to pay for spot purchases under delegated authority and dollar limit directly from merchants. Goals of the Program: Cost reduction through time/money saved Shortened procurement cycle Employee empowerment

Procurement Basics (con’t) Purchasing Methods & Choices (con’t) Payment Card (con’t) Benefits Efficient tool. Faster payment to vendors. Provides transaction details on monthly Smart Data statement Departmental delegated authority: agency sets limit Single purchase limit: $2,000 per cardholder Monthly purchase limit:$5,000 per card (standard) State law mandates that large purchases shall not be broken down into small purchases to avoid the competitive bid process.

Procurement Basics (con’t) How do I know what the order of precedence is for a procurement? Generally, the order is: Surplus Property DIR / CISV / CCG Set aside Term Contract TXMAS Competition $25K and over; posting time requirement How do I know if what I want is available on set-aside, Term Contract, or TXMAS? The TBPC website, of course.

Procurement Basics (con’t) How to find a source for your procurement Every situation is specific, however here is a brief outline of the standard process: Determine Class/Item Code Determine if the item can be obtained through Surplus Determine if the item is a DIR/Go Direct/CISV Determine if item can be bought from a TXMAS contract Determine if the item can be bought from a set-aside Determine if the item is on Term Contract Determine your competition – remember HUB reqmnt

Procurement Basics (con’t) The Agency Purchaser has the responsibility and ultimate decision on assigning the correct and most appropriate procurement method in accordance with statute, rule, and policy.

Procurement Basics (con’t) State of Texas Procurement Requirements Structured by: TGC (2155, 2156, others) TAC &pt=5&ch=113 Procurement Manual Contract Management Guide /contractguide Business Best Practices

Procurement Basics (con’t) State of Texas Procurement Requirements (con’t) Documentation for every purchase order Quotes/bids – hard copy format CMBL / vendor list Original and completed requisition Purchase Order Comptroller check EPLS check Posting notification (ESBD – over $25K) 14-day minimum for posting Award notification HSP ($100K and over)

Procurement Basics (con’t) State of Texas Procurement Requirements (con’t) Contracts $1M and over CATRAD requirement On-line questionnaire and solicitation submission Contracts $5M and over Posting on ESBD Including updates/amendments/pocn’s

Procurement Basics (con’t) State of Texas Procurement Requirements (con’t) LBB Reporting a contract for $14,000 or more for consulting services as defined by Section (1), Government Code; a contract for $14,000 or more for professional services as defined by Section (2), Government Code; a contract for $14,000 or more for construction services; a contract for $100,000 or more for major information systems as defined by Section , Government Code; or a contract for $50,000 or more for goods or services that are not consulting services, professional services, construction services or major information systems

Procurement Basics (con’t) State of Texas Procurement Requirements (con’t) Renewing and Managing Contracts and Purchase Orders Contract Administrator should call the vendor to discuss the renewal and obtain verbal approval from vendor Contract Administrator should be familiar with the contract in order to know how much the renewal will cost: Escalation fees and allowed increases Complete requisition Procurement verifies costs to the contract and communicates the renewal to the vendor in the form of a Purchase Order Change Notice (POCN)

Procurement Basics (con’t) State of Texas Procurement Requirements (con’t) Renewing and Managing Contracts and Purchase Orders (con’t) Contract and/or Purchase Order Term: All contracts/purchase orders must have a term defined Accounts Payable cannot pay for an item or service unless it falls inside the term date If your purchase order will not be completed within the originally defined term period, then you should complete a Purchase Order Change Notice (POCN) to define the new term date Provide a brief reason

Procurement Basics (con’t) State of Texas Procurement Requirements (con’t) Renewing and Managing Contracts and Purchase Orders (con’t) What are some of the reasons for a POCN? Price Change Purchase Order Term Change Increase or decrease the dollar amount on a PO Change Org Code or Funding Source

Explaining Exhibit A – the HSP HSP is required for all solicitations $100K and greater TBPC Link to HSP Form: forms forms

Explaining Exhibit A – the HSP (con’t) § AGENCY DETERMINATION REGARDING SUBCONTRACTING OPPORTUNITIES; BUSINESS SUBCONTRACTING PLAN. (a) Each state agency that considers entering into a contract with an expected value of $100,000 or more shall, before the agency solicits bids, proposals, offers, or other applicable expressions of interest for the contract, determine whether there will be subcontracting opportunities under the contract. If the state agency determines that there is that probability, the agency shall require that each bid, proposal, offer, or other applicable expression of interest for the contract include a historically underutilized business subcontracting plan. (b) When a state agency requires a historically underutilized business subcontracting plan under Subsection (a), a bid, proposal, offer, or other applicable expression of interest for the contract must contain a plan to be considered responsive. Added by Acts 1999, 76th Leg., ch. 1499, § 2.10, eff. Sept. 1, 1999.

Explaining Exhibit A – the HSP (con’t) § GOOD FAITH COMPLIANCE WITH BUSINESS SUBCONTRACTING PLAN. (a) When a state agency requires a historically underutilized business subcontracting plan under Section , the awarded contract shall contain, as a provision of the contract that must be fulfilled, the plan that the contractor submitted in its bid, proposal, offer, or other applicable expression of interest for the contract. The contractor shall make good faith efforts to implement the plan. A contractor's participation in a mentor-protege program under Section and submission of a protege as a subcontractor in the contractor's historically underutilized business subcontracting plan constitutes a good faith effort under this section for the particular area of the subcontracting plan involving the protege. (b) To the extent that subcontracts are not contracted for as originally submitted in the historically underutilized business subcontracting plan, the contractor shall report to the state agency all the circumstances that explain that fact and describe the good faith efforts made to find and subcontract with another historically underutilized business. (c) The state agency shall audit the contractor's compliance with the historically underutilized business subcontracting plan. In determining whether the contractor made the required good faith effort, the agency may not consider the success or failure of the contractor to subcontract with historically underutilized businesses in any specific quantity. The agency's determination is restricted to considering factors indicating good faith. (d) If a determination is made that the contractor failed to implement the plan in good faith, the agency, in addition to any other remedies, may bar the contractor from further contracting opportunities with the agency. (e) The commission shall adopt rules to administer this subchapter.

Reviewing the HSP Why is it important to give clear direction? Intensive process Vendor compliance reliant You need the vendors bid or proposal The vendor needs clear direction for success

Reviewing the HSP (con’t) INTRODUCTORY REMARKS The Historically Underutilized Business Program activities are designed to promote full and equal business opportunities for all businesses in the State of Texas. Therefore, in accordance with Gov’t Code § , the contracting agency has determined that subcontracting opportunities are probable under this contract. Therefore, respondents, including State of Texas certified Historically Underutilized Businesses (HUBs), must complete and submit a State of Texas HUB Subcontracting Plan (HSP) with their solicitation response. NOTE: Responses that do not include an HSP WILL be rejected pursuant to Gov’t Code § (b). The percentages located in the second major paragraph at the top of page one of the HUB Subcontracting Plan are goals established by the Texas Building & Procurement Commission for each of the listed contract types. These goals are defined in Texas Administrative Code

Reviewing the HSP (con’t) SECTION 1 Everyone will complete Section 1. Section 1a: Complete the fields for: ‘Respondent/Company Name’ ‘State of Texas VID #’ ‘Point of Contact’ at your firm during the solicitation ‘Phone #’ of the primary contact Section 1b; check either ‘Yes’ or ‘No’ if your firm is a certified State of Texas HUB. Remember, even if you are a State of Texas Certified HUB, you must complete the HUB Subcontracting Plan as directed in the following sections. Section 1c: complete by placing the solicitation number in this field.

Reviewing the HSP (con’t) SECTION 2 Everyone will complete Section 2 and select either ‘Yes’ or ‘No’. Section 2: if you select ‘No, I will not be subcontracting any portion of the contract and will be fulfilling the entire contract with my own resources’: Skip to Section 9 on the third page of the HSP, and state in narrative format your justification, ability, and affirmation to self perform all portions of this contract. Complete Section 10 with your signature, printed name, title, and date. This form must be signed by an authorized representative of your company, and by your signature you affirm that if awarded, your company will comply with the requirements of the HSP and those requirements listed in Section 10. Section 2: if you select ‘Yes, I will be subcontracting portion(s) of the contract’: For every trade that you will subcontract, you must list those trades in the fields provided. For example, if, in a construction solicitation you would be subcontracting mechanical drawings, you would place the trade name ‘mechanical and cad drawings’ in Box #1 in Section 2. Complete the boxes provided in Section 2 for as many trades as you will subcontract. If you have more than twenty trades to subcontract, simply download the extension from the link provided at the bottom of Section 2 on this first page of the HSP.

Reviewing the HSP (con’t) SECTION 3 - SECTION 8 For every trade that you listed in Section 2, you must complete page 2 of the HSP Sections 3 – Section 8; this is where you will document your required ‘Good Faith Effort’ in developing and completing the HSP. As an example, if you listed four trades in Section 2, then you will perform a Good Faith Effort for all four trades, and submit four pages of the HSP containing Section 3 – Section 8. At the top of page 2 complete the field for ‘Enter your company’s name here’ and ‘solicitation number’. SECTION 3 Section 3: continuing with our example from Section 2 Box #1, ‘mechanical and cad drawings’, place the line item number and trade description from Section 2 in the spaces provided in Section 3. Example ‘Line Item #1’, and ‘Description cad and mechanical drawings’.

Reviewing the HSP (con’t) SECTION 4 If you, the prime contractor (and respondent to the RFP) are a mentor to the selected subcontractor for this particular trade, and this relationship is documented by an official State of Texas Mentor-Protégé Agreement, you have met the Good Faith Effort for this particular subcontracting opportunity under Texas Administrative Code , and may select ‘Yes’ and move on to Section 8 and Section 10. If your firm does not meet the Mentor-Protégé requirements listed above, select ‘No’, and move on to Section 5.

Reviewing the HSP (con’t) SECTION 5 This section applies only to Professional Services contracts (as defined by Texas Gov’t Code ). Contracts that are defined as ‘Professional Services Contracts’ are those that require the services of a licensed professional such as: accounting; architecture; landscape architecture; land surveying; medicine; optometry; professional engineering; real estate appraising; professional nursing Normally these services are solicited on an Request for Qualification (RFQ). If this is not a Professional Services solicitation, then this section does not apply, you may check ‘No’ and proceed to Section 6.

Reviewing the HSP (con’t) SECTION 5 (con’t) If this is a Professional Services solicitation, and the total HUB subcontracting percentage is at least 20% or more of the contract, you have met the Good Faith Effort under Texas Administrative Code Select ‘Yes’, and then move on to Section 8 and Section 10. If this is a Professional Services solicitation, and the total HUB subcontracting percentage is less than 20%, you must go on to Section 6 and perform the Good Faith Effort requirements listed in Section 6. Please note that the 20% requirement for Professional Services HUB Subcontracting is the total of all HUB Subcontracting requirements, not a ‘per subcontracting trade’ requirement.

Reviewing the HSP (con’t) SECTION 6 There are three main components of the ‘Good Faith Effort’; you must satisfy all three of the listed components, 6a, 6b, and 6c, and provide supporting documentation: 6a) you must solicit at least three certified HUB vendors, for each trade you plan to subcontract, that provide services or commodities in the applicable trade, from the CMBL & HUB directory located at the link provided 6b) you must provide written notification of the subcontracting opportunities listed in Section 3 to a minority or women trade organization or development centers to assist in identifying potential HUB’s. To locate these organizations, follow the links provided in Section 6b. 6c) you must allow five days for these HUB vendors to respond to your request for quote or bid for the services you are subcontracting. Send your notification to HUB and Minority/Women trade organizations at least five days prior to solicitation submission deadline. Note that procurement letters, requests for quote or bid, fax logs, phone logs, and s are proof of your compliance to the Good Faith Effort and should be submitted with your proposal or bid package.

Reviewing the HSP (con’t) SECTION 7 In this section you will list the three HUB vendors you solicited for the applicable trade listed in Section 3. List the certified HUB vendor’s Company Name, VID number, and the date you contacted the HUB vendor for a quote or bid. Lastly, indicate in the boxes whether or not you received a response to your request for quote or bid from the HUB vendors. Please note that this section is subject to verification by the soliciting Agency’s HUB Coordinator. You must document your notifications to HUB’s and Minority and Women trade organizations and submit with your proposal or bid package. SECTION 8 In this section you will list your chosen subcontractor for the applicable trade. If the vendor you have chosen is not a certified HUB vendor, you must provide, in the space provided at the bottom of Section 8, a brief explanation as to why you did not choose one of your solicited certified HUB vendors (i.e. Best Value, Best Qualified, Lowest Price)

Reviewing the HSP (con’t) SECTION 9 This section applies only if you have chosen ‘No, I will not be subcontracting any portion of the contract’ in Section 2. State in narrative format your justification, ability, and affirmation to self perform any and all portions of this contract. SECTION 10 Complete Section 10 with your signature, printed name, title, and date. The Hub Subcontracting Plan must be signed by an authorized representative of your company, and by your signature you affirm that if awarded, your company will comply with the requirements of the HSP and the requirements listed in Section 10.

Reviewing the HSP (con’t) SUMMARY In summary: If you ARE NOT subcontracting any portion of this contract, complete Section 1, Section 2 select ‘No’, Section 9 and Section 10. If you ARE subcontracting any portion of this contract, complete Section 1, Section 2 select ‘Yes’, complete Section 2 by providing the names of the trades you will be subcontracting, complete Section 3, Section 4 (if applicable), Section 5 (if applicable), Section 6, Section 7, Section 8, and Section 10. You may contact the HUB Coordinator at the Agency that posted the solicitation for assistance in completing this form. You may also contact the Statewide HUB Program Manager at and/or the TBPC Assistant HUB Coordinator at if you need assistance in completing the form.

HSP - Frequently Asked Questions If I am a HUB Vendor do I still need to complete the form? Answer: Yes, the HUB Subcontractor Plan provides opportunities for subcontractors not Prime vendors. How do I find HUB Vendors on the CMBL? Answer: There are two databases: ‘HUB’s on the CMBL’ and ‘HUB’s not on the CMBL’. You may contact your Agency HUB or Asst. HUB Coordinator for assistance and step by step instructions.

HSP - Frequently Asked Questions (con’t) Where do I find a list of Minority/Women entities I can contact to advertise my subcontracting opportunities? Answer: Visit our Minority/Women Business Links at Each link provides a telephone number or address of the appropriate person to contact. If I am a Mentor can I use my Protégé instead of searching for three HUB vendors on the CMBL? Answer: Yes, if you have mentored with a protégé and have an official documented TBPC Mentor-Protégé agreement in place, and the protégé provides the specific class and item code for your subcontracting opportunity, you have met the Good Faith Effort requirements.

HSP - Frequently Asked Questions (con’t) Is the supporting documentation I submit with the HSP verified? Answer: Yes, certified HUB vendors may be contacted randomly to verify that the Good Faith Effort was performed. What determines a Good Faith Effort? Answer: Besides satisfying the three requirements listed in Section 6 a, b, and c: sending HUB vendors detailed written specifications for each specific class & item code you are subcontracting; contacting vendors who provide that specific Class/Item code; and contacting Certified Texas HUB vendors listed on the TBPC CMBL database.

HSP - Frequently Asked Questions (con’t) If I fail to complete my HSP correctly, will it be rejected? Answer: Not necessarily. Clarification may be sought by the HSP evaluator to determine Good Faith Effort compliance before a final decision is made whether to accept or reject an HSP. What are some reasons that HSP’s are rejected? Answer: If the HSP is not developed per the Good Faith Effort requirements listed in Section 6; not legally qualifying for the Mentor-Protégé GFE exemption listed in Section 4; ignoring the HSP requirement.

HSP - Frequently Asked Questions (con’t) How many days do I have to solicit a quote from a HUB vendor? Answer: Five business days prior to bid closing date (Section 6b Good Faith Effort requirement). What resources are available if I need help or have questions completing the HSP form? Answer: you may contact the soliciting Agency HUB or Asst. HUB Coordinator or Purchaser assigned to the solicitation; visit the TBPC website at and review the MP3 Audio File; contact the TBPC Asst. HUB Coordinator at or contact the TBPC Statewide HUB Program Manager Stephanie Richmond at

HSP - What’s New at TBPC MP3 Audio file on TBPC Website that vendors can access to listen to an explanation of how to accurately complete the HSP. MP3 reference is listed on ‘HUB Requirement Clause’ for Term Contract solicitations with a link to the HSP Form and MP3 Audio/Video File

Challenges for State of Texas Purchasers Compliance and Reporting issues Business driven issues Developing Competition

Challenges for State of Texas Purchasers (con’t) Compliance issues Statute requirements Authorized purchases Appropriate procurement method selected Solicitation process has integrity Internal Agency Procurement Training for your agency HUB/PAR Open Records / Transparency in Gov’t Delegation Authority and Review

Challenges for State of Texas Purchasers (con’t) Reporting requirements PCC Codes NIGP Codes ESBD Postings LBB Reporting Contract Workforce HUB/PAR CAT Review

Challenges for State of Texas Purchasers (con’t) Business Driven Issues Purchaser is the ‘gatekeeper’ in regards to fair, honest, and open competition Purchaser must be: Ethical barometer Wordsmith / Editor Facilitator Project Driver Advocate for the State and the Vendor Time driven constraints Resource constraints

Challenges for State of Texas Purchasers (con’t) Developing Competition The dilemma: every vendor starts anew with each solicitation The answer: fair, honest, and professional business practices will attract good vendors, and keep them coming back Work with vendors, not against Win/Win scenarios Educational opportunities Pre-proposal conferences HSP development Vendor debriefs

Value-Added Work Ethics BE RESPONSIVE To your end users and the public BE TRANSPARENT Adopt and utilize good business practices BE ETHICAL There can be no appearance of impropriety Purchaser is the ‘ethics barometer’

Value-Added Work Ethics (con’t) BE COMPETENT Or ask for assistance BRING SOMETHING TO THE TABLE Make it clear to the end user / customer that you are here to bring value and closure ( = award) to the procurement process, not hinder or stop it. Administrative Professional

Summary Know your procurement options and methods as a State of Texas purchaser so that you can assign and facilitate the appropriate procurement method Know your basic requirements as a State of Texas purchaser So that you can protect the State of Texas from damages due to negligence or errors

Summary (con’t) Know how to explain the HUB Subcontracting Plan So that you can promote the State of Texas’ HUB utilization efforts and goals and to promote small and disadvantaged businesses Bring Value to customers So that you can award and bring Best Value to the State of Texas regarding your procurements

Questions? Richard D. Ehlert, CTPM Internal Procurement Manager Texas Building & Procurement Commission