1. Procurement Transformation State of North Carolina
Jocelyn Thornton, C.P.M.
Transformation Project Manager
April 24-25, 2012

2. Background
On January 12, 2009, Governor Perdue issued Executive Order No. 5, which created the Budget Reform and Accountability Commission (BRAC).
At approximately the same time, the Office of State Budget and Management (OSBM) initiated a review of statewide procurement as a result of Executive Order No. 4, NC Open Book
The State has a complex set of procurement processes and systems
Decentralized structures exist, with little collaboration among the agencies to identify what improvements are needed
Lack of Central Compliance Resources, Stringent Training Standards
Its charge was to “advise the Governor on…measures that improve efficiencies, cost-savings and effectiveness…”
Open Book, which directed OSBM to create a searchable website on all grants and contracts awarded over $10,000, which would also include specific vendor and agency information
During the initial stages of identifying the data systems that might feed such a website, it became apparent that there is not a unitary
procurement process or entity. Rather, the State has a complex set of procurement processes and systems

3. Project Vision
“Create a customer-focused enterprise to achieve increased procurement effectiveness, efficiency, and compliance resulting in significant financial benefit for taxpayers by reducing the costs of acquiring goods and services.”

4. Expected Benefits
Streamline procurement functions across state government by increasing efficiencies, leveraging buying power and reducing overlap of key functions.
Better value and more effective use of tax dollars
More consistency across the enterprise to leverage buying power
More efficient processes and systems to provide customers with what they need—when they need it
Employees working together to better serve their customers and the taxpayers

5. Guiding Principles
Best Value - Procure at the lowest total cost of ownership
Customer Focus - Address all stakeholders’ business needs
Delivery Excellence - Develop, maintain, and execute standardized, repeatable procurement processes and procedures
Compliance and Accountability - Enforce compliance with statutes, administrative codes, executive orders, and policies
Operational Efficiency - Align people, processes, and technology
Workforce Excellence – Build and maintain the right knowledge and skills
Strategic Planning - Strategically plan procurement activities
Best Value - Procure goods and services at the lowest total cost of ownership by leveraging the State's buying power using the most appropriate channels to deliver economic value for North Carolina taxpayers
Customer Focus - Address all stakeholders’ business needs and manage their expectations in a timely, informative, and responsive manner
Delivery Excellence - Develop, maintain, and execute standardized, repeatable procurement processes and procedures across the procurement function – supported by technology where appropriate – to achieve targeted business outcomes
Compliance and Accountability - Enforce compliance with statutes, administrative codes, executive orders, and policies while providing appropriate transparency for stakeholders through monitoring, measuring, and reporting activities
Operational Efficiency - Align people, processes, and technology to optimize the procurement function against defined procurement goals and metrics
Workforce Excellence - Maintain a workforce with the right knowledge and skills to be viewed as a trusted partner on procurement related issues to achieve targeted business Outcomes
Strategic Planning - Strategically plan procurement activities using a proactive and collaborative approach to optimize the return on investment for the State of North Carolina

6. Six Cross-functional Teams
Change Management and Communications
eight members representing six agencies
Contract Management and Compliance
nine Members representing seven agencies
Policies and Procedures
nine members representing seven agencies
Staff Organization and Training
sixteen members representing ten agencies
Strategic Sourcing
eleven Members representing six agencies
Governance
eight Members representing five agencies

7. Contract Management and Compliance
Establish a standard contract management process
Create standard contract templates such as:
Contract close-out checklist
Contract file checklist
Contractor performance checklist
Develop and deploy a revised contract administration/monitoring guide
Finalize contract monitoring requirements, per SB 1213
Standard contract management process that includes specific protocol for managing contract templates, tracking contract reviews, establishing notifications for upcoming contract reviews and expirations,

8. Change Management and Communications
Consider communications best practices
Create standard communications vehicles
Ensure timely information sharing
Conduct readiness survey to gauge the effectiveness of initiatives, and identify issues
Closely align the change management effort with program leadership
Leverage Change Agents as a way of formalizing peer-to-peer information sharing
Leverage various forums to share successes and leading practices

9. Policies and Procedures
Responsible for recommending improvements to North Carolina procurement related statues and administrative codes to improve
consistency, streamline processes, and encourage best value
procurement
Consolidate and streamline relevant statutes and administrative codes
Clarify rules and exemptions to statutes
Review and modify IFB/RFP/RFQ templates where appropriate
Consolidate and streamline relevant statutes and administrative codes making the legislation for the
procurement of goods and services easier to understand
Clarify rules and exemptions to statues reducing the room for error and improving compliance

10. Staff Organization and Training
Charged with assessing current procurement training, organizational structure, job profiles, titles and existing career paths
Establish a Strategic Sourcing Group within State Procurement
Establish an Open Market Group within State Procurement
Establish an Operations group within State Procurement
Deploy standardized job titles and job profiles
Create a single purchasing manual for use by all state procurement organizations
Deploy a comprehensive procurement training program
Two central purchasing authorities (P&C and IT Procurement) perform similar functions under different
statutes, utilizing different processes resulting in duplication of efforts and added complexity
Purchasing professionals in P&C and IT Procurement spend significant time on tactical activities (open market
orders) preventing them from pursuing more strategic activities
There are 24 different formal procurement-related job titles and many additional working job titles
There is no formalized procurement training curriculum tied to each job profile
Operations Group to support the operational aspects of the procurement function (training, compliance, analytics) Complete the implementation of organizational changes within 16 months of beginning the Implementation
State Procurement, state agencies, and community colleges) for all procurement-related positions using relevant
industry/trade benchmark findings and leading practices

11. Strategic Sourcing
Responsible for implementing a statewide strategic sourcing methodology
Focus on the initial commodity and service groups which will be sourced
Assess opportunities and prioritize Wave I, II and III categories
Solicit input from end users
Develop category strategy
Negotiate and develop sourcing recommendations
Implement agreements
Monitor and manage agreements proactively
Talk about WSKA contracts, UPS/FEDEX Medical supplier etc.

12. Governance Charged with recommending a structure, processes, and
measurements to govern the procurement function after transformation
Recommend a Procurement Governance Team with representatives from State agencies, community colleges, universities, LEAs, and local governments
Develop a set of key procurement performance metrics
Continue oversight and guidance through use of a diversified steering committee

13. Technology Upgrade Online catalog Improvement
Initiative began in October 2011 and had three primary objectives
Improve catalog content
Refine the processes utilized to develop new catalogs
Establish a continuous improvement program
To allow end users to more easily search for and select items they wish to purchase
2. Refine processes updating existing catalogs, remove expired catalogs to ensure the catalog library accurately reflects the underlying portfolio of P&C and ITS contracts
3. To maintain high quality standard and further improve coordination around catalogs between vendors, P&C and ITS contract administrators, end users, and the E-Procurement team
You will be hearing more about this initiative as part of the E-procurement software update.

14. Summary: Current Priorities:
Develop standard contract administration/monitoring guide
Develop standard procurement manual
Develop standard templates and memo’s
Deploy training and update websites for refresher training and reference
Establish tools for continual communication among agencies
Identify and recommend procurement related changes to General Statues, Administrative Code and Operating Procedures
Develop key performance indicators
Prioritize categories for sourcing; statewide contracts (goods & services)
Methodology to save dollars and improve processed for tax payer
Develop modernized job classifications for purchasing positions
Outline purchasing professional career path
Goal is to improve consistency, streamline processes, encourage best value procurement standardize existing solicitation forms (RFQ, IRB, and RFP Develop instructional guidelines on when to use the forms and standard paragraphs. Reviewed by appropriate management.
Sub Rule team, eliminate obsolete references, inaccurate references (administer disposal of state property etc.)

15. Conclusion
Long term process 2 – 3 years to implement numerous initiatives
No longer a project – Just how we conduct procurement

16. QUESTIONS
???