Subcommittee on General Government Government Efficiency Task Force 401 Senate Office Building May 2, :30 p.m. 3:30 p.m.

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1 Subcmmittee n General Gvernment Gvernment Efficiency Task Frce 401 Senate Office Building May 2, :30 p.m. 3:30 p.m. 1) Call t Order 2) Rll Call 3) Discussin f Flrida Retirement System Recmmendatins 4) Public Cmment 5) Adjurn

2 Flrida Gvernment Efficiency Task Frce Subcmmittee n General Gvernment Recmmendatin Analysis Subject Matter: Recmmendatin Regarding State Prcurement Subcmmittee Members: Pat Neal (Chair), Senatr Mike Bennett, Ann Duncan, Frances Rice, and Larry Cretul RECOMMENDATION SUMMARY On April 11, 2011, the Subcmmittee n General Gvernment vted t apprve the fllwing recmmendatins regarding state prcurement: Increased utilizatin f state term cntracts: Review all statutry barriers and remve thse unnecessary fr full utilizatin f state term cntracts. Create a prcess that gives the Department f Management Services (DMS) an apprval rle fr nn-state term cntract purchases by agencies. Increased utilizatin f MyFlridaMarketPlace: Review the 1% usage fee fr MyFlridaMarketPlace (MFMP) and adjust t allw fr the greatest utilizatin by state agencies and ther eligible users. Measure full cycle utilizatin f MFMP thrugh DMS. Prvide a public facing catalg slutin fr ther eligible users f MFMP. Cnvert Flrida cmmdity cdes t the Natinal Institute f Gvernmental Purchasing (NIGP) cdes. Increased effectiveness f MyFlridaMarketPlace: Implement a data analytics slutin fr MFMP. Autmate electrnic psting f slicitatins created in Surcing t the Vendr Bid System (VBS). Autmate the wrkflw between the Ariba Buyer and Ariba Surcing mdules f MFMP. Prvide a public prtal fr cntract infrmatin. Strategic surcing: Utilize the increased visibility and vlume in spend achieved via increased use f state term cntracts and MFMP t strategically prcure cmmdities and services. Create an incentive mdel that utilizes savings achieved by agencies t encurage participatin in strategic surcing.

3 FULL ISSUE(S) ANALYSIS A. BACKGROUND Department f Management Services The Department f Management Services (DMS) prvides administrative and supprt services t ther state agencies and t state emplyees. DMS s areas f respnsibility include, but are nt limited t: Emplyee benefits (retirement and insurance); Human resurce management; Business peratins (real estate develpment and management, state purchasing, and specialized services); Telecmmunicatins; and Agency administratin. 1 State Prcurement f and Cntracts fr Persnal Prperty and Services Under ch. 287, F.S., the Divisin f State Purchasing in DMS is respnsible fr develping and administering standardized prcurement plicies, prcedures, and practices t be used by state agencies in acquiring cmmdities, cntractual services, and infrmatin technlgy. A variety f prcurement methds are available fr use by the agencies depending n the cst and characteristics f the needed gd r service, the cmplexity f the prcurement, and the number f available vendrs. T guide the prcedures fr the prcurement methd t be used, the type f review required, and the methd fr the award f any cntract the fllwing purchasing categries with threshld amunts have been established: Categry ne: $20,000 Categry tw: $35,000 Categry three: $65,000 Categry fur: $195,000 Categry five: $325,000 2 DMS prescribes methds f securing cmpetitive sealed bids, prpsals, and replies. 3 The cmpetitive slicitatin prcess must be used fr prcurement f cmmdities r cntractual services in excess f the categry tw threshld amunt and include any f the fllwing slicitatin methds: invitatins t bid, requests f prpsals, and invitatins t negtiate. Many services prcured by state agencies are exempt frm cmpetitive slicitatin requirements regardless f whether the purchase exceeds the applicable cst threshld, including artistic services, auditing services, and legal services. 4 Agencies currently must seek apprval frm DMS t use an alternate cntract surce t purchase cmmdities r services frm term cntracts r requirements cntracts cmpetitively established by ther gvernmental entities. In apprving the alternate cntract surce, DMS determines if the cntract surce is cst-effective and in the best interest f the State. 5 All agreements in excess f the categry tw threshld must be evidenced by a written agreement and include prvisins fr the required minimum level f service t be perfrmed by the cntractr, criteria fr evaluating the successful cmpletin f each deliverable, and financial cnsequences fr nnperfrmance. There must als be a prvisin dividing the cntract int quantifiable, measurable, and verifiable units f deliverables that 1 See the Department f Management Services website, (last visited 04/18/2012). 2 Sectin , F.S. 3 Rules 60A & 60A-1.002, F.A.C. 4 Sectin (3)(f), F.S. 5 Rule 60A-1.047, F.A.C. 2

4 must be received and accepted in writing by the cntract manager befre payment. Each deliverable must be directly related t the scpe f wrk and specify the required minimum level f service t be perfrmed and criteria fr evaluating the successful cmpletin f each deliverable. 6 State agencies may use a variety f prcurement methds, depending n the cst and characteristics f the needed gd r service, the cmplexity f the prcurement, and the number f available vendrs. These include the fllwing: "Single surce cntracts," which are used when an agency determines that nly ne vendr is available t prvide a cmmdity r service at the time f purchase; "Invitatins t bid," which are used when an agency determines that standard services r gds will meet its needs, wide cmpetitin is available, and vendrs' experience will nt greatly influence the agency's results; "Requests fr prpsals," which are used when the prcurement requirements allw fr cnsideratin f varius slutins and the agency believes mre than tw r three vendrs with the ability t prvide the required gds r services exist; and "Invitatins t negtiate," which are used when negtiatins are determined t be necessary t btain the best value and invlve a request fr highly cmplex, and custmized services, by an agency dealing with a limited number f vendrs. 7 Chapter 287, F.S. als establishes a prcess by which a persn may file an actin prtesting a decisin r intended decisin pertaining t cntracts administered by DMS, a water management district, r certain ther agencies. 8 State Term Cntracts Agencies als purchase cmmdities and cntractual services utilizing agreements called state term cntracts prcured by DMS. 9 A state term cntract is an agreement that leverages the state s vlume and buying pwer t prcure the best price fr services and cmmdities. DMS negtiates state term cntracts when it is in the best interest f the state t purchase mass quantities f a specific cmmdity r service. DMS is als respnsible fr cmpiling statistical prcurement data cncerning the methd f prcurement, terms, usage, and dispsitin f cmmdities and cntractual services by agencies. This data is available in the Flrida Accunting Infrmatin Resurce Subsystem (FLAIR) and the State s MyFlridaMarketPlace (MFMP) centralized e-prcurement system. 10 The advantage f state term cntracts is that the prcurement prcess allws the state t leverage increased vlume and buying pwer t prvide cmmdities and services at lwer cst t state agencies and ther eligible users (OEUs). 11 The mre state agencies and OEUs utilize state term cntracts, the mre leverage DMS has in negtiating a better price. In FY 2011, the Divisin tracked the fllwing state term cntracts: 6 Sectin (1), F.S. 7 See ss (6) and (1), (3), F.S. 8 See s (2)(c), F.S. 9 See ss (2)(a) and , F.S. 10 Department f Management Services Operatinal Audit, Reprt N , January 2011 (cpy n file with Gvernment EfficiencyTask Frce staff). 11 Sectin (11), F.S., prvides that Eligible user means any persn r entity authrized by the department pursuant t rule t purchase frm state term cntracts r t use the nline prcurement system. Rule 60A-1.005, F.A.C., prvides that the fllwing entities are eligible users: Gvernmental entities as defined in sectin , F.S., (a cunty, city, schl bard, r special district, 3

5 PCs, laptps, and mnitrs; 12 Infrmatin Technlgy (IT) netwrk infrastructure; 13 Medical and dental supplies; 14 Office and classrm supplies; 15 Unifrms; 16 and Office and educatinal cnsumables. 17 DMS identified $41.6 millin in annualized savings ver FY 2011, which equates t 19% savings cmpared t the estimated spend under the pre-state term cntract price. 18 Categry Estimated Annual Spend (Befre Surcing) Actual Identified Annual Savings $ Actual Identified Annual Savings % Impacted FY 11 Spend Actual FY 11 Spend Actual FY 11 Savings PCs, Laptps and Mnitrs IT Hardware: Netwrk Infrastructure Medical/Dental Supplies Office and Classrm Supplies $174,861,114 $56,834,099 33% $88,944, $60,035,496 $28,909, $133,857,238 $15,661,312 12% $91,204, $80,533,987 $10,670, $8,466,927 $2,024,192 24% $1,569, $1,194, $375, $45,717,154 $3,116,256 7% $4,915, $4,580, $335, Unifrms $2,285,981 $325,461 14% $718, $615, $102, Office and Educatin Cnsumables $40,463,264 $1,627,757 4% $31,235, $29,986, $1,249, Ttals $405,651,678 $79,589, % $218,589, $176,947,039 $41,642, Despite the demnstrated success that DMS has attained in reducing csts fr services and cmmdities thrugh state term cntracts, there is a large amunt f unaddressed state spend that is nt vlume purchased thrugh these cntracts. 19 Many state agencies have nt taken full advantage f the state term cntracts prvided by DMS, s vlume purchasing pprtunities are missed. DMS estimates that $1 t $1.7 billin 20 was which have a physical presence in Flrida) and any independent, nnprfit cllege r university that is lcated within the State f Flrida and is accredited by the Suthern Assciatin f Clleges and Schls ACS Reprt prvided by DMS at request f the Gvernment Efficiency Task Frce General Gvernment Subcmmittee Chairman (cpy n file with Gvernment Efficiency Task Frce staff). 19 Flrida Senate, State Cntract Management System, February DMS was able t track $1 billin f state term cntract spend thrugh MFMP and estimates that an additinal $700 millin was purchased n state term cntracts utside f MFMP thrugh FLAIR fr a ttal estimate f $1 t $1.7 billin in ttal agency spend. 4

6 purchased by state agencies thrugh a state term cntract last fiscal year with the pprtunity t surce 21 an additinal $1.8 t $2.5 billin f state agency spend. This ptential surceable spend des nt include OEUs, r cmmdities r services exempted pursuant t s (3)(f), F.S. State Spend Lw Estimate (in billins f $) State Spend High Estimate (in billins f $) Surceable, 1.8 State Term Cntract, 1.0 Surceable, 2.5 State Term Cntract, 1.7 If DMS was able t strategically surce the additinal $1.8 t $2.5 billin in surceable spend thrugh multiple state term cntracts and achieve a savings between 6-10%, the result wuld be in the range f $108-$180 millin 22 t $150-$250 millin 23 per year. Change and Efficiency Increase Use f State Term Cntacts The Subcmmittee n General Gvernment identified tw primary reasns fr under-utilizatin f state term cntacts: 1. Lack f enfrcement capability f DMS fr state term cntracts; and 2. Statutry barriers in the frm f exceptins f use. Apprval f Nn-Use f State Term Cntracts Sectin (2)(a), F.S., prvides that DMS has the duty: T establish purchasing agreements and prcure state term cntracts fr cmmdities and cntractual services, pursuant t s , under which state agencies shall, and eligible users may, make purchases pursuant t s Opprtunity t surce refers t agency spend t which a strategic surcing methdlgy culd be applied (i.e. a state term cntract culd be negtiated t prcure the service r cmmdity). 22 This range is based n a 6% r 10% savings n the additinal $1.8 billin f ptential surceable spend. 23 This range is based n a 6% r 10% savings n the additinal $2.5 billin f ptential surceable spend. 24 Emphasis added. 5

7 Additinally, s , F.S., prvides that: Agencies shall, and eligible users may, purchase cmmdities and cntractual service frm purchasing agreements established and state term cntracts prcured, pursuant t s , by the department. 25 While state agencies are required t utilize state term cntracts pursuant t statute, 26 DMS lacks an enfrcement mechanism. Pursuant t rule 60A-1.044, F.A.C., an agency that chses t purchase utside a state term cntract need nly dcument why the state term cntract des nt meet its needs. Since DMS des nt have a part in the apprval prcess fr nn-state term purchases, the Department des nt receive feedback fr imprvement f state term cntracts, which leads t ineffective cntract negtiatin and spend analysis. The Subcmmittee recmmends creating a prcess that gives the Department f Management Services (DMS) an apprval rle fr nn-state term cntract purchases by agencies. Currently, while an agency may be mandated by statute t purchase frm a state term cntract, there is n apprval r enfrcement mechanism. DMS shuld have an apprval rle fr agency purchases when the purchase can be made n a state term cntract and the agency wants t purchase elsewhere. This wuld aid DMS in cllecting data regarding the effectiveness f the state term cntract and als enfrce utilizatin f the state term cntract when apprpriate. This recmmendatin wuld aid DMS in strategically surcing the estimated $1.8-$2.5 billin in ptential surceable spend t achieve an estimated savings between 6-10%. This wuld equate t a savings f $108-$180 millin 27 t $150-$250 millin 28 per year. 29 Recmmendatin: The Subcmmittee recmmends creating a prcess that gives the Department f Management Services (DMS) an apprval rle fr nn-state term cntract purchases by agencies. Statutry Barriers t Use f State Term Cntracts There are several statutry barriers t use f state term cntracts. Sectin (3)(f), F.S., lists exceptins t the cmpetitive slicitatin requirements, including: Artistic services; Academic prgram reviews; Lectures by individuals; Legal services; Health services; Services prvided t persns with mental r physical disabilities by nt-fr-prfit crpratins; Medicaid services delivered t an eligible Medicaid recipient; Family placement services; Preventin services related t mental health; Training and educatin services; Cntracts entered pursuant t s , F.S.; and Services r cmmdities prvided by gvernmental agencies. 25 Emphasis added. 26 See s (2)(a), and (1), F.S. 27 This range is based n a 6% r 10% savings n the additinal $1.8 billin f ptential surceable spend. 28 This range is based n a 6% r 10% savings n the additinal $2.5 billin f ptential surceable spend. 29 Surcing and management f the added state term cntracts may require additinal staff. 6

8 Fr example, in FY $315 millin, r 24% f the $1.27 billin, in substance abuse and mental health cntracts were prcured under the health services exemptin. 30 This spend may be surceable, but due t the statutry authrity, the purchase is exempt. Additinally, the cmbined spend fr all exempt prcurements is $8.4 billin annually. 31 The Subcmmittee recmmends remving statutry barriers t full utilizatin f state term cntracts. All exceptins t the cmpetitive prcurement prcess shuld be reviewed and thse that are unnecessary shuld be repealed. By remving exemptins, there will be an increase in cmpetitin and ensure the best value fr the State f Flrida. Recmmendatin: The Subcmmittee recmmends remving statutry barriers t full utilizatin f state term cntracts. MyFlridaMarketPlace MyFlridaMarketPlace (MFMP) was established t create a prcure-t-pay system fr cmmdities and services. The system aids DMS in utilizing a strategic surcing methdlgy fr state purchasing. 32 MFMP s purpse is t increase visibility and analysis int statewide spend, which allws the state t cnslidate purchases acrss state entities. The strategic surcing mdel used by the Divisin f State Purchasing (the Divisin) seeks t maximize usage f MFMP by state agencies and ther eligible users (OEUs) t: Increase ttal spend under management; Increase spend visibility; and Leverage the increased visibility and vlume f spend t develp better prcurements. This visibility allws the Divisin t target deeper discunts thrugh negtiatins with suppliers, resulting in strnger cntracts. The State as a whle, including lcal gvernments, realizes reduced csts f prcured prducts and services frm these cntracts. MFMP currently prvides catalg availability nly t agencies in the State f Flrida. Currently, less than 50 percent f State f Flrida spend is under management. Industry best practice is t achieve spend management f mre than 80 percent, which has been achieved by ther states. 33 Utilizatin f MFMP by agencies prvides the fllwing benefits t the state: 1. Supply base management, which reduces prcurement csts; 2. Supplier prtal/netwrk access, which creates greater cmpetitin; 3. Spend analysis, which prvides a better understanding f state purchases; 4. Strategic surcing, which leverages mre dllars in rder t achieve better pricing; 5. Cntract lifecycle management, which reduces transitin csts and prviders greater visibility f spend; and 6. Prcure-t-Pay availability, which reduces transactin csts. 30 OPPAGA, Substance Abuse and Mental Health Cntracting, September 28, 2011, p. 4 (cpy n file with Gvernment Efficiency Task Frce staff). The Subcmmittee n Health and Human Services is addressing the specific issue f substance abuse and mental health services prcurement. 31 Analysis f the State Cntract Management System database and agency data. Includes all exempt purchases, nt just exemptins pursuant t s (3)(f), F.S. 32 Sectin (22), F.S., directs DMS t develp a prgram fr nline prcurement f cmmdities and cntractual services, which develped int MyFlridaMarketPlace. 33 Nrth Highland, Business Case Of The eprcurement Slutins, p.10 (cpy n file with Gvernment Efficiency Task Frce staff). 7

9 In rder fr the state f Flrida t achieve the greatest prcurement efficiency and savings, state agencies need t utilize MFMP t its fullest capability. With greater use, the state agencies will achieve: Tighter cntrl and better visibility f their purchases; Better cntrl f encumbered funds; Significant reductin in invicing and payment csts; and Easier detail and accessibility f spend data fr audit purpses. State Agency Utilizatin f MFMP Currently, MFMP is nt fully utilized by all agencies acrss state gvernment. Measuring agency utilizatin is best captured in terms f the percent f addressable spend that is captured in agency MFMP Purchase Order (PO) dllars. Currently, DMS State Purchasing identified $3.8 billin f addressable spend in Fiscal Year 2011 (FY11). This was derived frm FLAIR payments t vendrs, categrized by accunting bject cde The expected ttal MFMP PO dllars at full agency utilizatin ttals an estimated $3.6 billin. Currently, there are state agencies that are exempted frm bth cmpetitive slicitatin and utilizatin f MFMP. Accrding t DMS, exempt agencies accunt fr an additinal estimated $100 millin in addressable spend, while Purchasing card (P-card) transactins accunt fr an additinal estimated $123 millin in addressable spend. Additinally, apprximately $1.7 billin f the $3.6 billin (47 percent) went thrugh MFMP POs in FY11. Lastly, 32 vendrs accunt fr mre than 65 percent f PO dllars nt entered in MFMP. T better understand current state agency utilizatin trends, the Subcmmittee has brken dwn agency MFMP PO utilizatin belw int three categries: 1. State agencies with high utilizatin; 2. State agencies with medium utilizatin; 3. State agencies with lw utilizatin. The chart belw shws the agencies rganized by MFMP utilizatin. State Agencies with High MFMP Utilizatin (75% r Mre PO Adptin) State Agencies with Medium MFMP Utilizatin (75-30% PO Adptin) State Agencies with Lw MFMP Utilizatin (Less than 30% PO Adptin) The Agency fr Wrk Frce Department f Health State Curts System Innvatin 34 Department f Highway Safety and Department f Crrectins Department f Revenue Mtr Vehicles Divisin f Administrative Hearings Department f State Department f Juvenile Justice Department f Veteran Affairs Department f Elder Affairs Department f Transprtatin Flrida Fish and Wildlife Cnservatin Cmmissin Attrney General and Legal Affairs Department f Envirnmental Prtectin Department f Financial Services Executive Office f the Gvernr Department f Military Affairs Flrida Department f Law Enfrcement Department f Cmmunity Affairs 35 Agency fr Health Care Administratin Flrida Department f Business and Flrida Parle Cmmissin Department f Citrus Prfessinal Regulatin Department f Management Flrida Schl fr the Deaf and Flrida Lttery Services Blind Agency fr Persns with Disabilities Department f Educatin Nte: As f March 2012, the Department f Children and Families has 100 percent fully integrated MFMP utilizatin thrughut the agency. 34 Transitined t Department f Ecnmic Opprtunity in Transitined t Department f Ecnmic Opprtunity in

10 Change and Efficiency Increase Usage f MyFlridaMarketPlace 1% Transactin Fee One f the main identified factrs fr under utilizatin invlved the 1% fee currently charged t vendrs wh utilize MFMP. Sectin (22)(c), F.S., prvides that: The department may impse and shall cllect all fees fr the use f the nline prcurement systems. The statute prvides DMS flexibility in setting the fees fr usage f MFMP. The current 1% is established via rule 60A-1.031, F.A.C., with a list f exceptins t the 1% fee prvided in rule 60A-1.032, F.A.C. The Subcmmittee recmmends that the 1% usage fee fr MyFlridaMarketPlace (MFMP) be reviewed and adjusted t allw fr the greatest utilizatin by state agencies and ther eligible users. Users f MFMP are charged a 1% usage fee. The fee and funding structure f MFMP shuld be reviewed and changed t allw fr the greatest utilizatin. 36 If increased utilizatin was able t generate a 1% savings n nly 50% f the pssible spend that culd utilize MFMP, t the savings wuld ttal $9.5 millin dllars. 37 Recmmendatin: The Subcmmittee recmmends that the 1% usage fee fr MyFlridaMarketPlace (MFMP) be reviewed and adjusted t allw fr the greatest utilizatin by state agencies and ther eligible users. Full Cycle Utilizatin As demnstrated in the belw graph, agencies d nt fully utilize MFMP. Many agencies will rder (create a PO) within the system, but will nt utilize the e-invicing system; instead the agency will utilize FLAIR. Utilizing FLAIR creates additinal sft and hard csts 38 invlved in the invicing prcess. Tw separate reprts estimate a savings f $10-$15 per transactin if the rder were t be prcessed via the e-invicing in MFMP rather than thrugh FLAIR. 39 DMS has estimated a cst savings f $10.9 t $11.9 millin per year if 80% f addressable spend were t utilize the e-invicing system with MFMP. 36 DMS prvided several high level cncepts f a revised fee, including reducing the fee, an e-transactin incentive mdel, and tw hybrid mdels (n file with Gvernment Efficiency Task Frce staff). 37 This is calculated by taking 1% f the 50% f the 1.9 billin in ptential MFMP spend (1% f $950 millin), which equates t $9.5 millin. 38 Sft csts refer t the labr invlved in prcessing the rder, while hard csts refer t the printing and sending f the invice. 39 These reprts were dne by Frrester and Accenture (cpy n file with Gvernment Efficiency Task Frce staff). 9

11 MFMP Invice Payment dllars against MFMP POs Department f Crrectins Department f Transprtatin Agency fr Wrkfrce Innvatin Department f Financial Services Department f Juvenile Justice Department f Educatin Department f Law Enfrcement Agency fr Persns with Disabilities Department f Cmmunity Affairs Department f State Office f Legislative Services Executive Office f the Gvernr Attrney General Department f Military Affairs Divisin f Administrative Hearings Parle Cmmissin PO $ Created in MFMP $ $100,000, $200,000, $300,000, The Subcmmittee recmmends that DMS measure full cycle utilizatin. There are significant savings t be realized by nt printing and mailing ut invices t custmers. The hard csts alne (pstage, paper, custm envelpes) are significant enugh t justify adptin, but there are als significant sft csts in labr savings. Agencies shuld utilize MFMP fr invicing. This recmmendatin wuld result in savings f $10.9 t $11.9 millin per year if implemented. 40 Recmmendatin: The Subcmmittee recmmends that DMS measure full cycle utilizatin. MFMP Enhancements DMS s bjective is t establish the fllwing guiding principles t ensure that MFMP is fully as a best-in class 41 e-prcurement slutin: Maximize spend visibility; Maximize usage by bth agencies and ther gvernmental entities; Bring best value t the state thrugh strategic surcing, standard cntracts, and prcesses; Manage administrative csts thrugh self-service and a shared services delivery mdel; and Create a flexible technlgy platfrm that is easy t use and maintain. There are several enhancements available t the MFMP system that can further imprve the realized efficiencies, prduce greater savings frm ecnmies f scale, supprt pen gvernment requirements, better leverage OEU spend t Flrida s cllective benefit, further ease implementatin f a unified statewide prcurement prcess, embrace natinal and best-in-class standards, and embrace new clud technlgy. 40 The savings estimate is based n DMS calculatins based n tw reprts by Accenture and Frrester. 41 Gartner, Understanding Yur Tp Prcurement Prcesses, May 11, 2011 (Cpy n file with Gvernment Efficiency Task Frce staff). 10

12 The Subcmmittee recmmends implementing a data analytics slutin. MFMP shuld be mdified t assist the state in gaining greater spend visibility fr gds and/r services than is currently available. The gal shuld be data nrmalizatin at a minimum standard f 80 percent f the available dataset cvering: a. Suppliers including but nt limited t: i. Utilizing an external database t demnstrate parent-child relatinships ii. Federal emplyer identificatin number (FEIN) validatin iii. Physical lcatin detail b. Cmmdity cde Including but nt limited t: i. Transitin t Natinal Institute f Gvernmental Purchasing cmmdity cdes ii. Validate cmmdity cde spend against vendr business class c. Supplier business status validatin frm a vendr-supplied database cvering: i. Minrity ii. Veteran iii. Small Business The services shuld prvide infrmatin that will supprt the shared services initiatives the state is currently undertaking and shuld prvide greater visibility in expenditures made by state agencies. This enhancement prvides the necessary data t supprt a strategic surcing prcess fr the State f Flrida. The ability t access disparate data surces and nrmalize spend creates a benchmarking pprtunity that allws agencies and ther users t evaluate prcurement perfrmance. The Subcmmittee recmmends autmating electrnic psting f slicitatins created in Surcing t the Vendr Bid System (VBS). DMS develped and manages the VBS, t which apprximately 1,000 slicitatins are psted each year. DMS als uses the Ariba Surcing applicatin t pst slicitatins and receive respnses. One f DMS s gals is t rll-ut the Ariba Surcing applicatin t all agencies. Currently all agencies use VBS and are required t manually pst infrmatin in the system. DMS shuld create a slutin t facilitate the autmated psting f slicitatin infrmatin in VBS frm Ariba Surcing t avid manually entering data in bth systems. This enhancement will reduce the duplicatin f effrts by state agencies as the Ariba Surcing mdule is rlled ut t ther agencies in Flrida. The Subcmmittee recmmends that DMS autmate the wrkflw between the Ariba Buyer and Ariba Surcing mdules. Buyers must manually create a requisitin within MFMP Buyer when an electrnic qute r surcing event is awarded in the Surcing tl. DMS shuld create a slutin t autmate the creatin f requisitins in Buyer fr electrnic qutes awarded in Surcing. The Subcmmittee recmmends prviding a public prtal fr cntract infrmatin. DMS maintains all statewide agreement dcuments and cntract infrmatin n the DMS website, as well as in the MFMP applicatin. A best-in-class slutin will prvide a tl t maintain cntract infrmatin within MFMP cmplemented by a public prtal fr cntract infrmatin, in rder t prevent the duplicatin f data in multiple lcatins. This enhancement wuld replace the DMS state term cntract website and wuld be available t ther agencies in a shared slutins mdel t supprt transparency in Flrida. Recmmendatins: The Subcmmittee recmmends implementing a data analytics slutin. The Subcmmittee recmmends autmating electrnic psting f slicitatins created in Surcing t the Vendr Bid System (VBS). The Subcmmittee recmmends that DMS autmate the wrkflw between the Ariba Buyer and Ariba Surcing mdules The Subcmmittee recmmends prviding a public prtal fr cntract infrmatin. 11

13 Other Eligible Users (OEUs) OEUs accunt fr a significant amunt f the surceable spend n state term cntracts. The mre OEUs utilize state term cntracts and MFMP, the mre DMS is able t negtiate better prices due t increase in vlume f spend. MFMP des nt currently utilize a public facing catalg fr OEUs. The public facing catalg wuld be similar t the platfrm n amazn.cm r ther n-line stres. The catalg wuld significantly increase the ease f rdering frm MFMP fr OEUs. 42 MFMP als utilizes Flrida cmmdity cdes. This cdes are unique t the state and d nt crrespnd with the majrity f industry cdes. Mst OEUs use Natinal Institute f Gvernmental Purchasing (NIGP) cdes. The difference in cding makes it difficult fr OEUs t navigate and lcate the cmmdities they wish t purchase thrugh MFMP and pst slicitatins n VBS nce it becmes available t OEUs. The Subcmmittee recmmends prviding a public facing catalg slutin. DMS establishes catalgs fr all state term cntracts in MFMP Buyer frm which custmers purchase. Current catalg types include line items, punch-uts (an interface between a supplier s nline rdering prtal and Buyer), and rdering instructins (general instructins t buyers n hw t purchase). DMS is wrking t create a slutin t make the MFMP catalg cmpnent available t ther eligible users (OEUs), (e.g., cities, cunties, universities, etc.). This enhancement will als allw users t create a shpping cart f varius items fr print view reference and will accept P-card payment functinality. This additin will supprt the gal f increasing spend visibility by capturing purchases frm OEUs and making them reprtable in MFMP analysis. This enhancement will better drive spend t state term cntracts. Leveraging purchases acrss the entire State f Flrida is a key cmpnent f strategic surcing and will deliver better value t all Flrida taxpayers. The Subcmmittee recmmends cnverting Flrida cmmdity cdes t the Natinal Institute f Gvernmental Purchasing (NIGP) cdes. The State f Flrida currently leverages custm cmmdity cdes. These cmmdity cdes are maintained by the Divisin f State Purchasing (the Divisin) and are assciated t a default bject cde (defined by DFS). DMS is interested in mving away frm Flrida custmized cmmdity cdes t a set f standard industry cdes. Mst OEUs utilize NIGP cdes. If they are adpted as the State f Flrida standard, it will be easier fr the OEUs t utilize MFMP and VBS. Recmmendatins: The Subcmmittee recmmends prviding a public facing catalg slutin. The Subcmmittee recmmends cnverting Flrida cmmdity cdes t the Natinal Institute f Gvernmental Purchasing (NIGP) cdes. Strategic Surcing The ultimate gal f the Subcmmittee recmmendatins is t aid DMS in its missin t strategically surce cmmdities and services, fr bth the state and OEUs, in rder t achieve the best price. Increased utilizatin f state term cntracts will immediately realize savings by negtiating a better price fr agency purchases and will als allw DMS t cntinually negtiate better state term cntracts thrugh the increase in the vlume f spend. Increased use f MFMP allws DMS t track spending and in turn negtiate new state term cntracts r identify new avenues fr savings. 42 OEU spend is nt currently tracked thrugh MFMP. Vendrs self reprt the sales in rder t recncile the 1% fee with the state. It is estimated that the amunt reprted by vendrs is lwer than the actual amunt. See rule 60A-1.031, F.A.C. 12

14 The Subcmmittee recmmends utilizing the increased visibility and vlume in spend achieved via increased use f state term cntracts and MFMP t strategically prcure cmmdities and services. If utilizatin f state term cntracts and utilizatin f MFMP are increased, the state will achieve greater spend visibility and purchasing leverage. DMS shuld utilize these prcesses t strategically prcure and achieve greater savings. The Subcmmittee recmmends creating an incentive mdel that utilizes savings achieved by agencies t encurage participatin in strategic surcing. In rder t encurage agency cmpliance with the utilizatin f state term cntracts and MFMP, the state shuld adpt an incentive mdel that awards an agency fr cst savings thrugh strategic prcurement. The state shuld set realistic gals fr savings achievement and reward agencies fr achieving thse gals, nt just fr participating. Recmmendatins: The Subcmmittee recmmends utilizing the increased visibility and vlume in spend achieved via increased use f state term cntracts and MFMP t strategically prcure cmmdities and services. The Subcmmittee recmmends creating an incentive mdel that utilizes savings achieved by agencies t encurage participatin in strategic surcing. 13

15 Flrida Gvernment Efficiency Task Frce Subcmmittee n General Gvernment Draft Recmmendatins Subject Matter: Flrida Retirement System (FRS) Draft Recmmendatins Subcmmittee Members: Pat Neal (Chair), Senatr Mike Bennett, Ann Duncan, Larry Cretul, and Frances Rice DRAFT RECOMMENDATIONS The Flrida Retirement System (FRS): The Subcmmittee recmmends defining a gal fr the state retirement system. The state des nt currently have a defined gal fr the retirement system. The Flrida Statutes and Cnstitutin prvide requirements, but d nt utline a set gal r purpse fr the state. The Subcmmittee recmmends that prtability and transferability f retirement funds be placed as a pririty. The DC plan currently ffers prtability fr its members, but transferability and prtability is limited fr DB plan members. Due t the changing nature f emplyment and the increasingly transient nature f emplyees, the state shuld place a pririty n prtability and transferability fr all state emplyee retirement funds. The Subcmmittee recmmends reviewing the current acceptable funding level. Varius studies have indicated that a funding level f 80% is generally accepted as actuarially sund. As f June 2011, the FRS pensin fund has a funding level f 87.5%. The funding level plicy shuld be reviewed in the cntext f the ptential issues surrunding retirement funds. Emplyers shuld als be required t cntribute even when the fund is at a higher funding level. The Subcmmittee recmmends reviewing the assumed lng term returns n the pensin fund. The current assumed return fr the FRS pensin fund is 7.75%. This assumed rate shuld be reviewed in cntext f past market perfrmance t see if this is an accurate assumptin. The Subcmmittee recmmends cnsidering a hybrid retirement system. Varius states have either adpted r are cnsidering a hybrid retirement plan (incrprates bth DB and DC plans). Flrida shuld review the hybrid ptin as a methd t reduce future unfunded liability, prvide flexibility fr emplyees, and ensure adequate guaranteed retirement funds fr state emplyees, particularly lwer earning emplyees.