44 minute read
How have you overcome supply chain disruptions? What has been most difficult to purchase?
from Fall 2022 UPDATE
SCHOOL BUSINESS 101
What are the major challenges and issues facing your purchasing in the future?
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We are steering away from products and services with unreasonable delivery issues and cost inflation and towards other needs on our list which have the least of these stresses. Of course, some areas of stress on cost and lead time are unavoidable, so we try to buy more sooner to try to stay ahead. Having a capital plan which is flexible makes this much easier to manage.”
DOUG RENKOSIK, CPMM, Director of Operations & Maintenance, Huntley Community School District 158
How have you overcome some of your supply chain disruptions?
As a result of supply chain issues, we have put a greater emphasis on tracking when, how and why we make some of our larger purchases for the district (laptops, desks, equipment, etc.). This knowledge allows the district to re-evaluate the bidding process across our seven buildings and track current vendors to identify local vendors with faster delivery. We also have essential information on shipping costs and limits (purchase order approvals). Through this process, we identified inefficiencies within our workflow and continue to make adjustments to strengthen our future purchasing power.”
MIKE VARGAS, Director of Business Services, Twp. High Sch. Dist. 214
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NEW Membership Bundles
We have consolidated our member categories and provided bundles available to School District, Facilities and Support Professionals.
Illinois ASBO is excited to announce its new membership model, that launched on July 1. There are two changes to be aware of: 1. We’ve consolidated Basic A/B, Basic Plus, Premium and Premium Plus member categories into one, simple category called
School District Member — with all the great benefits Illinois ASBO has to offer! 2. School District, Support and Facilities Professional members who join or renew will be able to add the following to their membership invoices: Illinois ASBO Annual Conference, Illinois ASBOnline+ and Central and Southern IL Regional
Conferences Registration.
Why are these changes being made?
Continuous improvement is important to us. Members shared they would prefer having one invoice to ease administrative work. Our goal was to simplify and improve the member experience, so we streamlined the categories and made it possible to purchase our most popular offerings at the time you join or renew.
Who is affected by the change?
Those who are currently Basic A/B, Basic Plus, Premium and Premium Plus members will need to select a new membership category (and any add-ons) when they renew. Additionally, Support and Facilities Professionals will be able to take advantage of our add-on offerings.
What are the new membership categories?
There are three primary membership categories:
School District Membership $340
Available to professionals working in school business offices in school districts across Illinois. Members gain access to professional development, networking, resources and advocacy that helps districts become high performing.
Support Professionals $100
School district support professionals include office administrators, bookkeepers, office assistants, payroll supervisors and HR generalists. In a school district, support professionals need to understand a variety of unique subject areas.
This membership provides the access to knowledge and training that will help you excel in your role. Requires enrollment in Illinois ASBO’s Support Professionals Program.
Facilities Professionals $100
From custodial, maintenance and grounds to legal issues, long-range planning, emergency management and more, Illinois ASBO’s Facilities Professionals members help to create a consistent facilities standard for schools. Enrollment in Facilities Operations Program or CPS/CPMM Certification is required.
Did the other member categories change?
No. The other member categories did not change and your renewal experience and benefits will remain unchanged.
What add-ons will be available?
Illinois ASBO will allow School District, Support and Facilities Professional members to purchase the following at the time they join or renew: Illinois ASBO Annual Conference $495 Illinois ASBO’s premier event features two days of information-packed sessions, legislative updates and opportunities to connect with speakers and colleagues from across the state. You save $50 when you purchase at the time you join or renew. Illinois ASBOnline+ $299* Upgrade and unlock all learning platform content, earn unlimited PD clock hours, receive a free micro-credential (valued at $180) and more. Basic Illinois ASBOnline access is complimentary to all active members and provides access to all lunch-and-learn webinars and all School Business 101 presentations; however, access to all content and PD clock hours are only available with an IASBOnline+ subscription. *Introductory rate reflects discount when purchased at time of joining/renewing (Regularly $399).
Central and Southern IL Regional Conferences
Registration $175** Our regional conferences create opportunities for school business professionals to engage with colleagues and participate in discussions about professional development and advocacy. **Base price is $200. You save $25 when you purchase at the time you join or renew.
What can I expect when I’m due to renew?
When it’s time for you to renew, you will need to go online to select your new membership category and any add-ons that you wish to purchase. We’ve worked hard to ensure the renewal process is user-friendly and we do not anticipate any issues.
Have my benefits changed?
No. You can expect to continue to receive the same, highly valued benefits from Illinois ASBO that you have enjoyed in the past.
We take great pride in serving Illinois school district professionals. We hope you find these changes improve your member experience. We would appreciate hearing feedback about your join/renewal process. Please contact Chris Harley at charley@iasbo.org.
Guaranteed Energy Guaranteed Energy Savings Contracts: Savings Contracts:
An Efficient and Viable An Efficient and Viable Procurement Option Procurement Option
BUSINESS DEVELOPMENT MANAGER PERFORMANCE SERVICES, INC.
Over $15 Billion worth of Guaranteed Energy Savings projects have been completed over the past 20 years throughout the nation's K12 Schools. The majority of states in the US and the Federal Government have enabling legislation governing the use of what is known as Guaranteed Energy Savings Contracts or GESC (sometimes referred to as Energy Performance Contracting). In Illinois, this legislation for K-2 Schools is defined in Article 19b of the school code.
Article 19b:
• Allows school districts to partner with an Energy
Services Company (ESCO) to provide energy efficiency-related services • Defines how these services can be procured • Requires a financial guarantee from the ESCO to the school district that the savings from the improvements will pay back the cost in 20 years or less.
With literally hundreds of Illinois K-12 Schools utilizing the Article 19b procurement method since its inception over 30 years ago, why are there still so many misconceptions about how this legislation works? Some of the highest-profile school districts in Illinois, with some of the most well-respected business managers in the industry, have chosen this procurement method to address facility improvement needs for the most critical and costly equipment such as boilers, chillers, unit-ventilators, lighting and building controls. So, what challenges are school districts addressing and how does Article 19b help address those problems?
The Challenges
Similar to the idea that one would never purchase a car without knowing the gas mileage, how can school administrators be expected to purchase millions of dollars for building equipment and systems without considering the total cost of ownership? The lowest upfront cost may be the best option for some of this equipment, but on the other hand, sometimes the cheapest equipment can saddle school districts with decades worth of high energy and maintenance costs.
The nation's 17,450 K-12 school districts spend more than $6 billion annually on energy — more than on computers and textbooks combined. As much as 30 percent of a district's total energy is used inefficiently
or unnecessarily. Source: Energy Star.Gov – An Overview of Energy Use and Energy Efficiency Opportunities.
Equipment such as boilers, chillers, building controls, lighting and solar arrays significantly impact a school's future operating budget. Replacing these systems usually requires more than just a "one for one" replacement. Instead, newer technology, modern building codes and changes in teaching space are just some of the reasons these systems sometimes require complete re-designs by qualified engineers. But with so many decisions on highefficiency designs and initial cost considerations, how does a district decide to procure new systems? One answer: Guaranteed Energy Savings Contracts.
Renovating buildings to make them more comfortable and energy-efficient is nothing new. In the early 1880s, at what is now the University of Whitewater, Wisconsin, Professor Warren S. Johnson became frustrated that his classroom was either too cold or too hot. The janitors would come in to measure the temperature and manually adjust dampers— disruptive to his teaching. So, Professor Johnson invented, and in 1883 patented, a device called the "electric tele-thermoscope." With this, the industry of controlling classroom comfort was born. Nine years later, Willis Carrier invented air conditioning to help control humidity for a New
York printing press. Thus, the modern Heating, Ventilation and Air Conditioning (HVAC) evolution began.
Fast-forward to today, heating, cooling, ventilating and controlling the environment of modern buildings is a given but can be complicated and costly.
Performance contracts have been used for decades to provide cost-effective facility improvements. Over 30 years ago, Illinois adopted Article 19b of the School Code: Schools Energy Conservation and Savings Measures. This legislation allows districts more flexibility in procuring school improvements that reduce long-term energy and operating costs. Districts can choose an Energy Services Company (ESCO) directly via an RFP process. It emphasizes accountability on these companies by requiring financial savings guarantees and allows for more design collaboration between the ESCO, the district and the potential subcontractors.
The concept allows a district to use the future funds it would spend on higher utility and maintenance bills from antiquated and inefficient equipment as a "funding source" for improvements. Why overpay the utility company when you can use those dollars to renovate the equipment instead?
The following provides a high-level view of how this process works in Illinois and addresses a few common misconceptions about the legislation.
RFP Process: Choosing your ESCO is a Competitive Process
The formal procurement process begins with a Request for Proposal (RFP). This process allows the district to choose which ESCO they want to partner with to design, manage and install their project. However, previous to this step, the district may have had discussions with one or more ESCOs to learn more about the feasibility and process for implementing a project. If the district utilizes an ESCO to help prepare the RFP documents, it must disclose that relationship in the RFP.
The RFP illustrates the intent of the district to solicit proposals from qualified ESCOs and outlines the due date, evaluation criteria and instructions for how to respond. The RFP must be posted at least 30 days before the due date. A more detailed list of required items to include in the RFP and timing requirements are outlined in the legislation.
Utilizing an RFP is not a traditional bid process. By design, the RFP process typically does not yield an "apples to apples" comparison of the competing companies Instead, it allows the district to evaluate ESCOs based on creativity, approach, pricing methodology, references and experience.
Once the administration has decided on a company to select, they will ask the board to approve their recommendation to select that provider. In some instances, additional scope and pricing negotiations may need to be finalized before developing and signing a Guaranteed Energy Savings Contract.
Contracting and
Subcontracting: Guaranteed Energy Savings Contracts Can Include a Bidding Process
In most cases, the ESCO acts as the primary manager of the entire process, from design to subcontracting through installation. Like the Design-Build concept, the ESCO usually has in-house design engineers and project managers to create increased design quality and constructability. This approach affords the district a single source of accountability for the entire project from start to finish.
While every ESCO may have differing in-house capabilities, it is responsible for building a team of subcontractors. The following is how an ESCO might manage subcontractors using a "flat" organizational structure. This type of structure increases accountability for each subcontractor. Another significant benefit is the decrease in mark-ups which often saves the district large installation costs. Different ESCOs have different contracting styles and approaches, so districts are encouraged to review the ESCO's subcontractor selection and project management approach during the RFP stage.
Some districts choose to hire an Energy Services Company to work alongside their architect and other design professionals. That structure allows districts to have each specialized design professional (Architect, ESCO, CM for example) "at the table" during design, bidding and implementation. When addressing facility improvements using multiple design professionals, it is important to bring these teams together early to clearly identify roles and responsibilities early in the process.
Savings and Guarantees:
The Savings are Real, Measured and Verified
Most Guaranteed Energy Savings Contracts require the ESCO to calculate the pre-construction and postconstruction energy use and report those savings to the district or school board annually. To do this, the ESCO will first calculate a baseline energy use for the buildings. The ESCO will then calculate, using several methods, the energy reduction that will be achieved after the improvements are complete and will continue to monitor savings according to the performance agreement. Typically, the energy savings are measured and verified (M&V) based on methods within the U.S. Department of Energy (DOE) M&V Guidelines: Measurement and Verification for Performance-Based Contracts. Projects may also include operational
savings. These savings occur when an improvement implemented under the contract reduces future repair or replacement labor and/or material monies that would have otherwise been expended if the improvement was not implemented. Some energy savings may be stipulated with the district, such as future energy rates, weather and building occupancy.
According to the Energy Analysis and Environmental Impacts Division of Berkeley Labs, only about 63 percent of K-2 districts continue the Measurement and Verification process throughout the project. Many districts utilize the M&V service for around three years until they feel comfortable that they are realizing the savings.
Funding: Districts do NOT Need to be Tied to a Long-Term Contract
The funding for Guaranteed Energy Savings Projects is often misunderstood. These projects are not "Free." And most Illinois K-12 districts do not pay their ESCOs with their future energy savings. Those are called "shared savings programs" and are not often utilized in Illinois K12 schools.
The vast majority of the Guaranteed Energy Savings Contracts for Illinois K12 School districts are funded similarly to how a district would fund any other construction project. The ESCO and the district negotiate a total turnkey price for a set scope of work, and the district pays the ESCO during the construction period based on an agreedupon payment schedule. For example, districts can use existing capital or debt service options (such as a bond issuance) or some combination. According to Berkeley Labs, about 58 percent of K12 districts use 100 percent financing and 33 percent of districts use a combination of cash and financing to fund the improvements.
The district will also agree to a future annual cost for the ongoing measurement and verification (M&V) of the savings, which is typically less than .5 percent of the project cost annually and, as described earlier, can typically be canceled at any time. In summary, the district purchases the project upfront and will then "justify" the repayment of its bonds or fund balances with the ongoing savings generated from the project.
Summary
Public school districts in Illinois have several choices for procuring construction projects. Article 19b of the school code governing Guaranteed Energy Savings Projects is one choice. This legislation can be considered when a district is looking to focus on the most critical building components like chillers, boilers, lighting, solar, building controls and other energy conservation measures. Any equipment that will significantly affect future operating budgets can be purchased through this procurement option. For many districts with large construction projects, ESCOs can be hired as part of the overall design team and work alongside the district's architects and construction managers. Hiring an ESCO and an architect does not have to be mutually exclusive.
Illinois legislation provides school districts flexibility when choosing an Energy Services Company through an RFP process. The chosen company will then develop, manage and install a full turnkey project. This streamlined designbuild approach eliminates the finger-pointing of having multiple contracts with multiple providers. Additionally, combining these two trades under one roof increases the quality of design and installation. And the financial guarantees create even more accountability to ensure the project is installed and commissioned correctly from the start yielding quantifiable energy savings that are measured and verified for years to come.
The German philosopher Arthur Schopenhauer said, "All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident." The merits of Guaranteed Energy Saving projects as a procurement method for Illinois K12 public schools have arguably become accepted as selfevident with few exceptions.
ASST. SUPERINTENDENT FOR BUSINESS ADDISON SD 4
Amy McPartlin
ASST. SUPERINTENDENT OF FINANCE & OPERATIONS/CSBO PROSPECT HEIGHTS SCHOOL DISTRICT 23
Every business, regardless of industry, has some form of procurement need. For school business officials, determining the appropriate procurement strategy can often be a difficult task, as there is a myriad of variables to consider.
Let’s lean on the reliable “who, what, where, when, why and how?” line of questioning as we explore further.
Î Who is making the final decision on products/services? Who is the preferred vendor? Î What is the need? Identify the desired product or service. Î Where is the purchase needed? Î When do you need it? Is the purchase time-sensitive? Î Why is it needed? What is the desired goal or end result? Î How will you buy it? Does it require a bid or an RFP?
While all the above are valid and important considerations, we will focus on the how in this article. In doing so, we will contemplate two primary methods: centralized procurement and decentralized procurement. As we venture forth, it should be noted that these are not the only two options and, as we learned during the pandemic, we can make anything hybrid. To determine the best how, we have provided an overview of both the challenges and benefits of each model.
CENTRALIZED PURCHASING APPROACH
In a centralized procurement model, final purchasing decisions and execution of orders are completed by a single entity, typically the Business Office. Commodities or items requiring very little end-user input are generally a good fit for this procurement method. The list of items or services that can be purchased this way is endless and may include items such as copy paper and office supplies.
In districts with a dedicated procurement professional, transactions are initiated and executed by a single individual with specialized knowledge and skills in school district procurement and contracts. They are able to retain oversight of the entire purchasing process from quote, to order, to receipt of goods and final payment/closeout. They can track down missing or back-ordered items and can make sure that purchases fall within approved budgetary guidelines. Having a dedicated purchasing professional can result in more streamlined communication and closer adherence to best practices. In many cases, it can benefit the district through their ability to negotiate better pricing. It also allows for closer oversight of the total spend on products and services, ensuring that a bid or RFP is issued in accordance with Board policy and Illinois School Code, if required.
From the vendor’s perspective, it is easier to work through a more centralized model and more cost-effective. For example, the transactional cost to sell 10,000 pencils to a school district will be significantly lower if they buy all 10,000 units at once rather than placing ten separate (1,000 pencil) orders and shipping to ten different schools. This savings comes in the form of the reductions in cost to process multiple orders, the cost to ship multiple orders and the cost to invoice multiple orders. The vendor has to pay for these costs upfront and inevitably ends up passing the additional costs to the end user (school districts).
Let’s go back to the procurement professional, whose primary role at the district is; buying things and managing inventory. In a centralized model, this person represents the entire district’s purchasing interest. If properly trained, they will understand how to negotiate advantageous terms with vendors and manage inventory once supplies are delivered.
Taking another look at the pencil example; It is to the vendor’s advantage to have a single point of contact who deals solely with procurement. Building staff are often busy and “juggling” several different tasks. They are not purchasing experts and are likely busy every moment of the day reacting to and solving the many problems that unexpectedly crop up in a dynamic school environment. One of those ten contacts may find a better deal elsewhere, thereby reducing the total sale for the vendor. In this scenario, the vendor risks losing out on sales volume and the district loses out in the form of employee productivity and product consistency, as they have ten people doing essentially “the same” work.
While centralized procurement may be advantageous for many school districts, another approach to purchasing works using a more decentralized approach, in which multiple individuals or departments order what they need when they need it.
DECENTRALIZED PURCHASING APPROACH
Decentralized purchasing allows for greater autonomy among multiple departments. It allows staff to order exactly the products and services they prefer and negotiate the lowest pricing with their preferred vendors without Business Office involvement. Products can be ordered on an as-needed basis.
ARTICLE / Centralized vs. Decentralized Purchasing
While it may be a bit more costly to order in smaller quantities, there is no need for a warehouse to store large quantities and products are used promptly. No more boxes of unused paper, curling with humidity because it has sat for too long!
As multiple departments are placing orders, it is essential that there is a clear understanding of district purchasing procedures and budgetary guidelines with a firm set of internal controls and a system of approvals in place. The Business Office is encouraged to keep the lines of communication open and work with budget administrators to provide guidance and oversight of budgeted expenditures and correlating line items, as orders are placed.
Departments should be held accountable for their expenditures and “rewarded” for responsible purchasing and price comparisons. Unfortunately, procurement oversight by the Business Office can be a bit tricky, and it’s difficult to get a sense of total product spend as it relates to the obligation to conduct a more formal bid process.
HYBRID PURCHASING APPROACH
As alluded to earlier, there is also a more “hybrid” approach to purchasing, which involves Online and E-Commerce Ordering. Often online procurement is tied to a cooperative purchasing agreement or maybe a vendor-specific offering through your financial software program, which allows for direct ordering with certain vendors with or without a built-in approval queue. Provided that your Board has authorized these types of purchases, E-Commerce may be worthy of consideration as the ease of ordering and quick/next-day delivery generally may negate the slightly higher price of goods. As discussed previously, it’s important to be clear in communicating your district’s purchasing procedures in adhering to the internal controls and approval guidelines. Without those guidelines, it is much tougher to monitor the full spending through the fiscal year.
SUMMARIZING THE PURCHASING APPROACH OPTIONS
Some of the benefits of centralized procurement:
X Internal Controls allow for tighter oversight and monitoring of usage
X Central Office can maintain a standard of product and its utilization
X Closer oversight of budgetary adherence
X Larger opportunity for cost savings through fewer, larger orders
Some of the challenges of centralized procurement include:
X Warehouse/storage space may be required to house “extra” inventory
X District staff required to move items between sites and monitor usage
Some of the benefits to a decentralized approach to procurement include:
X Less idle inventory
X End-user preferences are honored
Some of the challenges of decentralized procurement include:
X Potential for equity issues between sites
X Lack of Business Office oversight on the amount of total spend, which is essential in determining the threshold for a required bid process
Clearly, there are advantages to each approach, and there are some products that fit neatly into each category. In the end, we must take into account the many factors at play when making a buying decision.
VICE PRESIDENT COMPARE COOPS
The public sector procurement process can be confusing and time-consuming, but there are plenty of opportunities to boost efficiency and savings.
Government agencies tasked with purchasing the goods and services they need to function must be cognizant of local and federal regulations put in place to ensure transparency and compliance when it comes to spending taxpayer dollars. Additionally, certain contracts within the public sector are subject to specific value thresholds, 1 and keeping track of all the information while staying on top of regulatory requirements can be daunting.
Purchasing cooperatives 2 allow groups of businesses in the private sector to join together to buy the goods and services they need to run their businesses. Likewise, Government Purchasing Cooperatives were created to give public sector agencies the ability to share procurement contracts between entities. This means that various state and local governments could buy the goods and services they need from the same contracts.
Public sector agencies use purchasing cooperatives to save time and money 3 when it comes to the procurement process. Purchasing managers and contract buyers can bypass the competitive bid process and immediately access contracts that meet all of their state-specific requirements. Not only that, but buyers can rest assured they’re getting fair and affordable pricing thanks to the competitively bid contracts that are already in place.
The use of purchasing cooperatives spans well over 100 years and there are now 29,000 cooperatives that operate within every aspect of the U.S. economy. From banking and insurance to the nation’s electrical distribution, cooperative purchasing has a pivotal role in how we procure the things we use every day.
Why School Districts Need Cooperative Purchasing
Business managers and procurement officers are continuously trying to procure the highest quality products and services for the best possible value. Purchases must stay within compliance and supplier information must remain organized, all while dealing with lengthy and expensive RFPs 4 and slow internal processes. There is a need to simplify the procurement process and there are several benefits of utilizing cooperative purchasing.
Save Time & Reduce Costs Above all, the use of cooperative purchasing will save districts time and money. The amount of time and due diligence it takes to sift through the right number of suppliers, to find the best value and make fair comparisons can be overwhelming. Not to mention, often this is a manual process. Purchasing cooperatives offer contracts that have already been established. Buyers no longer need to go bid or review proposals, they can simply choose the contract that works best for them.
Likewise, the purchasing power of the cooperative has been leveraged to secure the fairest, most reasonable pricing, letting buyers feel confident knowing they’re getting the best deal available to them.
Alleviate Resource Pressure A 2018 survey 5 found that 42 percent of staffers in public sector procurement felt overworked. Demand is increasing, yet staff are already dealing with limited resources. With that, and the desire to move toward more efficient procurement processes, buyers are pushing more toward cooperative contracts to piggyback off other agencies.
Increase Flexibility The use of cooperative purchasing contracts allows for more variety when it comes to suppliers and vendors, and more product flexibility. 6 This is especially beneficial in the wake of the COVID-19 pandemic where supply chains all over the world have been disrupted. Cooperative purchasing ensures there are always alternative options and products available to be delivered on time and on budget.
Secure Superior Contracts And Better-Quality Products Since cooperatives already have contracts in place that meet local, state and federal requirements, 7 and a public entity has completed the lengthy competitive bid process, it’s easier for government agencies to secure access to superior contracts and better-quality products by using cooperative purchasing.
ARTICLE / Tracking Capital Assets
How to Best Utilize Cooperative Purchasing to Boost Efficiency in the Public Sector
Anyone familiar with the public sector knows that traditional procurement methods are lengthy, oftentimes manual and outdated. Thankfully, purchasing cooperatives give school districts a way to improve upon some of those tedious processes. We’ve outlined some pro-tips below when it comes to utilizing cooperative purchasing to maximize efficiency in regard to procuring in the public sector.
Tip #1: Utilize Modern Technology It may not be realistic to think that every government agency is able and willing to update to the newest procurement technology system. Even if you’re up for the challenge, convincing stakeholders of the need for change will most likely happen at a snail’s pace. In the meantime, it’s helpful for procurement managers and buyers to be aware of the tools and resources that are available, which allow them to be as efficient as possible.
Tip #2: Cut Costs, Not Compliance The pressure to find new ways to cut costs and reduce the budget each fiscal year is real. Not only does cooperative purchasing allow you to find contracts that offer the best value, it significantly reduces the administrative costs and resources associated with traditional procurement processes. The previously long, drawn-out methods that normally took months are cut down to a matter of days or weeks thanks to cooperative contracts, all without sacrificing compliance.
When you compare different coop contracts,
8 your district gains wider visibility over the contracts that are currently available. From sourcing to awarding the supplier, when everything is done within the same platform, it reduces the chance of missed opportunities.
Tip #3: Stay Ahead Of Disruption COVID-19 came in like a wrecking ball, disrupting procurement and the supply chain like never before. Cooperative purchasing ensures there are always alternative vendors and suppliers available when agencies find themselves needing to pivot, thanks to shortages, lockdowns, closures and transportation delays.
Footnotes: 1. https://www.ukg.com/blog 2. https://ncbaclusa.coop/resources/co-op-sectors/purchasing-co-ops/ 3. https://www.alltrafficsolutions.com/blog/what-is-cooperative-purchasing/ 4. https://www.ukg.com/blog 5. https://images.more.deltek.com/Web/DeltekInc/%7B99f494a0-c09d-4fb4-8b97-e1da9a5fe78f%7D_Surveyof-Government-Procurement-Professionals-2018-GovWin-Deltek.pdf 6. https://public.omniapartners.com/hubfs/GOVPRO%20Sept%202019%20Cooperative%20Procurement%20
Article.pdf 7. https://public.omniapartners.com/resources/industry-insights/how-cooperative-purchasing-offers-keyadvantage-for-school 8. https://www.comparecoops.com/a-better-way-for-agencies-to-compare-cooperative-contracts
PARTNER ROBBINS, SCHWARTZ, NICHOLAS, LIFTON & TAYLOR, LTD.
Howard Metz
PARTNER ROBBINS, SCHWARTZ, NICHOLAS, LIFTON & TAYLOR, LTD.
Christopher R. Gorman
ATTORNEY ROBBINS, SCHWARTZ, NICHOLAS, LIFTON & TAYLOR, LTD.
As the recent Illinois legislative session wound down, school business officials had reason to be excited. On March 3, 2022, the Illinois House of Representatives unanimously approved House Bill 4393, which introduced a new, more-flexible model of value-based bidding criteria for school districts purchasing goods or services under Section 10-20.21 of the Illinois School Code.
However, by the time the 102nd General Assembly adjourned on April 8, 2022, HB 4393 remained stalled in the Senate. Legislators instead decided to approve much narrower reforms for food service contracts found in House Bill (HB 4813), which Governor Pritzker signed into law on June 29, 2022. A value-based bidding model will need to be reintroduced when the legislature convenes next year before public bidding criteria can be changed. If legislation is not reintroduced, school business officials will be forced to navigate the complexities of public bidding under Section 10-20.21 and its lowest, responsive and responsible criteria for at least another year.
Yet, while mastering public bidding requirements under Section 10-20.21 seems daunting, understanding the key strategies for complying with the School Code can help any school business official pilot even the most-complex purchases.
KNOWING WHEN TO CHART A COURSE THROUGH PUBLIC BIDDING
Despite the requirements of Section 10-20.21, not every purchase by a school district requires public bidding. School business officials should determine whether they will need to navigate public bidding requirements to reach their purchasing destination.
First, Section 10-20.21 applies to contracts for the purchase of supplies, materials or work involving an expenditure of $25,000 or more, allowing school districts to bypass competitive bidding requirements altogether for purchases below that threshold. Be wary, however. Before setting out on a purchase under $25,000 without public bidding, make sure your board of education has not set a lower public bidding threshold. This knowledge will always dictate how you approach a purchase, so long as the policies otherwise comply with the Illinois School Code (even if they are more restrictive).
Second, thresholds under Section 10-20.21 and board policy may not apply to the specific purchase being made by a school district. Indeed, certain purchases related to construction, repairs or renovations not involving a change or increase in the size, type or extent of an existing facility are treated differently under Section 10-20.21 and most board policies. In such cases, the school business official may rely on a higher threshold of $50,000 under Section 10-20.21 without going through public bidding, if allowed by board policy.
Finally, thresholds may be irrelevant altogether in mapping out a purchasing strategy. In fact, public bidding may not be required at all depending on the nature of the transaction. For example, Section 10-20.21 applies only to purchases. It does not apply to transactions involving many forms of leasing or financing. Similarly, even if a transaction involves a purchase of supplies, materials or work, other laws may impact a school district’s need to navigate public bidding requirements. For example, purchases involving professional services requiring a high degree of skill are exempt from public bidding requirements, including professional services offered by construction managers, architects and engineers. However, the Local Government Professional Services Selection Act requirements apply when school districts select an architect or engineer.
Staying on Track Regardless of Public Bidding Requirements
Although not all purchases require school districts to follow public bidding procedures, all school districts should be mindful that purchases typically are made with public tax dollars. As a result, exemptions and other routes around public bidding do not allow school districts to circumnavigate their obligation to be fiscally sensible. Even where public bidding is not required, school districts should consider a request for proposals or obtain quotes from three or more vendors when purchasing goods or services — either as a matter of best practice or as required by board policy. Doing so will ensure the school district pays competitive rates and serves the broader interests of all parties involved, including taxpayers.
1
ARTICLE / Navigating Public Bidding
2 In an Emergency (or not), Leverage Exceptions Even if the type of purchase requires public bidding under Section 10-20.21, there are exceptions for important public policy purposes. If leveraged, the exceptions will reduce obstacles, time, expense and burden of purchasing goods and services via public bidding. The exceptions include: Î Contracts for the maintenance and servicing of equipment by a manufacturer or authorized service agent Î Contracts for the purchase, delivery, movement or installation of data processing equipment, software or services and telecommunications and internet equipment, software and services (otherwise known as the computers exception) Î Contracts for purchases of equipment previously owned by some entity other than the school district Î Contracts for goods or services which are economically procurable from only one source Î Contracts for emergency purchases so long as the purchase is approved by three-quarters (six yes votes) of all school board members While public bidding requirements should not be avoided for the wrong reasons, nothing in Section 10-20.21 prevents a school district from strategically planning to procure supplies, materials and work in a manner that leverages permitted exemptions. Why, for example, spend time and effort to issue a bid for a new multi-use vehicle when you can rely on the used purchases exception by which a used vehicle can be purchased at a reasonable cost to the school district?
3 Consider the Path Already Traveled
(Cooperative Purchasing)
The Governmental Joint Purchasing Act applies to school districts and allows for the purchase of goods or services available through eligible third-party cooperative purchasing programs. Under the Act, a school district can purchase personal property, supplies and services (including construction) jointly with one or more other governmental units. The Act also allows governmental units to procure supplies and services under any contract “let” by the State of Illinois. School districts can do so by joining the Joint Purchasing Program administered by the Illinois Department of Central Management Services or entering into arrangements with in-state or outof-state governmentally sponsored cooperatives that meet statutory requirements under the Act. However, not all cooperative purchasing arrangements will comply or qualify for exemption from the bidding requirements of Section 1020.21. Given that this route is full of pitfalls, you should consult your school attorney before leveraging the use of joint cooperative purchasing.
4 Be Mindful of Your Public Bidding Documents Suppose Section 10-20.21 requires a purchase to be publicly bid. In that case, the strategic focus of the school business official should be on creating and gathering the necessary information to ensure that their district is in the best position to move forward with a purchase while complying with all applicable public bidding requirements. The first step is to strategically develop the bid documents, which will best position a district to receive bids that are responsive to its needs, flexible in considering alternatives and cost effective. Documents that can assist the school business official in strategically planning a purchase include the following: Î Advertisement for Bids
The Advertisement for Bids is a notice to the public alerting them of the opportunity to submit a bid. Under Section 10-20.21, the advertisement must be published at least ten calendar days before the school district accepts bids, in a newspaper published within the school district or one in the general area of circulation. The advertisement should identify the type of work or purchase but does not need to include every detail that should be included in the rest of the bid documents.
Î Instructions to Bidders
Instructions to Bidder provide a bidder with an understanding of the scope and size of the project.
Because instructions become part of the purchase contract document, they should be carefully drafted.
Instructions should be sure to reserve the right to reject any bid as well as waive any immaterial variances (meaning the bidder’s variance does not create an economic advantage to that bidder).
Î Bidder Qualification Criteria
Under Section 10-20.21, bids must typically be awarded to the “lowest responsible bidder, considering conformity with specifications, terms of delivery, quality and serviceability.”
In effect, each bidder will need to meet three separate tests.
The first is whether the bidder is the lowest bidder, with instructions that provide that alternates will or will not be used to determine the low bidder.
The second criteria is responsive — i.e., meaning that the bid submitted materially conforms to the specifications included in the school district’s invitation for bids.
The third is whether the bidder is “responsible,” meaning that the school district can consider, among other criteria, a bidder’s history with their own or other school districts, experience on similar sized projects and the bidder’s financial and bonding capacity in order to determine whether the bidder is able to effectively and cost-efficiently deliver the goods or services being purchased.
Once the district determines the lowest, responsive and responsible bidder, the school district may award the contract to that bidder. Therefore, it is critical that school district business officials invest the time to identify the qualifications they would like to have in a bidder awarded a bid and include those in any invitation to bid. Once bids are received, it is too late to set new specifications, qualifications or criteria. School district business officials should also be aware of unique circumstances where other factors can be considered when awarding a competitively bid contract, including a district’s letting of contracts for student transportation and food service.
In the case of student transportation, a district may select a bidder “most able to provide safety and comfort for the pupils, stability of service and any other factors set forth in the request for proposal regarding quality of service” before considering price. In such cases, the contract may be awarded to a responsive and responsible bidder despite the fact they were not the lowest bidder.
Similarly, HB 4813 created a new standard for procuring food service contracts—specifically, “goods, services or management in the operation of a school’s food service, including a school that participates in any of the United States Department of Agriculture’s child nutrition programs.” Like student transportation, a District may consider whether a bidder gives preference to suppliers that promote healthy, locally sourced foods, rely on local food products, use food producers practicing recommended hormone and pest management practices or value animal welfare. Preference may also be provided to contracts that increase opportunities for businesses owned and operated by minorities, women or persons with disabilities.
Î Contract Specifications
A successful lowest, responsive and responsible bidder must demonstrate that its bid included the entire scope of the project specifications. School Districts and their professionals should perform a review with the bidder,
ARTICLE / Navigating Public Bidding
of the bidder’s bid documents and worksheets to verify that the bidder included all elements of the project specifications. Any failure during this review will likely lead to a withdrawal or rejection of the bid, allowing the school district to proceed to the next bidder to conduct another bid review. Contract specifications include, for example, the key functionalities of a technology solution or the specific height of a retaining wall. In either case, the school district is best served by ensuring that the project specifications are identifiable, sufficiently explained and included in the bid documents, particularly for smaller projects where design professionals may not be used.
Î Contract and Bond Forms
School districts must include all contract terms in the bidding documents, including any applicable bonding requirements. Including such terms in the invitation for bids requires a bidder to accept the terms and conditions of the award before it is made. Once accepted, the bidder may not alter any terms. The school district, however, may negotiate a lower price with the lowest bidder as explained below.
5 Lean on Professionals
to Navigate Complex Purchases
Although not possible in every circumstance, we recommend relying on experienced individuals with expertise in purchasing and construction, especially those involved in designing and managing a school construction project. Often, these professionals can provide valuable insight into the specifications and conditions that schools will utilize when preparing and awarding bids and the necessary considerations for any complex purchase.
More importantly, as suggested above, Section 10-20.21 exempts purchases of professional services like those offered by the consultants, engineers and architects from bidding, which can help the school district during early stages of planning for complex projects without requiring the detailed specifications that would otherwise be required. Note that in certain circumstances, the Local Government Professional Services Selection Act will apply, requiring a school district to comply with evaluation and selection procedures for certain architects or engineers. However, if the school district has a preexisting relationship with an architect or engineer the selection process is not needed.
6 Even with the best-charted course, the bidding Careful When Navigating the Public Bid Course process can lead to unwelcome detours, especially with respect to cost or bidding confusion. Suppose a school district receives bids that are more expensive than anticipated or have the potential to overextend a budget. In that case, the school district may need to negotiate with the lowest responsible, responsive bidder. Typically, it is best to stay the course. However, in rare circumstances negotiating may be the best path forward. In such circumstances, nothing in Section 10-20.21 prohibits a school district from negotiating in the best interests of the school district once identifying a lowest responsible bidder, provided the negotiations take place prior to the award of the contract and the transaction is free from favoritism, improvidence, fraud or corruption. In any case, school business officials should never negotiate the scope of the contract terms that favors the bidder, even in consideration for a price reduction, as that may give the bidder a competitive advantage over other bidders. In most cases, it may be better to avoid the detour and navigate the next challenge — the budget. Negotiating too often at this stage will dissuade bidders from submitting bids for future projects or artificially inflate their bids in anticipation of needing to negotiate before being awarded a contract.
CONCLUSION
As we mentioned at the outset, mastering compliance with Section 10-20.21 and other bidding requirements seems daunting because it is. School districts must strategically plan, navigate the process and meet the demands of stakeholders while achieving the district’s purchasing goals. While we have tried to provide insight on tools for school business officials when tackling public bidding requirements, please consult with your attorneys or purchasing and construction professionals when engaging in the public bidding process.
RESOURCES
Equity Initiatives: What is your district for?
Many school districts have undertaken equity initiatives over the past several years. This action is essential in increasing the quality of public education, but it is also important to determine if these programs are effective.
“Belonging Through a Culture of Dignity” by Floyd Cobb and John Krownapple presents an excellent approach to the concept of equity in education. Chapter 1 discusses the dysfunctional cycle of equity work, which may ring quite true for many readers who have been a part of equity work. It clearly details the problems and failures of many schools' “typical” approaches.
The next several chapters analyze the keys to a successful equity implementation. The vital elements of such a program are inclusion, belonging and culture. The authors discuss the significance of new approaches that focus on a shared vision of what the school is for, rather than programs built around what they are against, such as anti-injustice or anti-bullying. Any successful equity implementation must be based on a vision of what we are working to create.
A necessary change in the current environment for many schools is the shift away from a culture where students need to achieve in order to belong, which is the wrong order. Cobb and Krownapple discuss how the need to belong precedes the need to achieve and belonging uncertainty hinders academic performance and contributes to the achievement gap.
The organizational culture, along with the climate, form the school's environment. While strategy is certainly important, the culture must be successful before any strategies can succeed. The culture must be positive and nurturing to be part of a healthy environment. The authors describe the four diverse environments provided by the United Nations (excluded, segregated, integrated and included) and show their relationships to belonging and access. They talk about how this inclusive and welcoming environment lays the groundwork for a culture of dignity, which is really at the heart of equity for all.
The book's final three chapters take the principles described and get into more specific examples and areas where school leaders can transform their current cultures into ones that incorporate the notions of inclusion, belonging and dignity. The process takes time, but readers are shown how to shape themselves and, ultimately, the institutional culture. The end result can be a balancing loop called the Theory of Equity Implementation Success which replaces the dysfunctional cycle of equity work found in so many schools today.
As school business officials, equity work is one of the areas where leaders can have an effect outside of finance and operations. Whatever your district's current state, I encourage you to give this book a read for your own personal development and perhaps as a starting point for the entire organization.
On Their List
Book reviews from your peers on relevant career topics
Myron Spiwak Director of Business Services New Trier Township, HSD 203 spiwakm@newtrier.k12.il.us
Myron Spiwak spent 17 years working in the Insurance industry before beginning his career in school finance. He currently serves as the Vice-Chair of the Principles of School Finance PDC. Myron believes equity initiatives will continue to grow as vital parts of school strategic plans.
THE FINAL WORD
SPEAKING UP ABOUT PURCHASING
MAUREEN JONES ASSISTANT SUPERINTENDENT FOR FINANCE & OPERATIONS/CSBO COMMUNITY CONSOLIDATED SCHOOL DISTRICT 89
My role as a CSBO when it comes to purchasing…
As a business manager in a smaller elementary school district, I am responsible for most aspects of purchasing. I manage relationships with service associates, including securing the best price on products. I approve all purchase orders as well as review all p-card purchases. When bids are necessary, I manage the bid process from start to finish, including recommendations to the board.
What do you see as the biggest purchasing challenge(s) facing school business officials right now?
The biggest challenge facing CSBO's right now is likely the supply chain issues due to the economy and residual effects from the pandemic. Not only are supplies being disrupted, but each of our outsourced service associates are facing staffing challenges, which in turn raises costs for districts as we renegotiate contractual agreements.
Purchasing issues to watch…
Of course, the CPI continues to drive most of our contractual arrangements and supply costs, and we're hoping to see some relief in this area within the next 12-18 months. Most economists believe we are heading into a recession, which should alleviate some of the purchasing stress we've faced in the last few years.
One thing districts can do today to improve their processes…
I would say continue working closely with your service associates to secure the best pricing possible. I've also begun to look more closely into purchasing cooperatives than I have in the past in order to benefit from volume discounts and purchasing arrangements.
May 3-5, 2023 Peoria Civic Center Peoria, IL
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