GovPro - October/November 2012

The official publication of NIGP: The Institute for Public Procurement

www.govpro.com

OCTOBER/NOVEMBER 2012

E-Learning at a

Bargain Price

Multnomah County’s in-house strategy wins NIGP Innovation Award PLUS: Reverse auctions for employee benefits FTC’s new guides target greenwashing Ethics: What’s your Kryptonite?

Enforcing liquidated damages clauses New bi-fuel trucks with more range

A PENTON MEDIA publication

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CONTENTS OCTOBER/NOVEMBER 2012 VOLUME 20, NO. 5

PERSPECTIVES 2 Guest Editorial: Welcome letter raises the bar.

4 Procurement Ponderable: Another ‘world-class’ strategy.

HOT TOPICS

IN DEPTH

22

Innovation Award Winner E-LEARNING AT AT BARGAIN PRICE Multnomah County’s central purchasing department developed a system in-house to deliver computer-based training to internal clients at a 69 percent cost savings compared to contracting with an outside vendor.

BY LARRY ANDERSON

26

Best Practices REVERSE AUCTIONS LOWER COSTS OF EMPLOYEE BENEFITS Maricopa County used reverse auctions to save 32 percent on a new employee life insurance contract and another 36 percent on a pre-paid dental contract.

BY LARRY ANDERSON

28

Green Purchasing CLEANING UP GREENWASHING

7 E-Procurement: Advantages versus expensive ERP systems.

10 Ethics: What’s your Kryptonite?

12 Legal Pro: Are liquidated damages clauses enforceable?

16 Spend Analysis: California State University completes first phase.

18 Cooperative Purchasing: Misconceptions in school districts.

19 Supply Chain: Buying group lowers costs.

20 Fleet Update: Bi-fuel trucks offer more range.

RESOURCES 30 Calendar of Events: Check out upcoming courses.

BACK PAGES 31 Ad Index 32 Fred Marks: Do awards have weight?

The Federal Trade Commission has revised its Green Guides to combat the increasing prevalence of greenwashing, including potentially false or misleading environmental claims.

BY SCOT CASE

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SALES OFFICES ARE LISTED ON PAGE 4.

PERSPECTIVES [guest column]

Welcome aboard ... Now hear this

By Carrie A. Patrick

W

elcome everyone! I am your newly appointed Director of Procurement. I am excited to be here as we embark on this new adventure together. I left my comfort zone across the country to take this new position to challenge myself and to challenge you to build a solid, ethical world-class procurement program from the ground up.

First things first: We must leave at the door our pre-conceived notions about past directors, county executives, and employees.

Today is day one of our efforts to build the foundation of a solid procurement program, and it will take everyone’s efforts and energy starting from this moment. We are going to get back to basics and the principles and core ethics of sound procurement practices. We will start implementing them in our every move, from the way we enter into work, to how we conduct our daily work routines, until we walk out of our business door and into our own doors and beyond.

It is imperative we establish and develop a program based on the procurement core values. Our program must be accountable for all its actions, be ethically sound, be impartial, always display professionalism, pride itself on service, and be completely transparent for all parties. We will implement a 90-day program to create a solid and ethical foundation. This is just the beginning phase of our evolving program; we will be constantly evaluating and improving.

Communication is the most important tool for any program to be successful. We must converse often. We must “eat, breathe, and live” the fundamentals and values of procurement.

For any program to work and operate effortlessly and efficiently, it must have a strong leadership in place, and our communication must be constant and fluid, both up the chain of management and down. Our County has a mission, to ensure that goods and services are procured in a timely and efficient manner with all the principles of procurement being adhered to. However, if leadership is not displaying these principles, neither are its people. If the people are not acting within the parameters of a sound and ethical procurement program, neither are the parties involved, and the entire chain breaks down. The County’s mission should be our first and main concern; however, people make up our county and should be considered always. There is a delicate balance between our County’s mission and our people that needs to be nurtured. Mission first, but people always.

This is easier said than done. However, every day, every action displayed and conducted makes a change, even a minor one, and eventually all the small changes make big changes. Let’s all be the small changes that make this procurement program a world-class program.

PENTON MEDIA INC. 6151 Powers Ferry Road NW, Suite 200 Atlanta, GA 30339 Phone: 770-618-0112 FAX: 913-514-3887 http://www.govpro.com EDITORIAL STAFF Bill Wolpin Editorial Director bill.wolpin@penton.com Larry Anderson Editor landerson1976@aim.com Lindsay Isaacs Managing Editor lindsay.isaacs@penton.com Kim Blaski Production Manager kim.blaski@penton.com Joan Roof Audience Marketing Manager joan.roof@penton.com Wes Clark Art Director wesley.clark@penton.com

THE INSTITUTE for PUBLIC PROCUREMENT

151 Spring St. Herndon,VA 20170-5223 Phone: 703-736-8900 Fax: 703-736-2818 Brent Maas Marketing Director bmaas@nigp.org Cathie Patin Communications Editor cpatin@nigp.org EDITORIAL ADVISORY BOARD

CARRIE A. PATRICK, MBA , CPPB, is senior buyer with Harrison County Purchasing Department, Houston, Texas. She wrote this “welcome letter,” which has been edited for space, in response to last month’s Procurement Ponderable question about how to transform a procurement program that has a reputation for corruption and poor business practices into a world-class program. For another response, see page 4.

Debbie Field, CPPO,VCO Virginia Department of General Services Yolanda C. Jones, C.P.M., APP Clark County, Nev. Jay T. McCleary, CPPB City of Red Wing, Minn.

2 | OCTOBER/NOVEMBER 2012

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PERSPECTIVES [discussion] PROCUREMENT PONDERABLE Last month’s Procurement Ponderable described a local government, XYZ Urban County, with a “long-standing and welldeserved reputation for corruption and poor business practices.” It challenged readers to imagine they had been brought in to implement a world-class procurement program and to explain how they would proceed. Here is a response from Steve Demel, CPPO, Purchasing, Contracts and Warehouse Manager, Tacoma (Wash.) School District: Why take on this challenge? Because you are not ready to “settle” and are always looking for new challenges.

What is your time frame for institutionalizing a worldclass procurement program? We are talking about a total cultural change for XYZ; therefore, three to five years.

What are the principal elements of your strategy for creating, implementing, and institutionalizing the world class program? Here are seven steps to success: 1. People are the most important elements for success. Lead change.

[Evaluate the people (stakeholders) you have on your team. Identify who will buy-in, who will stand on the side-lines, and who will resist. Get rid of resisters (convert them or marginalize them). Promote teamwork and an environment that encourages constructive risk taking. Provide ethics training and make it clear there will be zero tolerance for unethical conduct.

Promote and encourage professional development, especially to help staff learn the skills that will be needed to become a world-class program.

Make professional certification a factor in job advancement and salary.]

2. Do a SWOT (strengths, weaknesses, opportunities and threats) analysis relative to where the organization has been and where it needs to go in the future. Use it.

3. Map existing processes and measure current outcomes.

4. Fix the simplest processes first and build on success.

5. Always measure what happens after changes are implemented and tweak processes as needed and re-measure.

6. Inform your senior leadership as you progress. Keeping them informed is a good way to get support for the new direction.

7. Celebrate successes along the way, but go back to 1. (People) and keep repeating the steps until you are ready for another challenge.

GROUP OFFICERS Gregg Herring Group Publisher gregg.herring@penton.com Susie Barroso Group Marketing Director susie.barroso@penton.com Joanne Romanek Online Advertising Specialist joanne.romanek@penton.com

ADVERTISING SALES Dave Gibson Northeast Region Sales dave.gibson@penton.com Phone: 216-931-9469 NY, NC, NJ, OH, MA, CT, Washington DC,VA, MD,VT, DE, ME, NH, RI, Canada (Eastern), SC, GA Bill Perry Midwest Region Sales bill.perry@penton.com Phone: 770-618-0453 IL,WI, PA, MN, WV, AK, TN, MS, AL, FL Ron Corey Midwest Region Sales ronald.corey@penton.com Phone: 248-608-0994 MI, MO, IA, KY, IN, ND, SD, AR, LA, TX, OK Julie Fincher Western Region Sales julie.fincher@penton.com Phone: 913-981-6139 CA, KS, CO, AZ, UT, NE, OR, WA, NV, MT, HI, ID, NM, WY, Canada (Western)

CORPORATE OFFICERS CORRECTION: The August/September 2012 issue of Government Procurement incorrectly stated (on page 28) the number of individuals who successfully completed the spring 2012 UPPCC certification examinations administered May 7-9, 2012. The correct number is 208.

Government Procurement welcomes your feedback.

Send letters to: publications@nigp.org or Government Procurement, 6151 Powers Ferry Road NW, Suite 200, Atlanta GA 30339, Attn.: Bill Wolpin.

We reserve the right to edit all letters for clarity, brevity, grammar, punctuation, syntax and style.

4 | OCTOBER/NOVEMBER 2012

David Kieselstein Chief Executive Officer david.kieselstein@penton.com Nicola Allais Chief Financial Officer Executive Vice President nicola.allais@penton.com Bob MacArthur Senior Vice President bob.macarthur@penton.com

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HOTTOPICS [e-procurement]

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THE ADVANTAGES OF E-PROCUREMENT VERSUS EXPENSIVE ERP SYSTEMS

By Brittany Devine

P

ut your boxing gloves on. You’re headed into the ring, and it might just be a knock-down, drag-out conversation. Constrained budgets across the country have agencies and departments fighting for coveted dollars to fund “must-have� projects and initiatives. But how are these limited resources best allocated? Which projects drive value? Which initiatives will yield the best return on investment?

It’s time for procurement to enter the ring and demonstrate that purchasing departments hold the key to government reform.

With increased demand on leaner workforces, technology is creeping up on everyone’s priority list. For example, Michigan’s technology-minded governor, Rick Snyder, views the revitalization of information technology as a crucial step to get his state back on track. Snyder considers technology the backbone of a plan to increase efficiency and eliminate waste in government spending. The state’s 2013 budget clearly reflects the governor’s priorities, allocating $48 million to replace or upgrade aging computer systems.

Like the State of Michigan, finance and budget committees

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www.govpro.com • GOVERNMENT PROCUREMENT | 7

HOTTOPICS [e-procurement] State and local entities are temporarily putting ERP systems on the back burner to make room for nimble and lean solutions, like e-procurement, that yield immediate results. across the United States are dedicating funds to information technology overhaul. But which technology ventures should be tackled first? Departments are going head-to-head to determine who deserves first dibs on funding.

At first glance, Enterprise Resource Planning (ERP) systems get the attention of finance and IT, but the realities of associated cost and project length quickly sink in. Over the last few years, a shift has occurred. State and local entities are temporarily putting ERP systems on the back burner to make room for nimble and lean solutions, like e-procurement, that yield immediate results.

The State of Michigan is a leader in that shift.

“We’re looking at the whole procurement system, from A to Z,” Michigan Budget Director John Nixon told the Detroit Free Press. Part of Michigan’s technology reform plan is an e-procurement system to provide better data tracking and to demonstrate how and when to get the best deals. Speaking to the significant value-add of e-procurement, Kurt Weiss, a spokesman for Michigan’s Department of Technology, Management and Budget, said: “It also will allow for quicker turnarounds on bids and easier communication among state purchasing office officials and vendors, which will increase efficiency.”

The public sector needs technology projects to enhance transparency and increase efficiency, without breaking the bank. In today’s technology battle, e-procurement solutions are winning the fight.

HERE ARE SOME REASONS E-PROCUREMENT KNOCKS OUT ERP IN TODAY’S ECONOMY: > Quick implementation and quick return.

As states, counties, cities and municipalities face financial burdens, attention should be focused on ventures producing rapid return. E-procurement systems are implemented within months, not years, and the return on investment is evident almost immediately. Conversely, finance-driven ERP systems are notorious for taking years to implement. A hiccup here and there, and before you know it, ERP projects are behind schedule and facing months of fruitless

8 | OCTOBER/NOVEMBER 2012

waiting. Long projects cause frustration and create a lack of confidence in an entity’s ability to deliver service to constituents. Government officials also find it difficult to invest in massive projects if the return on their investment won’t be felt for several years. > Spend savings. Process efficiency is a benefit to implementing an electronic procurement system, but workload efficiency is not the only benefit. E-procurement produces tangible spend savings through strategic sourcing, maverick spend reduction, and by identifying cost saving opportunities. Public sector entities that have implemented e-procurement have experienced savings in the range of 20 to 30 percent. > Cost of an ERP. At first glance, an ERP might seem doable, until you get a glimpse of the ERP price tag that can reach up to the $250 million range.

Governments are working to achieve balanced budgets, not fall into money pits. Economic hardship lends little flexibility to engage in long, drawn-out projects that by definition are more expensive. At a fraction of the cost, e-procurement systems are more attractive. You get results with a clearancesale price tag. Executives are also intrigued by the opportunity to create an additional revenue stream which is possible through an e-procurement system. > Private sector expertise. ERP systems are designed for the private sector. Large ERP software suites provide good functionality for the finance and manufacturing industries, but they traditionally have little focus on public sector or higher education procurement markets. They lack the functionality required by government policy and processes. Many ERP companies and consultants customize and create “one-off” versions of the software to meet public sector needs. This leads to cost increases, and ultimately taxpayers foot the bill. Additionally, due to the customizations, future upgrades are difficult and expensive, which often leads to a quickly outdated product. > Functionality. ERP is not a one-stop-shop to meet full enterprise needs. Procurement is highly neglected within these systems. In fact, “bolt-on” software products are often required to fill gaps in purchasing functionality. Common procurement bolt-ons include stand-alone catalogs, vendor portals, e-RFP programs and reverse auction systems.

E-procurement specializes in accommodating all your procurement needs into one seamless system.

BRITTANY DEVINE oversees product marketing for Periscope Holdings, Inc. Contact her at bdevine@periscopeholdings.com.

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HOTTOPICS [ethics]

Even Superman Has a Weakness WHAT IS YOUR KRYPTONITE?

By Ruth Estrada

W

hen a government scandal hits the news, we all shake our heads in disbelief. Why would that buyer circumvent the rules? How shameful that a purchasing director would award a contract to his buddy! But were these individuals evil-doers or were they your average, hardworking individuals who gave in to a weakness?

We all know that every fictional superhero has one debilitating weakness. Could it be we are all good guys who, if we give in to our one fatal flaw, might end up doing something professionally unethical? If Superman can be stopped in his tracks by a little Kryptonite, could you make a bad decision when confronted with your weakness?

Do any of the following fatal flaws apply to you?

Captain Oblivious walks into the office and immediately stumbles over a large box of paper on the floor. He goes about his day with his cape tucked into the back of his pants. Everyone at the office loves Captain Oblivious because he is so at ease with himself and allows life’s little problems to just roll off his back. Unfortunately, Captain Oblivious’ relaxed manner is also his fatal flaw. He is the definition of complacent, just going through the motions, pushing paper and never really focusing on his job. Although he doesn’t mean to do anything unethical, he just does not pay attention to the details. When a scope of work for a new solicitation hits his desk, he doesn’t take the time to read it carefully. He skims it and misses the fact that the scope of work appears to be written by the current contractor who provides the service.

The scope is so restrictive that no other vendor has a chance of competing fairly for the work. Captain Oblivious publishes the solicitation “as is” and receives a protest. The agency is accused of playing favorites because they published restrictive specifications that preclude open and fair competition, and Captain Oblivious can only shrug his shoulders as to why.

Super People Pleaser is the nicest person in the whole agency. She prides herself on providing excellent customer service. In fact, Super People Pleaser hates to say no and gets sick to her stomach if she cannot give customers what they want. When

10 | OCTOBER/NOVEMBER 2012

her customer department submits a questionable sole source request, stating that a product is the best and only solution, Super People Pleaser does not investigate the validity of the sole source justification.

She simply approves it and issues the purchase order. And when the politicians in her agency start to pester her that their constituents are not being awarded contracts, Super People Pleaser remedies the situation and issues low-dollar purchase orders to the vendors, skipping the competitive process.

At the end of the day, Super People Pleaser goes home happy because she did exactly what everyone wanted. However, she does not stop to consider that doing the socially convenient thing and the ethically correct thing may not be one and the same.

Know It All Man is a certified genius. His extensive training and education have made him the authority on everything related to procurement.

When something new or different pops up on his desk, he does not think twice about it. “I don’t need to look up the rules or ask others for input. I can figure this out on my own,” he says. Sure, Know It All Man has never published a design-build solicitation before, but he vaguely remembers the state statute that applies. The customer department is relying on Know It All Man’s expertise when it comes to

issuing and awarding this solicitation. They are shocked to discover that the process did not have the correct committee member composition, or that they evaluated pricing before they were legally allowed to. Know It All Man is too proud to admit that, even with all his knowledge, there may be occasion to consult the laws, regulations and procedures to ensure he is doing everything correctly.

Invisible Gal is as stealthy as a ninja and can fly under any radar. However, sometimes the power gets to her head. When Invisible Gal is in a rush, she is tempted to cut corners. She has been known to process a change order without getting all the necessary approvals. Invisible Gal feels pressured to get her work processed quickly and to be recognized as a hard worker. Her powers keep her hidden, and she assumes no one will know that she skipped a few steps. Besides, she reasons, “This one tiny act isn’t a big deal in the long run.� Invisible Gal does not realize that the Super Audit Team is on the scene reviewing files. How will Invisible Gal explain the missing documentation when Super Audit Team inevitably tracks her down? She may be invisible, but her actions leave a vapor trail of destruction behind her.

Do any of these superheroes sound familiar to you?

In their hearts they want to believe they are doing their job in a manner that provides best value for the goods and services purchased by the agency, preserves the public trust, and protects the public interest. But by giving in to their weaknesses and not thinking through the consequences of their unethical actions, they become the bad guys in their own agencies.

We have all had days when we find it difficult to concentrate on the details, to say no to a superior, to ask the probing questions, to ask for help, or to be the one who puts an important project on hold because there is missing information. But being a true superhero means you have to ensure your conduct is always ethical and stand up for the values and guiding principles of the public procurement profession.

Doing so instills public trust and will keep you and your agency on the side of truth and justice!

RUTH ESTRADA, CPPB is a Senior Contract Officer for the City of Tucson, Ariz.

This article is based on the winning essay in the 2012 NIGP Ethics Essay Contest

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HOTTOPICS [legal pro]

ENFORCEABILITY OF LIQUIDATED DAMAGES CLAUSES

By Richard Pennington

“

No branch of the law is involved in more obscurity by contradictory decisions than whether a sum specified in an agreement to secure performance will be treated as liquidated damages or a penalty.” – Illinois Supreme Court, 1917 Two recent case decisions cover the enforceability of liquidated damages amid claims that they operate as unenforceable penalties. For well over a century, enforceability has been a live issue in contract litigation. In August, Utah’s Supreme Court revisited the issue and appeared to soften somewhat the amount of judicial scrutiny of liquidated damages clauses.

to enforceability. Some opinions seem to resurrect almost insurmountable proof obstacles, including resolving doubts against enforceability of liquidated damages where there is a “reasonable doubt” about whether the clause operates as a penalty.

Other court decisions appear more willing to permit the parties the freedom to contract and stipulate an amount to compensate for breach.

THE TRADITIONAL PENALTY ANALYSIS NIGP’s Online Dictionary of Procurement Terms defines liquidated damages as “[d]amages paid usually in the form of a monetary payment, agreed by the parties to a contract which are due and payable as damages by the party who breaches all or part of the contract.” The damage amount (or formula for computing damages) is specified in a contract clause. In construction contracts, liquidated damages commonly are stated as an amount assessed per day of delay.

Some states have statutes specifically prescribing requirements for liquidated damages in construction.

For transactions in goods, section 2-718 of the Uniform Commercial Code authorizes the use of liquidated damages where they are reasonable and not a penalty. Common court formulations for the penalty analysis include: (1) whether the amount of liquidated damages was a reasonable forecast of actual damages; and (2) whether actual damages were incapable of being accurately estimated – or very difficult to estimate – at the time of contract formation. Thus, liquidated damages are forwardlooking: The parties, in effect, are agreeing on an amount of damage that will be assessed because the amount of actual damage is difficult to determine.

The court opinions addressing the issue of enforceability are not unique to public procurement.

Like most other contract interpretation and administration issues, the law regarding enforceability of liquidated damages largely is derived from cases involving private companies and individuals.

State courts have taken a range of approaches

UTAH CHANGES ITS ANALYSIS In an opinion published in August, the Supreme Court of Utah acknowledged confusion in its own (and other states’) courts about the test for enforceability of liquidated damages. [Commercial Real Estate Investment, L.C. v. Comcast of Utah II, Inc., 2012 UT 49, Supreme Court of Utah, August 10, 2012] In the CRE case, Comcast was assessed liquidated damages in a lease providing that 1/30th of the monthly rent would be forfeited for every day that Comcast failed to continue operating its business there. Comcast had ceased operations in the building, and the landlord CRE assessed a total of $1.7 million in liquidated damages for the five years period before a replacement tenant was found.

The Utah Supreme Court described various approaches to analysis of liquidated damages.

One line of cases generally considers whether the court believes the damages are a penalty, often using post-breach hindsight not available when the contract was executed. The court decided to adopt instead the same review standard used in interpreting other contractual provisions. Under this approach, liquidated damages clauses (like other contract provisions) are presumed to be valid, shifting the burden to prove unconscionability to the one challenging it. The court reviewed the clause from a substantive perspective – whether its terms were so one sided as to be grossly disproportionate to actual damages as to be oppressive – and found it enforceable. The court’s language expressly abandoned the heightened judicial scrutiny that had characterized prior Utah case law on the subject.

12 | OCTOBER/NOVEMBER 2012

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HOTTOPICS [legal pro] ADMINISTRATIVE BURDEN AS DAMAGES Often one cannot quantify the value of the additional time spent on a delayed project. Can a liquidated damages provision be based on increased oversight from a delay? In a South Carolina case last year, the answer was “yes.” [Erie Ins. Co. v. Winter Const. Co., 713 S.E.2d 318 (S.C. App. 2011)] Winter Construction was the general contractor on a major construction project for a school district. Winter eventually terminated for default its electrical subcontractor, making Erie – the bonding company – entitled to the claims of the terminated subcontractor. On $3.1 million of completed, electrical subcontracted work, Winter withheld $350,000 from Erie based on the provision in the subcontract permitting withholding of a specified amount as an “allowance for administrative burden.”

Erie, the surety, filed a breach of contract action.

The trial court had held the administrative burden provision to be an unenforceable penalty.

The court of appeals reversed, applying traditional penalty analysis. The court noted that liquidated damages are widely used in construction. Where the sum stipulated is reasonably intended by the parties as the predetermined measure of actual damages in the completion of the project, and not as punishment for breach, then it is not a penalty. In this case, the court reasoned, the general contractor would have suffered an “administrative burden to oversee the timely completion of the project.”

The court considered the fact that it would have been impossible to estimate the administrative costs in the event of default, given the complexity of a phased construction project. Winter would have been required to inspect work completed, determine the amount of remaining work, analyze bids from other vendors, oversee the completion using its own senior management officials, and otherwise administratively coordinate and manage the completion of the electrical work on the project.

The court also considered evidence that the method of stipulating the amount of damages in the contract was consistent with industry practice. So despite the fact that the liquidated damages withheld were four times the actual damages, the court emphasized that the inquiry is on whether the stipulated amount is disproportionate to probable damage at the time of contracting. The court concluded that the liquidated damages provision was not a penalty.

IMPROVING YOUR CHANCES Your state’s law will have its own approach to enforceability of liquidated damages, particularly

14 | OCTOBER/NOVEMBER 2012

with respect to the relevance of actual damages to the analysis. There probably still are more jurisdictions applying the traditional penalty analysis than Utah’s “freedom to contract” approach.

This article addresses only one aspect of liquidated damages. Other issues you would want to discuss with your counsel include how long liquidated damages can be assessed, how concurrent delay caused by the government is treated (in some states concurrent delay precludes enforceability of the liquidated damages provision entirely), and to what extent liquidated damages preclude other remedies or claims for damages from breach.

With respect to enforceability, here are some general guidelines for improving the prospects that your liquidated damages clauses will be held valid: > Avoid the use of the term “penalty” in the title or text of the liquidated damages clause. Although there are cases that say that the use of “penalty” in the clause does not preclude a finding of validity, use of that term does not help with the characterization. > Involve the user and other functional experts in the calculation of amounts in order to align with industry practice in your jurisdiction. > Include a brief memorandum that describes the considerations in the types of damages, using available wage or consultant rates that quantity the hourly costs associated with oversight and inspection that occur during any delay. Without a memorandum, it’s difficult to later reconstruct what was considered in the computation. > As the Erie court did, list the types of oversight, inspection, and project management activities that would be required from delays and other covered breach, including lost opportunities on other projects that could fairly be characterized as damages from breach.

Where there are other damages that warrant additional liquidated damage amounts, supplement the general rate memoranda prepared for normal project delay. Include analysis that increases standard daily rates to account for other types of possible damaged, i.e. lost revenues, cost of interim facilities (e.g. rent), or other project-specific damages.

RICHARD PENNINGTON, CPPO, C.P.M., J.D., LL.M. is an NIGP Individual Member and NIGP Instructor. He served as an assistant attorney general (procurement and contract law and litigation) and State Purchasing Director for the State of Colorado. He retired from the practice of public procurement law in 2010.

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(1) An Advisory Board of over 20 public procurement professionals to ensure processes and methods used are of the highest standards

(2) A National Evaluation Team of public procurement professionals from multiple political subdivisions* participate in the creation, evaluation and award process.

Public Agency Protection & Supplier Contract Compliance: (1) Quarterly performance reviews with supplier executives and the Lead Public Agency to evaluate performance and compliance.

(2) A Supervisory Board of National Public Associations to oversee the cooperative and to ensure the interests of their public agency members are served and protected.

(2) Commitments: Corporate, Pricing, Economy & Sales.

(3) Annual independent third-party supplier audits to ensure contract compliance.

(3) Field Program Managers focused on supporting public agencies and resolving problems or concerns.

(3) All decisions regarding the awarded master agreement, pricing changes etc., are made by the Lead Public Agency NOT the staff of the cooperative.

Some questions you may want to ask prior to using a cooperative thatâ&#x20AC;&#x2122;s â&#x20AC;&#x153;just like U.S. Communitiesâ&#x20AC;? s 7HAT KIND OF INDEPENDENT OVERSIGHT OF THE s 7ERE THE SOLICITATION EVALUATION AND AWARD ALL cooperative is in place? performed by employees of a political subdivision that is independent of the cooperative organization? s $OES THIS CONTRACT MEET THE LEGAL requirements of my agency and state? s 7AS THE PROCUREMENT PROCESS SUBSTANTIALLY If in doubt ask your attorney. similar to the process your agency is required to use? *A political subdivision is generally defined in most states as local governments created by the states to help fulfill their obligations. Political subdivisions include counties, cities, towns, villages, and special districts such as school districts, water districts, park districts, and airport districts

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HOTTOPICS [spend analysis]

CALIFORNIA STATE UNIVERSITY SYSTEM LEVERAGING SYSTEMWIDE SPEND C

aliforniaâ&#x20AC;&#x2122;s State University System (CSU), the largest senior system of higher education in the United States, has successfully completed the first phase of ambitious plans to leverage systemwide spend to deliver savings on goods and services. CSU engaged Spikes Cavell Analytic Inc. to collect, cleanse, classify, enrich and collate raw spend data extracted from the accounts payable system used by the 23 campuses and the Chancellorâ&#x20AC;&#x2122;s Office to manage the institutionâ&#x20AC;&#x2122;s finances.

With the data transformation phase complete and $3 million in early cooperative savings identified, Spikes Cavell has now begun to deploy its online spend and contract analytics tools. The procurement functions at each of the campuses use the tools to analyze their spend on goods and services to rapidly identify where further savings can be delivered.

In the public and private sectors, spend, contract and pricing data is often incomplete,

inappropriately classified for procurement purposes and distributed across financial management and purchasing systems that are only partially integrated, according to Spike Cavell Analytics.

This â&#x20AC;&#x153;data deficitâ&#x20AC;? renders the analysis and management of spend difficult, time consuming, expensive and unreliable. The companyâ&#x20AC;&#x2122;s data transformation methodology and online analytical tools were developed to address this challenge. â&#x20AC;&#x153;It was a tough year to start this project, as we were in the middle of transitioning to a revised financial system as well as a new procurement card provider,â&#x20AC;? said Tom Roberts, director of contract services and procurement for the California State University Office of the Chancellor. â&#x20AC;&#x153;We ended up delivering as many as four datasets each per campus.â&#x20AC;? Despite the challenges, Spikes Cavell completed the project two weeks ahead of schedule. CSU is already zeroing in on initial opportunities for collaboration and savings.

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HOTTOPICS [coop purchasing]

Misconception Correction HOW COOPERATIVE PURCHASING CAN WORK FOR A SCHOOL DISTRICT

By Tara Barbieri

T

o their credit, school district leaders can be creative in how they fund and spend their budgets to get the most out of every dollar.

One savings area they sometimes overlook is cooperative purchasing – many times because of misconceptions. When used effectively, cooperative purchasing is a tool to simplify the buying process.

Cooperative purchasing organizations help districts streamline procurement and save on the soft costs associated with RFPs and awarding contracts.

TO HELP DECIDE IF A COOPERATIVE IS THE WAY TO GO, DISTRICT PURCHASING OFFICERS SHOULD ASK SEVERAL QUESTIONS: > Is my district legally able to use a cooperative purchasing vehicle? > Which contract vehicle will offer my district the best solution? > When does it make sense to purchase through a cooperative versus issuing my own RFP? > Does it make sense for my district to manage its own bid when there is not a lot of ROI? These questions help establish the basic framework for a district’s work with a cooperative, and group purchasing organizations such as the National Joint Powers Alliance (NJPA) and The Cooperative Purchasing Network (TCPN) can help districts answer these critical items. Let’s look at several misconceptions that can make K-12 districts apprehensive to use this type of contract: Misconception No. 1: It’s more efficient and cost effective if I do the contracting myself. At first glance, managing contracts internally may appear to be a cost-effective solution; however, the behind-the-scenes costs associated with the bidding process and long-term contract management may make working with a cooperative more affordable.

It can be easy to focus solely on the hard upfront costs of the products and services and overlook soft costs, such as employee time and the effort required to fulfill state mandates and regulations.

In the end, districts can miss the true cost picture.

On the other hand, cooperatives, such as NJPA and TCPN, streamline the RFP process, and their subject-matter experts manage multiple

18 | OCTOBER/NOVEMBER 2012

contacts, while satisfying each contract’s requirements for the purchasing officers.

In fact, cooperatives offer hard and soft cost savings, no matter the size of the customer. Smaller districts, for example, do not necessarily have the buying power of a large district and may not have the leverage to negotiate the same price on a product or service.

While larger K-12 districts have the buying power, they can still benefit from cooperative purchasing because cooperatives can protect districts and ensure that vendors will deliver on their promises.

Misconception No. 2: If I choose to use a cooperative purchasing vehicle, I will sidestep my state contract vehicles. In reality, groups such as NJPA and TCPN ensure districts are compliant with state and local regulations. The cooperatives walk districts step by step through the applicable statutes and how each is satisfied. This transparency and commitment to detail assure the purchasing officer the cooperative is handling bids correctly.

Misconception No. 3: National contracting agencies will overlook critical, communityspecific details. Purchasing cooperatives have the resources to investigate every line of every bid to make sure it is in compliance with local regulations and beneficial to the community.

NJPA, for example, provides a legal paper trail that publicly documents each step of the RFP process.

Cooperative purchasing is about making the RFP and award process easier and more efficient to save valuable effort and budget dollars. Purchasing officers still have to do their homework and ensure that they are informed and taking advantage of the most competitive agreement available to them.

However, when used appropriately, cooperative purchasing vehicles save significant time and money.

Cooperative purchasing frees staff time and resources, while providing peace of mind and increasing both accuracy and efficiency in the bidding and contract management process.

TARA BARBIERI is director of program sales at CDW-G, provider of technology solutions for government and education.

HOTTOPICS [supply chain]

BUYING GROUP LOWERS MANUFACTURER’S COSTS W

that provides clients savings on raw materials, components, supplies and services by combining the purchasing power of more than 750 industrial manufacturers. Prime Advantage negotiates volume rebates and discounts with suppliers.

For example, Cres Cor can continue to offer two inches of insulation in its hot holding cabinets, double the industry standard, because of a relationship with Fabrication Specialities inc., a Prime Advantage supplier based in Bridgeview, Ill. A relationship with another Prime Advantage supplier, electric control company Renau Electronic Laboratories, Chatsworth, Calif., enables Cres Cor to replace the analog electric controls in its hot holding cabinets with more reliable solid-state LED displays, without increasing product prices. Two metal suppliers, Main Steel and Kloeckner and Co. (formerly Macsteel Service Centers USA) enable Cres Cor to adjust the thickness and grades to create more economical versions of its metal cabinets.

hen Wichita (Kan.) Public Schools needed more than 200 transport utility cabinets to safely transport and store meals throughout the school district, they contracted with Cres Cor, Mentor, Ohio, manufacturer of mobile commercial food service equipment, including a line of hot food holding cabinets.

“This order required us to create a custom specification for these transport utility cabinets, yet we were able to keep our costs competitive and provide a five-year warranty,” said Rio DeGennaro, vice president of Cres Cor. DeGennaro cites Cres Cor’s membership in the Chicago-based manufacturer’s buying group, Prime Advantage, for helping the company realize a “good, better, best” strategy to control costs and remain competitive in project bid opportunities in the education market. Cres Cor purchases most of its key materials from Prime Advantage supplier members. Prime Advantage is a buying group

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HOTTOPICS [fleet update]

New Competitors for Diesel BI-FUEL TRUCKS USE BOTH NATURAL GAS AND GASOLINE FOR GREATER RANGE

By Sean Kilcarr

T

wo industry trends have suddenly dovetailed nicely to place natural gaspowered pickup trucks in a whole new light.

The first centers on the higher cost of diesel engines with the new selective catalytic reduction (SCR) emission control systems that meet stringent federal exhaust emission rules for diesel-powered trucks.

Now, the cost of a diesel-powered truck is close to natural gas models without any government subsidies.

The other is better range. Earlier this year, OEMs added a whole new twist to the natural gas picture – rolling out bio-fuel pickups capable of running on both compressed natural gas (CNG) and gasoline, thereby eliminating long-standing concerns over range.

For example, GM introduced a 2013 model in April of its Chevrolet Silverado 2500 HD and GMC Sierra 2500 HD with a factory-installed CNG/ gasoline propulsion system offering 17 gasoline gallon equivalent (GGE) worth of CNG storage – storage that occupies 25 percent of the usable space in the pickup bed – coupled to a 36 gallon gasoline tank.

“The bi-fuel truck provides [customers] with added re-fueling flexibility and eases consumer range concerns that typically come with CNG – all while reducing emissions and controlling costs,” says Joyce Mattman, director of GM’s commercial product and specialty vehicles division.

GGEs are calculated as having the same energy equivalent as one gallon of gasoline, she notes, with CNG sold at filling stations in the U.S. priced in dollars per GGE. A gasoline gallon equivalent of CNG is approximately 14.5 liters at 3600 psi.

At current prices, which are generally $1.25 less than the gallon equivalent of gasoline, CNG promises significant cost savings over the life of the truck, GM says.

GM also notes that its bi-fuel pickup models are priced $11,000 above gasoline-only versions but cautions that there is a 12 percent falloff in horsepower when the vehicle shifts from gasoline to CNG power. Yet that big up-charge for a bi-fuel truck – which varies depending on the OEM and model selected – isn’t too far off from the diesel option.

20 | OCTOBER/NOVEMBER 2012

CONVERTING TO BI-FUEL Canada’s Westport Innovations is one of six qualified vehicle modifiers providing a bi-fuel CNG/gasoline package for Ford’s F-250 and F-350 SuperDuty models called the “WiNG” system.

Westport’s LD (light duty) division notes that the up-charge for equipping either of those Ford Super Duty models with the “WiNG” bi-fuel system is $9,750, with an extra $1,200 added if buyers want to add a 24 GGE CNG storage tank versus the standard 18.4 GGE package – a cost in line with the $8,000 to $10,000 extra required to power such models with diesel engines, said Brian Raithsburg, Ford’s F-Series Super Duty marketing manager.

“It gives pickup operators a strategic opportunity, especially for small fleets,” he says. “For those operating for example in Texas, Oklahoma, and Pennsylvania where numbers of public CNG filling stations exist, they can achieve savings from the lower cost of natural gas over time.

That clearly factors into the TCO [total cost of ownership] decisions they’re making.”

However, all of the bi-fuel CNG/gasoline pickups hitting the market are still in their infancy, with orders only beginning to trickle in – orders that, surprisingly, are not just coming from state and municipal fleets that may try to take advantage of the MOU signed last November that’s been broadened to involved 22 states, up from the four original signers.

Indeed, Bob Hegbloom, director of the Chrysler’s Ram truck division, says the demand for the company’s new bi-fuel 2500 HD pickups unveiled in March quickly shifted unexpectedly. “We originally laid it out as a big fleet play; a truck that large fleets operating 50 to 100 vehicles or more would be the most capable of utilizing as they had more resources to address CNG refueling infrastructure needs,” he says.

“But right away, we started getting calls from our dealers for a ‘retail’ option so they could sell these bi-fuel trucks to small fleets operating say five vehicles as well as individual buyers,” Hegbloom says. “It was just surprising how fast demand for such alternative fuel options spread.”

Ram’s bi-fuel 2500 HD pickup will be sold in a crew cab configuration with either a long or short bed for $47,000, the company says. Powered by a 5.7-liter Hemi V8 engine linked to a 6-speed automatic, the bi-fuel Ram 2500 HD comes equipped with two CNG tanks providing 18.2 GGE worth of storage secured in the pickup’s bed to its frame.

The truck also comes with an eight-gallon gasoline tank.

The reason for the interest in such a bi-fuel platform is pretty simple, Hegbloom says: cost. With diesel engines and mandated emission control systems adding in some cases $10,000 to the base sticker price of a heavy-duty pickup, Hegbloom says fleets and individual buyers are strongly exploring a move to alternative fuels.

“CNG is a widely accepted fuel in the U.S., Europe and Asia,” says Robert Lee, VP and head of engine and electrified propulsion engineering for Chrysler. In addition, he says that CNG reduces smog-producing pollutants between 70 and 90 percent and significantly reduces greenhouse gas emissions. He adds that the CNG-only range for the Ram is estimated to be 255 miles, while the backup supply of gasoline extends the range to 367 total miles Proud Supplier:

STATES MOVE TO SPUR NGVS In November 2011, Gov. Mary Fallin of Oklahoma, Gov. John Hickenlooper of Colorado, Gov. Tom Corbet of Pennsylvania, and Gov. Matthew Mead of Wyoming signed a memorandum of understanding (MOU) to forge what they dubbed a “coordinated, multi-state” effort to encourage U.S. automobile manufacturers to develop a functional and affordable natural gas vehicle (NGV) fleet.

Since then, 18 other states have signed on to the MOU to save taxpayer dollars by “encouraging the use of a domestic energy resource to fuel our nation’s transportation needs.”

The MOU calls for the joint solicitation of multi-state requests for proposal (a joint-RFP) to aggregate annual state fleet vehicle procurements to provide sufficient demand.

The MOU calls on state governments to coordinate with local agencies, municipalities and companies to determine the number of NGVs each state can commit to purchase and the required specifications necessary to meet fleet needs.

The Joint-RFP also requires that the ultimate cost of an OEM-built NGV should be comparably priced to an equivalent gasoline powered model, ensuring that warranty and reliability concerns are not compromised.

Simultaneously, the states understand the need for continued development and expansion of CNG fueling infrastructure and encourage private investment to meet projected demand.

The states intend to transition new fleet vehicle acquisitions in committed volumes and encourage purchases from local businesses using life-cycle costs as the criteria.

SEAN KILCARR is senior editor of Fleet Owner, a Government Procurement sister publication.

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IN DEPTH [innovation award winner]

E-Learning at a

Bargain Price

Cost-conscious training project in Multnomah County, Ore., earns NIGP’s Innovation Award

By Larry Anderson

22 | OCTOBER/NOVEMBER 2012

W

hen Multnomah County, Ore., transformed its purchasing processes with a new Enterprise Resource Planning (ERP) system, the central purchasing department had an urgent need to train internal clients in new tools and processes. The department also sought to train internal clients to a common level of understanding to ensure better overall business planning, better procurement and contracting, and better business administration. In addition to training 120 high volume users, the department wanted to provide a training source that low-volume users could access as needed and others could use as a reference.

The department developed a system to deliver computer-based training in-house at a 69 percent cost savings compared to contracting with an outside vendor.

“Using an outside company didn’t make sense from the perspective of being flexible and self-sustaining,” said Brian R. Smith, Multnomah County’s purchasing manager.

“We started looking at how we can do this in-house.”

“The development of computer-based training combined with traditional classroom training has given us the ability both to develop training and to deliver it in non-traditional methods, all at a relatively low cost,” said Smith. Multnomah County’s project to implement e-learning was recognized with the Innovation Award at NIGP Forum 2012 in Seattle.

ENSURING CONSISTENT KNOWLEDGE Multnomah County provides an array of services, from bridges and roads to human services. The annual contract spend exceeds $300 million. The county operates a hybrid, centralized/decentralized procurement operation, with the county’s formal procurements (more than $150,000) handled by 18 full-time equivalent (FTE) employees in the central purchasing group. Another 350 or so other people have purchasing as some part of their jobs, but the county didn’t have a handle on exactly who was administering contracts in the various client departments. Dealing with the changes of the new ERP system required them to find out.

About 120 internal clients were identified as key people involved administering contracts in various departments, although many of their jobs are primarily focused on providing services to taxpayers, not on the business aspects of operations. The internal clients had limited exposure to the business aspects of procurement and contracting processes.

“They [may] have expertise in social work, for example, but they depended on others to consider the business side of contracts,” said Smith. “But we no longer have the people or time to afford that luxury – we have to have some consistent knowledge of contract business systems at the start in the initial scope development and continue that understanding through the contract development and administration cycle.”

“Part of the value-add that central purchasing brings to the organization is training at all levels,” added Smith “We wanted to do more training and better training using various methods to bring our expertise to enable the departments to do a better job.”

Looking at the scope of their needs, the department realized immediately they were not training experts. The initial thought was to contract training out, and there was some discussion with a prominent national training delivery firm. Barry Zimmerman, procurement and contracts supervisor, attended a four-day training session provided by an outside firm at a municipal agency also involved in undergoing large procurement process changes. Multnomah County even requested a budgetary quote for a semi-custom classroom/e-learning program from an outside firm.

But the outsourcing approach had problems. For one thing, after an initial push on training, there would be an ongoing need to update content and do refresher training.

To meet those needs would require that the county own the curriculum content to avoid paying additional licensing

fees for retraining and for customizing the curriculum.

Also, the cost of top-flight training was way too high.

FROM CONTENT TO SOFTWARE TO DELIVERY The department opted to develop its own course material, both for traditional classroom learning as well as computerbased learning and reference. A five-person team outlined the course, added content from other courses where they could, and developed drafts of materials where none existed. All the team members’ primary functions were in procurement and contracts, but some had experience in developing other materials and delivering it to users.

Once the material reached a completed draft stage, it was provided to selected individuals in various departments to critique and finish. Development began in January 2011 and the first course was delivered in June 2011. The individuals working on the project did so as a secondary responsibility.

The central purchasing department began looking for software that could be used for training. They quickly found that the county’s human resources (HR) department was using Adobe Captivate software, which enables users to combine visual and audio content into a finished course. There is a solid base of people who know the product, it is easy to earn, and outside expertise is easily available if needed. Captivate was adopted as the county standard. Talent development specialists in HR helped the central purchasing team learn how to use Captivate and also helped develop a Multnomah County and Multnomah County Purchasing brand to be included in all training. HR also shared their expertise in adult learning and how it can be structured. A short-term employee was brought in to work full-time for about three months on course development and to train central purchasing staff on how to use Captivate. She also created standard templates and designs and developed procedures and training for audio recording.

“We thought it would be 24 hours of training,” said Zimmerman. “Then we scaled it back to 16 and then later down to six hours if you take all the courses back-to-back.” The endproduct was a 191-frame presentation with review questions after each of six sections and an end-of-course review.

Central purchasing also needed a learning management system (LMS), a Web-based e-learning delivery system, and settled on Moodle, an open-source platform. The system handles registration for courses, delivery of course content and provides access 24/7 using a guest-pass system. The e-learning platform is available on the county’s secure network and can be accessed county-wide. Moodle is an abbreviation for Modular Object-Oriented Dynamic Learning Environment.

The Moodle system offers more flexibility than a webinar, for example, in which streaming content is delivered and someone listens in (maybe with a Q&A at the end). “The technology enables you to track who’s taking the course and to incorporate feedback and interaction in the form of quizzes,” said Smith. “It really gives you a much better sense of a two-way street. There

www.govpro.com • GOVERNMENT PROCUREMENT | 23

IN DEPTH [innovation award winner] is a specific followup to get feedback from people who took it.”

The system also keeps up with which modules have been completed. Based on incorrect answers, the LMS automatically refers students back to the appropriate section they missed, and keeps a summary of sections missed in the aggregate.

Although the computer-based course was available in lateJune 2011, implementation was delayed until September 2011 to coordinate with roll-out of the county’s LMS system.

TECHNOLOGY PROVIDES FLEXIBILITY Multnomah County central purchasing began by creating a Basic Contracting module and has additional modules, such as Unauthorized Purchase training, in development.

The county already has multiple existing training programs in PowerPoint that they will transition to the e-learning system. Creation of some additional modules is being delayed until the new ERP system is fully implemented.

“As purchasing professionals, we are constantly asked to do more with less, including training of our internal clients,” said Smith. “Training is a big part of extending the limited resources of procurement. It’s one of the ways we can provide value to organizations.”

New technologies provide much greater flexibility to provide training content beyond the traditional paradigm of gathering people together in a room, which is still the prevailing standard. Combining Web-based training with the availability of free or low-cost technologies can improve a procurement department’s ability to train, while providing content on-demand to enable employees to access the training anytime and any place, to fit their individual schedules.

An advantage of computer-based training is that it can be taken in small modules. The course can be stopped at any point and then re-entered where the last completed module was done. The student has 60 days to complete the course.

“Traditional classroom training is the right option for some, but others need to be able to take it on the road and fit bits into the available time in

A “hybrid” training approach involves presenting electronic content in a classroom setting and interrupting the presentation periodically to have discussions.

24 | OCTOBER/NOVEMBER 2012

their increasingly busy schedule,” said Smith.

While some people embrace an electronic format, others prefer to engage in-person. A surprisingly successful method Smith has found is a “hybrid” approach involving presenting the electronic content in a classroom setting and interrupting the presentation periodically to have discussions. “We have done a couple of them and people like the format,” Smith said. Another hybrid benefit is to expand the department’s instructor pool to include those who might not be comfortable doing a full presentation but can handle Q&A after the module has played for 10 minutes or so.

The feedback sessions from both the classroom and on-line training identified that users favored one method or the other. Offering both methods has provided more than 70 completions with another 20 participants identified as starting the computer-based training, a remarkable 75 percent of targeted participants.

MOVING BEYOND POWERPOINT “There are a lot of technology tools that can extend your ability to support your internal clients, and they are getting increasingly easy to use,” said Smith, who has even seen new technologies emerge since implementation of the Multnomah County training system 18 months ago. “The tools that are available have already changed, and we might not do it this way if we had it to do over.

There are now new tools, and some are better. That’s the constant challenge, keeping up with the technologies.”

Central purchasing is also implementing technology tools they learned in the training project for other parts of the business. For example, free screen capture tools enable them to provide visual elements to accompany written instructions related to operating the new ERP tool. “It really helps to bring business process documents to life,” said Smith. For example, a recent document required explanation of 27 steps, and doing so in a couple of sentences per step with a screen capture was easier than using many more words.

The experience has also helped the department move past the restrictions of PowerPoint. “We now understand visuals and the adult learning concepts. Also, people learn in different ways. For example, younger people have shorter attention spans and want video and visuals. We are learning a lot about that. Anybody who does this, there are a lot of takeaways about the technology and adult learning that you can apply across the board.”

Another benefit of owning the content is the ability to make it available to other jurisdictions in the public purchasing tradition of sharing. The Captivate file of two Multnomah County contract administration modules are available (without the LMS functionality) on the NIGP Web site at http://nsite.nigp.org/NIGP/Home/. After log-in, select the Communities tab, then Technology in Procurement. There are two files in the Library labeled e-learning examples.

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IN DEPTH [benefits]

Reverse Auctions Lower Costs of Employee Benefits New procurement tool generates millions in savings on life insurance and pre-paid dental in Maricopa County

By Larry Anderson aricopa County has found a new use for reverse auctions: employee benefits contracts. The Arizona county has used online reverse auctions to save 32 percent on a new employee life insurance contract and another 36 percent on a pre-paid dental contract.

The county had already been successful using reverse auctions during the last couple of years for several commodities – from flour to inmate shoes to canned fruit [see “Total Transparency in Real Time,” Government Procurement, June/July 2011]. More recently, conversation in Maricopa County turned to how the procurement tool might be used for employee benefits contracts.

The county uses a BidSync soft ware system to administer online reverse auctions. Multiple pre-qualified suppliers openly bid against one another electronically in an allotted time frame, prices decrease as the auction progresses, and suppliers are allowed to see each other’s bids. The BidSync system notifies suppliers of the auction and provides a link to allow them to bid.

Matthew T. Bauer, procurement supervisor for Maricopa County, Phoenix, Ariz., managed the reverse auctions with Steve Dahle, a part-time strategic procurement officer who handles benefits procurement for the county since his retirement. Bauer says Dahle was especially helpful in getting executive buy-in for the plan. “Steve has been here forever and understood

26 | OCTOBER/NOVEMBER 2012

how this is a good benefit for the county,” said Bauer.

Mercer, the county’s employee benefits consultant, had never heard of reverse auctions being used for employee benefits but projected the county might save 10 or 12 percent by using the tool. Results of the reverse auction exceeded everyone’s expectations, and the consultant confirmed the county’s new prices are among the best they have seen.

A key to successful reverse auctions is to provide a strict and standardized set of requirements that the contractors/ vendors have to meet to eliminate variables and ensure that any bids are apples-to-apples comparable, said Bauer.

MORE BENEFITS, LESS COST The county used reverse auctions for a $12 million employee life insurance contract and a $859,093 prepaid dental plan, both covering three years.

The county provides basic life insurance equivalent to each employee’s yearly salary free as a benefit. In addition, employees may purchase supplemental life insurance at multiples of their pay for an additional premium. Premiums are computed at a fi xed rate per $1,000 of salary.

The county saved almost 63 percent of the countypaid portion of employee life insurance, and employees will save just over 26 percent. The total savings for the next three years is more than $5.8 million, which is more than 32 percent lower than previously paid. The county is also increasing plan coverage; specifically, the maximum electable coverage has increased from 4x salary to 5x salary,

with the ceiling increasing from $500,000 to $750,000.

In the reverse auction, the rate for basic life insurance (paid by the county) decreased from 12.5 cents per $1,000 in salary to 4 cents per $1,000. The vendor also provided supplemental life insurance rates in ranges covering anyone under 25 and up to 70 and older, with separate rates for smokers and non-smokers. The employee-paid rates of the winning bid ranged from a low of 3.2 cents per $1,000 in coverage for non-smokers under 25 to a high of $1.80 per $1,000 of coverage for smokers over age 70. The county passes the full costs of the supplemental premiums on the employees, who benefit from the average 26 percent savings.

The life insurance contract calls for a fixed price for three years and an option to renew for an additional three years. Escalator language allows negotiation of an increase in the event of renewal. Eight vendors competed for the contract, and there was a total of nine bids during the reverse auction, which was held between Sept. 16 and October 18, 2011. ING won the contract.

PRE-PAID DENTAL REVERSE AUCTION PAYS OFF The reverse auction for pre-paid dental services is projected to save $1 million (over the next six years, compared to a previous contract and taking into account the yearly escalator.) The savings are 36 percent without a reduction in plan design. For example, the current rate of $10.67 for a single employee will be lowered to $7.99 under the new plan, and the $30.63 rate for an employee and his or her family will be lowered to $22.03.

Some of the savings will benefit the county, depending on how much the county decides to subsidize the premiums; the rest will benefit the 1,700-plus plan participants. The reverse auction was held between May 31 and July 17, 2012, and there were 10 bid changes during the auction. The new pre-paid dental plan will begin in July of 2013 with Cigna as the supplier.

Bauer says education of the vendor community is critical. Maricopa County held a pre-proposal meeting of suppliers before deciding to go forward with the reverse auction approach, and there was initially some resistance from vendors, although they ultimately participated.

“In a time when many companies and its employees are paying additional money for less comprehensive benefits, it is a great success for the county to be able to lower its premiums,” said Bauer.

‘DEFINE WHAT YOU’RE LOOKING FOR’ Timing is everything, says Bauer. “Especially with life insurance, the market is opening up. Agencies are competing for a lot more business, so it’s an opportunity in terms of timing to go out to bid. The reverse auction just further increased the competition we had.” Bauer speculates that suppliers might lower prices to enter new markets or to boost market share. Participating suppliers likely have a range of prices they would agree

to, including an optimistic and a pessimistic price.

Seeing what other suppliers bid provides transparency.

Bidding tends to escalate toward the end of an auction with contractors waiting until the end so as not to “show their hand” too early in the process, says Bauer. “In the end, vendors ask themselves: How much do I really want this business?”

Having specific parameters is important to ensure a reverse auction is fair to everyone, says Bauer. “What you need is a predefined plan and understand what you’re putting out there,” he said. “If you’re looking for them to propose different services, it’s very hard for vendors to bid apples to apples. One vendor might provide a superpremium package and another a bare-bones option.”

“You have to define what you’re looking for so as not to have vendors misunderstand,” Bauer said. “You need to develop specs to meet the needs of the county and try not to be unduly restrictive, which can limit competition.” Because there are many variables in plan designs from one vendor to another, the upcoming renewal of Maricopa County’s health benefits contract will be handled through an RFP. LOOK FOR NEW OPPORTUNITIES It’s also important to confirm that the winning bid has the resources to fulfill the contract, Bauer noted. If the contract specifies at least 200 dentists available to provide services in Maricopa County, that number should be verified before awarding the contract, he said.

Also, conformance to minimum bond ratings or overall financial stability is important. “We may ask for additional financials if we have never worked with them before,” said Bauer, given that there is a lot at stake providing benefits for Maricopa County’s 13,000 employees. In the end, respondents to the reverse auctions were solid, nationally based firms such as ING, Hartford and Prudential “It just shows there are a lot of opportunities to use reverse auctions,” said Bauer. “It’s not just for commodities.

You should look at different types of services. Ultimately, you’re spending taxpayer dollars so you want to spend them as wisely as possible. It’s another tool individuals can use to reduce their contracted spend.”

In Maricopa County, construction-related procurement has just been brought into Bauer’s department, and he says there may be opportunities to save in the construction area with reverse auctions.

The news related to employee benefits is encouraging.

“Costs are skyrocketing in the area of benefits for county employees, and benefits are getting reduced,” said Bauer. “We were able to reduce the costs to the employees and county and increase benefits.”

“It made sense that it would work, but we had never seen it before,” he said.

www.govpro.com • GOVERNMENT PROCUREMENT | 27

IN DEPTH [green purchasing]

Cleaning Up Greenwashing Federal Trade Commission issues new guidance to prevent misleading environmental claims

By Scot Case

G

overnment purchasers interested in buying healthier, greener and more sustainable products and services have additional support from the U.S. Federal Trade Commission (FTC). On Oct. 1, the FTC revised its “Guides for the Use of Environmental Marketing Claims,” better known as the Green Guides.

The Green Guides help government purchasers and other consumers by clarifying what kinds of environmental claims companies should make about their products and services.

The revised guides help combat the increasing prevalence of “greenwashing,” including potentially false or misleading environmental claims about a company, product or service. The Green Guides will also help combat the growing proliferation of more than 400 environmental labels by providing guidance on how labels can be used appropriately and effectively.

OVERVIEW OF THE GREEN GUIDES The FTC issued its original Green Guides in 1992 to address concerns about misleading environmental claims. They were revised in 1996 and 1998 to clarify additional issues. The most recent revisions include modifications to certain sections of the guides and provide new guidance on environmental claims that have emerged since the last revision. The new guidance is based on findings from a consumer perception survey, three public workshops, and more than 340 unique comments from 5,000 submitted in response to the 2010 proposed revisions.

The guides reiterate the importance of abiding by U.S. truth-in-advertising laws and remind anyone making environmental marketing claims of the importance of having reliable evidence to support any such claim. The guides include numerous specific examples to clarify the requirements.

Government purchasers should be aware of and ensure government suppliers are aware of the Green

28 | OCTOBER/NOVEMBER 2012

Government purchasers should be aware of and ensure government suppliers are aware of the Green Guides and their implications.

Guides and their implications, which include: > Do not make broad environmental claims. According to the FTC, broad environmental claims such as “green” or “Earth friendly” are difficult – if not impossible – for suppliers to substantiate. Any such claims should be qualified with clear, prominent and specific information to clarify the claim. When general environmental claims are made and qualified such as “Eco-friendly: made with recycled materials,” the qualifying language must be clear and prominent, accurate and substantiated, and the recycled content must make the product more environmentally beneficial overall. The FTC notes that recycled content does not necessarily mean a product is more beneficial. > Use certifications and seals of approval carefully. The FTC guidance recognizes that not all certifications and seals are equally useful and that some can be deceptive. Government purchasers should look for certifications and seals that clearly explain the basis for the certification (such as the standard or specific environmental attributes upon which the certification is based) and that are verified by an independent third-party. > Beware the challenges associated with specific

claims. The Green Guides highlight challenges associated with a variety of environmental claims, including: Carbon offset claims. Suppliers must ensure they have competent and reliable scientific evidence and appropriate accounting methods to make such claims.

Compostable claims. Suppliers must have evidence to prove the product can be composted safely in the same time frame as other compostable materials and clearly indicate if the product must be composted in a municipal or institutional facility or whether it can be composted at a consumer’s home.

Degradable and bio-degradable claims. Products must completely degrade within one year with customary disposal if suppliers make an unqualified degradability claim. Items disposed of in landfills, incinerators or at recycling facilities will not degrade within one year and so unqualified degradable claims should not be made.

Free-of claims. Suppliers should avoid “free-of” claims if the product includes an alternate substance that poses a similar environmental risk or if the substance has never been associated with that product category.

Non-toxic claims. All non-toxic claims must be supported by competent and reliable scientific evidence that the product is safe for both people and the environment.

Ozone-safe or ozone-friendly claims. The FTC has declared it is deceptive to suggest any product or service is ozone-safe or ozone-friendly if it contains any ozone-depleting or other substances that may negatively impact the atmosphere.

Recyclable claims. Suppliers should qualify all recyclability claims unless recycling facilities are available for at least 60 percent of communities where the product is sold.

Recycled-content claims. Materials recovered from the manufacturing process (pre-consumer) or after consumer use (post-consumer) are both considered recycled content. Recycled content claims should qualify the percentage of recycled content unless the product is made from 100 percent recycled content.

USING THE GREEN GUIDES IN GOVERNMENT PURCHASING The FTC Green Guides make it easier for government purchasers to continue buying healthier, greener and more sustainable products and services by establishing clear guidelines outlining what suppliers can and cannot say about the environmental benefits of their offerings.

Government purchasers can leverage the Green Guides in several ways: > Require suppliers to comply with the FTC Green Guides when marketing products to government purchasers or responding to requests for proposals (RFPs) or requests for quotes (RFQs). While the FTC Green Guides clarify current federal law, many government suppliers remain unaware of the requirement to substantiate environmental claims. Government purchasers can include standard

language in the terms and conditions section requiring that “Suppliers must comply with the U.S. Federal Trade Commission ‘Guides for the Use of Environmental Marketing Claims’ when making any statement about the environmental benefits of their products or services.” > Demand proof for environmental claims made by suppliers. The FTC Green Guides require suppliers to have reliable evidence to support environmental claims.

Government purchasers can require that such proof be provided as part of the associated contract submittals or include contract provisions requiring that proof be made available within seven to 14 days of a request for it. Acceptable proof could include relevant test results from an independent laboratory or independent third-party verification of the environmental claims by organizations such as UL Environment, Green Seal or other respected certifiers. > Continue specifying environmental standards and certifications. Government purchasers have been relying on environmental standards and specifications such as those developed by Energy Star, Green Seal, and UL Environment (which now includes EcoLogo and GREENGUARD) for more than 20 years. The FTC Green Guides clarify that environmental claims that are verified by an independent auditor and clearly identify the environmental attributes addressed are acceptable. This means requiring products and services to meet legitimate environmental standards remains one of the easiest ways for government purchasers to buy greener products.

LESS UNCERTAINTY AND CONFUSION The release of the revised FTC Green Guides makes it easier for government purchasers to continue buying healthier, greener, and more sustainable products. They remove some of the uncertainty and confusion around the ever expanding list of environmental claims being made by government suppliers. It allows government purchasers to worry less about greenwashing and more about buying the products and services that benefit the taxpayers of today and tomorrow.

SCOT CASE has been researching and promoting responsible purchasing for 17 years. He is market development director for UL Environment. Contact him via e-mail at scot.case@ulenvironment.com or in Reading, PA, at 610-779-3770. This article represents the views of the author only and do not necessarily reflect the views of UL Environment or its affiliates or subsidiaries. This article is for general information purposes only and is not meant to convey legal or other professional advice.

www.govpro.com • GOVERNMENT PROCUREMENT | 29

RESOURCES [calendar of events] Face-2-Face Courses

DEC. Developing and Managing RFPs in the Public Sector Date: Dec. 5 - 7 Location: Austin, Texas Hosted by: Texas Association of Public Purchasers Chapter of NIGP Instructor: Sharon T. Lewis, CPPB, C.P.M., VCO Effective Contract Writing Date: Dec. 6 - 7 Location: Montgomery County, Va. Hosted by: Virginia Association of Governmental Purchasing, Inc. Chapter of NIGP Instructor: Michael J. Kolodisner, CPPO

Introduction to Public Procurement Date: Dec. 10 - 12 Location: Wilsonville, Ore. Hosted by: Oregon Public Purchasing Association, Inc. Chapter of NIGP Instructor: Robin J. Rickard, CPPO, OPBC

Sourcing in the Public Sector Date: Dec. 10 - 12 Location: Suffolk, Va. Hosted by: Virginia Association of Governmental Purchasing, Inc. Chapter of NIGP Instructor: D. Allen Register, CPPO, ASCPM

Legal Aspects of Public Procurement Date: Dec. 10 - 12 Location: Linthicum, Md. Hosted by: Maryland Public Purchasing Association, Inc. Chapter of NIGP Instructor: Ronald L. King, CPPO, VCO, CPPB Performance Based Requests for Proposals Date: Dec. 6 - 7 Location: McKinney, Texas Hosted by: Dallas Ft. Worth Metroplex Chapter of NIGP Instructor: John R. Miller, CPPO

JAN. Developing and Managing RFPs in the Public Sector Date: Jan. 7 - 9 Location: North Chesterfield, Va. Hosted by: Virginia Association of Governmental Purchasing, Inc. Chapter of NIGP Instructor: Peter A. Rigterink, CPPO, CPPB, VCO

Warehousing and Inventory Control Date: Dec. 3 - 4 Location: Norristown, Pa. Hosted by: Pennsylvania Public Purchasing Association Chapter of NIGP Instructor: Edward Pabor, CPPO, CDT, C.P.M.

Date: Jan. 7 - 9 Location: Wilsonville, Ore. Hosted by: Columbia Chapter of NIGP Instructor: Elizabeth Lowe, CPPB

Date: Dec. 6 - 7 Location: Falls Church, Va. Hosted by: Virginia Association of Governmental Purchasing, Inc. Chapter of NIGP Instructor: Nancy K. Przymus, CPPO, CPPB, MBA

LIFT, LOAD AND DELIVER WITH SELLICK! 4DAPDAN UKQ JAA@ PK @AHERAN = OGE@ KB >HK?GO PK = FK>OEPA KN IKRA = H> HK=@ KB HQI>AN 0AHHE?G D=O PDA BKNGHEBP PD=P EO NECDP BKN UKQ 4A D=RA >AAJ AJCEJAANEJC =J@ I=JQB=?PQNEJC NKQCD PANN=EJ BKNGHEBPO BKN KRAN UA=NO =J@ KQN J=PEKJSE@A @A=HAN JAPSKNG KBBANO OQLANEKN OQLLKNP BKN =HH UKQN L=NPO =J@ OANRE?A NAMQENAIAJPO =HH PKHH BNAA KN A I=EH QO PK@=U BKN =HH UKQN I=PANE=H D=J@HEJC JAA@O

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30 | OCTOBER/NOVEMBER 2012

ADVERTISER INDEX Introduction to Public Procurement Date: Jan. 16 - 18 Location: Columbia, S.C. Hosted by: South Carolina Association of Governmental Purchasing Officials Chapter of NIGP Instructor: Mary “Jane” Lopez, CPPO Protests and Disputes: What’s A Buyer To Do? Date: Jan. 15 Location: Miami Hosted by: Greater Miami Chapter of NIGP, Inc. Instructor: David E. Nash, CPPO, CPPB Sourcing in the Public Sector Date: Jan. 16 - 18 Location: Linthicum, Md. Hosted by: Maryland Public Purchasing Association, Inc. Chapter of NIGP Instructor: Tony Reed, CPPO Strategic Procurement Planning Date: Jan. 28 - 30 Location: Winter Park, Fla. Hosted by: Central Florida Chapter of NIGP Instructor: Alan C. Bodine, CPPO, CPPB Online Courses Contracting for Public Sector Services Date: Six-week course beginning Tuesday, Jan. 15 through Tuesday, March 5, 2013.

(There is an orientation week for a total commitment time of seven weeks).

Presented by: Ken S. Babich, BCom, CPPO Legal Aspects of Public Procurement Date: Eight-week course beginning Friday, Jan. 25 through Friday, March 29, 2013.

(There is an orientation week for a total commitment time of nine weeks).

Presented by: C. Richard Pennington, CPPO, C.P.M.

Advertiser ................................... Page Applied Industrial Technologies.............. 17 Ductile Iron Pipe Research Association ..................................................BC Ford Motor Company ................................. 3 Grainger ......................................................IFC HD Supply Facilities Maintenance .......... 21 Imaging Supplies Coalition ........................ 5 John Deere ..........................................IBC Mastercard Internationa ..........l6, 7

Advertiser ...................... Page National Joint Powers Association ............................................. 11 Public Sourcing Solutions.......................... 16 Sellick Equipment Ltd. ............................... 30 Staples Advantage ....................................... 19 Toyota .............................................................. 9 U.S. Communities ....................................... 15 U.S. General Services Administration . 13

United States Postal Service Statement of Ownership, Management, and Circulation (Requester Publications Only) 1. Publication Title: Government Procurement 2. Publication Number: 1078-0769 3. Filing Date: 9/28/12 4. Issue of Frequency: Bi-Monthly 5. Number of Issues Published Annually: 6 6. Annual Subscription Price: Free to Qualified 7. Complete Mailing Address of Known Office of Publication (Not Printer): Penton, Media, Inc., 9800 Metcalf Ave., Overland Park, Johnson County, KS 66212-2216; Contact Person: Joan Roof, Telephone: 913-967-1877 8. Complete Mailing Address of Headquarters or General Business Office of Publisher (Not Printer): Penton Media, Inc. 249 West 17th St, Fourth Floor, New York, NY 10011-5390 9. Full Names and Complete Mailing Addresses of Publisher, Editor, and Managing Editor - Publisher: Gregg Herring, Penton Business Media, Inc., 6151 Powers Ferry Rd NW, Atlanta, GA 30339-2941; Editor: Bill Wolpin, Penton Business Media, Inc., 6151 Powers Ferry Rd NW, Atlanta, GA 30339-2941; Managing Editor: Lindsay Isaacs, Penton Business Media, Inc., 6151 Powers Ferry Rd NW, Atlanta, GA 30339-2941 10. Owner - Full name and complete mailing address: Penton Media, Inc., 249 W 17th St, Fourth Floor, New York, NY 10011 - 5390; Penton Business Media Holdings, Inc. (owns 100% of the stock of Penton Media, Inc.), 249 W 17th St, Fourth Floor, New York, NY 10011 - 5390 11. Known Bondholders, Mortgagees, and Other Security Holders Owning or Holding 1 Percent or More of Total Amount of Bonds, Mortgages or Other Securities: None 12. Tax Status (For completion by nonprofit organizations authorized to mail at nonprofit rates) (Check one) The purpose, function, and nonprofit status of this organization and the exempt status for federal income tax purposes: N/A 13. Publication Title: Government Procurement Average No Copies No. Copies of Single 14. Issue Date for Circulation Data: August/September 2012 Each Issue During Issue Published Nearest 15. Extent and Nature of Circulation Preceding 12 Months to Filing Date” a. Total Number of Copies (Net press run) 22,401 22,551 b. Legitimate Paid and/or Requested Distribution (By Mail and Outside the Mail) (1) Outside County Paid/Requested Mail Subscriptions stated on PS Form 3541.

(Include direct written request from recipient, telemarketing and Internet requests from recipient, paid subscriptions including nominal rate subscriptions, employer requests, advertiser’s proof copies, and exchange copies.)

12,047 15,280 (2) In-County Paid/Requested Mail Subscriptions stated on PS Form 3541.

(Include direct written request from recipient, telemarketing and Internet requests from recipient, paid subscriptions including nominal rate subscriptions, employer requests, advertiser’s proof copies, and exchange copies.)

0 0 (3) Sales Through Dealers and Carriers, Street Vendors, Counter Sales, and Other Paid or Requested Distribution Outside USPS® 711 790 (4) Requested Copies Distributed by Other Mail Classes Through the USPS (e.g. First-Class Mail®) 0 0 c. Total Paid and/or Requested Distribution (Sum of 15b (1), (2), (3), and (4)) 12,758 16,070 d. Nonrequested Distribution (By Mail and Outside the Mail) (1) Outside County Nonrequested Copies Stated on PS Form 3541 (include Sample copies, Requests Over 3 years old, Requests induced by a Premium, Bulk Sales and Requests including Association Requests, Names obtained from Business Directories, Lists, and other sources) 9,099 5,962 (2) In-County Nonrequested Copies Stated on PS Form 3541 (include Sample copies, Requests Over 3 years old, Requests induced by a Premium, Bulk Sales and Requests including Association Requests, Names obtained from Business Directories, Lists, and other sources) 0 0 (3) Nonrequested Copies Distributed Through the USPS by Other Classes of Mail (e.g. First-Class Mail, Nonrequestor Copies mailed in excess of 10% Limit mailed at Standard Mail® or Package Services Rates) 0 0 (4) Nonrequested Copies Distributed Outside the Mail (Include Pickup Stands, Trade Shows, Showrooms and Other Sources) 94 102 e. Total Nonrequested Distribution (Sum of 15d (1), (2), (3), and (4)) 9,193 6,064 f. Total Distribution (Sum of 15c and 15e) 21,952 22,134 g. Copies not Distributed 450 417 h. Total (Sum of 15f and g) 22,401 22,551 i. Percent Paid and/or Requested Circulation (15c divided by 15f times 100) 58.12% 72.60% 16. Publication of Statement of Ownership for a Requester Publication is required and will be printed in the issue of this publication: October/November 2012 17. Signature and Title of Editor, Publisher, Business Manager, or Owner: Date Joan Roof, Audience Marketing Manager, 9/26/12 I certify that all information furnished on this form is true and complete. I understand that anyone who furnishes false or misleading information on this form or who omits material or information requested on the form may be subject to criminal sanctions (including fines and imprisonment) and/or civil sanctions (including civil penalties).

PS Form 3526-R, September 2007 Facsimile

www.govpro.com • GOVERNMENT PROCUREMENT | 31

BACK PAGES [fred marks]

A closer look at the trophy case A

service provider recently contacted me to subscribe to their product. The salesperson told me they have “award winning products.” I’ve always been skeptical about awards. Maybe it’s my naturally jaundiced eye. Presentation of personal awards should be accompanied by one of two reactions: either a barrage of week-old ripe fruit and vegetables; or more properly, a loud murmuring of “richly deserved and long overdue.”

Which makes me think about awards in general. I have the utmost respect for most awards. I tip my hat to winners of Purple Heart, Silver and Bronze Stars, Navy Crosses, Professionally, the question we should ask and Army Commendation Medals. I is “what does the award stand for and who would walk barefoot through the snow is giving it?” When I see the recipient of an to shake the hand of a Medal of Honor award, I try to find out what standing it has in Winner or a Nobel Prize Laureate. the industry, and what are the qualifications Being a buyer, I am almost and backgrounds of the judges? automatically skeptical. Let’s take a look at awards. I am not talking about the legitimate ones we know undergo a vetting process. I have yet to walk into a business, whether a startup or a long-established company, that doesn’t have a collection of awards, certificates and other items attesting to their competence. Some awards seem to have a fog about them, such as “Best Service Company for BLANK” or “Voted by their peers to be the best of BLANK” or “Winner of the Smedley Award for Excellence.” I put some personal awards and certificates in the same category as “Fastest Hamburger Flipper” or “Outstanding Fish Cleaner.” I put them in the same category as claims by vendors that can’t be substantiated. I look for verification and substantiation. And if I can’t get that, I walk away. If your instincts tell you to look more closely, follow your instincts.

Anyone can make up an award and anyone can win an award. If you want to make up a special award and give it to your friends and colleagues, have at it. But professionally, the question we should ask is “what does it stand for and who is giving it?” When I see the recipient of an award, I try to find out what standing it has in the industry, and what are the qualifications and backgrounds of the judges?

I try to learn everything I can about the award criteria. I ask specific questions about how the recipients were chosen. I look at the nomination process, and ask how many awards are given in a particular year. I try to find out if there was undue influence in the selection or if the judges were fair and balanced.

Was the award criteria met and could it be verified and documented to the satisfaction of a majority of the judges? Were previous winners consulted and what influence did they have in the award process? Ask specific questions about how they were chosen. And if you didn’t apply for it, or nobody on the planet you know recommended you for the award, be wary.

Check out the nomination process. See what the requirements were and how you fit. Ask how many awards are given in a particular year (Hint: You want to hear a very small number) I try to find out who had previously won the award. Do, or did, they have standing in the industry or profession?

And if you are lucky enough to get a legitimate award based on your accomplishments, and drink the heady wine of your success, remember: “The pellet with the poison is in the flagon with the dragon! The vessel with the pestle has the brew that is true!”

FREDERICK MARKS, CPPO, VCO, is a retired purchasing officer who has held positions as a supervising buyer for the Port Authority of New York and New Jersey as well as director of material management for Northern Virginia Community College. Contact Marks at fmarks@mindspring.com.

32 | OCTOBER/NOVEMBER 2012

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