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Missouri Smart Buy
"Best Practices for Leveraging the
State's Purchasing Power"
What is the Missouri "Smart Buy"
Program?
Missouri "Smart Buy" is an
initiative of Governor Holden and State
of Missouri agencies. Its purpose is to
create sustainable savings for taxpayers by
promoting collaboration among State
agencies and institutions to effectively
leverage the State's purchasing power.
Using a data-driven approach, this project
will intelligently leverage Missouri's
tremendous volume purchasing power to
obtain better value for goods and services
that the State purchases. "Smart Buy" will
also review current procurement processes
and techniques used by different State
agencies to identify and eliminate
inefficient practices to better serve
taxpayers.
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Missouri "Smart
Buy" Mission
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To identify
and create sustainable cost savings
through more effective purchasing
practices while maintaining
high-quality government services to
the citizens of the
state.
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Key Project
Goals
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Improve and streamline
current procurement processes to
eliminate waste and foster a
collaborative environment
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Create savings for
taxpayers by lowering prices and
achieving better value on commonly
purchased goods and services through
effectively leveraging the State's
purchasing volume
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Evaluate specifications
of goods and services being bought to
ensure the optimal use of State
dollars
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Transfer knowledge and
train state procurement professionals
in procurement best practices
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Project Process
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Analyze spend data
across key State agencies to better
understand statewide spending
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Identify important spend
areas that will provide the maximum
benefit from collaborative
procurement
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Understand and challenge
current purchasing specifications for
each spending category to ensure
optimal combination of price and
quality for each
agency/institution
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Apply best-in-class
purchasing methods such as:
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Performing reverse
auctions as appropriate
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Benchmarking prices
and conducting market analysis to
determine bid viability
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Examining automatic
renewals to ensure
cost-effectiveness
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Reworking
specifications of goods and
services and grouping like
commodities
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Implementing a more
detailed and aggressive bid process
with multi-round competitive
negotiations
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Compare bid responses using detailed
cost/benefit and Total Cost of
Ownership analysis to select responses
most advantageous to the State
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Execute contracts centrally for local
use and benefit
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Ensure purchasing compliance with
established contracts
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Frequently
Asked Questions (FAQs)
Q. Who is
leading Missouri "Smart
Buy?"
A. When Governor
Holden launched the project, he
named Gary Weeks, Director of State
Government Operations, as the project
sponsor. There is also broad
participation from 23 diverse
agencies, including executive
agencies, State Lottery and other
entities that comprise the project's
Steering Committee, which is
responsible for overall project
guidance and decision-making.
Q. What is the timeframe
for this effort?
A. The first phase of
this initiative has a target
completion date in January 2004. This
phase includes an assessment of
FY2003 spend by category, specific
recommendations to improve
procurement in a number of
high-impact spend categories, and
recommended improvements to current
procurement code and practices. The
second phase, which is scheduled to
begin early next year, will involve
evaluating product/service
specifications and obtaining
proposals from suppliers in each of
the target categories, including both
incumbent and new potential
suppliers. For each spend category,
specific tactics and savings
opportunities will be recommended to
the Steering Committee, which will
determine which opportunities to
pursue. During the coming months,
several pilot spend areas will be
addressed to ensure maximum benefits
to the State.
Q. What impact will the
project have?
A. Savings from the
State's improved sourcing and
negotiating leverage will benefit the
State's overall budget as well as
that of your agency. "Smart Buy" will
also improve the State's procurement
capabilities by enabling statewide
collaboration among agencies,
centralizing coordination of
procurement efforts while retaining
local spending control, and ensuring
knowledge sharing between procurement
professionals.
Q. If the State already
takes the lowest bid to select
vendors for many of its contracts,
why will "Smart Buy" drive prices
even lower?
A. "Smart Buy" uses
new approaches, better access to
spending data, and decision-making
based on achieving the best value.
The project will negotiate contracts
based on true statewide spending,
which provides a better opportunity
to harness volume discounts. Further,
the project will focus on supplier
relationships and the total cost over
the life of the contract when
determining the best value. The State
will adopt procurement best practices
that create greater opportunity for
negotiations and new techniques, such
as ITBs, that use target pricing to
create greater savings.
Q. If the project creates
savings based on lowering prices,
won't Missouri be sacrificing
quality for
price?
A. The project team
will focus on both cost and quality
while ensuring that the State has
what it actually needs to deliver
quality services. In many situations,
contracts will remain with existing
vendors providing the same goods and
services, but at more competitive
prices. "Smart Buy" simply helps
identify when the State is
overspending and helps get the best
price possible.
Q. Will the project address
or cut state employee
jobs?
A. The project cuts
costs in purchased expense, not state
jobs. The project is not evaluating
headcount reductions. Procurement is
an important function, and it is
getting more important. The project
will be executed in a way that will
transfer knowledge to state
procurement professionals and build a
better spend management capability
within the state. The project should
make the state's procurement
professionals even more valuable in
the future.
Q. This effort seems to be
about price, what about the other
values that the state also is
concerned with such as
sustainability, local jobs,
Missouri minority women and
emerging small businesses? Is there
a way that we can be supportive of
these values as
well?
A. The Missouri Smart
Buy team will identify impacts to
local business as a part of their
category recommendations. Part of the
steering committee's job and the
Missouri Smart Buy team is to assess
the total impacts and strike a
balance between price and values so
we do not lose ground on values set
by the Governor or established in
statute by the Legislature.
Q. What types of
procurements are included in the
scope of this
project?
A. With the exception
of construction and public works
procurements, all other purchasing
and contracts are within the scope of
the project.
Q. How will the program
affect statewide purchasing
agreements?
A. All state spending
is under review, and it is too early
to determine what will happen with
current price agreements. You should
continue to use current price
agreements until you are advised by
the State Procurement Office to do
otherwise.
Q. Will the project result
in fewer discretionary contracts
and more mandatory
contracts?
A. Because an
important project goal is to better
leverage our State's purchasing
power, we intend to champion the use
of more mandatory contracts so that
the State can use volume purchase
leverage during negotiations with
suppliers. While it is too early in
the project to make firm predictions
about what will happen, we will
evaluate each spend category and
sourcing opportunity independently,
and will make recommendations based
on the best value to the State in
each situation.
Q. How will the process
affect current state
suppliers?
A. Some current
suppliers, most of whom are
contractually required to report on
their spending with the state, will
be asked to answer "requests for
information" on the State's purchases
with them. All suppliers are welcome
to submit recommendations on how the
state can improve its buying
practices. Detailed state spending
information is being gathered in a
broad number of spending categories.
NOTE: Receipt of a request for
information means only that the State
is evaluating its purchasing
practices in this area, it does not
mean any decision has been made to
renegotiate a suppliers'
agreement.
Q. Will the project create
new tools for ordering supplies
online?
A. In some cases, the
project may give buyers access to
online ordering tools (typically
those of suppliers). That is not the
focus of the project, however, and
may not result in all or even most
categories that are included in the
scope of Phase II.
Q. Will the project result
in significant changes in
operations for
agencies?
A. While we do not
anticipate significant operational
changes for agencies, it is too early
in the project to predict operational
changes.
Q. Who can
participate?
A. All State agencies
are expected to participate in order
to help the State benefit from lower
prices that will be achieved as a
result of this project and to buy
better in the future. Those agencies
and institutions not subject to DAS
purchasing authority are highly
encouraged to participate in buying
off new contracts for maximum volume
leverage with vendors. During the
second phase, key agency buyers will
participate in user groups to help
determine product/service
specifications, and identify ideas
and issues that the project team
should address. Also during the
second phase, cross-agency teams will
participate in best practice and
knowledge transfer sessions for
relevant categories that have been
selected for sourcing.
Q. How are the consultants
paid?
A. The consultants
will be paid like any other
consulting firm - for the resources
to do the project at a fixed hourly,
monthly rate or fixed fee and no
more. The consultants do not get a
"share of savings". For this type of
contract we believe such an
arrangement would create the
potential for conflict of interest
and could lead to excessive
payments.
How Will
You Participate in Missouri "Smart
Buy"?
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Actively
collaborate with the effort, from
developing strategies to buying
off of new contracts to help the
State buy smarter
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Assist with
information gathering process by
providing contacts and internally
available data
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Help identify
additional purchased goods and
services categories with savings
opportunities
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Communicate
support for the project to all
colleagues, users, buyers and
suppliers
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Be willing to
challenge current buying
specifications to determine their
true cost/benefit
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Meet the "Smart Buy"
Project Teams
The Missouri "Smart
Buy" project team information is
below. Please contact us with
questions, comments, or
suggestions. Generally, replies
should be expected within one
business day.
E-mail:
MissouriSmartBuy@state.mo.us
Hotline: 573.555.1212
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Steering
Committee
The Steering Committee is comprised
of representatives from the
following agencies and other
entities. The Steering Committee
may be expanded further in the
future to include representation
from industry.
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Departments
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Administrative
Services
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Consumer & Bus.
Services
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Agriculture
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Governor’s Office
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Corrections
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Lottery
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Economic & Community
Dev.
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Youth Authority
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Education
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Secretary of State
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Employment
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State Police
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Environmental Quality
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Forestry
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Human Services
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Justice
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Revenue
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Transportation
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Core
Team
The Core Team directs the project
scope and makes all key decisions
throughout the project on behalf of
the Steering
Committee. This group provides
necessary State resources and
supports all internal and external
communications. SPO contract staff
is involved at this level of
project oversight.
Core Team Members
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Dugan Petty
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Dianne Lancaster
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John McGinn
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Kelly Freels
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Clyde Saiki
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Jim Carbone
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Cindy Becker
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Project
Team
The Project Team participates in
category strategy development,
supplier bidding and negotiation
processes, data collection, and
formulating and presenting
recommendations to the Steering
Committee.
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Name
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Title
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Phone
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Dugan Petty
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Deputy Administrator, PFSS
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503.378.5093
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Daniel Clem
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Purchasing Internal
Operations Manager
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503.378.4721
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Tim Walker
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Central Purchasing Analyst,
Services Team Lead
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503.378.4091
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Heather Guthrie
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Central Purchasing Analyst,
Goods Team Lead
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503.378.6781
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