Orange County Grand Jury • 2015-2016 • Agency Response
Response to: Procurement – Big Budget, Low Priority 6/30/16

Procurement: Big Budget, Low Priority*

Published: September 13, 2016 14 pages
Ver PDF original

Findings and Recommendations 18 findings

F1
For several years the Orange County Procurement Office and the County's procurement functions have not been prioritized to bring about necessary changes to achieve an efficient and cost effective operation despite numerous recommendations from Grand Juries and auditors. Response: Disagrees wholly with the finding. Over the last several years, the County has spent a significant amount of time reviewing and implementing recommendations made in various audits and reports. For example, nine recommendations from the previous Board of Supervisors (Board) Procurement Subcommittee, established in response to the various audits and reports, were adopted and implemented, and 70% of the recommendations from the 2014 Performance Audit review have been implemented or are underway. The current Board Procurement Subcommittee is working towards achieving additional operational efficiencies in procurement policies and practices.
No recommendations for this finding
F2
Training requirements for new and experienced Deputy Procurement Agents is inadequate. Further, the inconsistent enforcement of training compliance, and confusing training and certification timelines is a high risk practice because it allows untrained and/or uncertified employees to perform procurement tasks. Disagrees wholly with the finding. Response: Each Deputy Purchasing Agent (DPA) receives 32 hours of training on procurement principles and the County's Contract Policy Manual (CPM) and must pass a test on the CPM before becoming a DPA. The successful completion of these two elements are followed by the requirement to complete at least ten hours of procurement training annually. Each DPA must pass a recertification exam on the CPM every two years. Hours of annual training required was increased from four to ten hours in 2014. DPAs participating in compliance reviews are provided training prior to taking part in the reviews. Training requirements are consistent for all DPAs and regular training status updates are provided to employees to ensure completion of and compliance with the requirements. The current de-centralized Procurement organizational structure is outdated
No recommendations for this finding
F3
and not consistent with other large California counties or current procurement Best Practices and deprives the County of the ability to leverage its collective buying power to reduce costs. Disagrees partially with the finding. Response: Each County organizes its operations to meet its needs, so organizational structures will vary in consistency. Orange County is currently focusing on standardizing training, tools, and practices for consistency countywide as evidenced by the successful roll-out of OC Expediter, the County's universal purchasing requisition system and National Association of Counties (NACO) achievement award winning tool. In order to leverage County spending, 145 Regional Cooperative Agreements (RCA) are available for all departments to use for commonly purchased items. In addition, the County takes advantage of competitively bid cooperative contracts from regional and national organizations. The County does not appear to have an in-house expert on centralization who
No recommendations for this finding
F4
could design and implement the transition to centralized procurement. Disagrees wholly with the finding. Response: There are a number of resources within the County who have education and/or experience with organizational placement and development. The automated procurement tracking system is outdated and thereby difficult
No recommendations for this finding
F5
to use and appears to contribute to errors and additional costs. Disagrees partially with the finding. Response: The OC Expediter universal purchasing requisition system provides a platform for all County departments to proceed with requisitions in a uniform manner across the organization. This award winning tool, developed in collaboration with OCIT, is now in use by several departments and is on track for use by all departments by the end of calendar year 2017. OC Expediter improves accuracy, increases transparency and offers a variety of benefits to procurement and non-procurement staff. Additionally, the County Procurement Office (CPO) is working with the Auditor- Controller on the CAPS+ upgrade currently underway and slated to go live on October 7, 2016.
No recommendations for this finding
F6
Current practices regarding multi-year contract awards that require annual renewal are costly, inefficient, and unnecessary. Response: Disagrees partially with the finding. The practices concerning multi-year contract awards are currently being reviewed by the Board Procurement Subcommittee. It is anticipated that the subcommittee will bring recommended changes to the CPM to the full Board for consideration in order to streamline current processes while assuring performance metrics. In the interim, adherence to the current policy contained in the Board adopted CPM is required.
No recommendations for this finding
F7
Advanced training and professional certification are not encouraged and are not credited in hiring or promotion of employees with procurement duties. Response: Disagrees wholly with the finding. Education, training, knowledge, skills and abilities are measured through various competitive assessments designed to objectively measure the qualifications of the candidates.
No recommendations for this finding
F8
The Request for Proposal (RFP) process has a number of correctable technical operational issues such as inconsistencies in solicitation packets, conflict of interest, uncorrected errors and bidder qualifications Response: Disagrees partially with the finding. In 2012, the CPO released a manual titled "Navigating the Request for Proposal (RFP) Process." The manual and its attachments serve as a desk reference guide for facilitating the RFP process. The manual accompanies the RFP policies, procedures, and requirements provided in the CPM. The manual outlines how each RFP procurement may vary depending on the complexity and type of services being solicited. When uncertainty exists as to the various aspects of an RFP, DPAs refer to the CPM and consult with the CPO and/or County Counsel throughout the RFP process. The manual is available on CPO's website and is commonly used by the DPAs as a guideline in navigating through the RFP process. The RFP manual will be revised in the future, as needed, based on revision of the Board adopted CPM.
No recommendations for this finding
F9
In pursuit of centralizing OCIT services, a cross-agency Working Group developed a program for the pilot phase recently launched which, if successful, may be a model for centralization of Procurement. Disagrees partially with the finding. Response: CPO will review the results of the OCIT cross-agency Working Group, as well as other service delivery models including decentralization and hybrid models such as the out stationed Auditor-Controller model.
No recommendations for this finding
F10
There are Procurement best practices readily available for consideration that could be adopted to improve Orange County Procurement performance. Response: Agrees with the finding. CPO received the 2007, 2014, 2015, and 2016 Achievement of Excellence in Procurement Award, which validates that National Purchasing Institute (NPI) recognized CPO is dedicated to developing excellence in procurement processes and procedures, measuring innovation, professionalism and providing benchmarks for continuing performance.
No recommendations for this finding
F11
The number of contracts annually reviewed for compliance with the Contract Policy Manual is insufficient for a dependable assessment. Response: Disagrees wholly with the finding. The CPM requires that contracts be monitored annually on a sample basis. The monitoring of procurement records is completed by reviewing a sampling of each solicitation type identified in the CPM. With the number of records reviewed, a dependable assessment of each procurement type is conducted to identify areas that may require changes to ensure corrective action is taken on active procurements, in addition to ensuring future procurements are done in a manner that is fair, effective, efficient, and in compliance with legal requirements and the CPM.
Related Recommendations (1)
R11
The Chief Purchasing Agent should research procurement best practices, especially Performance Based Contracting, and submit a plan to adopt appropriate practices that would contribute to improved performance by Procurement, by January 1, 2017. (F1. F3, F6) The recommendation will not be implemented because it is not warranted. Response: The CPA has already researched procurement best practices and over the last several years, CPO has received various Excellence in Procurement awards that recognize governmental entities for developing excellence in procurement policy, procedures and best practices. Through the application process for the various awards and CPO attendance at purchasing related conferences and training, the CPO recognizes that performance based contracting is becoming the industry standard. As a result, CPO has implemented the practice of performance based contracting for contracts in which payments based on performance measures is in the County's best interest. The Board has already expressed its desire for performance metrics, and the CPO and Board Procurement Subcommittee will consider performance based contracting during its review of the CPM. Any changes to the CPM related to performance based contracts will be submitted to the full Board for consideration.
F12
There are no current specific minimum qualifications for County Purchasing Agent or a selection/testing procedure to identify and appoint the most qualified candidate. Response: Disagrees wholly with the finding. The County Purchasing Agent (CPA) position is classified as an Administrative Manager III, which requires a competitive assessment directly related to the duties and responsibilities of the position.
No recommendations for this finding
F13
Orange County does not offer competitive compensation for the Purchasing/Procurement Job Classification Series (and related positions) and pays up to 30% below the average of three like-sized California counties. Response: Disagrees partially with the finding. A thorough salary market study is required to determine placement of the Purchasing/Procurement occupational series within the southern California market. The Finding cites outdated salaries for the County of Orange.
Related Recommendations (1)
R13
The County Purchasing Agent should complete a report on recommended revisions to the Contract Policy Manual by October 15, 2016 and complete the revisions by March 1, 2017. (F1, F8, F15,) Response: The recommendation has been implemented. The CPA has already submitted recommended revisions to the CPM to the Board Procurement Subcommittee. It is anticipated that revisions will be completed and submitted to the full Board for consideration
F14
There has been no action taken on many of the recommendations made by 1997-1998, 2002-2003 and 2013-2014 OC Grand Juries, the 2009 Procurement Policy Study, and the 2014 Performance Auditor and the Internal Auditor. Disagrees partially with the finding. Response: A variety of recommendations were made and many have been implemented, are in progress, or are scheduled for future implementation. Other recommendations were found unwarranted or not reasonable and will not be implemented.
No recommendations for this finding
F15
The Contract Policy Manual – 2012 is outdated. Disagrees wholly with the finding. Response: The CPM was revised and adopted by the Board in 2007 and 2012. Revision of the CPM is underway and a recommendation from the Board Procurement Subcommittee is targeted for completion in calendar year 2016. The existing version of the CPM remains in place and in use until a new one is adopted by the Board.
No recommendations for this finding
F16
There are no consistent hiring standards and qualifications for employees working in Procurement assignments, and most procurement staff are hired by agencies other than County Procurement into job titles outside the Purchasing/Procurement Job Classification Series. Disagrees wholly with the finding. Response: The County has hiring standards for all of its positions. Each job bulletin sets forth the qualifications for each selection process.
No recommendations for this finding
F17
The County lacks approved procedure manuals for procurement functions. Response: Disagrees partially with the finding. The CPO has established various manuals to standardize procurement functions including the RFP Manual, RCA Manual, OC Expediter User Guide, and the Procurement Ethics Manual. Additionally, CPO will develop and issue a County Procurement Procedure Manual in 2017; extensive training will follow for all DPAs.
No recommendations for this finding
F18
Some executive and upper management selections are made without an active recruitment and a testing process to identify the most qualified candidate, but by transferring an existing manager into the position, some without related education or experience. Disagrees wholly with the finding. Response: Executive placements and upper management rotations, while not governed by Orange County Recruitment Rules, do include formal interviews and/or analysis to determine candidates' qualifications. RECOMMENDATIONS AND RESPONSES:
No recommendations for this finding

* This report's PDF did not contain easily extractable text and required Optical Character Recognition (OCR) for analysis. There may be minor errors in the extracted findings and recommendations due to OCR limitations with scanned documents.