TO: HONORABLE MAYOR FROM: Julia H. Cooper
AND CITY COUNCIL
SUBJECT: CITY ROADMAP - PROCUREMENT DATE: April 25, 2022
IMPROVEMENT STATUS REPORT
Approved Date
4/28/2022
SUPPLEMENTAL
REASON FOR THE SUPPLEMENTAL
The purpose of this memorandum is to submit the City of San José Procurement Current State Assessment Report and City of San José Procurement Future State Vision Report, as directed by the Smart Cities and Service Improvements Committee on April 7, 2022 and to revise the recommendation language accordingly.
RECOMMENDATION
(a) Accept the status report on the City Roadmap Procurement Improvement initiative. (b) Direct staff to return to City Council with recommendations to update Chapter 4.04 Contract Authority and Chapter 4.12 Procurements of Goods and Services of Title 4 of the San José Municipal Code.
(c) Refer procurement improvement staffing and technology recommendations for consideration, along with other City priorities, to the FY 2022-2023 budget process. (d) Accept the City of San José Procurement Current State Assessment Report and City of San José Procurement Future State Vision Report.
/s/
JULIA H. COOPER
Director of Finance
For questions on department-led consultant procurements, please contact Sarah Zarate, Director of the City Manager’s Office of Administration, Policy, and Intergovernmental Relations, at [email protected]. For questions on Finance-led procurements, please contact Jennifer Cheng, Deputy Director of Finance, at [email protected].
Attachments:
City of San José Procurement Current State Assessment Report City of San José Procurement Future State Vision Report COUNCIL AGENDA: 05/10/2022
FILE: 22-659
ITEM: 3.7
San José
Finance Department
Purchasing Division
Current State Assessment
May 10, 2022
2 Executive Summary
October 2021 – November 2021 December 2021 – January 2022 February 2022 – March 2022 The Current State Assessment Team completed its assessment of the people, processes, and technologies related to procurement within City of San José. Over the course of 15 weeks, 76 interviews were conducted across the Purchasing Division and City departments. Additionally, procedural documentation and technologies were reviewed to identify opportunities for additional clarity and optimization opportunities.
Future State Development
Phase 1 (Completed) Phase 2 (In Progress) Phase 3 (Upcoming) Project Kick
Off
Staff Interviews
Workload Modeling
Process, Tools, Technology Review
Current State Assessment Development
Future State Visioning
Sessions
We are here!
Project timeline and progression
May 10, 2022
Who is involved in procurement?
3 Executive Summary
Within the scope of this assessment
Purchasing Division
City Departments
Public Works
The City of San José has a mixed procurement model, with the Purchasing Division maintaining responsibility for all non-consulting and non-public works procurements.
The Purchasing Division is responsible for procuring goods and services not covered by other two procurement
processes, along with administering the P-Card program.
City departments are responsible for procuring all consulting services. Additionally, departments may run procurements for Purchasing at Purchasing’s request.
Public Works Department is responsible for procurements relating to public works projects, including the construction, improvement, or demolition of buildings or structure.
• Number of Procurement Staff: 15 Staff
• Oversight Authority: Finance Department
• Contracting Responsibility: Negotiates Contracts
• Number of Yearly Procurements: 89 RFxs & 2,054 POs
• Total Value of Procurements: $450 Million
• Number of Procurement Staff: Staffing Varies by Department • Oversight Authority: City Manager’s Office
• Contracting Responsibility: City Attorney’s Office
• Number of Yearly Procurements: 205 Contracts & 620 Adjustments • Total Value of Procurements: $169M
• Number of Procurement Staff: 3 Staff (1 Position is Open) • Oversight Authority: Director of Public Works
• Contracting Responsibility: City Attorney’s Office
• Number of Yearly Procurements: 78 RFxs
• Total Value of Procurements: $151 Million
May 10, 2022
Note: Due to data limitations, data for the Purchasing Division and Public Works is based on FY2021, whereas the City Departments data utilizes calendar year 2021. 4 Executive Summary
Procurement within San José impacts the City’s ability to provide basic services and deliver on key innovation priorities, while introducing significant risk to the City.
The implementation of select City procurement policies increases the risk of non-compliant procurements and workload for the Purchasing Division
Staffing lacks the long-term investment necessary to reduce turnover and incentivize staff performance
Procurement processes lack alignment to City or Division goals and reflect inconsistencies in City procurement policies
Disparate technology complicates processes and hampers the Purchasing Division’s ability to leverage technology to drive efficiencies
The Purchasing Division has a significant procurement backlog that impacts the City’s ability to get needed goods and services in a prompt manner
High-level takeaways
May 10, 2022
5 Key Takeaways | Backlog
Percentage of outstanding
requisitions that are past due
81%
Current backlog as a
percentage of monthly output
272% 33%
337 Requisitions
415 Requisitions
Percentage of buyers who have
been with the City for fewer than
3 months
2 Buyers
Note: All data current as of December 15, 2021
The Purchasing Division has a significant backlog
May 10, 2022
▪ Documentation to assist City staff with the software purchasing process is lacking. The Purchasing Division lacks a centralized resource to assist City staff with selecting the correct software procurement method. ▪ Reflecting the complexity of the software procurement process, reviewing Citywide Procurement Card Transactions datasets revealed multiple non-compliant software purchases made by various departments.
Unclear
Software
Procurement
▪ The City Attorney Office’s unwillingness to negotiate contract terms reflects a risk avoidant posture that limits the City’s ability to engage with vendors. Many technology companies are unwilling to agree to the City’s terms. ▪ By requiring all vendors to adhere to the same insurance requirements, the City limits its ability to work with smaller vendors.
Unwillingness
to Negotiate
Contract Terms
▪ The Municipal Code restricts the City’s ability to effectively leverage piggyback agreements. The Code requires other entities include non-standard language in their procurements. ▪ Due to concerns City staff would cherry-pick vendors, the Purchasing Division will steer City staff away from cooperative agreements. More fully utilizing these agreements would lessen the Purchasing Division’s workload.
Cooperative
Agreements
▪ The P-Card program lacks necessary training and documentation to ensure City staff comply with all policies.
During interviews, many City staff openly admitted to unknowingly using their P-Cards in non-compliant manners. ▪ The minimal repercussions for non-compliant P-Card usage do not adequately dissuade City staff from misusing their P-Cards or from ignoring City policies.
P-Card
Program Lacks
Enforcement
▪ Due to compliance concerns (e.g., vendor cherry-picking, not using the lowest bid), the Purchasing Division is unable to implement the informal procurement process as outlined in the Municipal Code. ▪ Certain City policies implemented by the City Council are impossible for the Purchasing Division to effectively execute in practice (e.g., Wage Theft Policy).
Policies and
Practices
Differ
6 Key Takeaways | Policy
Select policies increase risk of non-compliant procurements Assessed Importance
May 10, 2022
▪ Current KPIs fail to account for the Strategic Procurement Team’s work as their work is not purchase order-based.
The existing KPIs are based on measures already tracked by the Division. ▪ Due to technology limitations, the Division lacks the ability to track additional KPIs or regularly update the KPIs they current use.
KPIs Misaligned
with
Mission
7 Key Takeaways | Process
Current Processes are not aligned to City or Division goals ▪ The current decentralized consulting procurement process lacks mechanisms to ensure compliance with City policies. The City Manager’s Office is responsible for providing oversight but lacks process expertise. ▪ Despite having the knowledge, tools, and deep process understanding to provide effective oversight, the Purchasing Division is only tangentially involved in the consulting procurement process.
Consulting
Procurement
Oversight
▪ There is minimal documentation to assist departments with properly executing the consulting services procurement process. The documentation that exists is not maintained or reviewed by the Purchasing Division. ▪ Departments have created their own consulting procurement documentation that has not been reviewed by the City Manager’s Office or the Purchasing Division. This introduces significant compliance risks.
Consulting
Procurement
Documentation
▪ The division between the consulting services procurement process and the process managed by the Purchasing Division is blurry and unclear to City departments.
▪ City departments will stretch the definition of consulting services to create opportunities to bypass the Purchasing Division’s procurement process due to the extensive timelines involved.
Unclear
Process
Definitions
▪ City departments lack an effective understanding of the requirements for a procurement to successfully pass the Information Technology Department’s procurement review process. ▪ Procurements will stagnate during the Information Technology Department’s review process. Departments will have to routinely remind ITD staff when procurements need to be advanced to the next review step.
ITD Review
Introduces
Barriers
Assessed Importance
May 10, 2022
▪ GILES provides an effective platform to efficiently research contract-related information. The searchable database offers a complete catalog of all contracts the City of San José signed. ▪ Many City staff are unaware of the GILES platform, its functionality, and how it can be used to assist them throughout the procurement process.
GILES Meets
the City’s
Needs
▪ The intranet is designed to be both a resource for City departments creating procurements and Purchasing Division staff actioning procurements. As both groups have different needs, the site fails to serve either group. ▪ City staff are frequently unable to efficiently locate information on the intranet site. The site assumes all users possess some familiarity with the procurement process and know what documentation they need.
Intranet has
Dual Uses
▪ As a platform, Biddingo provides the basic functionality the City needs to advertise solicitations, receive responses, and effectively engage with vendors.
▪ The sudden transition to the Biddingo platform left vendors unaware and some City staff unconfident using the new platform. There is a need for additional training and vendor outreach to mitigate these issues.
Lack of
Biddingo
Experience
▪ The Purchasing Division’s “O Drive” is organized but could use additional safeguards, such as version control management, metatags to allow easy searching, and protection against editing documents. ▪ The Purchasing Division could benefit from a more robust document management system to assist in the management, audit, and storage of key documents.
“O Drive”
Serves Storage
Needs but
Introduces Risk
▪ While FMS serves the needs of the Purchasing Division, it lacks the basic features most technologies possess today.
▪ FMS is slow and experiences unanticipated outages. This causes further delays in the addressing day-to-day tasks and backlog items.
FMS is
Effective but
Outdated
8 Key Takeaways | Technology
Disparate technology complicates procurement within San José Assessed Importance
May 10, 2022
▪ The current performance metrics account for requisitions and purchase orders closed within the month and does not account for administrative activities that support the process. ▪ The performance metrics do not support the Purchasing Division’s current KPIs.
Performance
Metrics are
not aligned to
KPIs
▪ Staffing model is based on commodity codes, allowing Purchasing Division staff to identify commodity-level trends. This model causes confusion across customers as there is no single point of contact for their department. ▪ Some Purchasing Division staff lack a clear understanding of customer needs. This stems from limited experience and minimal interactions with a given department.
Model Does Not
Support
Customer
Service
▪ Staff training typically consists of job shadowing and “on the job” training during the new hire probation period.
The lack of formal training and updated documentation impacts ramp up time, thus reducing overall productivity. ▪ Purchasing procedural documentation and checklists exist but are long and unclear.
Lack of Clear
Training and
Documentation
▪ There is no clear path to promotion for Purchasing Division staff and staff development opportunities are limited.
There are few incentives to motivate staff to take remain with the Purchasing Division in the long-term. ▪ Due to high attrition, the Purchasing Division has not had the opportunity to effectively plan for succession. Often job vacancies result in a reactive distribution of work and escalations from customers.
Lack of Staff
Development
and Planning
9 Key Takeaways | People
Staffing lacks long-term investment to reduce turnover
Assessed Importance
Factors Used to Assess Importance:
Added Cost to City
Impact on City Stakeholders
Compliance Risk
May 10, 2022
10 Assessment Next-Steps
Leveraging the Current State Assessment to drive improvements 02 Visioning Sessions
The visioning sessions represent an
opportunity for City stakeholders to build a
shared vision of the future of procurement
within San José
04 Mission Considerations
The Future State Recommendations should
allow the Purchasing Division to further both
their own and the City’s mission and vision
Future State
Recommendations
Current State Assessment
The Current State Assessment documents
where San José’s procurement processes
are now and what areas for improvement
exist
03 Leading Practices Research
Analyzing what peer cities are doing
represents an opportunity to build San
José’s processes off of national best
practices
01 May 10, 2022
11 11
Executive Summary 2
Background 12
Approach and Methodology 20
Key Trends 26
Backlog 28
Policy 37
Process 46
Technology 55
People 64
Next Steps 70
Appendix 74
May 10, 2022
Table of Contents
12 Background
Why is procurement important to San José?
May 10, 2022
To fuel innovation within the City
13 Why Conduct this Assessment
Every modern, innovative City is supported by an effective, efficient, and compliant procurement organization.
San José’s Smart City Vision sets an ambitious goal of being the most innovative city in America. The vision, centered around three innovation principles, lays out an agenda of over 133 projects. Almost all these projects require some form of procurement, meaning San José cannot achieve its innovation objectives without an effective procurement function. As such, an assessment of the City’s procurement processes, both department-led and Purchasing-managed, is a core element of the City’s Roadmap.
May 10, 2022
14 Why Conduct this Assessment
To help execute on City Roadmap initiatives
Enterprise Priority
COVID-19 Pandemic: Community +
Economic Recovery
Emergency Management +
Preparedness
Creating Housing + Preventing
Homelessness
Safe, Vibrant, and Inclusive
Neighborhoods and Public Life
Building the San José of Tomorrow
Smart, Sustainable, and Reliable
Infrastructure
Project Strategy
Housing
Stabilization
Re-Employment
+ Workforce
Development
Small Business
Recovery
Food +
Necessities
Distribution
Digital Equity Child Care
Policy
Build Back
Better Task
Force
Vaccination
Task Force
Emergency
Housing +
Construction
Sheltering +
Encampment
Services
Police Reforms
Work Plan
San José 311 +
Service
Delivery
Encampment
Waste Pick-Up
Vision Zero
Traffic Safety
Align Zoning
with General
Plan
Development
Services
Transformation
Google
Development
Real Estate
Development
Projects
Pavement, Fire,
EOC, Transit
Capital
Improvements
Wastewater
Facility Capital
Improvements
Electrical
Service for
Major
Development
Climate Smart
American Cities
Climate
Challenge
Equity Strategy
Development
Neighborhood
Services
Access
Strategy
North San José
Strategy
BART + High-
Speed Rail
Strategy
Lowering PG&E
Above Market
Costs for Clean
Energy
Soft-Story
Retrofit Policy
Encampment
Management +
Relocation
Policy
Foundational Enterprise Priority Project Strategy Policy Strategic Fiscal Positioning +
Resource Deployment
Powered by People
Continuity of
City Services Safe Workplace
Employee
Health +
Wellness
Drive to Digital Effective Teams
Budgeting for
Equity
City Roadmap
Budgeting,
Accountability,
& Performance
City Workforce
Diversity + Skill
Building
Federal + State
Recovery
Advocacy
Secure City
Cybersecurity
Procurement
Improvement
Pension
Obligation Bond
Analysis
Key: Likely involves
procurement
Procurement is central to the City’s ability to execute on City Roadmap initiatives. Indeed, 71% of City Roadmap initiatives likely involve one or more procurements.
May 10, 2022
To mitigate audit findings
15 Why Conduct this Assessment
The City Auditor conducted audits of the City’s department-led procurement process in 2013, 2017, and 2019 and there are unresolved audit findings stemming from those audits.
Audit Findings Include:
Minimize Exceptions to Competitive Procurement Improved Monitoring of Consulting Contracts Clarification of Transparency and Ethics Policies
The City Auditor identified inappropriate exceptions to the City’s competitive procurement rules, including abuse of the unique services provision. The Auditor recommended
increased oversight of the consulting services procurement process.
Per the City Auditor, the City’s oversight of consulting services contracts is inadequate, with departments changing
deliverables, contract terms, and payment schedules without following the proper processes. Additionally, some
departments were overpaying vendors for their services.
Given the myriad of state and local laws that govern
consulting agreements, City departments could do a better job of ensuring consultants comply with all applicable
transparency and ethics legislation. This will help increase oversight of all consulting procurements and contracts.
Improved Cost Controls for Consulting Contracts
When procuring consultants, there is an opportunity for City departments to improve their cost controls to ensure the City is receiving the best value possible. The City Auditor found instances where consultants were providing services without fixed hourly billing rates.
May 10, 2022
16 The Current Situation
Procurement in San José is multifaceted and complex
May 10, 2022
17 The Purchasing Division Today
The Purchasing Division is responsible for processing all procurements that are not consulting services or public works-related. The Purchasing Division also administers the City’s P-Card program and oversees contract negotiations with vendors. Separated into two teams, the Purchasing Division processes roughly 89 RFPs and 2,054 purchase orders annually.
The City’s procurement powerhouse
Strategic Procurement Team
Tactical Procurement Team
The 8 team members of the Strategic Procurement
Team are responsible for all evaluative procurements,
IT-related purchases, contract amendments, and other
complex procurement matters.
The 6 team members of the Tactical Procurement Team
are responsible for non-evaluative procurements,
requisitions processing, and encumbrance increases.
The Tactical Team keeps the City running by ensuring
common supplies are regularly purchased.
Mission and Goals
While the Purchasing Division lacks a defined
mission, most interviewed staff believe its mission
should be to purchase goods and services for the
City in a manner that is cost-effective, compliant, and maximizes value for the residents of San José.
Impact of the Municipal Code
The Purchasing Division and the procurement process
it administers are governed by Chapter 4, Title 12 of
the Municipal Code. Given the importance of
procurement, the Code lays out exacting standards the
Purchasing Division must meet.
May 10, 2022
Division staffing and structure
18 The Purchasing Division Today
Deputy Director
Program ManagerDepartment IT
Manager
Buyer III
Buyer IIBuyer II
Buyer II
Buyer III
Buyer II
Senior Analyst
Senior Analyst
Senior Analyst Analyst I
Analyst II
Analyst II
(Overstrength)
P-Card Administrator
Strategic Procurement Team Tactical Procurement Team
The Purchasing Division is organized into two teams, Tactical Procurement and Strategic Procurement, which are distinguished by the types of procurement they conduct (e.g., evaluative, non-evaluative, purchase orders, IT purchases). Both teams are supervised by a Deputy Director, who reports to Finance Department leadership.
May 10, 2022
Purchasing Division Structure:
Senior Analyst
19 The Consulting Services Procurement Process
Specialty services for specialized needs
Within the City of San José, consulting services procurements are decentralized. With the oversight of the City Manager’s Office, individual departments are responsible for procuring the consulting services they need to meet their specific needs. Within 2021, there were 205 consulting services contracts signed and 620 contract adjustments, with an expected total contract value of $169M.
Limited Oversight
Departmental Expertise
Due to the decentralized nature of consulting
procurements and the absence of the Purchasing
Division from the process, the City Manager’s Office is only able to provide limited oversight to ensure
departments are compliant with applicable policies.
The decentralized procurement process gives
departments a significant degree of control to procure
the exact consulting services needed. It also allows
them the freedom to potentially adapt the procurement
process to meet their needs.
Disparate Documentation
There is limited process documentation for the
consulting procurement process. Instead, various City
departments have independently created needed
documentation, without verifying the process with the
City Manager’s Office.
Impact of the Municipal Code
Like with the Purchasing Division, the City’s Municipal Code outlines strict requirements departments must
follow to ensure they are procuring consulting services in a manner that is cost effective and delivers
maximum value to the citizens of San José.
May 10, 2022
20 Approach &
Methodology
The approach to the Current State
Assessment
May 10, 2022
21 Our Approach to the Current State Assessment
Our process ensured a holistic and complete assessment
Current State
AssessmentPeer City Research Tools, Process, &
Technology Review
Workload
Modeling
Stakeholder
Interviews
Tools, Technology, &
Process Review
Workload Modeling
Stakeholder Interviews
Peer City
Research
As part of our assessment, and to get a
holistic understanding of procurement in
San José, we interviewed 76 City staff
members. Staff members interviewed
included Purchasing Division
To understand leading practices
nationwide, we compared San José’s
procurement practices, limits, and staffing
to peer cities across the country. Peer
Cities included other tech hub cities, cities
with similar populations, and cities from
within California.
staff, City leadership,
Procurement Customers,
and department-led
procurement
stakeholders.
With the aim of understanding what resources
are available to procurement stakeholders
internal and external to the Purchasing
Division, we reviewed resources available on
the Purchasing Division’s intranet page,
shadowed City staff as they used FMS, and
diagramed procurement processes.
To calculate how the Procurement
Division’s staffing compared to
demand for their services, we
modeled their workload over the
past three financial years.
May 10, 2022
22 Stakeholder Interviews
To better understand current procurement processes within the City, strengths of the current processes, and opportunities for improvement, the Assessment Team interviewed 76 City staff members from 20 City departments. Due to the tight timeline of the assessment, the City determined the list of City Staff interviewed and provided the list to the Assessment Team.
Interviews with City staff for a first-hand perspective Interviewee Breakdown:
City Leadership & Oversight
Purchasing Division Staff
Department Stakeholders*
Department Customers
Total Interviews 76
37 20
10 9
Participating Departments:Interview Methodology:
1 The Assessment Team conducted 55-minute interviews using Microsoft Teams.
All interviewees were asked a set of pre-defined questions based on their role and involvement in the procurement process.
To capture the information shared, the Assessment Team took notes and shared the notes with interviewees following the interviews. 2 3
4 The Assessment Team anonymized information from the interviews prior to sharing it with any City staff or including it in this report. *Note: Department stakeholders are City employees involved in the department-led procurement process for consulting services May 10, 2022
Airport City Attorney’s Office Finance Dept.
City Clerk’s Office Fire Dept. Housing Dept.
Community Energy Dept. of Public Works Human Resources
Police Dept. Environmental Services Dept. of Transportation Parks, Recreation, and
Neighborhood Services
Planning, Building, and Code
Enforcement
Office of Civic Innovation
Library Information Technology Dept. City Manager’s Office • The Assessment Team reviewed each peer city’s public facing documentation (e.g., website, procurement portal, vendor guide), procurement manuals, budgets, and municipal codes.
• When necessary, the Assessment Team contacted peer cities by phone or email to collect additional insights or resource materials. o Similar population ( )
o Large technology sector ( )
o Located within California ( )
o Recommended by the City of San José ( )
23 • To understand how San José’s procurement practices compare to similar cities, the project team benchmarked San José to various peer cities.
Cities Researched Basis for
Selection
San Diego
San Francisco
Santa Clara County
Oakland
Sacramento
Dallas
San Antonio
Austin
Cities and methods used to compare procurement practices Peer City Research
Purpose for Peer City Research:
Information Sources:
Peer City Selection Factors:
To better understand how the City of San José’s procurement policies, practices, and staffing compared to national best practices and other leading cities, the Assessment Team benchmarked the City to other peer cities.
May 10, 2022
24 Tools, Technology, & Process Review
The Purchasing Division and their stakeholders leverage a variety of tools, technologies, and processes to help manage procurements. Many tools and processes were localized in nature, with limited sharing of information. Technologies reviewed in this assessment included GILES, FMS, and Biddingo.
Step 1
Step 2
Step 3
Step 4
Interviews were conducted including team members from the Purchasing Division and City departments that participated in the procurement process. The goal of these interviews was to gain a holistic understanding of the end-to-end process, tools and trainings used to support the process, technologies City staff interact with throughout the process, and any challenges faced by City staff during the process.
Once interviewees validated the notes from their interviews, the Assessment Team compared process documentation to actual processes as captured in the interviews. Interviews revealed that Purchasing Division staff leveraged procedures and checklists located on the Purchasing intranet and several City departments developed internal checklists and trainings to support the procurement process.
The Assessment Team shadowed Purchasing Division staff as they used GILES, FMS, and Biddingo to understand how they use these tools as part of their day-to-day workflow. The Assessment Team also accessed a sandbox environment within Biddingo and GILES’s online access portal to further explore the functionality of these tools.
Supporting tools used to manage procurements, such as the Priority Matrix and tracking spreadsheets, were reviewed for accuracy and completeness. Several City departments leveraged “homegrown” spreadsheets to manage in-flight procurements, upcoming renewals, and contract performance and termination.
Tools, technologies, and processes that support procurement May 10, 2022
Tactical Procurement Team
Estimation Method:
• Processing Capacity: The Yearly PO Report was leveraged to calculate the number of yearly POs completed by the Tactical Team.
• Demand: As the Tactical Team cancels all unprocessed requisitions at the end of each fiscal year, the combined number of POs completed and requisitions canceled provided an accurate estimate for demand.
• Average FTEs: The Yearly PO Report includes the number of POs processed monthly by employee. When a previously active employee did not process any POs, they were marked as inactive.
25 Workload Modeling
Determining the correct staffing for the Purchasing Division Determine the
processing capacity
for both teams
Calculate the average
number of FTEs
available to each
team
Calculate output per
employee by dividing
processing capacity
by FTEs
Estimate the total
demand for each
team’s services
Determine the number
of employees needed
to meet the demand
for each team’s
services
Optimal staffing
levels for each
procurement team
Workload Modeling Process:
Method Specifics:
Data Used: Yearly PO Reports, Open RQ Status Reports, Canceled Requisition Log Strategic Procurement Team
Estimation Method:
• Processing Capacity: Leveraging the data in the Strategic Projects Log, it was possible to calculate the median time it takes to complete various activities. The processing times were then multiplied by the activities completed to generate a processing capacity estimate.
• Demand: N/A (The Strategic Team’s data did not allow for forecasting the demand for their services in a manner that captured the range of their activities) • Average FTEs: The Strategic Project Log lists an employee that is assigned to each project. An employee was counted as active between the dates of their first and last completed project.
Data Used: Strategic Projects Log
Method Specifics:
May 10, 2022
26 Key Trends
What trends did the assessment uncover?
May 10, 2022
27 Our Findings
Procurement
Delays
Policies
People
Backlog
Process Technology
High Turnover
Understaffed
Onboarding & Training
Customer Education
Missing Oversight
Obscure
Lack of Defined Processes
Disparate Processes
Lack of Process Transparency
Outdated Technology
KPI Tracking
No Automation
CMO Contract Authority
Low Competitive Procurement Threshold ($10K)
Difficult to Implement Policies
Limited Ability to Leverage Cooperative Agreements
Risk of Staff Burnout
Risk of Department Shutdowns
No Plan to Address Surges (Open Season)
Lack of Long-term Plan to Resolve
Note: These are initial interview observations. Our final takeaways may be different.
What our assessment uncovered
Chart Key
- Purchasing-managed
- Department-led
May 10, 2022
28 Backlog
The Purchasing Division lacks the staffing to
effectively resolve their backlog
Key Trends
May 10, 2022
29 Tactical Procurement Team’s Backlog
Forecasted Requisition Backlog by Month
0 100
200
300
400
500
600
700
800
Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Outstanding Requisitions
302
450
373
599
635
652
624
This chart shows the actual and forecasted number of outstanding requisitions in the Tactical Procurement Team’s backlog for each month. Once processed, the Tactical Procurement Team will convert the requisitions into purchase orders to allow City departments to acquire needed goods and services. This chart does not account for encumbrance adjustments (compensation increases and/or date extensions requested by departments) that the Tactical Procurement Team is also responsible for processing.
Forecasted
Based on our model, the backlog is expected to continue growing May 10, 2022
30 Tactical Procurement Team’s Backlog
Current Requisition Backlog Avg New Requisitions per
Month
Avg Requisitions Processed
per Month
Avg Monthly Requisitions
Processed per FTE
302 202 140.6 (assumes 6.2 FTEs) 23
Tactical Procurement Observations:
1 2
3 4
5 With their current staffing, the Tactical Procurement Team will be unable to resolve their current backlog prior to the closeof FY2022.
When fully staffed (6.2 FTEs), the Tactical Procurement Team is unable to process the average number of requisitions they receive in a month.
Demand for the Tactical Procurement Team’s services is increasing. In FY2020, the team averaged 188 new requisitions per month. To date in FY2022, the team received 228 new requisitions per month, which constitutes a 21% increase.
As calculated in December 2021, assuming the Tactical Procurement Team halted the receipt of any new requisitions and maintained current staffing, it was estimated that they would resolve the current backlog by March 26, 2022.
Staffing within the Tactical Procurement Team varies significantly. Over the past two years, the Team’s staffing ranged between
4.8 and 6.9 FTEs. The variability in staffing is due to a high rate of staff turnover. 6 The program manager responsible for the Tactical Procurement Team does not have a plan to resolve the backlog before the end of the fiscal year.
The Tactical Procurement Team is unable to meet demand
May 10, 2022
New Purchase Orders Entering into Effect by Month*
31 Impact of Open Season
0 100
200
300
400
500
600
700
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
New Purchase Orders Going into Effect
2021 2020 2019 2018
Open Season
The City’s financial year ends June 30. As many purchase orders expire with the new fiscal year, Purchasing must create new purchase orders that are effective July 1. The flood of requisitions submitted by departments seeking to extend existing purchase orders is referred to as “open season.”
What is open season?
How is open season handled?
What happens to unprocessed requisitions?
To ensure departments can continue to rely on vendors to provide critical goods and services after the transition to the new fiscal year, the Purchasing Division will begin processing open season-related requisitions during the quieter winter and spring periods. Once processed, the resulting purchase orders go into effect July 1st of the new fiscal year. This creates a spike in new purchase orders annually in July.
The Tactical Procurement Team has a policy of canceling unprocessed requisitions at the end of a fiscal year, and departmentsmust resubmit their canceled requisitions. Due to the sizable backlog and limited staffing, the Tactical Procurement Team has two options. The Team can focus on eliminating the backlog and be ill-prepared for the upcoming open season, or they can focus on preparing for open season and cancel hundreds of requisitions for needed goods and services. Neither option gets City departments their needed goods and services in a timely manner.
Open season shapes the Tactical Team’s workflow
Note: Data does not include encumbrance adjustments
May 10, 2022
32 Backlog Considerations
Forecasted Requisition Backlog with Mitigation Strategies* 0 50
100
150
200
250
300
350
400
450Outstanding Requisitions
Staff Augmentation
Additional Employees
Limited staff augmentation would assist with clearing
out the current backlog. The staff augmentation would
allow the Tactical Procurement Team to eliminate their
current backlog, allow City departments to get needed
goods and services, and prevent the mass cancelation
of requisitions at the end of the fiscal year.
Increasing the Tactical Procurement Team’s staffing
from 6.2 FTEs to 9 FTEs would allow the team to meet
the increased demand for their services and prevent the development of new backlogs.
Assumptions
• Any potential staff augmentation would start in March 2022 and run through June 2022. The staff augmentation would involve 4 individuals, with each working at 80% of the capacity of a buyer hired by the City.
• Purchasing would add 3 new buyer positions. Two buyers would start in February 2022 and one in April 2022. To account for regular turnover, the model includes one buyer leaving the City in December 2022.
• For a full accounting of all additional assumptions, please refer to the appendix.
The City must act quickly to reduce the backlog
Open Season
Note: Data does not include encumbrance adjustments
May 10, 2022
The Strategic Procurement Team’s workload is varied
33 Strategic Procurement Team’s Workload
Avg Yearly Workload Units per
FTE
Avg Monthly Workload Units per
FTE
Current Yearly Workload Unit
Capacity
Current Monthly Workload Unit
Capacity
3235 250 24,883 (assumes 7.8 FTEs) 1,924 (assumes 7.8 FTEs) • Without additional data on the demand for the Strategic Procurement team’s services, it is not possible to accurately forecast the team’s staffing needs.
Limitations:
Strategic Procurement Observations:
1 2
3 Roughly 11% of all projects the Strategic Procurement Team begins are canceled before they are completed. Most of the cancelations are from the departments and due to changing requirements.
Due to staff turnover, staffing within the Strategic Procurement Team fluctuates considerably. In July of 2018, the Team had a staffing low of 2.1 FTEs. Currently, the Team is at its highest staffing level to date with 7.8 FTEs.
Since 2018, staff time spent on low value procurements has increased by 600%. Most likely, this growth is caused by the increased number of IT-related purchases made by the City.
May 10, 2022
High Value Procurements
• Requests for Proposals
• Requests for Bids
Low Value Procurements
• Requests for Quotes (evaluative
and non-evaluative)
Other Procurements
• Unique Services Exemptions
• Sole Source Procurements
• Cooperative Agreements
• Requests for Information
Major Contract Adjustment
• New Contracts
• Contract Amendments
Minor Contract Adjustment
• Option Processing
• Change Orders
• Purchase Orders
• Service Orders
• Council Memos
Vendor Communication
• Vendor Notice
• Agreement Termination
Other Activities
• Department Internal Activities
• Pilot Programs
• Miscellaneous
Workload is increasing for the Strategic Procurement Team 34 Strategic Procurement Team’s Workload
Strategic Procurement Team’s Workload by Year
0 5,000
10,000
15,000
20,000
25,000
FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 Workload Units
High Value Procurements Low Value Procurements Other Procurements Major Contract Adjustment Minor Contract Adjustment Vendor Communication Other Activities Activity Classifications
23,039
17,718
13,149
11,588
13,916
11,528
9,525
7,437
Workload Units: For the purposes of this assessment, workload units are equivalent to the median number of days it takes to complete a specific activity. The sum of the yearly activities completed, measured in median days per activity, constitutes an estimate of the team’s yearly output.
Note: All data current as of December 15, 2021
May 10, 2022
Purchasing Prepares RFP Package
35 Strategic Procurement Team Processing Times
Median processing durations for various activities
0 50
100
150
200
250
300
350
Processing Times (Days)
301
136 152
18 129.5
66 68 81 56 37 46 42 14
73.5 14 24.5
60 36.5 67
ITD
Review PPB Solicitation
Advertised
Evaluation of Vendor Responses,
BAFO, and NOIA
22 Days 37 Days
Contract Negotiations and
Execution
107 Days 32 Days 10 Days83 Days 69 Days
Department Prepares Procurement Scope
Median RFP Processing Times by Process Step
Included in Median Processing Time Protest Period
Key: Outside Department Purchasing Division Procuring Department with Purchasing Division Vendors with the Purchasing Division Municipal Code Requirement This graph shows the median processing time, measured end-to-end in days, of major activities completed by the Strategic Procurement Team. The Purchasing Division’s limited staffing and the highly collaborative nature of the procurement process can lead to extended processing times. The Purchasing Division may lack the staff capacity to action a procurement or be waiting on a third party to provide needed information.
Note: All data current as of December 15, 2021 May 10, 2022 Median Processing Times by Strategic Procurement Team Activity How the Strategic Team prioritizes their workload
36 Procurement Prioritization Board
Given the high demand for their services, the Strategic Procurement Team relies on the Procurement Prioritization Board to effectively prioritize their workload. The Board, which is comprised of the Assistant City Manager, the Budget Director, and the Director of Finance meets on the 3rd Monday of every month to prioritize all procurements that are pending assignment. 37 Days
Median time to prioritize a project
20 Projects
Projects prioritized since 2019
1 Project
Projects awaiting prioritization
Procurement Prioritization in Numbers:
Procurement Prioritization Observations:
• Most interviewees expressed the belief that the Procurement Prioritization Board contributes little value to the procurement process and adds an additional two months of processing time to the already lengthy RFP process. • Given the number of director-level staff present on the board, it consumes a significant amount of high-level staff time. • Many of the procurements processed by the Procurement Prioritization Board are high-profile, important procurements. By having high-level stakeholders from outside the Purchasing Division prioritize procurements, it protects the Strategic Procurement Team from political implications if certain procurements are deprioritized. • The Procurement Prioritization Board is a mechanism to ensure the Purchasing Division prioritizes procurements that are strategically important to the City, such as City Roadmap projects.
May 10, 2022
37 Policy
Current policies increase risk and create
additional work
Key Trends
May 10, 2022
City Policies Today
Like any city, the City of San José has a myriad of policies that govern how the City procures goods and services.
These policies range from outlining procurement thresholds to how the City advertises solicitations to vendors. While focused on minimizing risk to the City, many of these policies place an undue burden on the Purchasing Division’s ability to promptly procure needed goods and services.
Policies handicap the procurement process
Lack of Use of Informal Procurement Process Additional Work Additional Work and Higher Costs
Additional Work
Signing Authority Limits Include Options Additional Work for Purchasing and City Council City Policy or Practice: Impact on Purchasing Division:
Restrictive Requirements for Procurement Piggybacking
The City's Municipal Code restricts City's ability to piggyback off another entity's procurements by requiring piggyback language to be included in procurement documents, instead of both procurement and contract documents.
Not effectively leveraging piggybacking to streamline
procurements introduces additional work. Other entities procure the same things, and the City could leverage those procurements.
The Municipal Code outlines an informal, 3-bid procurement process for procurements under $130,000. The Purchasing Division only allows City staff to use the informal process on a limited exception basis.
By restricting departments from using the informal process the Purchasing Division is creating additional work as they now must run full solicitations for these procurements.
Any purchases over the $10,000 competitive procurement
threshold must go through a competitive procurement process, which creates additional work for the Purchasing Division.
Low Competitive Procurement Threshold
The City’s competitive procurement threshold ($10,000) is lower than some peer cities. City staff note that, due to inflation, it is challenging to acquire needed goods and services while remaining under the threshold.
When determining if a contract exceeds the City Manager’s signing authority, the Purchasing Division includes the value of any option years, regardless of if the option years are exercised.
As any contract that exceeds the City Manager’s signing authority must be approved by City Council, this practice creates additional work for the Purchasing Division and City Council.
38May 10, 2022
Procurement Thresholds for the City of San José are aligned with Peer Cities Procurement Thresholds
City Competitive Threshold Informal Bid Threshold CMO Signing Authority San José, CA $10,000 $130,000 $320,0001 or $1,300,0002
City Competitive Threshold Informal Bid Threshold CMO Signing Authority San Diego, CA $25,000 $150,000 $3,000,0001,2 or $250,0005 Oakland, CA $15,000 $50,000 $250,000
Sacramento, CA $5,000 $25,000 $250,000
San Francisco, CA $10,000 $129,0003 or $706,0004 $100,000 Santa Clara County, CA $5,000 $100,0001,2 or $300,0005 $200,000 Dallas, TX $3,000 $50,000 $100,000
Austin, TX $3,000 $50,000 $66,0006
San Antonio, TX $3,000 $50,000 Less than the budgeted amount San José:
Peer Cities:
Competitive Threshold:
Anything below this threshold
may be purchased without
seeking multiple bids/quotes.
Informal Bid Threshold:
Anything below this threshold can
be competitively sourced without
a public announcement.
CMO Signing Authority:
The City Manager or Dept.
Manager is authorized to approve
any purchase below this amount
without Council approval.
Competitive
Procurement
Threshold
($10,000)
CMO Signing
Authority ($320,000)
Informal Bid
Threshold
($130,000)
39 San José
Thresholds
May 10, 2022
City Competitive Threshold Informal Bid Threshold CMO Signing Authority Federal Uniform Guidelines $10,000 $250,000 N/A
Federal Entities:
1For Goods
2For Services
3For Commodities and Professional Services
4For General Services
5For Professional Services
6Threshold is adjusted yearly based on CPI
Notes:
Local Business Enterprise:
5% preference based on the
final evaluation score
Small Business Enterprise:
10% preference based on the
final evaluation score
40 Small and Local Business Preferences
How the City attracts small, local, and diverse vendors Vendors with a current San José Business Tax Certificate Number and an office in Santa Clara County with at least one employee.
Local Business Enterprises (LBE)
Vendors qualifying as Local Business Enterprises and have 35 or fewer employees.
Limits to diversifying vendors:
• Paperwork requirements limit undocumented
vendors from bidding on projects.
• California State Proposition 209 bars the City from
granting preferential treatment to vendors on the
basis race, sex, color, ethnicity, or national origin.
• High insurance requirements and extensive terms
and conditions create barriers for LBE and SBE
vendors.
• In order to leverage preferences, the LBE/SBE
entity must be the prime contractor, discouraging
partnerships with larger entities.
• RFxs are complicated. Organizations without
experience responding to RFxs, such as LBEs and
SBEs, sometimes struggle to understand what
constitutes a complete and effective response.
2 3
4 1
5 Small Business Enterprises (SBE)
Best Value Evaluation Lowest Bid Evaluation
Local Business Enterprise:
2.5% preference on their
submitted bid
Small Business Enterprise:
5% preference on their
submitted bid
May 10, 2022
41 Procurement Card Program
A tool to make small purchases quickly
Single transaction
limit for services$1,000
Single transaction
limit for goods$2,500
Per card monthly
transaction limit$10,000
Number of
cardholders*990
Total annual P-
Card spend*$14M
*Note: Data as of the 2019 audit of the P-Card program.
The City of San José’s Procurement Card program, which is administered by U.S. Bank, streamlines small dollar purchases within the City by allowing card holders to purchase goods directly from vendors using a city-issued credit card.
Procurement Card Program Observations:
Thresholds are Too Low
The single transaction limits for goods and services are too low to allow City staff to routinely use P-Card to make needed purchases.
Awareness of Preferred Vendor Programs is Lacking
The City set up business accounts with vendors that receive a significant amount of P- Card spent (e.g., Amazon, Home Depot). However, many City staff members are unaware of these programs and that the City benefits from participating.
Independent Policy Making
Some City Departments will make changes to their policies that impact the P-Card program without coordinating with Purchasing to ensure updates are compliant and consistent with current P-Card policies.
Lack of Current Policies
The City’s current P-Card policy is outdated. While there is a revised policy currently under review, it has not been approved by City leadership yet.
May 10, 2022
42 Procurement Card Program Documentation
Documentation for the program is lacking, which increases risk There is no centralized, easy to reference resource that outlines what purchases can be made using a P-Card, the applicable purchasing limits, and if there are any categories of goods or services that have unique exceptions. The absence of a comprehensive resource increases risk for the City and the likelihood P-Card users will make non-compliant purchases.
Update: As of 1/5/21, the Purchasing Division is working on a revised guide to Procurement Cards that lists what items can be purchased using P- Cards, any exceptions that exist, and the reporting requirements for all P-Card purchases. It is expected the revised guide will be made available to City employees sometime in 2022.
Lacking Documentation
Minimal Training
Restrictive Usage
The lack of documentation makes it difficult for City staff to quickly and efficiently determine what expenses can be compliantly charged to a P-Card.
Outside of the yearly P-Card quiz that all P-Card holders must take, there is minimal training to ensure City staff are using P-Cards correctly.
Due to the Municipal Code, there are significant restrictions on what purchases P- Cards can and cannot be used for.
High Risk of P-Card Violations
Examples Include:
• One City staff member reported using their P-Card to purchase subscription software. The staff member’s P-Card coordinator authorized the purchase.
• Multiple City staff members reported P-Card holders using their P-Cards to purchase DoorDash and other personal purchases. • Staff members reported dividing purchases into increments to remain under the competitive procurement threshold.
May 10, 2022
43 P-Card Violations
There are minimal repercussions for P-Card policy violations 01 02
03 04
P-Card User Commits Policy
Violation
Department
Identifies Violation
Department Submits After-
the-Fact Memo
P-Card User
Remunerates City
P-Card Violation Process: How are Violations Identified:
The repercussions for misusing P-Cards are minor. In most instances, the violating user is required to repay the City for any non-City P-Card expenses and the department submits an after-the-fact memo. Only in extreme circumstances or after repeat violations, will a P-Card user’s limits be lowered, or their P-Card revoked. There is no set definition of an extreme or repeat violation, instead it is up to the judgement of individual departments.
Individual Users
As the first line of defense, individual users are responsible for reporting if they misuse their P-Card.
Department Coordinators
Each department’s P-Card coordinator is responsible for reviewing all monthly departmental P-Card spend for compliance with City policies. Some P-Card coordinators lack a strong understanding of City policies.
Accounts Payable
In limited circumstances, the Accounts Payable Team may identify instances of P- Card violations.
Approving Official
The approving official reviews a cardholder’s expenditures to ensure compliance with City policies. During interviews, approving officials appeared to have a varied understanding of P-Card policies.
The Purchasing Division does not have the ability to review P-Card transactions to ensure compliance with City policies.
May 10, 2022
The wage theft policy severely restricts the number of eligible vendors. Many large or medium sized businesses are ineligible under the current policy as they have paid wage theft violations. With the current policy, the City is limiting its opportunities to find the best vendors.
44 City Policy Limitations
The City of San José’s rigid policies and terms and conditions handicap the City’s ability to attract a diverse vendor pool of high- quality vendors. Smaller vendors cannot afford to meet the insurance requirements and larger vendors are unwilling to meet the City’s rigid terms. Instead, the City tends to attract the same vendors that may not best meet the City’s needs.
Insurance Requirements
1 2 3
Examples of how Vendor are Limited:
Vendors are required to meet all the City’s insurance requirements, including automotive insurance, regardless of the type of work being performed or the location of that work. This can pose an enormous burden for smaller vendors.
Restrictive Policies
Indemnification Requirements
The City of San José requires that all vendors indemnify the City.
However, many larger vendors, such as the technology companies within the Bay Area, may be unwilling to fully indemnify the City, causing them to walk away during the contract negotiation process.
Restrictive policies limit the City’s vendor pool
May 10, 2022
45 Software Purchases
Terms & conditions restrict the City’s software purchases Within the City of San José, the process of purchasing software is overly rigid, as the City is unable to deviate from its standard terms and conditions. Due to the complexity of the process, interviewees reported confusion regarding how to purchase software, and multiple interviewees reported violations of Purchasing Division policy when acquiring software.
Software Procurement Methods:
P-Cards
For non-subscription software purchases
under $1,000 that do not require agreeing to
terms and conditions with the vendor.
Citywide Open Purchase Orders
For all Microsoft Office, Microsoft Server,
Autodesk, Rukus Wi-Fi software purchases,
or any software available from Oready.
Formal Procurement Process
For all software that cannot be acquired
under either of the other procurement
processes.
Observations:
Staff Training – Many City staff members appeared to be unaware of the specific processes for purchasing software in the City. When asked about software procurement, one City member described using their P-Card to purchase subscription software for their department, with the approval of department senior staff.
Reliance on P-Cards – In the City’s P-Card transaction logs, there appears to be multiple instances where City staff purchased subscription software (e.g., Adobe Reader, Twitter advertising plans). As purchasing software on a P-Card is easiest, many staff likely default to using their P-Card, even if it is not the proper process.
Software Quality – During interviews, some City staff members expressed frustration with the quality of the software the City uses. As the City takes a rigid stance to negotiating terms, some of the larger, more established vendors are unwilling to work with the City. This forces the City to use lower-quality software products.
Lack of Documentation – Within the City, there is no documentation that clearly outlines the different processes for procuring software, when they are applicable, and the limitations for each process. The lack of rigorous documentation likely inhibits compliance with the current processes. 1 2
3 4
May 10, 2022
46 Process
Current Processes are not aligned to City or
Division goals
Key Trends
May 10, 2022
47 Procurement Method Selection
Department wants to procure goods or
services
Purchase
over
$10,000?
Evaluative
procurement?
How to select the correct procurement process
Services
purchase?2
Purchase
over
$130K?4
Use the Tactical
Procurement Checklist
Use the Strategic
Procurement Checklist
Available
through
citywide PO?
Available
through
department
PO?
IT-related
procurement?
Available
through
business
account?3
Use the Tactical
Procurement Checklist
Purchase through
department PO
Purchase through City-
wide PO
Purchase through
business account with P-
Card
Purchase using P-Card
The process for selecting the proper procurement process is complex and has multiple process steps that rely on City staff tohave knowledge of specific resources (e.g., department PO list, Tactical Procurement Checklist, Strategic Procurement Checklist) or definitions (e.g., evaluative procurement, IT procurement, business accounts).
Procurement Process Selection:
Available
through
citywide PO?
Available
through
department
PO?
Purchase through
department PO
Purchase through City-
wide PO
Goods or
services?1
Available
through
citywide PO?
Available
through
department
PO?
IT-related
procurement?
Does the
value exceed
$1K?
Vendor
accepts P-
Cards?
Use the Tactical
Procurement Checklist
Yes
No
Services
Goods
No No
No
No
No No No
NoNo
Yes Yes Yes Yes
Yes Yes Yes Yes
No No No
Yes Yes
NoYes Yes
1Per the Municipal Code, software is considered a service. 2If a procurement involves a combination of goods and services, the procurement is considered a service if over 25% of the anticipated contract value is services. 3Business accounts include retailers where the City receives a discount or other benefit from purchasing through that retailer (e.g., Amazon, Home Depot). 4This is based on the estimated value of the initial contract term.
Notes:
Yes
Yes
No
May 10, 2022
48 The Purchasing Procurement Process
The procurement process documented by the Purchasing Division Department Initiates
Procurement
Department Collects
Required
Documentation
ITD and/or OEA
Review
Procurement
Prioritized by PPB
Purchasing
Collaborates with
Department to Finalize
Scope
Purchasing Packages
Procurement and
Posts it to Biddingo
Vendors Respond
Department Evaluates
Responses Purchasing Issues
Notice of Intent to
Award
Purchasing and Vendor
Negotiate Contract
Vendor Begins Work
Tactical Procurements
If Required
Purchasing Selects
Lowest Bid
Tactical Procurements
Strategic Procurements
Key: Procuring Department Purchasing Division Vendor
Note: This diagram is an abbreviated representation of the Purchasing Division’s process. For a full accounting of all process steps, please consult the appendix.
The diagram below outlines the procurement process for both the Tactical and Strategic Procurement Teams. Certain process steps are specific to the Tactical or Strategic Procurement Teams.
External Departments
May 10, 2022
49 Consulting Services Procurement Process
The current process lacks oversight and standardization Within the City, the consultant procurement process is decentralized with each department responsible for procuring their own consulting services. Currently, the City Manager’s Office is responsible for providing oversight of the process to ensure departments’ procurements remain compliant with the Municipal Code. While the staff in the City Manager’s Office are well intentioned, they lack the bandwidth and procurement experience to develop and rigorously enforce effective procurement processes.
Process Standardization
Process Oversight
Training and Documentation
During interviews, many interviewees reported having developed their own processes, without verifying them with the City Manager’s Office or the Purchasing Division, to run consulting services procurements. Many times, these processes were based on institutional knowledge that was not documented.
Most interviewees reported minimal oversight of their consulting services procurements. The City lacks a centralized system for documenting consulting procurements, ensuring consulting procurements comply with City policies, or tracking consulting services vendors.
Of the City staff interviewed, almost all reported they learned how to action consulting procurements through undocumented
institutional knowledge or experimentation. Few staff members were aware of the limited training and documentation available on the Purchasing Division’s intranet page.
Purchasing Division Engagement
With Consulting Procurements, City staff reported a lack of engagement by the Purchasing Division. When they had
procurement-related questions, City staff reported being unable to contact the Purchasing Division for assistance.
May 10, 2022
50 The Department-led Procurement Process
Department Initiates
Procurement
Department Collects
Required
Documentation
OEA ReviewDepartment Finalizes
Scope
Department Packages
Procurement and
Posts it to Biddingo
Vendors Respond Department Evaluates
Responses
Department Issues
Notice of Intent to
Award
Department Negotiates
Contract with
Assistance of the City
Attorney’s Office
Vendor Begins Work
Key: Department Office of Equality Assurance Review Vendor If Exempt from OEA Review
Department with External Assistance
How departments procure consulting services
This diagram reflects the consulting services procurement process as explained by City staff during the procurement effectiveness interviews. As the process lacks standardization, some departments use different processes.
May 10, 2022
51 Consulting Services Procurement Oversight
Oversight is minimal, leading to increased risk for the City Minimal Process Oversight
Lack of Purchasing Division Involvement
Lack of Systems to Enforce Process Consistency
As the City Manager’s Office lacks procurement expertise, they are ill equipped to effectively oversee the consulting services procurement process.
Without a system to ensure departments are following all relevant process steps, departments can create contracts that are non-compliant with City policies.
As the entity within the City with significant Procurement expertise, the Purchasing Division is well equipped to provide effective oversight. However, City staff the Purchasing Division is largely unengaged with consulting services procurements.
Examples Include:
• One City staff member reported a department tried to
evaluate an RFP with two separate panels to evaluate
different parts of the responses.
• An interviewee noted consulting procurements are only checked for minimum insurance requirements if the
procuring department is aware of the requirement.
• Departments have allowed vendors to assist with
developing their scopes of work and with defining the
requirements for the procurement.
The minimal oversight of the consulting services procurement process introduces the opportunity for significant, unintentional risk for the City of San José and is in direct contrast to the risk-adverse posture the City takes with most other procurement processes.
Increased Risk for the City of San José
May 10, 2022
52 Distinguishing Which Process to Use
For most City staff, the distinction is unclear and poorly defined Services Handled by Purchasing Division Consulting Services Procurement Process Services procured by the Purchasing Division include
services where skilled professions are working on a specific project, program, or function. Frequently, these individuals are professionally certified.
The consulting services procurement process is for all
procurements where the procuring department needs a
skilled individual to provide evaluative services or advise departments about policy or strategic questions.
As Defined by the Purchasing Division:
Observations from City Staff:
Lack of Clarifying Documentation – Many City staff members reported they were unaware of any documentation that clarified what constitutes consulting services. Most staffed reported learning the distinction through institutional knowledge shared during onboarding.
Significant Grey Areas – Given the large variety of different services the City procures, there are instances where services may fall into a grey areabetween consulting and non-consulting services. When this occurs, City staff will contact the Purchasing Division for clarification.
Misuse of the Consulting Services Procurement Process – Some departments reported stretching the definition of consulting services to avoid the Purchasing Division procurement process to allow the department to run the procurement themselves. 1 2
3 Constant Redefinitions – Some interviewees reported the Purchasing Division would at times reclassify certain procurements as consulting or non-consulting depending on the Division’s workload at the time. This creates significant confusion for departments.4 Examples Include: Services associated with an equipment purchase, training services, and hardware or software maintenance Examples Include: Audit services, technical expert advisors, evaluation services, and studies or assessments
May 10, 2022
53 Information Technology Review Processes
Ensures Citywide IT alignment at the expense of expediency The Information Technology Department (ITD) reviews all technology-related procurements prior to them being released for bid to ensure that they are compatible with existing City technology infrastructure, that the procured solution will meet the Department’s information technology security requirements, and that there is a technological need for the solution. 21 Days
Median time to review a project
85 Projects
Projects reviewed since 2020
6 Project
Projects awaiting review
Information Technology Review in Numbers:
Information Technology Review Observations:
• Many interviewees noted they were unclear on the exact requirements for a procurement to be approved by ITD. It does not appear the review requirements are defined or shared with other City departments. • Some interviewees expressed a desire for a checklist to help them expediate their procurements through the ITD review process. • The process can be slow, and procurements can sometimes stagnate while being reviewed. One department reported that they routinely remind ITD to advance their procurements to the next phase of the review process. • Processing times vary depending on the complexity of the procurement. For straightforward smaller technology procurements City staff reported the review can take less than a week. For larger procurements, the process may take months. • Procurements may spend in excess of four months going through ITD review and being prioritized by the Procurement Prioritization Board before Purchasing begins actioning the procurement.
May 10, 2022
54 Current Key Performance Indicators (KPIs)
Key Performance Indicator FY2020
Actual
FY2021
Target
FY2021
Estimated
Percentage of cost savings achieved through the
centralized purchasing process 3.7% 7.2% 3.8%
Cost of purchasing services as a percentage of the total dollars procured 1.15% 1.56% 1.61%
Percentage of purchase orders (POs) processed within established timeframes:
- 8 business days for POs ≤ $10K 65% 80% 42%
- 26 business days for POs > $10K and ≤ $100K 79% 80% 68% - 38 business days for POs > $100K and ≤ $250K 83% 80% 86% - 83 business days for POs > $250K and ≤ $1.0M 95% 95% 99% - 108 business days for POs > $1.0M 100% 85% 100%
Percentage of contracts processed for insurance
clearance within 5 days of receipt 91% 88% 88%
KPIs are not specific to the goals and objectives of San José KPI Observations:
The KPIs fail to account for the Strategic Procurement
Team’s work. By focusing entirely on purchase orders,
the KPIs miss RFx processing and contract work.
1 The KPIs are output oriented and do not account for
variation in procurements that can disrupt or extend
the procurement lifecycle.
2 KPI Calculation Methodology:
3 As the Purchasing Division lacks a strategic mission, the tracked KPIs are not necessarily aligned with the
Division’s purpose and objectives.
• The Purchasing Division calculates the KPIs every March during the budget process. The current calculation process is manual and can be time intensive. • The estimated values are determined using the data from the partial financial year running up until the point the Purchasing Division pulls the data, with minor adjustments to account for the final quarter of the financial year. 4 The current KPIs are based on historical practices
and the Purchasing Division has not updated them to
account for changes in business practices.
5 KPIs are calculated and reviewed once a year,
making it difficult to track the Purchasing Division’s
performance in real time.
May 10, 2022
55 Technology
Disparate technology complicates procurement
within San José
Key Trends
May 10, 2022
56 Current Procurement Technology Solutions
Technology leveraged to support the procurement process To support procurement processes across the City, four primary technologies are leveraged. In addition to these technologies, individual Departments use internal tools to manage procurement projects.
Procurement Technologies:
Biddingo
Biddingo is the procurement
portal for the City.
FMS GILES
Observations:
Training – Many City department staff have not been trained on or is not aware GILES or how to navigate the Purchasing Division’s Intranet.
Biddingo Support – For Purchasing Division staff, Biddingo support and training during the transition from BidSync was in person and excellent. Many City staff who run consulting procurements reported the training was lacking and assumed a significant familiarity with procurement.
Vendor Onboarding – Some vendors were unaware of the transition from Biddingo to BidSync, despite repeated outreach from the City. Due to privacy concerns, the Purchasing Division had to rely on vendors to make new accounts on the Biddingo platform. Some departments reported receiving fewer bids post-transition, indicating not all vendors registered.
FMS is Outdated – FMS provides the functions needed to support the procurement process. However, due to its age, it lacks basic features found in modern solutions. Staff leverage cumbersome workarounds daily tasks and have reported extreme slowness due to unanticipated system outages. 1 2
3 4
Purchasing Intranet
FMS is the Purchasing
Division’s purchasing
management system.
GILES is the City Clerk’s
database for contracts,
ordinances, and resolutions.
The Purchasing Division’s Intranet site
provides a source for procurement
processes, documentation, and FAQs.
May 10, 2022
57 Purchasing Procurement Portal (Biddingo)
How the City advertises bids to potential vendors
Biddingo for Vendors:
Biddingo for City Employees:
• Overall, for vendors, Biddingo is an easy-to-use software solution that is functional, transparent, and pleasing to reference. • The introduction of Biddingo allowed the City to begin accepting paperless bids from vendors. By no longer requiring paper copies of all bids, the City can effectively broaden its vendor pool.
• As a Canadian company, Biddingo has a smaller database of vendors within the United States compared to BidSync. Therefore, San José must leverage proactive vendor outreach to ensure solicitations reach the same number of vendors. • Many City staff members reported that Biddingo requires additional process steps compared to BidSync. While not difficult to navigate, these process steps add time and introduce additional complexity.
• Procurement templates (e.g., RFP, RFQ, RFB) are fixed, and City staff cannot customize them should the existing templates fail to meet their needs.
There have been instances where City staff have requested to edit templates. • With BidSync, City staff were able to upload bid packages onto the platform in a single file. Biddingo requires City staff to paste bid documents into specific fields. While this is more time consuming for City staff, it encourages uniformity. • Some department staff lack a full understanding of Biddingo’s functionality. Staff mentioned wishing that Biddingo had features that the platform already has (e.g., vendor notice generation, running reports).
In 2019, the City of San José replaced its long-time e-procurement platform, BidSync, with a new platform from Biddingo. Biddingo introduced new functionality to enhance the City’s ability to manage its vendor engagement, post paperless solicitations online, and collect bid responses. The e-procurement platform is critical part of the City’s procurement process as it ensures the City is compliant with Chapter 4.12.270 of the City’s Municipal Code.
May 10, 2022
58 Transition to Biddingo from BidSync
The transition left City staff and vendors confused and unaware Vendor Confusion
with New Platform
Strong Customer
Service to Assist
Vendors Unaware of
the Transition
Commodity Code
Transition
Absence of Hands-On
Training
In interviews, City staff noted that Biddingo
customer service is responsive, helpful, and
quick to solve any issues that staff may be
experiencing. Supposedly, the sales
representative assigned to San José is
particularly useful for resolving customer
support-related issues.
Strong Customer Service to Assist
Interviewees that regularly use the Biddingo
platform felt the transition training did not leave
them adequately prepared to use the platform
when it went live in 2019. Specifically,
interviewees noted they wished they had
additional training in a sandbox environment.
Most training occurred using online videos.
Absence of Hands-On Training
Biddingo uses non-standard commodity codes to classify procurements.
This has led to confusion for some vendors and City staff.
Commodity Code Transition
Biddingo
Transition
With the transition to Biddingo, the City lost
access to all historical bid data that BidSync
hosted. This includes a log of all procurements
released on the BidSync platform and the
associated bid packages. Many City staff
members reported using the historic bid
packages when drafting their scopes.
Vendor Confusion with New Platform
Some vendors appear to be unaware of the
transition to Biddingo. Since the transition to
Biddingo, many departments have seen fewer
bids per solicitation, with some solicitations
receiving only one bid. When contacted, some
long-time vendors that stopped bidding were
unaware the City transitioned to a new platform.
Vendors Unaware of the Transition
Lack of Access to Historical Data
Lack of Access to
Historical Data
Some vendors appear to struggle with using the Biddingo platform.
Departments reported receiving email copies of vendor questions when vendors should be submitting them online.
Note: Biddingo observations are inclusive of both the consulting service and Purchasing-managed procurement processes.
May 10, 2022
59 FMS
The Purchasing Division leverages Financial Management System (FMS) to manage purchase orders.
This system is approximately 30 years old and lacks key features that basic procurement management systems have today.
Financial system that stores Purchase Order data
Observations:
Outdated Software – FMS is outdated, when compared to more modern solutions currently available. FMS lacks support for basic features such as printing or generating customized reports, which requires staff to create workarounds outside the system. Additionally, the City is reliant on specialized IT staff to maintain the system.
Unexpected System Outages – During interviews, City staff reported the FMS system experiences significant unplanned downtime during regular business hours. While some of this downtime is associated with system outages, the vendor will also perform regular system maintenance during business hours.
Expanded Capabilities May Not be Realized – By relying on an outdated system, the City of San José is unable to leverage the expanded capabilities of modern software solutions. Features included in more modern platforms would allow the City to improve internal controls, remove process workarounds, and increase staff efficiency, all while reducing risk to the City.
1 2
3 Screenshots of FMS’s user interface
May 10, 2022
60 GILES
Comprehensive contracts information in a single location GILES is the City’s comprehensive database for legislative documents such as ordinances, resolutions and contracts. GILES is available online to all City staff, City residents, and interested third parties and provides a keyword searchable compilation of all contracts signed by the City.
Top: Screenshot of GILES’s
contract database after searching
for Guidehouse
Right: Guidehouse’s contract as
entered into the GILES database
GILES Observations:
Staff Awareness – Many City staff members appeared to be unaware of GILES or its functionality. During interviews, many staff expressed a desire to have a searchable tool where they could pull past contracts or RFPs to help with developing scope documents for current procurements – this is exactly what GILES offers.
Search Functionality – GILES offers a robust search capability. Beyond key words or document tags, users can also search for specific terms from within contract documents. In a procurement context, many GILES users may be looking for specific terms from a contract scope of work and having a robust search feature is essential.
Consulting Services Vendor Database – The City of San José does not centrally track consulting services vendors that have historically or are currently working with the City. GILES is the only record within the City of if a specific consulting services vendor has a prior relationship with the City. 1 2
3 May 10, 2022
61 Procurement Document Management
Processes are manual and prone to errors
The Purchasing Division and other City departments utilize a variety of document formats and file storage systems to store procurement-related files. The inconsistent use of multiple record formats creates information silos, and the lack of safeguards introduces document management-related risks.
Key Observations:
Staff Awareness – The use of multiple different document storage methods and limited documentation explaining the different methods used, requires staff to have significant awareness of where specific documents may be stored. During interviews, staff were frequently unaware of key resources or documents.
Reliance on Paper Records – The Purchasing Division is still reliant on paper records to store procurement-related information and some historic procurements. The reliance on paper records created an issue when Purchasing Division staff were unable to access critical documents when working from home.
Document Silos – As each department maintains their own separate procurement-related documentation, City staff lack awareness of resources that might help them with successfully completing procurements. Staff may also duplicate efforts and create multiple versions of the same document.
Additionally, the existence of document silos introduces compliance risks as some documents may be out of date.
1 2
3 Purchasing Shared Drive Organization – The Purchasing Division’s shared drive, also known as the “O Drive”, was well organized and served as a useful resource for Purchasing Division staff. Documents are periodically reviewed and manually updated, though this process is dependent on limited staff availability.
Lack of Safeguards – Much of the City’s procurement documentation is stored in a manner that lacks safeguards such as version control, document audit trails, read/write/delete permissions, and document recovery systems.
This is a particular issue for the Purchasing Shared Drive, which has a significant amount of critical documentation, but lacks key safeguards.
Version Control – The Purchasing Division lacks a system for effectively managing version control for many key documents. There is a risk that different department may be unintentionally using different versions of key documents as there is no authoritative resource for version control. 4 5
6 May 10, 2022
62 Purchasing & Risk Management Intranet
A comprehensive procurement resource
The Purchasing & Risk Management Intranet site is a procurement resource for City departments and the Purchasing Division. It outlines the Purchasing Division’s role in facilitating procurement within the City, provides useful documentation and checklists, and includes information departments may need when creating procurements.
The site is maintained by the Purchasing Division, though some documents are provided by other departments.
Intranet Observations:
Assumed Procurement Knowledge – The site assumes users are already familiar with procurement and know what information they are looking for. A procurement novice may struggle to find the resources they need in an effective manner.
Unclear Documentation – The site includes a variety of useful procurement process resource documents. However, the site does not provide information on when the various documents are relevant. For example, both the Tactical and Strategic Procurement Checklists are included on the site, but there is no information on when one checklist would be used over the other.
Well Organized – If a user has sufficient procurement knowledge, the intranet site is well organized to allow them to access the resources they need in an expeditious manner. 1 2
3 The Purchasing and Risk Management Intranet
Page
Out of Date Resources – Some of the resources on the intranet site were not the most recent versions of those resources. The Guidehouse team was provided copies of procurement checklists dated after the versions on the intranet.
4 Minimal Consulting Services Resources – The consulting services resources available on the intranet are minimal and not maintained by the Purchasing Division.5 May 10, 2022
63 Intranet Uses Within the City
City departments and Purchasing Division use intranet differently Procurement Resource Database
The Purchasing Division uses the intranet to store procurement-related resources that the Division or other City departments may need.
Consulting Services are Secondary
While the intranet includes resources on consulting procurements, the Purchasing Division is not responsible for maintaining those documents.
Confirmation of Procurement Knowledge
Purchasing Division staff access the intranet with a specific need. This could be to clarify a specific policy or provide a resource to a department.
Procurement Method Selection
Departments will use the intranet when attempting to determine how to procure needed goods or services.
Consulting Services Procurement Resource
Unable to engage with Purchasing Division staff, departments will turn to the intranet site when in need of assistance with consulting services procurements.
Self-Help Resource
When in need of assistance with common procurement tasks departments will reference the intranet before contacting the Purchasing Division.
Purchasing DivisionCity Departments
Intranet Usage Scenarios by Entity:
While both the Purchasing
Division and City departments
utilize the intranet, their needs are
different. The current site attempts
to blend these needs into a single
site, causing it to optimally serve
neither group.
To maximize customer satisfaction, the intranet
needs to be designed from the perspective of
the Division’s departmental customers.
May 10, 2022
64 People
Staffing lacks long-term investment to reduce
turnover
Key Trends
May 10, 2022
65 Purchasing Division Staffing Today
Team composition and roles
Leadership
• Composition: Deputy Director (1),
IT Manager (1), Program Manager
(1)
• Provides oversight and makes
decisions that impact the Division.
• Reviews escalated issues.
• Manages staff and team
performance against goals.
• IT Manager and Program Manager
oversee the Tactical and Strategic
Teams’ day-to-day activities and
performance.
• Composition: Senior Analyst (4),
Analyst (4)
• Initiates and manages the
procurement process for City
departments.
• Procurements are assigned to
analysts based on workload with
multiple Analysts potentially
interacting with a single department.
• Analyst utilization (i.e. productivity)
is tracked via spreadsheet and is
based on number of completed
activities.
• Composition: Buyer III (1), Buyer
II (3), Buyer I (1), P-Card
Administrator (1)
• Buyers initiate and manage
Purchase Orders for City
departments.
• P-Card Administrators provide
guidance to City departments and
staff regarding P-Card policies.
• Buyer utilization is tracked via PO
log and is based on number of
completed POs.
Analysts Buyers and Administrator
The City of San José’s Purchasing Division is comprised of 17 team members who manage the process for procuring goods and services for departments across the City. The team also develops training and procedural documentation for procurements and acts as the liaison between City departments and vendors during the procurement process.
May 10, 2022
66 Staff Attrition
High turnover is costly and causes procurement delays
The Purchasing Division has a history of high attrition, which was further compounded by COVID-19. Many factors contribute to the turnover, including competing entities, increased workload, and the daily stressors of providing high-quality customer service. The Purchasing Division has been in constant “reaction” mode due to high attrition coupled with increasing work volumes.
Competing Entities
Lack of Succession Planning
Key Observations:
High Workload and Increased Hours
Long periods of increased hours and workload to address the sizeable procurement backlog have resulted in staff burnout and driven staff to seek other employment opportunities.
The City is situated within Silicon Valley, which means there are many high-paying employment options in the surrounding areas. Departing staff often seek roles in neighboring cities or organizations due to better pay and less work. During interviews, it was noted that City employees could work for Santa Clara County for “30% more pay and 30% less stress”.
Lack of Incentives
Staff are unaware of the requirements necessary for promotions within the Division. Individual goals or paths to promotions are not clearly communicated to staff, making the incentive to stay, long-term, within the Division unclear. Lack of incentives, such as promotions or competitive pay, may drive staff to seek opportunities in other organizations.
Due to the high turnover and workload, the Division struggles to engage in appropriate for succession planning. Staff departures often trigger reactive measures, resulting in procurement delays, missed communications, and frustrated customers.
May 10, 2022
1.0 2.0
3.0 4.0
5.0 6.0
7.0 8.0
Jul-14
Nov-14
Mar-15
Jul-15
Nov-15
Mar-16
Jul-16
Nov-16
Mar-17
Jul-17
Nov-17
Mar-18
Jul-18
Nov-18
Mar-19
Jul-19
Nov-19
Mar-20
Jul-20
Nov-20
Mar-21
Jul-21
Nov-21
Team Staffing FTEs)
Total Staff Capacity Budgeted Positions
1.0 2.0
3.0 4.0
5.0 6.0
7.0 8.0
Team Staffing (FTEs)
Total Staff Capacity Budgeted Positions
Staffing levels are inconsistent and fluctuate significantly 67 Purchasing Division Staffing
Strategic Procurement Team StaffingTactical Procurement Team Staffing
4.69 6.81 6.81
4.40 6.94
3.0 4.0
3.0 5.2
4.7 2.1
4.1 3.3
5.1 6.1
5.3 7.8*
The Strategic Procurement team is at its highest staffing level since the creation of the Strategic Project Log. One of the current positions is an overstrength position and is only budgeted through the end of the current fiscal year
With two recent departures, the Tactical Procurement team has two vacant positions that were only filled recently. Once the two new team members are onboarded, the Tactical Procurement team should be back up to roughly 6 FTEs.
Note: The budgeted positions calculation does not include 1 Program Manager, 1 Department IT Manager, and 1 Deputy Director, who all provide oversight and management of the Purchasing Division. Time spent by Division management actioning procurements is factored into the total staff capacity calculations.
May 10, 2022
68 Staffing Model
Current staffing model does not provide strong customer support Purchasing Division staff are assigned requisitions based on commodity codes. The goal of this model is to allow staff to easily identify trends and group procurements accordingly. This model is effective at helping Purchasing staff identify opportunities to group department requests, avoiding multiple solicitations. However, the model does not allow staff to fully understand the unique needs of individual departments. City departments have expressed concern with the lack of a contact within Purchasing that is knowledgeable of their department’s needs, or City staff are unsure who to contact for procurement-related questions.
Requisition Vetting
Decision Making
Prioritization Assignment
Department Requisitions
Parks, Recreation, & Neighborhood Services
Fire Department
Airport
Police Department
Environmental Services
Planning, Building, & Code Enforcement
Assignments
Vehicles
Plumbing
Automotive Parts
Office Products
IT
Computers
Landscaping
Janitorial
May 10, 2022
Implications
• Purchasing processes that were designed to minimize risk, are not adhered to and could result in the
mismanagement of purchases and rogue spending.
• During interviews, City staff indicated they were unaware of the correct process, often follow the path of least
resistance, and not fully aware of downstream impacts.
• “On the job” training and knowledge transfer is often conducted with minimal procedural documentation or
formal training. This can result in inconsistent practices and longer onboarding times for staff. Additionally,
undocumented procedures run the risk of being lost during staff transition or attrition.
• Staff who do not receive adequate training learn through “trial and error” which introduces risk to the organization and can contribute to attrition.
69 Training and Knowledge Transfer
Observations
• Departments have inconsistent procurement management
structures, which extends to staff training, documentation creation, and procurement oversight.
• There is no centralized location for departments to share best practices and lessons learned.
• The Purchasing Division does not have insight into
department-led procurement procedures and training
practices.
• Procedural training for procurements is available via the Purchasing Division’s intranet but some City departments are unaware that it exists or do not find it valuable.
• Some City departments indicated that instructor-led
training, when provided by Purchasing, was valuable but not all departments were able to participate.
Inconsistent or lack of training practices introduces risk Consistent training and documentation practices are lacking in several City departments resulting in mixed levels of success ranging from pockets of subject matter expertise to rogue spending. Additionally, staff have indicated a desire for consistent training and a centralized procurement repository that is written in laymen terms.
May 10, 2022
70 Next Steps
Envisioning the future of procurement in
San José
May 10, 2022
71 Our Timeline
What we’ve done and what we plan to do
Project Kick-off
Initiate the project,
develop project kick-off
deck, and meet with the
City to better understand
the reason for the
assessment
Procurement
Effectiveness
Interviews
Interview City staff to
understand strengths,
weaknesses, and pain
points of current
processes
Process, Tools,
and Technology
Review
Review the City’s current
process, tools, and
technology used to action
procurements
Visioning
Sessions
Engage with City
leadership and key
stakeholders to envision
the future of procurement
in San José
Future State
Development
Develop future state
recommendations based
on the Current State
Assessment and the
visioning sessions
Current State
Assessment
Development
Develop a Current State
Assessment cataloguing
our findings from the
interviews, process tools,
and technology review,
and peer City research
Workload
Modeling
Model the Division’s
current workload to
determine optimal staffing
levels and develop
staffing recommendations
Phase 1 (Completed) Phase 2 (In Progress) Phase 3 (Upcoming) October 2021 – November 2021 December 2021 – January 2022 February 2022 – March 2022 Current Step
May 10, 2022
An opportunity to envision the future of procurement in San José 72 Visioning Sessions
Tuesday, Jan 18th Wednesday, Jan 19th Thursday, Jan 20th Friday, Jan 21st Monday, Jan 24th Opening and Goal Setting IT Procurements Customer Deep-dive Procurement Innovation Conclusion Agenda Items:
• Introduction
• Purpose of the assessment
• Assessment timeline
• Current state overview
• Goals for the sessions
• Mission statement exercise
Agenda Items:
• Current state IT deep-dive
• Aligning the IT procurement process
• Process efficiency discussion
Agenda Items:
• Current state feedback
• Customer/stakeholder support and
training
• Grants and emergency
procurements discussion
• Equitable procurement
considerations
Agenda Items:
• Aligning procurement with the City
Roadmap
• Procurement Prioritization Board
process discussion
• Opportunities for innovative
approaches to procurement
• Timelines and priorities
Agenda Items:
• Key takeaways
• Mission statement revisions
• Key performance indicators
discussion
• Governance model design
• Next steps
Proposed Attendees:
Julia Cooper, Luz Cofresi-Howe,
Jennifer Cheng, Jessica Lowry, and
Sarah Zarate
Proposed Attendees:
Jennifer Cheng, Vickie Davis, Rob
Lloyd, Stephanie Frank, Judi Torrico,
Ho Nguyen, and Matt Loesch
Proposed Attendees:
Jennifer Cheng, Bernie Reyes, Vickie
Davis, Lisa Watt, Fletcher Barnes,
Sabrina Parra, Lauren Profeit, David
Mesa, Rachel Ramirez, Ann
Grabowski, Bob Lockhart, Lauri
Yarwasky, Walter Lin, Jessica Lowry,
and Sarah Zarate
Proposed Attendees:
Luz Cofresi-Howe, Jennifer Cheng,
Vickie Davis, Rob Lloyd, Dolan
Beckel, Jessica Lowry, Sarah Zarate,
and Collin Lopes (Guidehouse)
Proposed Attendees:
Julia Cooper, Luz Cofresi-Howe,
Jennifer Cheng, Jessica Lowry, and
Sarah Zarate
Examples from Previous Visioning Sessions:
May 10, 2022
This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. 73 Your Guides
Collin Lopes
Partner
[email protected]
(916) 549-7393
Berry Lefler
Managing Consultant
[email protected]
(916) 631-3226
Blake Brooks
Senior Consultant
[email protected]
(301) 807-0441
Ryan Levy
Consultant
[email protected]
(307) 413-7933
May 10, 2022
74 Appendix
Additional information relevant to the
Current State Assessment
May 10, 2022
75 Model Assumptions
For both the Tactical and Strategic
Procurement Teams
Workload Modeling
May 10, 2022
76 Tactical Procurement Model Assumptions
We made limited assumptions to ensure an accurate model Model Assumptions:
1 2
3 4
5 All staff work 5 hours of weekly overtime in June and July to accommodate open season. Additionally, a Buyer III worked 50hrs per week from May 2021 through November 2021.
All new staff require 6 months to be fully onboarded and achieve full output.
The Tactical Procurement Team will not begin working on requisitions for the next fiscal year until they have fully worked through that year’s backlog.
Department IT Manager dedicates at most 2.5hrs per week to activities associated with the Tactical Procurement
Team. Similarly, for the time they are working as the
technology buyer, a Senior Analyst will dedicate at most 5hrs a week to tactical procurement activities.
The Tactical Procurement Team cancels all outstanding
requisitions at the end of the fiscal year. Of the canceled requisitions, half will be reentered as they are for critical goods or services.
6The number of requisitions the Tactical Procurement Team receives in a month remains consistent with previous years.
May 10, 2022
77 Strategic Procurement Model Assumptions
We made limited assumptions to ensure an accurate model Model Assumptions:
1 2
3 4
5 All team members on the Strategic Procurement Team work a standard 40hr work week.
All new staff require 6 months to be fully onboarded and achieve full output.
The Department IT Manager dedicates 2/3 of their time to tasks directly associated with the Strategic Procurement Team. The Deputy Director dedicates 1/8 of their time.
Analysts and senior analysts are equally productive and can be treated interchangeably for the purposes of
estimating workload.
All projects are logged in the Strategic Projects Log and the Strategic Procurement Team does not work on any
activities that are not logged.
Strategic Procurement Team
Activity
Median Workload Units to
Complete
RFP 301
RFQ 152
Option Processing 37
Unique Services Exception 18
Amendment 56
Contract 81
Department Internal 60
Unknown 36.5
Council Memo 73.5
Change Order 46
RFB 136
Vendor Notice 14
Pilot Program 67
RFI 68
Brand Name/Sole Source 129.5
Purchase Order 42
Agreement Termination 24.5
Cooperative Agreement 66
Service Order 14
Workload Assumptions:
May 10, 2022
78 Purchasing Division
Processes
For both the Tactical and Strategic
Procurement Teams
Detailed Process Diagrams
May 10, 2022
Procuring
Department
Purchasing
Division
Information
Technology
Department
79 Procurement Initiation
How departments initiate procurements
Department Initiates
Procurement
Department
Representative
Drafts Scope
IT Procurement?
OEA Review Process
ITD Review Process
No
Yes
Department
Conducts Internal
Approvals
Subject to OEA
Review?
Department
Submits
Procurement to
Purchasing
Yes
No Tactical or
Strategic?
Office of Equality
Assurance
May 10, 2022
Purchasing
Receives
Documentation
and Reviews
PPB Prioritizes
Procurement
Documentation
Complete and
Accurate?
Yes
Department
Corrects
Documentation
No
Tactical or
Strategic?
Strategic
Purchasing
Reviews Scope
Scope
Complete?
No
Department
Corrects Scope
Yes
Purchasing Works
to Build Bid
Package
Yes RFx Released on
Biddingo
Vendors Submit
Responses
Department
Provides Needed
Information to
Complete Bid
Package
Purchasing
Completed Bid
Package
Tactical or
Strategic?
Procuring
Department
Purchasing
Division
Procurement
Prioritization
Board
Vendors
80 Procurement Drafting and Release
How the Strategic Procurement Team prepares procurements May 10, 2022
Procuring
Department
Purchasing
DivisionVendors
81 Procurement Drafting and Release
How the Tactical Procurement Team prepares procurements May 10, 2022
Purchasing
Reviews Scope
Scope
Complete?
No
Department
Corrects Scope
Yes
Purchasing Works
to Build Bid
Package
Yes RFP Released on
Biddingo
Vendors Submit
Responses
Department
Provides Needed
Information to
Complete Bid
Package
Purchasing
Completed Bid
Package
Tactical or
Strategic? Tactical
Tactical or
Strategic?
Purchasing
Reviews Scope
Procuring
Department
Purchasing
DivisionVendors
82 Bid Evaluation Process
Purchasing
Evaluates Vendor
Responses for
Responsiveness
Evaluation
Committee
Evaluates
Responses
Vendor Demos
or Interviews
Required?
Yes
Purchasing Hosts
Vendor Interviews
or Demos
Purchasing
Requests
BAFOs?
Vendors Submit
BAFO
Purchasing Issues
Notice of Intent to
Award
Yes
No
Purchasing Waits
for Protest Period
to End
Tactical or
Strategic?
Strategic
Purchasing
Develops Demo
and/or Interview
Scripts
Department
Reviews Demo
and/or Interview
Scripts
Purchasing
Develops BAFO
Template
Department
Reviews BAFO
No
Purchasing Holds
Consensus
Meeting
Bid Evaluation for the Strategic Procurement Team
May 10, 2022
83 Bid Evaluation Process
Purchasing
Evaluates Vendor
Responses for
Lowest Bid
Purchasing Issues
Notice of Intent to
Award
Purchasing Waits
for Protest Period
to End
Tactical or
Strategic? Tactical
Purchasing
Evaluates Vendor
Responses for
Lowest Bid
Purchasing
contacts
departments to
confirm bids work
Department
reviews bids to
confirm they work
Bid Evaluation for the Tactical Procurement Team
Procuring
Department
Purchasing
DivisionVendors
May 10, 2022
Selected Vendor
Submits
Documentation
Purchasing
Reviews
Documentation
Documentation
Meets
Requirements?
No
Yes
Purchasing
Negotiates
Contract with
Vendor
Vendor Responds
to Purchasing s
Contract
Both Sides
Agree to
Contract?
Yes Vendor Selected
No
Purchasing Waits
for Protest Period
to End
Purchasing Sends
Contract to
Department
Department
Reviews Contract
84 Contract Negotiation Phase
How the Purchasing Division Negotiates Contracts
Procuring
Department
Purchasing
DivisionVendor
May 10, 2022
85 Informal Procurement Process Initiation
How departments initiate the informal procurement process Procuring
Department
Purchasing
DivisionVendor
Department Initiates
Procurement
Department
Representative
Drafts Scope
Department
Conducts Internal
Approvals
Department
Conducts Outreach
to Three Vendors
Purchasing
Reviews Need for
Informal
Procurement
Use Justified?
Yes
No
Department Uses
Tactical Procurement
Guidelines
May 10, 2022
86 Informal Procurement Process Execution
How departments execute the informal procurement process Procuring
Department
Purchasing
DivisionVendor
Vendors Respond to
Department Outreach
Department Selects
Lowest Bid
Department Submits
Documentation to
Purchasing
Purchasing Reviews
to Ensure all
Documentation is
Complete and
Compliant
Documentation
Complete
No
Department Corrects
Documentation
Yes
Purchasing Issues
Purchase Order
Vendor Begins
Work
Department
Conducts Outreach
to Three Vendors
May 10, 2022
87 Peer City Procurement
Details
Thresholds, signing limits, and staffing for
other peer cities
Peer City Benchmarking
May 10, 2022
Peer cities’ procurement scope, thresholds, staffing, and KPIs 88 Peer City Comparison
Cities Analyzed:
Dallas, TX San Diego, CA San Francisco, CA Santa Clara
County, CA
Oakland, CA San Antonio, TX Austin, TX Sacramento, CA
May 10, 2022
89 City of Dallas
Key procurement information
Key Performance Indicators:
Organizational Diagram:
Signing Authority
The City Manager is authorized to approve purchases worth up to $100,000. For contract amendments, the City Manager can authorize amendments of the smaller of either $50,000 or 25% of the contract value.
Scope of Services
Dallas Procurement Services procure all services and products for the City, including construction and Public Works materials.
Staffing
The Dallas Office of Procurement Services has 22 full-time employees. The Office has 3 managers, 9 procurement specialists, 9 senior procurement specialists, and one agenda coordinator.
Purchasing Thresholds
The City of Dallas has a competitive procurement threshold of $3,000. For purchases between $3,000 and $50,000, the City uses a 3-quote informal procurement process.
Key Performance Indicator Result
Avg bids per solicitation 5
Dept. completion rate of Dallas
Contracting Officer Representative
program
75%
Pct of contracts renewed before expiration 90%
Pct of spend captured on contract 95%
Pct of reprography completed within 3
business days
98%
Customer satisfaction rate 90%
May 10, 2022
90 City of San Diego
Key procurement information
Key Performance Indicators:
Organizational Diagram:
Signing Authority
The Director of Purchasing and Contracting is authorized to sign contracts worth up to $3,000,000 for goods and services and contracts up to $250,000 for consulting services.
Scope of Services
The Purchasing and Contracts Division is responsible for procuring all goods and services for the City, except for construction and engineering-related goods or services.
Staffing
The San Diego Purchasing and Contracting Division is headed by a deputy director and has 32 budgeted employees with 10 full-time purchasing specialists.
Purchasing Thresholds
The City of San Diego has a competitive procurement threshold of $25,000. For purchases between $25,000 and $150,000, the City utilizes an informal procurement process involving between three to five quotes from vendors.
Key Performance Indicator Result
Avg. days to award a contract 66 days
Pct of contracts awarded to SLBEs 20%
Pct of on-line Quick Copy requests
processed for production within 1 day
92%
Pct of POs processed within 10 days 88%
May 10, 2022
91 City of San Diego
Key procurement information
Organizational Diagram:
Purchasing and
Contracts Division
May 10, 2022
92 City of San Francisco
• Develop and implement new policies for reviewing
Chapter 6 awards by DPW.
• Develop an online contract database.
• Digitize Citywide “Pre-contract” Approval through
ServiceNow & PeopleSoft.
• Digitize 12X & 12T Waiver process using ServiceNow.
• Complete development of new OCA templates for
solicitations and contracting.
• Launch and train departments on how to use the new
Prop Q Checklist.
• Update internal TC/Procurement Manual.
Key Performance Goals:
Organizational Diagram:
Signing Authority
The City Administrator is authorized to sign contracts up to $100,000.
Scope of Services
The Office of Contract Administration is responsible for purchasing commodities and services not related to public works and real estate.
Staffing
The Office of Contact administration has 47 full-time employees (including vacancies). The Office is organized into 10 teams, each headed by a supervising purchaser or an administrative analyst.
Purchasing Thresholds
The City has a competitive procurement threshold of $10,000. For commodity and professional services procurements between $10,000 and $129,000 and below $706,000 for general services, the City utilizes on an informal procurement process.
RED
UNFILLED
1119574
953
Dep Dir III
Ex Cat: 6
Jessica Denise Leslie
1115198
1822
Administrative Analyst
TX'd 1952 Ex Cat: 18
Sailaja Kurella
1111513
932
Manager IV/Acting Dir.
Ex Cat: 1
Carolyn Sladnick
1103677
1958
Supervising Purchaser
TX'd 1825
Abnous Fard
1100408
1956
Senior Purchaser
Evan Magante
1102193
1956
Senior Purchaser
Arthur Marcelo
1131626
1952
Purchaser
APPROVED
1102192
1823
Senior Administrative Analyst
TX'd 1956
Kristoffer Fernando
1134185
1823
Senior Administrative Analyst
TEMP Ex Cat: 16
Shawn Peeters
1071033
1958
Supervising Purchaser
Gloria Gill
1071007
1952
Purchaser
Hermilo Rodis
1096937
1956
Senior Purchaser
Mark Farley
1071025
1958
Supervising Purchaser
Gloria Yuen
1105987
1952
Purchaser
Daniel Sanchez
1144729
1824
Pr Administrative Analyst
APPROVED
1071006
1822
Administrative Analyst
TX'd 1952
Lee Laxamana
1127363
1822
Administrative Analyst
TEMP Ex Cat: 16
UNFILLED
1123484
1823
Senior Administrative Analyst
TX'd 1956
Florence Kyaun
1131643
1824
Pr Administrative Analyst
Shawnee Tang
1109666
1840
Junior Management Assistant
Howard Tevelson
1133257
1956
Senior Purchaser
TEMP Prop F
APPROVED
1122262
1952
Purchaser
TX'd 1956
Stacey Lo
1115329
1824
Pr Administrative Analyst
Romeo Alberto Jr
1103616
1952
Purchaser
Erica Baker
1105847
1952
Purchaser
Drake Herrador
1131625
1952
Purchaser
TX'd 1823
Taraneh Moayed
1123482
932
Manager IV
Ex Cat: 1
Linda Repola
1071032
1958
Supervising Purchaser
Jose Cano
1103619
1823
Senior Administrative Analyst
TX'd 1956 Ex Cat: 18
Victoria Falcon
1071011
1952
Purchaser
Concepcion Dantes
1070999
1408
Principal Clerk
TX'd 1446 Ex Cat: 18
Richelle Valencia
1108363
1406
Senior Clerk
TX'd 1426
William Gainey
1131644
1958
Supervising Purchaser
UNFILLED
1109468
1404
Clerk
TX'd 1426
Galen Leung
1112619
1958
Supervising Purchaser
Maria Sio
1071026
1956
Senior Purchaser
Gwendolyn Williams
1096936
1956
Senior Purchaser
Deborah Wells
1131868
1952
Purchaser
UNFILLED
1096708
1958
Supervising Purchaser
Prop F
Paul Cheng
1115292
1823
Senior Administrative Analyst
TX'd 1956
Iliana Gonzalez Merino
1070992
1950
Assistant Purchaser
Ex Cat: 18
APPROVED
1123483
1824
Principal Administrative Analyst
TX'd 1956
Jonathan Jew
1131627
1952
Purchaser
Norman Liang
1120880
1952
Purchaser
Diane Handa
1103618
1952
Purchaser
Carmen Omran
1102195
1952
Purchaser
Omar Sanchez
1079690
1952
Purchaser
Key procurement information
May 10, 2022
93 City of San Francisco
Key procurement information
Organizational Diagram:
RED
UNFILLED
1119574
953
Dep Dir III
Ex Cat: 6
Jessica Denise Leslie
1115198
1822
Administrative Analyst
TX'd 1952 Ex Cat: 18
Sailaja Kurella
1111513
932
Manager IV/Acting Dir.
Ex Cat: 1
Carolyn Sladnick
1103677
1958
Supervising Purchaser
TX'd 1825
Abnous Fard
1100408
1956
Senior Purchaser
Evan Magante
1102193
1956
Senior Purchaser
Arthur Marcelo
1131626
1952
Purchaser
APPROVED
1102192
1823
Senior Administrative Analyst
TX'd 1956
Kristoffer Fernando
1134185
1823
Senior Administrative Analyst
TEMP Ex Cat: 16
Shawn Peeters
1071033
1958
Supervising Purchaser
Gloria Gill
1071007
1952
Purchaser
Hermilo Rodis
1096937
1956
Senior Purchaser
Mark Farley
1071025
1958
Supervising Purchaser
Gloria Yuen
1105987
1952
Purchaser
Daniel Sanchez
1144729
1824
Pr Administrative Analyst
APPROVED
1071006
1822
Administrative Analyst
TX'd 1952
Lee Laxamana
1127363
1822
Administrative Analyst
TEMP Ex Cat: 16
UNFILLED
1123484
1823
Senior Administrative Analyst
TX'd 1956
Florence Kyaun
1131643
1824
Pr Administrative Analyst
Shawnee Tang
1109666
1840
Junior Management Assistant
Howard Tevelson
1133257
1956
Senior Purchaser
TEMP Prop F
APPROVED
1122262
1952
Purchaser
TX'd 1956
Stacey Lo
1115329
1824
Pr Administrative Analyst
Romeo Alberto Jr
1103616
1952
Purchaser
Erica Baker
1105847
1952
Purchaser
Drake Herrador
1131625
1952
Purchaser
TX'd 1823
Taraneh Moayed
1123482
932
Manager IV
Ex Cat: 1
Linda Repola
1071032
1958
Supervising Purchaser
Jose Cano
1103619
1823
Senior Administrative Analyst
TX'd 1956 Ex Cat: 18
Victoria Falcon
1071011
1952
Purchaser
Concepcion Dantes
1070999
1408
Principal Clerk
TX'd 1446 Ex Cat: 18
Richelle Valencia
1108363
1406
Senior Clerk
TX'd 1426
William Gainey
1131644
1958
Supervising Purchaser
UNFILLED
1109468
1404
Clerk
TX'd 1426
Galen Leung
1112619
1958
Supervising Purchaser
Maria Sio
1071026
1956
Senior Purchaser
Gwendolyn Williams
1096936
1956
Senior Purchaser
Deborah Wells
1131868
1952
Purchaser
UNFILLED
1096708
1958
Supervising Purchaser
Prop F
Paul Cheng
1115292
1823
Senior Administrative Analyst
TX'd 1956
Iliana Gonzalez Merino
1070992
1950
Assistant Purchaser
Ex Cat: 18
APPROVED
1123483
1824
Principal Administrative Analyst
TX'd 1956
Jonathan Jew
1131627
1952
Purchaser
Norman Liang
1120880
1952
Purchaser
Diane Handa
1103618
1952
Purchaser
Carmen Omran
1102195
1952
Purchaser
Omar Sanchez
1079690
1952
Purchaser
Department Director
The department is
organized into
procurement “teams”
May 10, 2022
94 Santa Clara County
Signing Authority
The Director of Procurement is authorized to sign contracts worth up to $200,000.
Scope of Services
Except for public works and construction projects, the Santa Clara County Procurement Department is responsible for procuring all goods and services needed by the County.
Staffing
The Santa Clara County Procurement Department is budgeted for 94 full-time employees. The bulk of these positions are allocated to buyers and contract specialists.
Purchasing Thresholds
Santa Clara County has a competitive procurement threshold of $5,000 with informal procurement permitted up to $100,000 for non-professional services, and $300,000 for professional services.
Organizational Diagram:
Key procurement information
Procurement
Department
May 10, 2022
95 City of Oakland
Organizational Diagram:
Signing Authority
The Director of Purchasing and Contracts is authorized to sign contracts worth up to $250,000.
Scope of Services
The City of Oakland Procurement Department is responsible for purchasing everything for the county, except public works and construction purchases.
Staffing
The Oakland Contracts Administration Unit has 8 full-time employees. The Unit has a director, a purchasing supervisor, a senior buyer, and 5 buyers.
Purchasing Thresholds
The City of Oakland has a competitive procurement threshold of $500. For procurements between $15,000 and $50,000, the City of Oakland uses a three-quote informal bid process.
Key procurement information
May 10, 2022
96 City of San Antonio
Key Performance Indicators:
Organizational Diagram:
Signing Authority
If a procurement is accounted for in the City budget and the bids received are less than the budgeted amount, City officials may approve an execute a contract without Council approval.
Scope of Services
The San Antonio Purchasing Division procures all non-public works or construction goods and services required by the City.
Staffing
The San Antonio Office of Procurement Services has 22 full-time employees. The Office has 3 managers, 9 procurement specialists, 9 senior procurement specialists, and one agenda coordinator.
Purchasing Thresholds
The City of San Antonio has a competitive procurement threshold of $3,000. For procurements between $3,000 and $50,000, the City may elect to use an informal competitive procurement process.
Key Performance Indicator Result
Percentage of PO spend associated
with contracts.
93%
Average number of days to cycle
discretionary contracts
140
days
Percentage of print jobs completed in
three days or less
95%
Key procurement information
May 10, 2022
97 City of Austin
Key Performance Indicators:
Organizational Diagram:
Signing Authority
The Purchasing Office is authorized to make all purchase for the city up to $66,000.
This threshold increases every year based on the CPI with a base of $43,000 in 2002 dollars.
Scope of Services
The Austin Purchasing Office makes all purchases for the City except those relating to capital projects.
Staffing
The Austin Purchasing Office has 68 full-time staff across 23 different roles. The Purchasing Office is separated into procurement, contracting, and P-Card teams, with a sizable administrative support staff.
Purchasing Thresholds
The City of Austin has a competitive procurement threshold of $3,000. For procurements between $3,000 and $50,000, the City may elect to use an informal competitive procurement process.
Key Performance Indicator Resul
t
Pct of employees with certifications 19.6%
Purchases meeting sustainability guidelines $182M
# of Purchases requiring RCAs 236
Avg bids per solicitation 2.84
# of purchases by Central Purchasing Office 3,681
$ of purchases by Central Purchasing Office $1.32B
P-Card transactions without reject 96.4%
P-Card transactions signed prior to closing 99.7%
Key procurement information
May 10, 2022
98 City of Sacramento
Key Performance Indicators:
Organizational Diagram:
Signing Authority
The City Manager is authorized to sign any contract worth up to $250,000. For contracts over $250,000, the City Manager can sign amendments increasing the value of the contract between 6% and 10% depending on the contract’s value.
Scope of Services
The Office of Procurement Services is responsible for purchasing supplies and non-professional services for the City, including materials required for the maintenance or repair of any street, sewer, or water work.
Staffing
The City of Sacramento’s budget allocates funding for 7 staff within the Office of Procurement Services.
Purchasing Thresholds
The City of Sacramento has a competitive procurement threshold of $5,000. For procurements between $5,000 and $25,000, the City uses an informal three-quote competitive procurement process.
Key Performance Indicator Result
Percentage of vendors paid in 30 days 80%
Days to issue a Purchase Order 3 days
Prompt payment discounts taken $100,000
Prompt payment discounts lost $100,000
Percentage of payment discounts taken 91%
Key procurement information
May 10, 2022
99 City of Sacramento
Key procurement information
Organizational Diagram:
Procurement Services
May 10, 2022
1 City of San José
Procurement
Improvement Initiative
Future State Vision
May 10, 2022
2 Executive Summary
Within the scope of this report
Purchasing Division
City Departments
Public Works
The City of San José has a decentralized procurement model, with the Purchasing Division maintaining responsibility for all non-consulting and non-public works procurements.
The Purchasing Division is responsible for procuring goods and services not covered by other two procurement
processes, along with administering the P-Card program.
City departments are responsible for procuring all consulting services. Additionally, departments may run procurements for Purchasing at Purchasing’s request.
The Public Works Department is responsible for
procurements relating to public works projects, including the construction, improvement, or demolition of structures. • Number of Procurement Staff: 15 Staff
• Oversight Authority: Finance Department
• Contracting Responsibility: Negotiates Contracts
• Number of Yearly Procurements: 89 RFxs & 2,054 POs
• Total Value of Procurements: $450 Million
• Number of Procurement Staff: Staffing Varies by Department • Oversight Authority: City Manager’s Office
• Contracting Responsibility: City Attorney’s Office
• Number of Yearly Procurements: 205 Contracts & 620 Adjustments • Total Value of Procurements: $169 Million
• Number of Procurement Staff: 3 Staff (1 of 3 Positions is Open) • Oversight Authority: Director of Public Works
• Contracting Responsibility: City Attorney’s Office
• Number of Yearly Procurements: 78 RFxs
• Total Value of Procurements: $151 Million
May 10, 2022
Note: Due to data limitations, data for the Purchasing Division and Public Works is based on FY2021, whereas the City Departments data utilizes calendar year 2021.
The City of San José has three different procurement processes Low Competitive Procurement Threshold ($10K)
3 Executive Summary
The current state of procurement within the City of San José Current State Context:
The City's 2016 Smart City Vision identified streamlining procurement processes as a critical element of the City's innovation strategy. In response to growing demand for City procurement services, the City launched a procurement improvement initiative in 2018, seeking to streamline procurement processes to help departments secure goods and services more efficiently and standardize procurement processes.
The Coronavirus Pandemic exacerbated the existing situation, delaying procurements and saddling the City’s Purchasing Division with a three-month backlog. The City Council approved procurement Improvement as a City Roadmap priority in March of 2021. An October 2021 memo issued by the Mayor's Office directed the Finance Department to report back to the Smart Cities and Service Improvement Committee and City Council on procurement improvement recommendations and strategies..
Procurement Delays
High Turnover
Understaffed
Onboarding & Training
Customer Education
Missing Oversight
Obscure
Lack of Defined Processes
Disparate Processes
Lack of Process Transparency
Outdated Technology
Lack of KPI Tracking
No Automation
CMO Contract Authority
Difficult to Implement Policies
Limited Ability to Leverage Cooperative Agreements
Lack of Long-term Plan to Resolve
Risk of Department Shutdowns
No Plan to Address Surges (Open Season)
Risk of Purchasing Staff Burnout
Chart Key
- Purchasing-managed
- Department-led
People Process Technology
Policies Backlog
Current State Assessment Key Themes
The City of San José’s procurement challenges fall into five main categories, including people, process, technology, policies, and backlog. While many challenges span the Purchasing Division-managed and department-led processes, certain challenges are unique to a specific process (e.g., backlog).
Current Procurement Challenges:
May 10, 2022
4 Executive Summary
A shared future vision for procurement within San José
Provide consultative procurement
expertise to departments as they
navigate the procurement process
Core Procurement Components
Mission
Act as stewards of public funds by
ensuring the City spends money in
a manner that safeguards the best
value to the City
Decrease procurement processing
times to allow departments to
obtain needed goods and services
in a timely manner
Develop a vendor pool that
represents the diversity of San
José’s businesses and residents
Serve as a strategic procurement
resource during the planning and
execution of City Roadmap
initiatives
Goals
Objectives
Procurement Processing
Times
Develop a Representative
Vendor Pool
Ensure the Efficient Use
of City Funds
Support the City RoadmapAssist City Staff 53 41 2
As stewards of public funds, the City of San José facilitates a transparent, competitive process that responsibly, equitably,and efficiently procures goods and services at the best value for the City.
1. Decrease time to process
purchase orders
2. Decrease procurement
dwell times
3. Decrease procurement lead
times
4. Leverage technology to
increase staff productivity
5. Track time spent
negotiating agreements
1. Improve vendor customer
service
2. Increase equity throughout
the procurement process
3. Track core vendor
participation metrics
4. Develop new vendor
outreach practices
5. Examine relaxing policies
and practices to improve
vendor participation
1. Ensure the City receives
the best possible value
2. Increase P-Card
compliance
3. Identify spend consolidation
opportunities
4. Develop a compliance
scoring methodology
5. Leverage technology
solutions to improve
compliance
1. Ensure that City staff have
the support they need
2. Transition Purchasing to a
consultative model
3. Centralize consulting
services procurements
4. Develop procurement tools
and trainings
5. Effective triaging of
procurement requests
1. Include the Purchasing
Division earlier
2. Align Purchasing Division
staffing to City Roadmap
3. Leverage outcome-based
procurements
4. Reduce resistance to
involving Purchasing
5. Develop clear procurement
escalation pathways
May 10, 2022
5 Executive Summary
Positioning procurement to maximize value within the City Key Future State Recommendations:
Transitioning the Purchasing Division to a new staffing model focused on close collaboration with customer departments, while increasing the Purchasing Division’s staff to reduce backlog and improve oversightStaffing Leveraging an outcome-based procurement process that positions the Purchasing Division as a strategic advisor for procurement throughout the City, while working to increase oversight of the consulting services procurement process Procurement
Consistency
Implementing changes to policies and practices to streamline procurement within the City and building a review process to regularly update Title 4 of the City’s Municipal Code to meet the needs of a continuously innovating city Procurement
Streamlining
Developing comprehensive, broadly available training for various stakeholder groups (e.g., Purchasing Division staff, procurement stakeholders, procurement customers) that is attuned to the unique needs of each stakeholder groupTraining Using technology to automate key performance indicator tracking and unlock additional efficiencies through automating time intensive procurement processesTechnology
Assessed Importance
The future state recommendations are centered around five pillars. Each pillar represents a key component of developing and refining the City’s procurement processes. Full details and recommendations are available in the corresponding section of the Future State Vision.
Future State Recommendations:
Project Context:
The Procurement Future State Report provides a modernized vision of procurement within the City of San José. The goal is to create a procurement process that is agile, responsive to the needs of customers, compliant with all City policies, and furthers San José’s goal of being the most innovative City in the United States. Driven by input from over seventy City staff members, direction from City leadership, a comprehensive current state assessment, and visioning sessions, the future state vision aims to be actionable and implementable. The future state vision will come to fruition through a focus on centralizing procurement processes, staff, and leadership within the areas of the City with specific subject matter expertise.
May 10, 2022
6 Executive Summary
Assessment objectives and overview
Assessment Objectives:
Execute Stakeholder Interviews
Facilitate Visioning Sessions
Complete Leading Practices Research
The Procurement Improvement Assessment aims to:
• Develop a clear mission and goals with significant buy-in from key procurement stakeholders throughout the City (e.g., Purchasing Division, City Manager’s Office) • Reposition the Purchasing Division as a strategic partner for departments and City leadership in achieving procurement-related goals
• Ensure that the Purchasing Division and other teams within the City have the staffing, technological, and educational resources needed to effectively action procurements • Reduce procurement-related risks through sufficient training and transparent procurement processes
Gain Understanding of San José’s Needs
Peer City Comparisons
Assessment Overview:
Phase 1: Project Initiation Phase 2: Current State Assessment Phase 3: Future State Recommendations The Assessment Team spent twenty weeks working with key City stakeholders, including the Purchasing Division, City Manager’s Office, procurement customers, and City leadership, to identify challenges with procurement processes, develop a shared future vision of procurement within San José, and develop a prioritized list of implementable recommendations to help advance procurement within the City. • Project Kickoff – The Assessment Team oriented itself, met key City staff members, and began developing the
infrastructure to conduct the assessment
• Staff Interviews – To better understand the strengths, weaknesses, and areas for improvement within the
City’s current procurement practices, the Assessment
Team interviewed seventy-six City staff members over
seven weeks
• Workload Modeling – The Assessment Team modeled
the Purchasing Division’s workload to determine the
adequacy of the Division’s staffing levels
• Process, Tools, and Technology Review – To
understand the procurement resources available, the
Assessment Team reviewed procurement -related
processes, tools, and technology
• Current State Assessment: To summarize their
findings, the Assessment Team drafted a Current State
Assessment
• Visioning Sessions – Involving over twenty
procurement stakeholders from throughout the City, the
visioning sessions were an opportunity to build a shared vision for the future of procurement within San José
• Future State Recommendations & Implementation
Guide – The Future State Recommendations and
Implementation Guide outline how the City can progress
from its current state to achieve the shared future vision developed during the visioning sessions
May 10, 2022
7 May 10, 2022 7
Table of Contents
Executive Summary 2
Background 8
Future State Vision 16
Staffing 21
Procurement Consistency 38
Procurement Streamlining 50
Training 58
Technology 68
Implementation Guide 76
Appendix 82
8 Background
Why is procurement important to San José?
May 10, 2022
9 Why Conduct this Assessment
Every modern, innovative City is supported by an effective, efficient, and compliant procurement organization.
San José’s Smart City Vision sets an ambitious goal of being the most innovative city in America. The vision, centered around three innovation principles, lays out an agenda of over 133 projects. Almost all these projects require some form of procurement, meaning San José cannot achieve its innovation objectives without an effective procurement function. As such, an assessment of the City’s procurement processes, both department-led and Purchasing-managed, is a core element of the City’s Roadmap.
May 10, 2022
To fuel innovation within the City
To help execute on City Roadmap initiatives
10 Why Conduct this Assessment
Enterprise Priority
COVID-19 Pandemic: Community +
Economic Recovery
Emergency Management +
Preparedness
Creating Housing + Preventing
Homelessness
Safe, Vibrant, and Inclusive
Neighborhoods and Public Life
Building the San José of Tomorrow
Smart, Sustainable, and Reliable
Infrastructure
Project Strategy
Housing
Stabilization
Re-Employ ment
+ Workf orce
Dev elopment
Small Business
Recov ery
Food +
Necessities
Distribution
Digital Equity Child Care
Policy
Build Back
Better Task
Force
Vaccination
Task Force
Emergency
Housing +
Construction
Sheltering +
Encampment
Serv ices
Police Ref orms
Work Plan
San José 311 +
Serv ice
Deliv ery
Encampment
Waste Pick -Up
Vision Zero
Traf f ic Saf ety
Align Zoning
with General
Plan
Dev elopment
Serv ices
Transf ormation
Google
Dev elopment
Real Estate
Dev elopment
Projects
Pav ement, Fire,
EOC, Transit
Capital
Improv ements
Wastewater
Facility Capital
Improv ements
Electrical
Serv ice f or
Major
Dev elopment
Climate Smart
American Cities
Climate
Challenge
Equity Strategy
Dev elopment
Neighborhood
Serv ices
Access
Strategy
North San José
Strategy
BART + High -
Speed Rail
Strategy
Lowering PG&E
Abov e Market
Costs f or Clean
Energy
Sof t-Story
Retrof it Policy
Encampment
Management +
Relocation
Policy
Foundational Enterprise Priority Project Strategy Policy Strategic Fiscal Positioning +
Resource Deployment
Powered by People
Continuity of
City Serv ices Saf e Workplace
Employ ee
Health +
Wellness
Driv e to Digital Ef f ective Teams
Budgeting f or
Equity
City Roadmap
Budgeting,
Accountability ,
& Perf ormance
City Workf orce
Div ersity + Skill
Building
Federal + State
Recov ery
Adv ocacy
Secure City
Cy bersecurity
Procurement
Improv ement
Pension
Obligation Bond
Analy sis
Key: Likely involves
procurement
Procurement is central to the City’s ability to execute on City Roadmap initiatives. 71% of City Roadmap initiatives likely involve one or more procurements.
May 10, 2022
11 Why Conduct this Assessment
The City Auditor conducted audits of the City’s department-led procurement process in 2013, 2017, and 2019 and there are unresolved audit findings stemming from those audits.
Audit Findings Include:
Minimize Exceptions to Competitive Procurement Improved Monitoring of Consulting Contracts Clarification of Transparency and Ethics Policies
The City Auditor identified inappropriate exceptions to the City’s competitive procurement rules, including abuse of the unique services provision. The Auditor recommended
increased oversight of the consulting services procurement process.
Per the City Auditor, the City’s oversight of consulting services contracts is inadequate, with departments changing
deliverables, contract terms, and payment schedules without following the proper processes. Additionally, some
departments were overpaying vendors for their services.
Given the myriad of state and local laws that govern
consulting agreements, City departments could do a better job of ensuring consultants comply with all applicable
transparency and ethics legislation. This will help increase oversight of all consulting procurements and contracts.
Improved Cost Controls for Consulting Contracts
When procuring consultants, there is an opportunity for City departments to improve their cost controls to ensure the City is receiving the best value possible. The City Auditor found instances where consultants were providing services without fixed hourly billing rates.
May 10, 2022
To mitigate audit findings
12 The Purchasing Division Today
The Purchasing Division is responsible for processing all procurements that are not consulting services or public works-related. The Purchasing Division also administers the City’s P -Card program and oversees contract negotiations with vendors. Separated into two teams, the Purchasing Division processes roughly 89 RFPs and 2,054 purchase orders annually.
Strategic Procurement Team
Tactical Procurement Team
The 8 team members of the Strategic Procurement
Team are responsible for all evaluative procurements,
IT-related purchases, contract amendments, and other
complex procurement matters.
The 6 team members of the Tactical Procurement Team
are responsible for non-evaluative procurements,
requisitions processing, and encumbrance increases.
The Tactical Team keeps the City running by ensuring
common supplies are regularly purchased.
Mission and Goals
Prior to this assessment, the Purchasing Division
lacked a clearly defined mission and goals. City staff
believe the Division’s mission is to procure goods and
services for the City in a cost effective, compliant
manner.
Impact of the Municipal Code
The Purchasing Division and the procurement process
it administers are governed by Chapter 4, Title 12 of
the Municipal Code. Given the importance of
procurement, the Code lays out exacting standards the
Purchasing Division must meet.
May 10, 2022
The City’s procurement powerhouse
13 The Purchasing Division Today
Deputy Director
Program ManagerDepartment IT
Manager
Buyer III
Buyer IIBuyer II
Buyer II
Buyer III
Buyer II
Senior Analyst
Senior Analyst
Senior Analyst Analyst I
Analyst II
Analyst II
(Overstrength)
P-Card Administrator
Strategic Procurement Team Tactical Procurement Team
The Purchasing Division is organized into two teams, Tactical Procurement and Strategic Procurement, which are distinguished by the types of procurement they conduct (e.g., evaluative, non-evaluative, purchase orders, IT purchases). Both teams are supervised by a Deputy Director, who reports to Finance Department leadership.
May 10, 2022
Division staffing and structure
Purchasing Division Structure:
Senior Analyst
14 The Consulting Services Procurement Process
Within the City of San José, consulting services procurements are decentralized. With the oversight of the City Manager’s Office, individual departments are responsible for procuring the consulting services necessary to meet their specific needs. Within the 2021 calendar year, there were 205 consulting services contracts signed and 620 contract adjustments, with an expected total value of $169M.
Limited Oversight
Departmental Expertise
Due to the decentralized nature of consulting
procurements and the absence of the Purchasing
Division from the process, the City Manager’s Office is only able to provide limited oversight to ensure
departments comply with applicable policies.
The decentralized procurement process gives
departments a significant degree of control to procure
the exact consulting services needed. It also allows
them the freedom to potentially adapt the procurement
process to meet their needs.
Disparate Documentation
There is limited process documentation for the
consulting procurement process. Instead, various City
departments have independently created needed
documentation, without verifying the process with the
City Manager’s Office.
Impact of the Municipal Code
Like with the Purchasing Division, the City’s Municipal Code outlines strict requirements departments must
follow to ensure they are procuring consulting services in a manner that is cost effective and delivers
maximum value to the citizens of San José.
May 10, 2022
Specialty services for specialized needs
Purchasing Division
15 The Consulting Services Procurement Process
Process and oversight structure
May 10, 2022
While the City Manager’s Office is responsible for providing oversight of the consulting services procurement process, individual departments are tasked with compliantly procuring the consulting services they need. Departments are also responsible for creating any instructional guides or other resources needed to correctly execute the procurement process.
Consulting Services Procurement Structure:
City Leadership
City Manager’s Office
Process
Oversight
Process
Support
Airport Budget Office Office of Civic
Innovation
Office of
Communications
Office of Cultural
Affairs
San José Clean
Energy
Office of
Economic
Development
Office of
Emergency
Management
Office of
Employee
Relations
Environmental
Services
Department
Finance
DepartmentEvent Services
Fire Department Housing
Department
Human
Resources
Department
Information
Technology
Department
Parks, Recreation,
& Neighborhood
Services
Library
Department
Planning,
Building, & Code
Enforcement
Police
Department
Policy and
Intergovernmental
Services
Public Works
Department
Department of
Transportation
Office of Racial
Equity
Process
Execution
16 Future State Vision
Improving procurement within San José
May 10, 2022
17 Mission Statement in Practice
The implementation of San José’s future state procurement vision Purchasing Division City Manager’s Office
• The Purchasing Division is
appropriately staffed
• The Division’s staffing
model allows for close
coordination with customer
departments
• The Division leverages
technological tools to
unlock efficiencies
• Purchasing Division staff
are well supported
City Departments Vendors City Residents
• Departments get needed
goods and services in a
timely manner
• Purchasing is attuned to
department needs and
collaborates to find best
value procurement
solutions
• There are designated
procurement resources
departments can leverage
for support
• Consulting procurements
are centralized with the
Purchasing Division
• The City Manager’s Office
helps set the strategic
direction for procurement
within San José
• The City Manager’s signing
authority is reviewed and
updated regularly
• Vendors participate in a
transparent and fair
procurement process that
ensures the best value for
the City
• The City attracts a wide
breadth of vendors that
represent San José’s
diverse economy and
population
• Local Business Enterprises
(LBEs) and Small Business
Enterprises (SBEs) are well
represented in the process
• The procurement process
allows the City to deliver
exceptional services to City
residents, with a focus on
customer service
• Procurement professionals
act as stewards of public
funds
• Procurement processes
are compliant and have
sufficient oversight
Procurement Mission Statement: As stewards of public funds, the City of San José facilitates a transparent, competitive process that responsibly, equitably, and efficiently procures goods and services at the best value for the City.
May 10, 2022
The Future of Procurement in San José:
18 Consulting Procurement Collaboration
Procurement within San José is a collaborative process
No single department or division can meet the City of San José’s procurement needs. While the Purchasing Division is the City’s subject matter expert and plays a critical role in designing procurement processes, other departments are essential for ensuring the City can procure the goods and services it requires.
Police
Department
City Manager’s
Office
Fire Department
Information
Technology
Finance
Department
Compliant Consulting Services
Procurements
Effective Oversight and Defined Rules and Processes
City Clerks
Office
Purchasing Division’s Responsibility
Departments can only run compliant, effective consulting procurements if they are building upon a solid foundation of oversight, defined processes, and clearly communicated rules maintained by the Purchasing Division. While the process may be decentralized, it is highly collaborative in nature.
Although the Purchasing Division is not responsible for directly managing the department-led procurement process, the Division’s subject matter expertise makes it ideally positioned to assist with providing oversight and administering the process.
Note: City departments and offices listed are examples of departments that may use Consulting Services Example Procuring Departments
Desired Outcome
May 10, 2022
19 Consulting Services Procurement Centralization
Centralization occurs along a spectrum
Currently, consulting procurements are decentralized within the City of San José, which introduces significant risk as processesare not standardized across the City. Moving towards a more centralized model allows the City to standardize processes and ensure consulting services are procured in a compliant manner.
Degrees of Centralization:
• Departments are responsible for procuring consulting services without oversight or throughput assistance from the Purchasing Division.
• Each department is responsible for developing the process they need to conduct consulting procurements. • The Purchasing Division provides oversight of the consulting services procurement process through spot audits, engagement with departments, and training to ensure departments are conducting compliant procurements. • Departments continue to be responsible for developing process documentation and procurement resources. • The Purchasing Division develops process documentation, procurement resources, and training materials to allow all City departments to follow a consistent process for consulting procurements. • Departments would still administer the procurement over the full duration of the procurement’s lifecycle. • As smaller City departments may lack the capacity to effectively conduct compliant consulting procurements, the Purchasing Division would provide limited consulting services procurement throughput support. • Larger departments would still be responsible for conducting consulting services procurements. • To minimize the risk of non-compliant procurements, all consulting services procurements are run by the Purchasing Division with input from City departments.
• Departments would treat consulting services procurements similarly to any non-public works procurement.
Decentralized
Procurement
Oversight
Process
Standards
Throughput
Support
Full
Centralization
Degree of Centralization
Purchasing Division Involvement
May 10, 2022
20 Recommendation Priority
Examining the City’s procurement processes holistically Each of the following subsections is designed to address a specific problem statement regarding procurement within San José. When evaluating the City’s procurement processes, the Assessment Team looked at the process holistically, including both the Purchasing Division-managed and department-led processes, along with any findings from the City Auditor. The subsections are ordered based on their perceived impact.
1 Staffing – Staffing the Purchasing Division to get City staff needed goods and services in a timely manner
The Purchasing Division lacks the staffing to effectively resolve the City’s procurement backlog in a timely manner
2 Procurement Consistency – Using the right process
to procure the right goods or services every time
Across City procurement practices, current processes are not standardized nor aligned to City goals
3 Procurement Streamlining – Streamlining
processes and policies while preserving competition
Current policies introduce procurement roadblocks and complicate processes for City staff
4 Training – Providing consistent and broadly available training for relevant stakeholder groups
The Purchasing Division lacks the staffing to effectively resolve the City’s procurement backlog in a timely manner
5 Technology – Updating the City’s procurement
technologies to streamline processes
Disparate technology complicates procurement by requiring City staff to navigate siloed documentation and outdated systems
Priority Subsection Topic Problem Statement Process
Key:
Purchasing-Managed Process Department-Led Process
May 10, 2022
21 Staffing
Staffing the Purchasing Division to get City staff
needed goods and services in a timely manner
Future State Vision
May 10, 2022
22 Purchasing Division Staffing
Getting departments needed goods and services in time
Quick Wins (1 Year)
Objective: Eliminate the backlog of requisitions
to get departments the goods and services they
need before the end of the fiscal year
Recommendations:
• Staff Augmentation – Leverage staff augmentation to clear the current requisition backlog
• Additional Staff – Hire three new buyers or analysts and convert the current overstrength analyst position to a permanent role • Develop a Competency Framework – Create a competency framework for all roles within the Purchasing Division
Medium-Term (1-2 Years)
Objective: Optimize staffing to ensure staffing levels
align with Division goals and procurement demand
from departments
Recommendations:
• Additional Analysts – Hire two new analysts or senior analysts to account for growth in IT procurements
• Demand Management and Staffing Plan – Leverage demand management and a staffing plan to staff the Purchasing Division to demand • Division Restructure – Transition the Purchasing Division to a new structure based on procurement teams, which would each be assigned to departments Long-Term (2-5 Years)
Objective: Attract new candidates from diverse
backgrounds by leveraging new recruitment and
retention strategies
Recommendations:
• Alternative Entry Buyer Program – Launch a program to recruit and train buyers that may not have a Bachelor’s Degree
• Alternative Recruitment Strategies – Consider leveraging alternative recruitment strategies to attract candidates from unconventional backgrounds
The current Purchasing Division backlog presents a challenge to departments that rely on the Purchasing Division for the to get needed goods and services within a timely manner. The recommendations below focus on eliminating the backlog.
May 10, 2022
23 Tactical Procurement Team’s Backlog
Forecasted Requisition Backlog by Month
0 100
200
300
400
500
600
700
800
Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Outstanding Requisitions
302
450
373
599
635
652
624
This chart shows the actual and forecasted number of outstanding requisitions in the Tactical Procurement Team’s backlog for each month. Once processed, the Tactical Procurement Team will convert the requisitions into purchase orders to allow City departments to acquire needed goods and services. This chart does not account for encumbrance adjustments (compensation increases and/or date extensions requested by departments) that the Tactical Procurement Team is also responsible for processing.
Forecasted
The Tactical Team’s backlog is forecasted to continue growing May 10, 2022
24 Tactical Procurement Team Workload
Requisitions processed grew by 250% over the past 11 years Requisitions Processed by Year
0 500
1000
1500
2000
2500
3000
FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 Yearly Requisitions Processed
824
1,342
758
1,175 1,221
1,145
1,529
1,945
1,930
2,427 2,467
Despite a constant staffing of six budgeted buyer positions, the Tactical Procurement Team’s output increased by an 11.59% annual growth rate over the past eleven years. Additionally, this chart does not account for encumbrance adjustments, an important component of the Tactical Procurement Team’s workload, or any requisitions that were canceled due to the procurement backlog.
May 10, 2022*Note: FY2021 excluded due to potential demand surges associated with the COVID -19 pandemic.
Staffing:
• 6.0 – Budgeted Buyer Positions
• 5.6 – Current staff capacity
measured in full-time
equivalents (FTEs)
• Before 1999 – Last time the
City added a buyer position
Throughput:
• 1,472 – Requisitions processed
in FY2021
• 12% – Annual growth rate in
requisitions between 2010 and
2020
• 569 – Average encumbrance
adjustments processed per
year
Backlog:
• 272% - Backlog measured as a
percentage of current monthly
output
25 Increasing Staffing to Meet Demand
Business Need The Tactical Procurement Team is unable to meet the demand for their services Recommendation Add three new buyer or analyst positions to prevent the development of future backlogs* Current Purchasing Division staffing is inadequate
0 50
100
150
200
250
Current Staff Capacity Budgeted Staff Capacity Adding Three Buyer Positions Requisitions Processed per Month
Staff Capacity Under Different Scenarios
129 136
205Average Monthly Requisitions Received – 203 Requisitions Due to the team’s limited staffing, the T actical Procurement T eam is unable to process the full number of requisitions they receive in a month. In part, this has helped cause the current backlog, which will continue to grow unless the City adds additional buyer positions. We recommend increasing the number of buyers from the current budgeted six positions to nine positions to account for current demand.
Key Statistics
May 10, 2022
*Note: Assuming the Purchasing Division transitions away from its current staffing model, adding analysts instead of buyers may be a dvantageous for the Division. Analysts have similar pay and qualifications, but their job classification allows them to complete a wider breadth of work. • All individuals added to the Purchasing Division team as staff augmentation would provide 80% of the productivity of a normal buyer as they may not be familiar with the City’s policies. • The City would manage the staff augmentation to strict productivity goals. 0 50
100
150
200
250
300
350
400
450
500
Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 May-22 Jun-22
Current Staffing Staff Augmentation
26 Leverage Staff Augmentation to Clear Backlog
Business Need Reduce the requisition backlog to get City departments needed goods and services promptly Recommendation Utilize staff augmentation to provide a short-term throughput increase for the Tactical Procurement Team Short-term backlog reduction strategy
Forecasted Requisition Backlog with Mitigation Strategies 320
380 391
450
359
420
373 386
238
101
21 Assumptions:
• Staff augmentation would involve five individuals who would begin in March and finish with the end of the fiscal year in June.
Why Use Staff Augmentation?
Staff augmentation is needed to efficiently clear out the current requisition backlog before the end of the fiscal year. If the backlog is not cleared, departments will have their requisitions canceled at the end of the fiscal year, requiring them to resubmit requests and causing delays.
May 10, 2022
27 Increasing Staffing to for Future Growth
Business Need Recently, demand for the Strategic Procurement Team’s services grew by of 13% annually, stressing the Team’s current staffing Recommendation Convert the current overstrength analyst role to a permanent role and phase in two new analyst/senior analyst positions over the next two years Adding positions to account for forecasted growth
Strategic Procurement Team Staffing Required to Meet Forecasted Demand 0 2
4 6
8 10
12 0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 Full Time Equivalents (FTEs)
Workload Units
Historic Demand Total Forecasted Demand Historic Staffing Staffing Required for Forecasted Demand Reflecting an increased emphasis on technology procurements within the City of San José, demand for the Strategic Procurement T eam’s services grew with a compound annual growth rate (CAGR) of 13% over the past seven years. In comparison, the T eam’s staffing CAGR was only 11%. Assuming demand continues to grow at the same rate, the Strategic Procurement T eam will need seven full-time analysts by FY22-23 and ten by FY25-26.
Competitive Procurements
• Requests for Proposals
• Requests for Bids
• Requests for Quotes (evaluative and
non-evaluative)
Other Procurements
• Unique Services Exemptions
• Sole Source Procurements
• Cooperative Agreements
• Requests for Information
Contract Adjustments
• New Contracts
• Contract Amendments
• Option Processing
• Change Orders
• Purchase Orders
• Service Orders
• Council Memos
Vendor Communication
• Vendor Notice
• Agreement Termination
Other Activities
• Department Internal Activities
• Pilot Programs
• Miscellaneous
Strategic Activities:
Workload Units: For the purposes of this document, workload units are equivalent to the median number of days it takes to complete a specific activity. The sum of the yearly activities completed, measured in median days per activity, constitutes an estimate of the te am’s yearly output. 7,449
13,940
23,065
17,729
29,100
22,714
4 4.8
3.6 5.7
6.4 8.2
10.5 May 10, 2022*Note: As the Strategic Procurement Team’s work becomes increasingly IT -focused, the workload required to process procurements is increasing. This effect is not captured in the graph above. 28 Effective Demand Management
Predict demand for the Purchasing Division’s services
Business Need Anticipate demand for the Purchasing Division’s services to allow them to staff up to meet the anticipated demand Recommendation Develop an effective demand management process to accurately forecast future demand Effective demand management allows an organization to plan for and anticipate changes in demand before they occur. This can allow the organization to have the staffing, supplies, and other needed resources on hand to seamlessly respond to changes, without delaying the timing of needed processes.
Demand Forecasting
Processes
Forecast
Intelligence of Upcoming Procurements
Historical Trends
Budget Documents
City Roadmap Information
Staff Capacity
Manage
Yearly Budget Request
Division Staffing
Considerations
Work Prioritization
Staff Overtime Management
Plan
Staff Performance
Management
May 10, 2022
29 Develop a Staffing Plan
Staff the Purchasing Division based on predicted demand Business Need Staffing levels within the Purchasing Division are not regularly adjusted for changes in demand Recommendation Leverage demand management to create a forward-looking staffing plan that is regularly updated By creating a staffing plan, Purchasing Division management will be able to ensure the Division is always staffed adequately,and if the Division is understaffed, management can communicate the exact resource needs to Finance Department leadership or the Budget Office.
Purchasing Division Staffing PlanDemand Management
A comprehensive understanding of the
forecasted demand for the Division’s services
Workload Modeling
Leverage quantitative modeling to better
understand the Purchasing Division’s current
and anticipated capacity
Division Goals
An understanding of what the Purchasing
Division intends to accomplish short-term
Staff Input
Input from Purchasing Division staff on current
workload, job satisfaction, and personal goals
Staffing Plan ConsiderationsUnderstanding of Short-Term Staffing Needs An effective staffing plan will leverage demand management and workload modeling to assess the short-term staffing needs of the Division.
Staffing Aligned to Purchasing Division Goals
The staffing plan represents an opportunity to regularly evaluate if the Division’s staffing supports the execution of the Division’s goals.
Communication of Roles and Responsibilities
Division staff can leverage the staffing plan to understand their roles, how they support the Division, and the objectives they are responsible for accomplishing.
Outside Stakeholder Visibility
The staffing plan can communicate the Division’s staffing needs to outside stakeholders in a manner that is clear and easily understood.
May 10, 2022
With two departures, the T actical Procurement team has two vacant positions that were only filled recently. Once the two new team members are onboarded, the T actical Procurement team should be back up to roughly 6 FTEs.
The Strategic Procurement team is at its highest staffing level since the creation of the Strategic Project Log. One of the current positions is an overstrength position and is only budgeted through the end of the current fiscal year
Note: The budgeted positions calculation does not include 1 Program Manager, 1 Department IT Manager, and 1 Deputy Director, who al l provide oversight and management of the Purchasing Division. Time spent by Division management actioning procurements is factored into the total staff capacity calcu lations.
1.0 2.0
3.0 4.0
5.0 6.0
7.0 8.0
Jul-14
Nov-14
Mar-15
Jul-15
Nov-15
Mar-16
Jul-16
Nov-16
Mar-17
Jul-17
Nov-17
Mar-18
Jul-18
Nov-18
Mar-19
Jul-19
Nov-19
Mar-20
Jul-20
Nov-20
Mar-21
Jul-21
Nov-21
Team Staffing FTEs)
Total Staff Capacity Budgeted Positions
1.0 2.0
3.0 4.0
5.0 6.0
7.0 8.0
Team Staffing (FTEs)
Total Staff Capacity Budgeted Positions
30 Purchasing Division Staffing
Strategic Procurement Team StaffingTactical Procurement Team Staffing
4.69 6.81 6.81
4.40 6.94
3.0 4.0
3.0 5.2
4.7 2.1
4.1 3.3
5.1 6.1
5.3 7.8*
While additional staff will help the Purchasing Division increase its output, it is a limited-scale fix. Unless the Purchasing Division can consistently retain staff, staffing will continue to hinder the Division’s ability to deliver on its core mission and goals.
Staffing levels are inconsistent and fluctuate significantly May 10, 2022
31 Create a Clear Path for Advancement
Give staff an understanding how to move up within the Division Business Need Staff within the Purchasing Division are not incentivized to seek advancement or add additional responsibilities Recommendation Develop a clear path for advancement across all roles and ensure it is clearly communicated to Purchasing Division staff Manager
Senior AnalystAnalyst
Buyer
Deputy Director
Time in Role
Division Management
Division Staff
To incentivize staff to remain with the Purchasing Division and take on additional responsibilities, Division management needs to outline a clear path to promotion, using a Competency Framework, for all staff. An effective Competency Framework will communicate the exact performance metrics a staff member must meet to be competitive for a new position.
Developing a Competency Framework:
Application Considerations
Mapped Career Path
The Competency Framework should outline the exact path an employee will follow to progress from an entry-level role (e.g., buyer) through to the highest possible role (e.g., Deputy Director).
Make sure minimum requirements for each job classification are communicated, along with the process of competitively applying for a new role within the Division.
Clear Performance Benchmarks
The Framework should list the expected core competencies for each position. When appropriate, these competencies should be accompanied by quantitative performance expectations.
Diagramed Responsibilities
The Competency Framework should also outline the expected responsibilities for each role, along with how the roles work together to accomplish the Purchasing Division’s mission and goals.
May 10, 2022
32 Revise Job Qualifications
Hire staff who want to make the Purchasing Division a career Business Need The Purchasing Division experiences high turnover as current staff see the Purchasing Division as a job instead of a career Recommendation Revise minimum job qualifications to hire staff that are incentivized to make the Purchasing Division a career Buyer Alternative Entry Program:
Probation Period: 6-9 Months
City of San José hires a Buyer I
w ith four years of professional
experience in lieu of a
bachelor’s degree
Buyer completes Division
onboarding
Buyer completes mandated
certifications
Assuming satisfactory
performance, buyer is released
from probation
Program Core Components:
1 Education Substitution: For Buyer I applicants, the City of San José would allow candidates to substitute four years of professional experience for a college degree. This would involve updating the Buyer 1 Job classification. 2 Probation Period: If hired, alternative entry buyers would have a six-to-nine-month probationary period. While the standard probationary period is six months, additional time may be necessary to evaluate their performance. 3 Mandated Certifications: Alternative entry buyers would be required to complete specific procurement-related certifications (e.g., CIPS Certificate in Procurement and Supply Operations) prior to the end of their probationary period. 4 Clear Performance Goals: All buyers would have clear performance goals that they must meet to be released from probation. These goals would be outlined at the time of hire and would be based on the Competency Framework.
A career in the
Purchasing
Division
Alternative Entry Buyer
Probationary Period
5 Upwards Mobility: Buyers would be eligible to progress to the Analyst I position without a college degree. Additional advancement would depend on working with unions to add an exception to the educational requirements.
Peer Cities Examples:
Seattle
Portland
Los Angeles
San Diego
Phoenix
Oakland
San Francisco
San José
Key:
Allows for Education Substitutions
Requires Bachelor’s Degree
Does not Require Secondary Education
For buyers, many peer cities will substitute
experience for a Bachelor’s Degree
May 10, 2022
33 Alternative Recruitment Pipelines
Attracting qualified applicants from new areas
Business Need The Purchasing Division struggles to attract qualified applicants for open positions Recommendation Leverage new recruiting pipelines to attract qualified candidates that would not have otherwise applied # Opportunity Overview Cost Effort to
Implement Other Considerations
1 Launch an
Internship
Program
Create a buyer intern job classification and develop an internship program for students from surrounding
universities. Upon graduation, students that completed
the internship program would be very competitive
applicants for any open positions.
Medium High
• Partnering with a local university to offer course credit would help ensure the success of an internship program.
• An internship program might require the Purchasing Division to create a new job classification for the interns.
• College internships represent a steady pipeline of qualified applicants. 2 Leverage
Funded
Apprenticeships
Launch an apprenticeship program to attract and
mentor competitive candidates from throughout the
Bay Area. Various state and federal government
entities may offer funding for apprenticeship programs
that may offset the cost of the program.
Medium High
• If funded through grants, an apprenticeship program could allow the Purchasing Division to increase its staffing at no additional cost. • 92% of apprentices continue employment after completing an apprenticeship.1 Apprenticeships represent a pipeline of loyal workers. • The Purchasing Division would need to improve training and onboarding to ensure the success of the program.
3 Procurement
Job Boards
Post openings on municipal or procurement -focused
job boards (e.g., National Association of State
Procurement Officials, Municipal Management
Association of California) to increase the visibility of opportunities for target candidates.
Low Low
• Peer cities that may pay more are likely advertising opportunities on the same sites.
• Leveraging procurement job boards is a low -effort, low-cost strategy that could significantly increase the applicant pool.
4 Develop a
Rotational
Program
To help build an understanding of the Purchasing
Division’s work, develop a rotational program where
City staff from other departments would rotate into the Purchasing Division for a limited period.
Low Medium
• There may be union or human resources considerations that prevent implementing this opportunity.
• Other departments would need to have staff available to participate in the rotational program.
• Program participants would only be able to work for a limited period. 1United States Department of Labor (apprenticeships.gov) May 10, 2022
34 Restructuring the Purchasing Division
An opportunity to structure the Purchasing Division for success Optimizing the Purchasing Division’s performance is not simply a matter of sufficiently staffing the Division. Instead, additional efficiencies may be unlocked by examining the Division’s staffing structure to ensure the Division is structured in a manner that maximizes collaboration with customer departments, enables spend consolidation opportunities, and positions Purchasing Division staff for success.
Potential Benefits of Introducing a New Staffing Model:
1 2
Enable close collaboration between customer departments and Purchasing Division staff. During visioning sessions, many Purchasing Division customers expressed a desire for designated contacts or procurement coaches within the Purchasing Division.
Increase spend consolidation opportunities, by transitioning the Purchasing Division’s structure towards a model that better positions staff to have visibility into department spending trends. 3 Enable further training of customer departments by providing them with consistent guidance, comprehensive documentation, regular trainings, and designated contacts.
4 Allow the Purchasing Division to transition away from simply owning procurement as a process and instead to providing consultative input throughout the procurement lifecycle, especially with City Roadmap projects.
Business Need The Purchasing Division’s current staffing model hinders the Division’s efforts to provide exceptional customer service Recommendation Implement an updated staffing model that allows the Purchasing Division to prioritize both customer service and spend consolidation May 10, 2022
35 Proposed Department-Oriented Staffing Model
Senior Analyst /
Procurement
Liaison
Senior Analyst /
Procurement
Liaison
Senior Analyst /
Procurement
Liaison
Senior Analyst /
Procurement
Liaison
Analyst Analyst Buyer Analyst
Oversight and Leadership
Buyer Buyer Buyer Buyer Buyer
Team 2 Team 3 Team 4 Team 5
Departments:
• ITD
• Library
Departments:
• PRNS
• PBCE
• Airport
Departments:
• Fire
• Police
Departments:
• Fleet
• Public Works
Department IT Manager Program Manager (Onboarding Manager) Consulting &
Surge
Support
Note: The assigned departments and team composition (e.g., senior analyst, analyst, buyer) are representative. Actual department assignments and team composition would be determined during implementation.
Governance Committee (Procurement Prioritization Board) Leveraging a team-based model oriented around departments Staff Specialist (P-Card Support)
Analyst
Senior Analyst /
Procurement
Liaison
Buyer
Team 1
Departments :
• CMO
• City Roadmap
Initiatives
Analyst
Senior Analyst /
Procurement
Liaison
May 10, 2022
New Staff
Senior Office Specialist (Administrative Support)
36 Proposed Commodity-Oriented Staffing Model
Senior Analyst /
Procurement
Liaison
Senior Analyst /
Procurement
Liaison
Senior Analyst /
Procurement
Liaison
Senior Analyst /
Procurement
Liaison
Analyst Analyst Buyer Analyst
Oversight and Leadership
Buyer Buyer Buyer Buyer Buyer
Team 2 Team 3 Team 4 Team 5
Commodities:
• Janitorial Services
• Pharmaceuticals
• Furniture
Commodities:
• Fire Equipment
• First Aid Supplies
• Police Equipment
Commodities:
• Building Supplies
• Electrical Cables and
wiring
Commodities:
• Airport Equipment
• Auto Equipment
Department IT Manager Program Manager (Onboarding Manager) Consulting &
Surge
Support
Note: The assigned departments and team composition (e.g., senior analyst, analyst, buyer) are representative. Actual department assignments and team composition would be determined during implementation.
Governance Committee (Procurement Prioritization Board) Leveraging a team-based model oriented around Commodities Staff Specialist (P-Card Support)
Analyst
Senior Analyst /
Procurement
Liaison
Buyer
Team 1
Commodities :
• Computer Supplies
• Computer Software
Analyst
Senior Analyst /
Procurement
Liaison
May 10, 2022
New Staff
Senior Office Specialist (Administrative Support)
37 Roles and Responsibilities Under New Model
Increasing collaboration without adding new responsibilities Roles and Responsibilities:
• Maintain and build relationships with customer departments • Action all procurements for customer departments by leveraging an outcome -based procurement model • Answer any procurement-related questions that customer departments have, including questions regarding consulting services procu rements • Coordinate spend consolidation opportunities across procurement teams through an awareness of department needs and procuremen t p ipelines Procurement Team
Roles and Responsibilities:
• Onboard into the Purchasing Division through shadowing other team members, reviewing documentation, and participating in trai ning • Provide surge support to any procurement teams in need of assistance with actioning procurements • Update documentation and assist with other support activities as assigned by division management • Conduct consulting services procurement spot audits and provide additional oversight of the consulting services procurement p rocess Consulting & Surge Support
Roles and Responsibilities:
• Supervise the execution of procurement teams, including spot audits to ensure the quality of work products • Serve as point of escalation for any procurement -related issues • Explore opportunities for incremental process improvements and deploy process changes to further refine procurement processes • Assist procurement teams with identifying opportunities for spend consolidation Purchasing Division Management
Note: This model does not involve assigning responsibilities outside of any staff’s existing job classifications.
Roles and Responsibilities:
• Develop documentation, user guides, and other resources for the P -Card program • Work in collaboration with procurement teams to provide P -Card support to specific City departments • Conduct spot audits to identify potentially non -compliant transactions, and document P -Card infraction trends • Provide administrative support to the Purchasing Division P-Card & Administrative Support
May 10, 2022
38 Procurement Consistency
Using the right process to procure the right
goods or services every time
Future State Vision
May 10, 2022
39 Increasing Procurement Consistency
Altering processes to regularly achieve optimal value for the City Quick Wins (1 Year)
Objective: Once staffing is sufficient, increase
usage of cooperative agreements and the
informal procurement process
Recommendations:
• Informal Procurement Redesign – Implement a redesigned informal procurement process that encourages department compliance • Expand Usage of Cooperative Agreements – Make greater use of cooperative agreements for simple, low-risk commodity procurements • Consulting Procurement Oversight – Increase the Purchasing Division’s oversight of the consulting procurement process to reduce risk Medium-Term (1-2 Years)
Objective: Move to a business needs oriented
model for procurements within the City
Recommendations:
• Business Needs Focus – Transitions to a business need-focused model where the Purchasing Division selects procurement strategies based on a department’s identified business need
• Collaborative Scope Development – Transition to a model where the Purchasing Division is involved in scope development from the outset to reduce the likelihood of departments developing non-compliant scopes Long-Term (2-5 Years)
Objective: Centralize consulting procurements with
the Purchasing Division to reduce risk to the City
Recommendations:
• Centralize Consulting Procurements – When the Purchasing Division is sufficiently staffed, processes are improved, and there is no backlog, centralize consulting services procurements under the Purchasing Division To reduce risk to the City, maximize value, and consistently deliver exceptional customer service, the City of San José should look to refine its procurement processes to center on department’s business needs. Many of these recommendations are predicated on the City having sufficient staffing.
May 10, 2022
Request for
Proposals
Request for
Bids
Informal
Procurement
Process
Purchasing
Triages Request
Department
Submits Business
Need
40 Revised Procurement Intake Process
Moving to an outcome-based procurement model
1 2
3 Business Need Submission
Purchasing Division Triaging
Procurement Strategy Selection
Level of Effort for Purchasing Division
Instead of submitting a scope of services, departments begin the procurement process by describing the business needthey require a solution for.
Serving as a strategic partner, the department’s assigned Purchasing Division team reviews the request, prioritizes it, and selects the appropriate procurement strategy based on the request.
As the procurement experts within the City, the Purchasing Division is well positioned to select the procurement strategy that is compliant, best optimizes efficiency, and minimizes cost to the City.
Business Need Departments are expected to know how to select the procurement method that best matches their business need Recommendation Leverage an outcome-based model, where the Purchasing Division assigns the procurement method best matching the business need An outcome-based procurement model empowers the Purchasing Division to more effectively administer the procurement process and identify spend optimization opportunities, by positioning the Division as a strategic partner for departments.
Consulting
Services
Procurement
Request for
Information
Open Purchase
Order
Cooperative
Agreement
Note: This process would only be used for purchases exceeding the City’s competitive procurement threshold. Purchases below the threshold would still be made using existing processes.
Note: The triaging process would involve close collaboration with the customer department and may involve the selection of multiple potential procurement strategies.
May 10, 2022
Request for
Quotes
41 Revising Procurement Processes
Modifying processes for outcome-based procurements
Business Need Current procurement processes focus departments on defining a detailed scope of what they need instead of the outcome they wa nt Recommendation Based on the new intake process, revise the current processes to emphasize an outcome -based procurement model During interviews, City staff demonstrated a lack of awareness of the different procurement strategies available to them. By moving to an outcome-based procurement model, the Purchasing Division selects the optimal procurement strategy for a given procurement, reducing risk to the City and improving compliance with City policies.
Consulting Services Procurement Process:
Department Runs Procurement
with Oversight from Purchasing
Purchasing Selects Consulting
Services Process
Request for Information Procurement Process:
Department Drafts Scope with
Regular Reviews from
Purchasing
Purchasing Selects Request for
Information Process
Purchasing Releases RFI and
Manages Response Process
Department Reviews
Responses
Open Purchase Order Process:
Purchasing Identifies Open
Purchase Order
Department Procures Good or
Service Through Open PO
1 Process Notes:
1 Consulting Services Oversight: The Purchasing Division would be responsible for reviewing the identified Business Needof each procurement to determine which are consulting services. This would prevent departments from misusing the consulting services procurement process.
Procuring Department
Key:
Purchasing Division
May 10, 2022
42 Expanding the Use of Cooperative Purchasing
Strategically leveraging cooperative buying to reduce workload Business Need The Purchasing Division could more extensively leverage cooperative agreements to reduce the Division’s workload Recommendation Further leverage cooperative agreements and redesign the process to reduce the risk of cherry -picking Cooperative purchasing is an opportunity for the Purchasing Division to expedite the procurement of low risk, high-volume items by leveraging competitive procurements run by other municipalities or organizations.
Types of Cooperative Purchasing:
Piggybacking: Piggybacking is the post-award use of another entity’s procurement to purchase the same supplies/equipment as specified in the original procurement. The procuring entity signs a separate contract with the same vendor. When piggybacking off another entity’s procurement, the procuring entity must trust that the original entity conducted the procurement in a compliant manner.
Cooperative Agreements: Cooperative agreements occur when multiple agencies aggregate their solicitation needs into a single competitive procurement. In some instances, organizations run cooperative procurements specifically for state and local entities to leverage. When executed correctly, cooperative agreements are transparent and allow outside entities to validate the correct process was used.
When to Leverage Cooperative Purchasing:
Used only when necessary
Commodity Procurements: Commodity procurements are low-risk, high volume, and typically lack supplier diversity. This makes them ideal candidates for cooperative purchasing as there is little added risk and their high-volume nature maximizes the cost savings opportunities.
Brand Name or Standard: When procuring items that may establish a brand name or standard within the City (e.g., printers), the City can still leverage cooperative agreements. However, the City should leverage cooperative agreements that allows them to get quotes from multiple manufacturers.
Specialty Goods and Services: One-off procurements of specialty goods and services are best conducted using a traditional, non-cooperative procurement to maximize the City’s ability to customize the goods or services it receives.
Complex Information Technology Procurements: Large, complex information technology procurements should continue to be run through the City’s regular procurement process. These purchases are high-risk and require a large amount of customization and control.
May 10, 2022
43 Expanding the Use of Cooperative Agreements
Strategically leveraging cooperative buying to reduce workload Business Need The Purchasing Division could more extensively leverage cooperative agreements to reduce the Division’s workload Recommendation Further leverage cooperative agreements and redesign the process to reduce the risk of cherry -picking Cooperative agreements represent a unique opportunity to streamline procurement within the City by leveraging competitive procurements run by other organizations for certain regular commodity purchases (e.g., fleet vehicles, IT software providers).
Procuring Department
Department Drafts Scope with
Regular Reviews from
Purchasing
Purchasing and Department
Collaborate to Select
Cooperative Agreement
Purchasing Solicits Multiple
Bids from Cooperative
Agreement Vendors
Purchasing Selects Lowest
Bidder
Purchasing and Vendor
Negotiate Contract
Cooperative Procurement Process:
Purchasing Selects Cooperative
Agreement
1 2
Key:
Purchasing Division
Process Notes:
1 Scope Collaboration: By consistently reviewing the procurement‘s scope of services, the Purchasing Division can ensure departments do not tailor the scope to a specific vendor or cooperative agreement.
2 Competitive Vendor Selection: To ensure the City is competitively seeking the best available price and a vendor that will agree to the City’s terms and conditions, the City would solicit pricing from at least three vendors on the selected cooperative agreement.
Other Recommendations:
Modify Piggybacking Requirements: Under the Municipal Code, for the City of San José to piggyback off another public entity’s procurement, the procurement documents (e.g., RFP, RFO, RFB) must specify that the procurement can be piggybacked off by other public agencies. This is a non-standard requirement as most other public entities simply require that the executed contract resulting from the procurement allows for piggybacking.
May 10, 2022
Procuring Department
44 Redesign the Informal Procurement Process
Design a transparent process for departments to use
Business Need Due to non-compliant behavior from departments, the informal procurement process is only utilized on an exception basis Recommendation Redesign the informal procurement process to emphasize compliance and transparency The informal procurement process offers a unique opportunity to expedite the procurement of goods under $130,000. However, inits current implementation, the process is sometimes utilized by departments in a non-compliant manner. Unlocking the efficiency of the informal process hinges on redesigning the current process to encourage compliance.
Department Drafts Scope with
Regular Reviews from
Purchasing
Department Provides Three
Potential Vendors Purchasing Approves Vendors
Department Contacts Vendors
for Quotes
Purchasing Reviews Quotes
and Selects Lowest Bidder
Purchasing Issues Purchase
Order
Informal Procurement Process:
Purchasing Selects Informal
Process
21 3
4 Process Notes:
1 Limited Process Selection: Purchasing Division staff would only select the informal procurement process for single, non-reoccurring purchases of non-IT goods where the initial term of the contract is expected to be under $130,000. 2 LBE/SBE Considerations: To encourage participation from the City’s small and local businesses, one of the three vendors would have to be a business that meets the City’s LBE or SBE requirements. If a department is unable to locate an LBE or SBE vendor, they would submit a written justification to Purchasing. 3 Vendor Approval: To prevent departments from cherry-picking the vendors or choosing vendors that provide the same brand of product, the Purchasing Division would approve the list of vendors.
4 Purchasing Selects Vendor: As there have been previous instances where departments selected vendors based on preference instead of lowest bid, the Purchasing Division would be responsible for evaluating bids and selecting the lowest priced vendor.
Key:
Purchasing Division
May 10, 2022
Process Notes:
45 Request for Quotes and Bids Process
Collaborative scope development to maximize competition Business Need Current procurement processes focus departments on defining a detailed scope of what they need instead of the outcome they wa nt Recommendation Based on the new intake process, revise the current processes to emphasize an outcome -based procurement model Department Drafts Scope with
Regular Reviews from
Purchasing
Purchasing Selects Request for
Quotes or Bids Processes
Information Technology
Department Review (if required)
Office of Equality Assurance
Review (if required)
Purchasing Packages
Procurement and Posts to
Biddingo
Vendors Respond Purchasing Selects Lowest Bid Purchasing and Vendor Negotiate Contract
As it is more time intensive than the informal procurement process, the request for quotes or bids processes should be used for non- evaluative procurements where the City cannot leverage an alternative procurement process (e.g., cooperative agreements, open purchase orders, informal procurement process)
Request for Bids Process:
Procuring DepartmentKey: Purchasing Division Outside Actor 2 Scope Development: Departments would maintain responsibility for developing procurement scopes, and the Purchasing Division would provide regular input throughout the process. The Purchasing Division would define clear time limits for the scope development process to prevent excessive dwell times. 2 3
3 Information Technology Department (ITD) Review: ITD review occurs after the scope is finalized. This allows ITD to better evaluate if there are existing solutions that meet the Business Needof the department. May 10, 2022 1 1 Process Selection: The request for quotes and request for bids processes are both non-evaluative procurement processes. The differentiator is the total value of the procurement. Procurements with an initial term of over $130,000 use the request for bids process and lower value procurementsuse the requests for quotes process. 46 Request for Proposals Process
Maximum effort and customization as a last resort
Business Need Current procurement processes focus departments on defining a detailed scope of what they need instead of the outcome they wa nt Recommendation Based on the new intake process, revise the current processes to emphasize an outcome -based procurement model Department Drafts Scope with
Regular Reviews from
Purchasing
Purchasing Selects Request for
Proposals Process
Information Technology
Department Review (if required)
Office of Equality Assurance
Review (if required)
Purchasing Packages
Procurement and Posts to
Biddingo
Vendors Respond Purchasing Evaluates
Responses for Responsiveness
Department Evaluates
Responses
The request for proposals process is the most time intensive of the procurement methods available to the Purchasing Division.While the process allows customer departments to maximize procurement customization, it should only be used only when all other procurement methods fail to provide a reasonable solution to a department’s business need.
Request for Proposals Process:
Purchasing Negotiates Contract
with Vendor
Purchasing Issues Notice of
Intent to Award
Procuring DepartmentKey: Purchasing Division Outside Actor Process Notes:
2 Scope Development: Departments would maintain responsibility for developing procurement scopes, and the Purchasing Division would provide regular input throughout the process. The Purchasing Division would define clear time limits for the scope development process to prevent excessive dwell times. 3 Information Technology Department (ITD) Review: ITD review occurs after the scope is finalized. This allows ITD to better evaluate if there are existing solutions that meet the Business Needof the department. 2 3
May 10, 2022
1 1 Procurement Prioritization Board (PPB): Assuming the Purchasing Division is adequately staffed and there is not a procurement backlog, the PPB would provide process-wide oversight instead of prioritizing individual procurements Note: This process is only for requests for proposals run by the Purchasing Division 47 Centralize Consulting Services Procurements
Centralization reduces risk to the City
Business Need The consulting services procurement process lacks oversight and standardization, which increases risk for the City Recommendation In the long term, look to centralize consulting procurements with the Purchasing Division to improve oversight and compliance The minimal oversight of the consulting services procurement process introduces significant, unintended risk for the City of San José.
To minimize risk, the Purchasing Division should begin providing process oversight, and consulting services procurements should be centralized once there is sufficient staffing.
Degrees of Centralization
Short Term
(Within 2 Years Assuming Sufficient Staffing)
Long Term
(Within 5 Years)
Goal: Minimize immediate risk to the City, while allowing the Purchasing Division to refine its processes.
Goal: Eliminate the risk of non-compliant procurements by centralizing all procurement activities within the Purchasing Division
Leverage Purchasing: Under the teams-based model, Purchasing Division teams would be responsible for providing ad hoc guidance on consulting services procurements to their assigned departments.
Spot Audits: To ensure policy compliance, the Purchasing Division’s onboarding, training, and support team would be responsible for conducting spot audits of select consulting services procurements.
Training Ownership: As the City’s procurement experts, the Purchasing Division should develop comprehensive training documents to educate departments on conducting compliant consulting services procurements.
Centralize Consulting Services Procurements: To minimize risk to the City from non-compliant procurements and reduce the workload of City departments, consulting procurements should be centralized with the Purchasing Division. However, to allow Purchasing to refine its processes, the following criteria should be met first:
• No Backlog: The Purchasing Division should have eliminated its procurement backlog.
• Shortened Turn Times: Procurement turn times should be at an acceptable level for customer departments.
• Adequate Staffing: As communicated via a staffing plan, Purchasing’s staffing should be sufficient for the added workload.
May 10, 2022
48 Increase Staffing for Consulting Services
Staff the Purchasing Division to assume consulting procurements Business Need The Purchasing Division does not currently have sufficient staffing to consolidate consulting procurements Recommendation Increase Purchasing Division staffing to a level sufficient to consolidate consulting procurements with the Division Oversight and Leadership
Department IT Manager Program Manager (Onboarding Manager) Team 1
Program Manager
Team 2 Team 3 Team 4 Team 5
Surge &
Output
Support
Team 7 Team 8 Team 9
Undetermined Number of New Procurement Teams
Recommended Staffing Model with Additional Teams:
Consulting Services Consolidation Staffing Considerations:
Currently Proposed Staffing Levels
Note: Centralizing consulting services procurements with the Purchasing Division without sufficiently increasing staffing would be extremely detrimental to the City’s ability to procure needed goods and services in a timely manner. 1 Scalable Model: By moving to a teams-based model, the Purchasing Division can easily adjust to any level of consulting services procurement consolidation ranging from the current decentralized model to full consolidation. As workload increases, the Purchasing Division would add teams and adjusts department assignments. 2 Unknown Staffing Burden: Based on data currently collected by the City, it is difficult to assess the total amount of consulting services procurement-related activity departments undertake on a regular basis. Without this data, it is challenging to determine the total number of new procurement teams that would be necessary.
May 10, 2022
49 Consulting Services Roles and Responsibilities
Roles and responsibilities remain largely similar
Roles and Responsibilities:
• Maintain and build relationships with assigned customer departments • Action all procurements, including consulting services procurements , for customer departments by leveraging an outcome -based procurement model • Answer any procurement-related questions that customer departments have, including questions regarding consulting services procu rements • Coordinate spend consolidation opportunities across procurement teams through an awareness of department needs and procuremen t p ipelines Procurement Team
Roles and Responsibilities:
• Onboard into the Purchasing Division through shadowing other team members, reviewing documentation, and participating in trai ning • Provide surge support to any procurement teams in need of assistance with actioning procurements • Update documentation and assist with other support activities as assigned by division management Surge Support
Roles and Responsibilities:
• Supervise the execution of procurement teams, including spot audits to ensure the quality of work products • Serve as point of escalation for any procurement -related issues • Explore opportunities for incremental process improvements and deploy process changes to further refine procurement processes • Assist procurement teams with identifying opportunities for spend consolidation Purchasing Division Management
Note: This model does not involve assigning responsibilities outside of any staff’s existing job classifications.
Roles and Responsibilities:
• Develop documentation, user guides, and other resources for the P -Card program • Work in collaboration with procurement teams to provide P -Card support to specific City departments • Conduct spot audits to identify potentially non -compliant transactions, and document P -Card infraction trends • Provide administrative support to the Purchasing Division P-Card & Administrative Support
May 10, 2022
50 Procurement Streamlining
Streamlining processes and policies while
preserving competition
Future State Vision
May 10, 2022
51 Streamlining Policies
Increasing efficiency by streamlining and clarifying policies Quick Wins (1 Year)
Objective: Develop compliant workarounds to
the most burdensome policies and critically
examine the City’s risk posture
Recommendations:
• Risk Posture Examination – Examine if there are opportunities to take minimal risks to increase procurement speed and decrease acquisition cost • Wage Theft Policy – Modify the City’s wage theft policy as the current policy makes certain procurements impossible
Medium-Term (1-2 Years)
Objective: Develop and implement improvements to
the City’s Municipal Code to streamline procurement
processes
Recommendations:
• Competitive Procurement Threshold – Increase the competitive procurement threshold to account for inflation
• Local Business Preference – Modify the City’s Local Business Enterprise preference program to focus on companies that prioritize San José Long-Term (2-5 Years)
Objective: Regularly review Title 4 of the City’s
Municipal Code to ensure it continues to meet the
City’s procurement needs
Recommendations:
• Municipal Code Review Process – At regular intervals evaluate the relevancy of Title 4 of the Municipal Code and propose necessary changes to Council
• Council Approval Process – Streamline the process for contracts to be approved by City Council to minimize staff time required, while still preserving the City Council’s oversight of the process
Title 4 of the City’s Municipal Code governs goods and services procurements within the City of San José. Given how infrequently Title 4 is updated, there are multiple opportunities to revise policies to streamline procurements without increasing risk.
May 10, 2022
52 Critically Analyze the City’s Risk Appetite
Determining the cost of the City’s current risk posture Business Need The City’s risk posture limits its ability to efficiently engage with vendors and conduct procurements Recommendation Consider risk through the lens of return on investment, by allowing flexibility when allowing for limited risk leads to a hig h return on investment When evaluating procurement-related risks, the City of San José should adopt the perspective of opportunity cost. When decliningto negotiate contract terms or requiring standard levels of insurance regardless of contract type, what is the cost to the City?By thinking about risk strategically, the City can more critically evaluate which opportunities are right for it. Recalibrating the City’s risk posture will require collaboration between City departments.
Insurance-Related Risks Lower SBE/LBE Participation
Limited Vendor Pool
Limited Vendor Pool
Informal Procurements Additional Work for Purchasing Division Risk Category: Opportunity Cost to Mitigate Risk:
Contract Indemnification
To protect the City from legal exposure, the City requires the vendors to fully indemnify the City. This protects the City protects the City from any claims that may arise from the vendor's products or service delivery.
Many larger vendors are unwilling to fully indemnify the City or agree to accept unlimited liability. This may limit the City from working with certain larger vendors that are leaders in their industries.
The City requires insurance, so the vendor has financial backing for its indemnification obligations. Due to risk and fairness concerns, the City is unwilling to negotiate contract-specific insurance requirements.
Many small businesses are unable to meet the City’s insurance requirements. Certain insurances may be of limited use for the services these vendors provide (e.g., car insurance for remote work).
For a variety of reasons (e.g., intellectual property, liability), certain vendors need exceptions to do work for the City. Currently, these vendors are excluded.
Rigid Contract Terms
To prevent the preferential treatment of certain vendors and limit the City’s risk exposure, the City is largely unable to negotiate contract terms with vendors.
Vendors are expected to agree to the template contract without exceptions.
Due to the risk of departments leveraging the informal procurement process in a non-compliant manner, the Purchasing Division only allows departments to leverage the process on a limited exception basis.
Limiting the use of the informal procurement process forces the Purchasing Division to run additional full procurements, which creates additional work, requires increased staffing, and delays procurements.
May 10, 2022
53 Modifying the Wage Theft Policy
Current policy prohibits the City from acquiring needed services Business Need The City’s Wage Theft policy is overly restrictive and prohibits the City from doing business with needed suppliers Recommendation Revise the policy to preserve its intent while loosening the restrictions to allow the City to purchase needed goods and serv ices Under the Wage Theft Policy passed by City Council in July of 2016, the City of San José is prohibited from doing business with any vendors who violated applicable wage and hour laws more than once or has an unpaid wage judgment within the past five years.
Unfortunately, many key potential suppliers have violated wage and hour laws within the past five years.
Wage theft denies hardworking employees' money that they are rightfully owed. Wage theft is a problem and governments play an important role in preventing it.
Wage Theft is a Problem
The Center for Public Integrity reports that wage theft violations cost workers in the United States $15 billion a year in lost wages1. Large multi-national corporations tend to be the worst offenders.
Wage Theft is Pervasive
Given the pervasiveness of wage theft within the United States, the City’s current policy severely restricts the number of vendors the City can work with. Indeed, the current policy prohibits the City from working with companies as varied as Apple, Starbucks, and Bank of America. While in many instances it is possible to find a suitable alternative vendor, there are limited circumstances where that is not possible. One example is banking services. To provide the full range of banking services the City needs, the City must work with a large bank. However, almost every major bank has paid at least one wage theft violation.
Challenges with the City’s Current Policy
1The Center for Public Integrity, Ripping Off Workers With No Consequences; https://publicintegrity.org/inequality-poverty-opportunity/workers-rights/cheated-at-work/ripping-off-workers-with-no-consequences/ May 10, 2022
The current Wage Theft policy is very difficult to implement without impacting the City’s ability to provide services to Cityresidents. Given the complexity of the issue, the range of stakeholders involved (e.g., Purchasing Division, Public Works Department, City Council, public interest groups), and the need for significant policy changes, the Wage Theft policy is best addressed by the City through the City roadmap process. It is worth recognizing the City is alreadymaking progress. City staff made recommendationsto City Council on February 11, 2020, on updating the definition of wage theft.
Recommended Approach
Adjusting Procurement Thresholds: The
competitive procurement threshold’s inflationary
adjustment mechanism requires rounding to the
nearest $10,000. The threshold will only increase if
the Consumer Price Index increases by 50% in a
three-year period.
54 Develop a Municipal Code Review Process
Ensure the Municipal Code is serving City residents adequately Sections of Title 4 of the Municipal Code impede the ability of City departments and the Purchasing Division to procure necessary goods and services in a timely manner. As updates to Title 4 are irregular and infrequent, the City should consider implementing a regular review process.
Business Need Title 4 of the San José Municipal Code contains policies that are outdated and hinder procurement within the City Recommendation Design a process to regularly review and potentially revise sections of Title 4 of the City’s Municipal Code Policies To Consider Revising:
City Manager’s Signing Authority:The
Municipal Code does not specify how City Staff
should assess the total value of a contract. The
lack of specificity has caused divergent practices
within the City.
1 Local Business Enterprise Definition: The
City’s requirements for a business to qualify as a
Local Business Enterprise are minimal and can be
exploited by vendors.
2 3
Review Consistency:
To ensure updates are made at a consistent cadence, the City should look to define a pre- determined review timeline for Title 4 of the Municipal Code. The review process should be comprehensive and, when necessary, involve presenting Municipal Code updates to Council.
As the procurement process owners for the City, the Purchasing Division should lead the review process for Title 4. As the procurement process involves a variety of stakeholders, the Purchasing Division should solicit input from other key groups.
Review Responsibility:
If the City updates its procurement processes as an outcome of the review process, the Purchasing Division should ensure that any relevant training and documentation is updated accordingly to ensure City staff are well informed. Additionally, between reviews, the City should consider utilizing spot audits to assess if City staff are compliantly leveraging updated policies.
Post Review:
Note: The Public Works Department recently completed a comprehensive revision of the Municipal Code sections relevant to its procurement process. The update allowed the Department to revise processes to match current practices and clarify policies that presented a compliance risk.
Key Components of an Effective Review Process:
May 10, 2022
Procurements with Federal Funds: For
procurements mixing of federal and non-federal
funds, the City currently conducts two procurements
to adhere to federal and City procurement rules.
4 55
Streamlining the Council Approval Process
Focus on expediting contract execution
Currently, when determining the City Manager’s signature authority, The Purchasing Division evaluates the combined value of the contract’s base year and any option years specified in the contract, regardless of if the option years are executed. This causes contracts to go before Council upon execution, instead of when the contract’s value exceeds the City Manager’s signature authority ($320,000 for services and $1.3 million for goods). Many City departments do this for consulting procurements.
Business need The Municipal Code does not specify how the City Manager’s signing authority should be calculated Recommendation Require City Council approval only when a contract’s total value exceeds the City Manager’s signing authority Base Year Option Year 1 Option Year 2 Option Year 3Negotiation Option Year 4 Typical Contract Duration (Base Year + 5 Option Years)
Current: As the combined value of the contract’s base and option years is $540,000, it would require City Council approval prior to contract execution.
Contract Execution
Example Contract:
Recommended: The contract would go to City Council prior to executing the third option year as that option would put the contract’s total value above $320,000.
Assume an example services contract has a base value of $90,000 and five potential option years:
1 2
21 Benefits of Revised Approach:
1 Fewer Contracts Requiring Council Approval: As the City does not exercise option years on every contract, there may be contracts where the value of the base and option years exceeds the City Manager’s signature authority, but the contracts final value is under the $320,000 limit. 2 Faster Procurements: Currently, the process of getting City Council approval for a contract can add over two months to a procurement’s timeline. By requiring approval only when the contract’s not to exceed value will exceed the City Manager’s limit, City staff can plan around the Council’s timeline to minimize disruptions. 1 Implementing the Revised Approach: As the City currently is unable to effectively monitor the total value of certain contracts or if any contract changes occur (e.g., amendments, change orders), this recommendation should only be implemented once City procurement and contract management practices are sufficient to ensure compliance.
Other Considerations:
Procurement Option Year 5
DRAFT
May 10, 2022
56 Adjusting the Competitive Procurement Threshold
Allow the threshold to increase with inflation
Under the current policy, the City’s competitive procurement threshold will only increase if the Consumer Price Index (CPI) increases by 50% within the three-year period. As this is unlikely to ever occur, the threshold will not increase without modifications topolicy.
Business Need The Municipal Code does not allow for the competitive procurement threshold to increase with the cost of goods Recommendation Update the Municipal Code to allow for periodic increases of the City’s competitive procurement threshold based on inflation Current Situation:
Under Title 4, Chapter 4.085 of the City’s Municipal Code, the City’s procurement thresholds should be increased every three years based on increases to the Consumer Price Index during that period. Any increases must be rounded to the nearest $10,000 dollars. While the competitive procurement threshold is due to be updated this year, the threshold will not increase as the three-year CPI increase is only roughly 5%, which falls short of the 50% needed to trigger a threshold increase.
Current Threshold - $10,000
Next threshold
increment - $20,000
2022 projected 3-year increase due to CPI - $500
Required 3-year increase to
modify threshold - $5,001CPI Increase since Title 4, Chapter 4.085’s base year (2013) - $2,000 Competitive Procurement Threshold Update Process
Recommendation:
Decrease the Rounding Cutoff: Currently, increases to the competitive procurement threshold are rounded to the nearest $10,000. By adjusting the Municipal Code to round the competitive procurement threshold to the nearest $1,000, it would be possible for the threshold to increasewith reasonable levels of inflation.
One-Time Threshold Bump: To account for inflation and the lack of previous increases to the competitive procurement threshold, the City should consider a one- time threshold increase to $12,000. The bump would be roughly equal to the CPI increase since Title 4, Chapter 4.085 of the Municipal Code’s base year of 2013.
Threshold Alignment: For purchases made using a P-Card, the City has a $1,000 single transaction limit for services and a $10,000 single transaction limit for goods. As Purchasing Division staff cannot identify a reason for the divergence, the City should align the thresholds to reduce confusion.
May 10, 2022
Single Full-Time Employee: As companies increasingly transition to a remote work model, having a single employee based within Santa Clara County does not signify a meaningful commitment to the City of San José. Requiring a more meaningful presence would better match the LBE policy’s intent. 57 Revise Local Business Enterprise Criteria
Give preference to the businesses that make San José a priority Business Need The City’s Local Business Enterprise (LBE) preference policy is potentially exploited by companies that are not invested in t he San José community Recommendation Revise the policy to prevent abuse from non -local companies or companies without a significant presence within the City The City’s current Local Business Enterprise (LBE) preference policy can potentially be exploited by vendors as the qualifying criteria are broad and vague. Any alterations to the City’s LBE policy would need to be coordinated across multiple City departments and could involve analyzing other forms of procurement equity (e.g., a disparity study).
Peer City Practices:
City of San Diego
To be considered as an LBE within the City of San Diego, a firm must:
“have a Principal Place of Business and a Significant Employment Presence in San Diego City or County, California.”
City of San Francisco
Within the City of San Francisco: “Local Business Enterprise certification is available to businesses with a principal place of business in San Francisco.”
City of Los Angeles
LBEs must have a workspace within Los Angeles and employ at least 50 full-time employees within the County, have half of its employees located within the County, or be headquartered within Los Angeles County.
City of Austin
Within Austin, a business must be headquartered within the City, have 20% of its employees based within the City, or a minimum of 100 employees based within the City in order to receive an LBE preference.
City of San José Policy:
For a business to qualify as a Local Business Enterprise within the City of San José, they must:
• Have a current San José business tax certificate; and • Have either the business’ principal business office or regional office with at one full time employee within Santa Clara County.
Challenges with Current Policy:
1 Vague Definition of “Office”: The current policy does not define the terms principal business office or regional office. Under the policy as currently written, a vendor could reasonably argue any location in which they do business (e.g., WeWork, personal residence, office building) is an office for the purposes of the policy. 2 May 10, 2022
58 Training
Providing consistent and broadly available
training for relevant stakeholder groups
Future State Vision
May 10, 2022
59 Procurement Training
Getting stakeholders trained on policies and procedures Quick Wins (1 Year)
Objective: Improve access to procurement
training and resources to increase policy
compliance
Recommendations:
• Intranet Redesign – Redesign the Purchasing Division’s intranet around the needs of Purchasing Division customers and procurement stakeholders • Overhaul P-Card Trainings – Revamp P-Card trainings by consolidating disparate documentation and making the yearly P-Card exam more difficult • Procurement Trainings – Introduce procurement and contract management trainings at regular intervals and begin developing module-specific trainings Medium-Term (1-2 Years)
Objective: Increase the consistency of training and
work to better anticipate citywide procurement training needs
Recommendations:
• Disparity Study – Fund the current City disparity study proposal to understand disadvantaged business participation in the procurement process • Internal Training Program – Develop a yearly training program for Purchasing Division staff that is centered around executing on Division goals • Vendor Engagement – Increase vendor engagement efforts throughout the procurement lifecycle and track vendor participation
Long-Term (2-5 Years)
Objective: Implement formal training programs and
processes to standardize the training experience
across stakeholder groups
Recommendations:
• Onboarding Standardization – Standardize the onboarding experience within the Purchasing Division to maximize effectiveness • Vendor Outreach: Develop a formal vendor outreach program with a particular emphasis on reaching disadvantaged businesses • Implement a Learning Management System – Implement a learning management system to standardize and formalize training across the City Procurement is complex, detail-focused, and has little margin for error. To ensure City staff and the Purchasing Division team successfully navigate the intricacies of procurement, the City should refine its procurement training curriculum.
May 10, 2022
May 10, 2022 60
Purchasing Division Onboarding Standardization
Ensuring all new team members have the same knowledge
Business Need There is no standardized onboarding process when joining the Purchasing Division Recommendation Standardize the onboarding process around key trainings to ensure the success of new joining staff Four Levels of Effective Onboarding:
Given the high turnover present within the Purchasing Division, effectively onboarding staff is essential for ensuring the productivity of the Purchasing Division team. Ideally, the Division’s onboarding program should be standardized, comprehensive, and successfully integrate new joiners into the team.
Compliance
Clarification
Culture
Connection
Connection: Refers to how successfully a new employee can develop the interpersonal relationships and information networks needed to thrive.
Culture: Getting an employee established with the
organizational norms within the City. This includes unwritten policies and practices the City might have.
Clarification: Ensuring an employee understands their role, the responsibilities associated with their role, and how their role fits into the larger organization.
Compliance: Ensuring employees are aware of City policies across all areas relevant to their position. This includes City procurement policies, general City policies, and employment policies.
To effectively onboard
employees, the
Purchasing Division
must develop an
onboarding program
that encompasses all
four dimensions.
61 Regular Trainings for the Purchasing Division
Standardized upskilling for the entire Division
Business Need The Purchasing Division lacks a standardized training curriculum, leading to staff having different understandings of certainpolicies Recommendation Develop a standardized yearly training curriculum for the Purchasing Division To ensure consistent upskilling, the Division should implement a standardized training program based on a training plan. Ideally, trainings would be at both a Division-wide and team specific-level depending on the training need.
Determine
Objectives
Assess Training
Needs
Develop a
Training Plan
Deliver the
Training
Evaluate
Impact
Components of Effective Internal Training:
Leveraging the Purchasing Division’s mission statement and goals, identify topics that may require additional training (e.g., Cooperative Agreement processes, IT procurement methods).
Based off the determined objectives, assess the Division’s training needs through discussions with team members, staff goals, and trends.
As clear training needs emerge, begin developing a yearly training plan to outline a clear schedule for delivering the trainings, the expected core competencies staff are expected to develop, and any budget considerations.
As specified in the training plan, deliver the training to the Purchasing Division. T o maximize information uptake and understanding, it is best to use a variety of presentation formats and present training in small, role-based modules.
T o ensure staff complete the trainings and learn the desired material, it is necessary to measure the impact of the training.
The identified training outcomes should then feed into the objectives development and needs assessment phases.
May 10, 2022
62 Training Procurement Customers
Assume customers have zero procurement knowledge
Business Need Support resources for procurement customers assume a high degree of familiarity with the procurement process Recommendation Develop resources with the assumption customers have zero familiarity with procurement processes Training Curriculum:
Securing
Procurement
Budget
Procurement
Method Selection
Procurement
Initiation
Vendor
Communications
and Outreach
Response
Evaluation
Reference Documents and Templates (e.g., Scope Template, City Contract Templates) Compliance
Documents
Individual modules provide in-depth coverage of specific areas Procurement Process Overview Documents and Checklists
Reference documents provide an overview of the entire end-to-end process Procurement Overview Module Specific Trainings
These trainings and reference materials provide an end-to-end overview of the procurement process for goods and consulting services and are designed to help procurement novices understand the procurement process, and the parties involved. The reference materials also provide helpful templates for City staff.
Module specific training provide an in-depth overview of a single component of the procurement process (e.g., scope development).
These trainings would be used by City staff when completing a specific step within the procurement process.
Training Best Practices:
1 Designed for the Novice: To maximize the effectiveness and utility of the training, it should be designed for procurement novices. 2 Leverage Multiple Mediums: Training materials should leverage multiple formats (e.g., instructor led, computer-based, virtual) to maximize staff learning. 3 Consistent Delivery: Standard and refresher trainings should be offered at regular, scheduled intervals for all departments to take advantage of.
May 10, 2022
Scope
Development
63 Contract Management Training
Ensuring departments manage vendors appropriately
Business Need Departments lack the training and resources to manage vendors effectively Recommendation Develop a comprehensive contract training program for departments and provide training at regular intervals During interviews, City staff indicated both a desire and need for increased contract management training. Current processes involve City departments managing contracts without an understanding of what effective contract management looks like. To improve the value the City receives from its vendors, the City should develop comprehensive contract management training resources.
Effective Contract Management Training:
For Contracting
Departments For Contract Managers For Department
Leadership For City Staff
• Highlights strategies for creating an
enforceable contract
• Informs City staff of key contract
management considerations prior to
and during the contracting process
• Describes how to hand-off the
contract to the contract manager
• Provides resources for managing a
contract against the specified
deliverables
• Clarify escalation paths for
underperforming vendors
• Describes the process for amending
and/or modifying contracts
• Outlines a clear contract status
reporting process
• Summarizes leadership’s contract
management responsibilities
• Diagrams repercussions should a
department fail to effectively
manage its contracts
• Stresses the importance of contract
management
• Introduces basic contract
management principles
• Outlines how City staff can support
contract managers with managing
contracts
Impact to the City of Effective Contract Management
Contract Management Training Priorities:
1 Consistent Delivery: City staff revealed the City had previously provided limited contract management training at inconsistent intervals. To ensure maximum effectiveness, consistency in training delivery and availability is critical. 2 Alignment with City Priorities: The City Auditor and other members of City leadership have identified contract management priorities for the City. Any training should be designed to align with those priorities.
May 10, 2022
64 Reorient the Purchasing Division’s Intranet
Building the intranet for procurement customers
Business Need The intranet site attempts to be a resource for both Purchasing Division staff and customers, causing it to optimally serve neither group Recommendation Redesign the intranet site from the perspective of the Purchasing Division’s customers Purchasing Division Staff Purchasing Division Customers Procurement Stakeholders Leadership and Oversight Access the intranet looking for specific
procurement-related information or
documentation (e.g., checklists)
Access the intranet to get an understanding
of the procurement process or begin
working on developing a procurement
Utilize the intranet when looking for
resources on the department-led process
for consulting services
Leverage the intranet when looking for
information on the Purchasing Division’s
performance
Target Audience
A Customer Focused Intranet:
1 Assumes people accessing the site do not have any procurement knowledge and appropriately guides users to the correct resources 2 Guides City staff in selecting the correct procurement method by leveraging either a decision tree or interactive forms
3 Defines all key terms (e.g., strategic procurement, tactical procurement) so City staff have a common understanding
4 Has regularly updated resources on both the Purchasing Division-managed and department-led procurement processes
5 Is designed to be a self-help resource for City staff, so they can make progress on a procurement without contacting the Purchasing Division 6 Clearly documents all policies and procedures without relying on City staff to have institutional knowledge of undocumented practices
May 10, 2022
65 Enhancing P-Card Training and Resources
Leveraging training to enhance compliance
Business Need There is significant abuse of the P-Card program as staff are either unaware or willfully ignorant of many P-Card policies Recommendation Leverage training to drive compliance with P-Card policies and procedures Effective training and staff development represent an opportunity to increase P-Card compliance. If staff are appropriately trained and tested, the City is justified in actively disciplining those who fail to adhere to City policies.
Educate Evaluate
Leverage training to make City staff
aware of P-Card policies and limitations
Evaluate P-Card holders’ knowledge of
relevant policies
P-Card Compliance Process:
Enforce
Rigorously enforce policies to drive
further compliance
1 Centralize P-Card policy information into a
single, easy to ready document (In Progress)
2 Customize training based on role (e.g., P-Card
user, department coordinator)
3 Create a quick reference guide to help City staff
with determining if an expense is P-Card eligible
Considerations:
4 Limit exceptions to standard policies to make the
exceptions easier to remember
5 Provide trainings in a variety of formats to appeal
to the various learning needs of City staff
1 Increase and standardize repercussions for non-
compliant P-Card usage
2 Expand the Purchasing Division’s spot audit
program to catch non-compliant transactions
Considerations:
3 Enhance training for P-Card Coordinators to
equip them to identify prohibited transactions
4 Publicly announce common P-Card violations
and the number of violations within a set period
1 Track who takes and passes the yearly P-Card
exam
Considerations:
2 Curve the exam to ensure it is sufficiently difficult and that City staff cannot pass without studying
3 Suspend P-Card privileges for any staff
members who fail to complete the exam
4 Randomize exam questions to limit the
opportunity to memorize or share exam answers
May 10, 2022
66 Implement a Learning Management System (LMS)
Centralize training activities on a single platform
Business Need The City currently lacks a standard training platform, leading to disparate practices across City departments Recommendation Implement a learning management system to centralize training activities within the City and track compliance with required trainings Benefits of a Learning
Management System
Learning Centralization
LMS platforms allow organizations to centralize
training materials in a single location. Beyond
allowing users to go back and reference the
materials at any point, LMS systems encourage
training collaboration between entities within an
organization.
Completion Tracking
LMS systems allow administrators to centrally track
when users have completed specific trainings, all
from a centralized reporting dashboard. Some LMS
systems will even automatically notify users if they
fail to complete a training by a specified deadline.
Customized Training Journeys
Managers can create customized training journeys
for employees, with the journeys tailored to the
development goals of each employee. These training
journeys can support an employee's path to
promotion or serve as part of a performance
improvement plan.
Multi-Format Training
Depending on their configuration, LMS systems can
support a variety of training formats (e.g.,
asynchronous, classroom, on demand), which allows
each employee to learn in the format that best suits
their needs.
Ease of Deployment
Leveraging the tools built into the LMS platform,
trainings can be easily designed, configured, and
deployed with minimal staff effort. Given the ease of
deployment, LMS systems may require a decreased
need for designated training staff.
Increased Engagement
LMS systems help to build a culture of learning within
an organization. Their ease of use encourages
participation from employees and the on -demand
nature allows employees to easily incorporate
trainings into their yearly goals.
Note: Until 2020, the City’s Human Resources Department had an agreement with Saba Software for a learning management system. However, the City terminated the contract in February 2020.
May 10, 2022
67 Vendor Onboarding and Outreach
Ensuring vendors can participate effectively
Vendor Outreach Timeline:
Procurement-Specific Vendor Outreach Vendor Response Management Post-Procurement Evaluation Regular Vendor Outreach and Engagement
As the City of San José aspires to run a procurement process that equitably procures goods and services, effective vendor outreach is critical. Through vendor outreach, it is possible to engage new and diverse vendors.
Business Need Vendor engagement throughout the procurement process is minimal, which potentially leads to fewer responses Recommendation Develop a formal vendor outreach program that spans the procurement lifecycle Procurement Lifecycle
Pre-Solicitation Solicitation Release Post Solicitation • Conduct outreach to targeted vendors or
communities to notify them of the upcoming
solicitation
• Notify vendors of the solicitation once it is posted
• Help vendors with any questions during the
response process
• Track vendor responses per solicitation and
engage with vendors to understand pain points
Outreach and Engagement Strategies:
• Vendor Outreach Program: Develop a vendor outreach program to regularly hold outreach events with different types of vendors. These programs should center around various topics relevant to the solicitation response process (e.g., response composition, LBE/SBE requirements, navigating Biddingo). • Regularly Update the City’s Vendor Guide: Continue to regularly update the City’s written vendor guide as policies change. The guide should outline the various procurement practices (e.g., formal competitive, informal competitive, noncompetitive) and the process of responding to each type of procurement.
Disadvantaged Business Outreach:
• Targeted Outreach: To encourage full participation from disadvantaged businesses, the City should look to conduct targeted outreach to specific communities. • Procurement Workshops:For many disadvantaged businesses, navigating the complexity of the solicitation response process is a significant impedimentto doing business with government entities. To reduce the impact of this barrier, the City could hold solicitation response workshops for businesses within the local community. • Effective Engagement Tracking:Currently, the City has a limited ability to track how engaged disadvantaged businesses are with the procurement process. In order to better target outreach efforts, the City should undertake efforts to better track disadvantaged business participation (e.g., a disparity study).
May 10, 2022
68 Technology
Updating the City’s procurement technologies
to streamline processes
Future State Vision
May 10, 2022
69 Procurement Technology
Leveraging technology to drive process efficiencies
Quick Wins (1 Year)
Objective: Better leverage existing tools to
improve KPI tracking and document
management practices
Recommendations:
• Data Cleansing: Clean existing data to improve reliability and allow for more accurate output reporting
• Automate KPI Tracking – Develop dashboards using existing software tools to automate the tracking of procurement-related KPIs • Centralize Documentation – Using SharePoint, centralize procurement documentation in a single location to make it easily referenceable Medium-Term (1-2 Years)
Objective: Begin assessing opportunities to replace
existing systems that no longer meet the City’s needs
Recommendations:
• Procurement Management Requirements Gathering – Gather requirements and develop an RFP for a procurement management solution • Process Automation – Leverage process automation technologies to explore opportunities to automate processes to save time and reduce City procurement workload
Long-Term (2-5 Years)
Objective: Implement a software solution to
streamline and automate procurement-related
business processes
Recommendations:
• Implement Procurement Management System – Implement a new procurement management solution to help streamline processes, improve accountability, and reduce workload
Leveraging technology throughout the procurement lifecycle represents an opportunity to unlock efficiencies, enhance collaboration, and drive further compliance with City policies. Recommendations to improve how the City leverages technology are included below:
May 10, 2022
70 Clean Data to Improve Performance Tracking
Store data in consistent formats that are easily accessible Business Need Data is stored in disparate locations and formats making it difficult to comprehensively assess the City’s procurement performance Recommendation Clean and revamp existing tracking tools to allow for accurate reporting Disparate Data Storage Locations
Inconsistent Data Formatting
Lack of Data Quality Standards
Current State:
Improving Performance Through Data Cleaning:
1 Conflicting Data: Certain datasets maintained by the Purchasing Division provide conflicting data on the Division’s performance and output. 2 Output Measurement: Current data storage practices make it difficult to accurately measure the City’s monthly and yearly procurement output. 3 Performance Management: Data inconsistencies hinder the Purchasing Division’s ability to comprehensively manage the performance of individual team members. 4 Tool Functionality: The City is unable to leverage the full functionality of existing procurement tools to provide process transparency to internal and external stakeholders.
By cleaning and standardizing existing data storage practices, the City can leverage the full functionality of existing tools(e.g., Excel, Power BI), to track procurement KPIs, report output to stakeholders, and quantitatively evaluate staff performance.
Best Practices:
1 Data Quality Plan: To ensure all data and documents entering City procurement trackers is clean, free of errors, and in the correct format, the City should develop a data quality plan that outlines the minimum standards all data must meet. 2 Minimize Free Form Text: To maximize the business intelligence and visualization capabilities of current data analysis technologies, the City should look to minimize the use of free form text within trackers. Current trackers have excessive free form text, hindering the deployment of business analysis tools. 3 Align Data Between Trackers: There are data inconsistencies between various trackers. To ensure the City is reporting accurate procurement output figures,the City should align data between trackers. Longer term, the City should appoint data stewards to manage the quality of data input into trackers. 4 Create a Data Legend: Given the complexity of the procurement process and the large number of critical dates or data points, the City should createa data legend to explain what data is tracked, the units it is tracked in, and how the data is logged.
May 10, 2022
71 Improve KPI Tracking Processes
Automate KPI tracking using existing data visualization platforms Business Need Procurement key performance indicators (KPIs) are not regularly updated Recommendation Leverage existing data visualization tools to automate KPI tracking and updating Utilizing existing data visualization tools such as Microsoft Excel or PowerBI, it is possible to create automated dashboardsto track a variety of KPIs. The dashboards can be integrated into existing communication platforms to share progress with key stakeholders.
Data Capture
Capture KPI data at various, pre -
determined intervals throughout
the procurement lifecycle (e.g.,
requisition dwell time, scope
development timeline, RFP
release date).
Automated KPI Tracking Process:
Data Input
KPI VisualizationKPI Reporting
Input the captured data into
various trackers. In order to
ensure the accurate reporting of
the captured data, the data within
the trackers should be cleaned
and standardized.
Data visualization features within
existing tools automatically
calculate KPIs and adjust
visualizations (e.g., graphs,
dashboards) accordingly.
KPI Tracking in Practice:
Integrated into existing
communication platforms (e.g.,
intranet), the KPI visualizations
are shared with key stakeholder
groups.
An example of an automatic KPI tracking
dashboard, the California Department of Motor
Vehicles uses this dashboard to track and monitor
KPIs related to their Enterprise Goals.
KPI
Reporting
Leveraging existing data visualization platforms to automate KPI reporting is an easily implemented, inexpensive solution for the City to track procurement-related information. A procurement-specific software solution would add additional functionality for a greater cost.
May 10, 2022
72May 10, 2022
Key Performance Indicators to Consider
KPIs the City should track as it refines its procurement processes KPI tracking should be based on the City’s goals and abilities. Should the City wish to begin tracking new KPIs, it should begin recording data as soon as it is able, regardless of if there is historical data. As the City cleans historical data and introduces new technology, it may wish to consider additional KPIs.
City Procurement Goals
Provide consultative procurement
expertise to departments as they
navigate the procurement process
Act as stewards of public funds by
ensuring the City spends money in
a manner that safeguards the best
value to the City
Decrease procurement processing
times to allow departments to
obtain needed goods and services
in a timely manner
Develop a vendor pool that
represents the diversity of San
José’s businesses and residents
Serve as a strategic procurement
resource during the planning and
execution of City Roadmap
initiatives
Decrease
Processing Times
Efficient Use of
City Funds
Provide Support
for City Staff
Representative
Vendor Pool
Support the City
Roadmap
Potential KPIs Aligned to Procurement Goals*
• Percentage of contracts awarded to LBE/SBEs
• Number of P-card violations per month
• Average days to award a contract
• Number of bids per solicitation
• Average time to receive Council approval
• Percentage of City staff that completed
procurement and contract management training
• Customer satisfaction with Purchasing Division
• Average options invoked per contract
• PPB and ITD review times
• Informal procurement process processing times
• RFx processing times
• Dwell time between procurement process steps
• Informal procurement process time savings
• Cost savings achieved by leveraging cooperative
agreements
• Output per procurement team
Trackable in Near-Term (Under 1 Year) Trackable in Medium-Term (1-2 Years) Trackable Long-Term (2-5 Years) *Note: The suggested KPIs assume the Purchasing Division has clean data and the tools necessary to effectively collect the data. 73 Leverage Project Collaboration Technologies
Use SharePoint to improve procurement collaboration
Business Need The use of multiple record formats creates information silos and introduces document management-related risks Recommendation Consolidate document storage on a Purchasing Division SharePoint site that is shared with other departments Project Collaboration Workflow:
Converting Existing Records to SharePoint:
While the Purchasing Division currently leverages OneDrive for document sharing, centralizing all procurement documentation on a SharePoint site would allow for increased collaboration and records retention, especially in instances where there is turnover within the City.
Department Initiates
Procurement
Purchasing Division
creates
procurement-specific
SharePoint folder
Department uploads
documentation to
SharePoint folder
Purchasing Division
and department
collaborate on
procurement
Procurement
completed
Purchasing Division
organizes
procurement-specific
documentation
Documentation
retained for future
use
Existing document management practices involve multiple record formats (e.g., paper, “O-Drive”) and information is largely siloed. Departments that are involved in the consulting services procurement process create and maintain their own documentation. All procurement-related doc umentation should be centralized on a single SharePoint maintained by the Purchasing Division. 1 Process Compliance: As the Purchasing Division and City departments currently maintain siloed, duplicative procurement process documentation, it introduces process compliance risks for the City. By centralizing documentation, the Purchasing Division can better standardize documentation and processes. 2 Searchability: Many departments and Purchasing Division staff mentioned leveraging content from previous procurements when developing new procurements. By centralizing documentation, staff would be able to search past procurements for key terms.
Benefits of Document Centralization:
3 Increased Productivity: Currently, staff must search a variety of different locations when looking for needed documentation. By centralizing documentation on a single SharePoint site, staff should be able to more easily locate the documents they need. 4 Version Control: SharePoint can be configured with version control and change log functionality to record if documentation is inadvertently altered and restore the documents to a previous version.
Note: The City of San José has access to SharePoint through Microsoft 365. The Information Technology Department is working to implement the software citywide.
May 10, 2022
Technology to Automate Processes
Workflow automation can decrease workload and timelines Business Need Current processes are largely manual and email-based Recommendation Leverage workflow automation to streamline processes and improve compliance Leveraging workflow automation tools will enable the City to use rule-based logic to automate a series of procurement-related tasks that will run independently without human intervention. By leveraging self-operating processes to run manual tasks, workflow automation would save time, diminish errors, and boost productivity.
Workflow Automation Example (Procurement Triaging):
Procurement Intake Request Triaging Request Submission Request Actioning Regular Updates 1 2 3 4 5
74 Benefits of Workflow automation Potential Solutions
The department submits their
business need and relevant
information through an online
tool, which assigns the
procurement an identification
number
The tool evaluates the
provided business
need information and assigns
the applicable procurement
strategy
The tool guides the procuring
department through
collecting and completing the
required information. The
documentation is all stored
within the tool
The procurement and
accompanying
documentation is sent to
Purchasing via SharePoint to
be actioned
Based on the identification
number, both the procuring
department and the
Purchasing Division can
regularly review the
procurement’s status
Workflow automation allows for improved accountability and transparency as the automation breaks the process down into easily trackable steps
The centralization of documentation within a single tool allows for improved collaboration between and within departments during the procurement process If provided with specific criteria, the approval and prioritization processes can be automated, removing Purchasing from the potentially political approval and prioritization process Potential workflow automation solutions include:
• SimpliGov – Already in use within the City
• Power Automation & SharePoint
• UI Path
• Automation Anywhere
• Blue Prism
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75 Implement a Procurement Management Solution
Streamlining workflows through technology
Business Need The City lacks technological tools to streamline procurement workflows and decrease processing times Recommendation Procure and implement a new centralized procurement management solution Procurement management solutions offer an additional layer of functionality on top of process automation. Procurement management solutions vary in functionality, cost, and degree of integration with other City platforms. Some systems, such as Workday, offer an end-to-end integrated approach, whereas procurement specific platforms, such as Ivalua, are limited to procurement. 1 2 3
Leverage Existing Platforms Procurement-Specific Solutions Citywide Integrated Platform* Solution Details
Leverage current technologies that exist within San
José’s information technology architecture. While
some technologies might not be designed for
procurement, they could potentially be repurposed.
A procurement-specific tool that delivers on a
singular value proposition for the City. It would be a
best-of-breed solution specific to Procurement, but
potentially be of limited benefit to the larger
organization.
A tool with multiple modules (e.g., procurement,
human capital) that offers an integrated approach to
service delivery within the City. The solution would
provide data storage and automatic connections
across City processes.
Potential Benefits
By leveraging existing technology, the Purchasing
Division could potentially shorten implementation
timelines and reduce overall project cost.
A procurement specific tool would likely bring a
higher degree of procurement functionality and
would be optimized to the needs of the Purchasing
Division
A citywide integrated platform would consolidate
end-to-end City processes in a single solution,
creating cross-department efficiencies and
improving how the City provides services.
Example Solutions
Potential currently implemented solutions include
Salesforce, Oracle, and the Microsoft product suite.
Example procurement-specific tools include Ivalua,
Coupa, and Ariba. Each has specific strengths.
Hypothetical citywide platforms could be Workday,
ServiceNow, or Microsoft Dynamics.
May 10, 2022
*Note: The City is currently developing a strategy for a new enterprise resource planning (ERP) solution to replace FMS. Given FMS’soutdated nature, promptly replacing FMS should be a priority for the City and offers an opportunity to add procurement management into a larger integrated software solution. 76 Implementation
Guide
Implementing the Future State Vision
May 10, 2022
77 Implementation Guide
Next steps to improve procurement performance
Backlog Process Policies People Technology
Key:
Hire Staf f
Augmentation Redesign Intranet
Centralize
Documentation
Modif y Wage
Thef t Policy
Hire Analy sts
Expand usage of
Cooperativ e
Agreements
Cleanse Data
Inf ormal
Procurement
Redesign
Dev elop
Competency
Framework
Dev elop Demand
Management
Update P -Card
Training
Dev elop
Additional
Trainings
Automate KPI
Tracking
Transition to
Business Needs
Focus
Adjust
Competitiv e
Procurement
Threshold
Dev elop
Procurement
Training Program
Dev elop Vendor
Outreach
Program
Procurement
Management
Sy stem
Dev elop Future
Staf f ing Plan
Staf f f or Demand
Growth
Rev ise City
Manager Signing
Authority
Consulting
Procurement
Ov ersight
Rev ise Local
Business
Pref erence
Dev elop
Alternativ e
Recruitment
Strategies
Centralize
Consulting
Procurements
Onboarding
Standardization
Dev elop
Alternativ e Entry
Buy er Program
Dev elop
Municipal Code
Rev iew Process
LMS
Implementation
Workf low
Automation
Quick Wins (0-1 year) Medium-Term (1-2 years) Long-Term (3+ years) The Implementation Guide details a phased approach to implementing this report’s recommendations for improving and maturing the City’s procurement processes. Each task highlights a specific recommendation designed to address a unique need within the City.
Quick wins are lower effort remediations that can be implemented within a year and help address immediate needs of the City.
Medium-term and Long-term tasks are more complex and require increased coordination.
May 10, 2022
Consulting
Procurement
Centralization
Consulting
Procurement
Ov ersight
Consulting
Process
Standardization
Consulting
Procurement
Throughput
Support
78 Implementation Resources
Key resources required to implement recommendations
The implementation of the proposed recommendations is critical for improving the City’s procurement processes and getting City departments needed goods and services with minimal risk. However, implementing the recommendations will require City departments to dedicate significant time and resources to the endeavor.
Project Funding Procurement Staff Time Institutional Buy-in Implementation Need
Successfully implementing the proposed
recommendations will require the City to increase
procurement-related funding to fund new positions,
implement procurement technologies, and develop
new documentation.
As the City’s procurement experts, the Purchasing
Division is responsible for implementing and
supervising many of the suggested
recommendations. This will require significant
Purchasing Division staff time during the
implementation phase.
Procurement is multi-faceted and collaborative. For
procurement process improvements within the City
to be successful, both the Purchasing Division and
City departments must be committed to
implementing the recommendations within a timely
manner.
Anticipated Challenges
The City of San José has limited funding and
competing priorities. While procurement is important
to ensuring the functionality of the City, there may be other equally important initiatives.
The Purchasing Division team is already
understaffed and lacks the capacity to action
procurements in a timely manner. Adding additional
implementation responsibilities may overstretch the
Division.
As the full implementation of the suggested
recommendations may take up to five years, City
staff may begin to lose enthusiasm for and
commitment to procurement process improvements.
Potential Solutions
While some recommendations require additional
funds, many do not. If necessary, the City should
prioritize recommendations that do not require
additional budget resources.
The Purchasing Division can leverage staff
augmentation and consulting services to relieve
pressure on the Division and help with implementing
the suggested recommendations.
To maximize current institutional support, the City
should focus on implementing the recommendations
in the most expeditious manner possible.
May 10, 2022
Budgetary Constraints
Some recommendations require additional funding from City Council. Given competing priorities within the City, the City Council may be hesitant to provide additional funding for procurement-related initiatives.
Resistance to Change
As many of the recommendations in this report involve significant modifications to current procurement processes, some staff may resist change or actively fight against the proposed changes.
Implementation Priority
City staff may place a higher priority on other City projects, making it difficult for procurement improvements to get the priority they deserve.
Staff Turnover Delaying Implementation
Given the high turnover rate present throughout the City, effectively capturing procurement-related knowledge and maintaining consistent procurement processes is difficult.
Policy Considerations
Several recommendations require changes to the City’s Municipal Code or established City policies. As changing these requires buy -in from a variety of stakeholders, it may be difficult implement some of the changes. 79 Avoiding Implementation Risks
Mitigating risks to promptly implement recommendations
May 10, 2022
Effective Change Management
Lay the Groundwork Early
Focus on Procurement’s Reach
Work Within Constraints
Ensure City Council and other key stakeholders are aware of the City’s procurement needs early in the budget process and the impact of those needs is well communicated.
Develop and execute an effective change management and
communication plan to ensure staff are aware of and aligned to upcoming changes.
Procurement touches just about every department within the City.
Stressing procurement’s importance to City functionality is key to ensuring procurement improvements are prioritized appropriately.
Potential risks hamper the City’s ability to effectively and efficiently implement the recommendations within this report. Mitigating risks is critical to ensuring the success of this initiative and positioning the City’s procurement processes for future success.
Potential Implementation Risk: Risk Mitigation Strategy:
Document Processes and Changes
By developing detailed, comprehensive process documentation, the City can minimize the impact of attrition on the City’s ability to efficiently procure needed goods and services.
Proactively communicate how current policies impact procurement timelines and the quality of the vendors the City works with.
80 Leveraging Effective Change Management
Mitigating change resistance to improve performance
When undertaking any large-scale change effort, effective change management is critical for unlocking organizational resistance, building stakeholder support, and ensuring customers can successfully leverage processes to achieve proper outcomes. With large- scale policy, process, or technology changes, change management can make the difference between success and failure for an organization.
Identify
Priorities
Establish a Clear
Vision
Engage Affected
Stakeholders
Communicate
Changes
Train Staff
Identify organizational goals and prioritize changes
appropriately to achieve goals within a reasonable
timeframe
Develop a shared future state vision and demonstrate to staff how the proposed changes support that vision
Engage impacted stakeholders to answer questions and
clarify expectations
Effectively communicate when and how policies and
processes will be changed so that staff are aware
Provide training to staff as necessary to help them feel confident with the implemented changes
Organizational Output
Time
Key: Change Implemented
May 10, 2022
Components of Effective Change Management: Impact of Change Management:
81 Your Guides
Collin Lopes
Partner
[email protected]
(916) 549-7393
Berry Lefler
Associate Director
[email protected]
(916) 631-3226
Steven Duart
Associate Director
[email protected]
(916) 631-3234
Blake Brooks
Senior Consultant
[email protected]
(301) 807-0441
Ryan Levy
Consultant
[email protected]
(307) 413-7933
May 10, 2022
82 Appendix
Additional information relevant to the
Future State Vision
May 10, 2022
83 Audit Report Mapping
Designing solutions to City Auditor findings
Audit Recommendations
May 10, 2022
84 Addressing Audit Findings
How the Future State Vision mitigates audit findings
Audit
Year
Report
# Audit Recommendation Future State Vision Recommendation Page #
2010 09
Recommendation #1: We recommend the Finance Department revise the p-card policy to require simple descriptive annotations on receipts or statements that describe the intended use of the purchases, as well as the intended location, and if applicable, the number of people intended to use the purchased items or services. • Status: Mitigated
• Mitigation Strategy: Increase P-Card-related trainings and develop a straightforward, comprehensive P-Card policy document
• Implementation Timeframe: Within One Year
64 2013 06
Recommendation #5: The City Manager’s Office should revisit the role of the Finance Department with respect to consultant procurements, evaluating whether its current level of involvement and resources is adequate.
• Status: Mitigated
• Mitigation Strategy: The City hired a consulting firm to assess the Finance Department’s involvement in the consulting services procurement process • Implementation Timeframe: Within One Year
46 2013 06
Recommendation #7: To lessen the burden on City staff while fostering improved competition in consultant procurements, the Finance Department should include in its annual procurement training simplified procurement processes for smaller consulting contract procurements while encouraging full and open competition and define when these simplified processes can be used.
• Status: Mitigated
• Mitigation Strategy: Revise informal procurement process to stress policy compliance. Once processes are implemented and sufficient documentation developed, the process could be expanded to consulting services • Implementation Timeframe: Within Two to Five Years
43 2013 06
Recommendation #8: We recommend that the City
• Reconcile overpayments as described above and get reimbursed for these overpayments,
• Document any changes in consulting contract terms or requirements through a formal contract amendment and enforce existing contract terms. If the contract allows for changes in terms without amendments, such changes should be documented in writing, and
• Require contract managers to reconcile previously received deliverables to contract payments during the amendment process, prior to increasing contract amounts. • Status: Mitigated
• Mitigation Strategy: To improve consulting services contract oversight, the Future State Vision recommends increasing consulting services procurement - focused training resources and standardizing those resources to ensure departments adhere to consistent practices. The Future State Vision also recommends spot audits to improve procurement and contract management compliance monitoring
• Implementation Timeframe: Within One Year
46, 61
While providing a comprehensive vision for the future of procurement in San José, the Future State Vision also provides actionable strategies to address currently outstanding procurement-related audit findings. By addressing audit findings in a detailed manner, the City of San José can increase regulatory compliance, decrease cost, and deliver better value for the City’s residents.
May 10, 2022
85 Addressing Audit Findings
How the Future State Vision mitigates audit findings
Audit
Year
Report
# Audit Recommendation Future State Vision Recommendation Page #
2013 06
Recommendation #9: We recommend the Administration develop Citywide policies and procedures on contract monitoring and management including:
• a standardized contract management process,
• organization of contract files,
• checklists for tracking agreed-upon deliverables and line-item budgets, • components of invoice review which link payments to contract deliverables, and • documenting deliverables prior to payment.
We further recommend that the City require contract administrators to annually certify they have reviewed and understand those policies and procedures. • Status: Partially Mitigated
• Mitigation Strategy: Increased collaboration between Purchasing and other City Departments may allow the City to better monitor and manage contracts.
Additionally, recommendations around improved training and documenting best practices should lead to a better understanding of policies and procedures
• Implementation Timeframe: Within One Year
60, 62
2013 06
Recommendation #11: We recommend the Administration ensure that:
• Staff managing contracts conform with current City contract retention policies and, consistent with those policies, keep all documents related to contract procurement, compliance and monitoring, including all documents related to contract renewals, amendments, continuation agreements, and other contract modifications; and • Require staff to include a notation regarding the City’s retention policies in each individual contract file.
• Status: Mitigated
• Mitigation Strategy: Recommend new, consistent training program for contract management that is tailored to the needs of each role within the contract management process. Additionally, recommendations around improved training and documenting best practices should lead to a better understanding of policies and procedures
• Implementation Timeframe: Within One Year
62 2013 06
Recommendation #13: We recommend that the City Administration include the City’s Conflict of Interest and Ethics policies in its annual procurement and contract monitoring training.
• Status: Mitigated
• Mitigation Strategy: Redesigned training programs for all constituents in the procurement process structured around a set training curriculum • Implementation Timeframe: Within One Year
61, 62
2013 12
Recommendation #8: The Administration should require, through the City Procurement Card Policy, that procurement card approvers attach travel coordinator -approved Travel Statements as supporting documentation for travel-related procurement card expenditures.
• Status: Mitigated
• Mitigation Strategy Description: Increase P-Card-related trainings and develop a straightforward, comprehensive P-Card policy document • Implementation Timeframe: Within One Year
64 May 10, 2022
86 Addressing Audit Findings
How the Future State Vision mitigates audit findings
Audit
Year
Report
# Audit Recommendation Future State Vision Recommendation Page #
2014 07
Recommendation #1: We recommend that the Finance Department revise the Procurement Card Policy to:
• Emphasize the responsibility cardholders must make prudent purchases; • Include questions that guide cardholders to evaluate the reasonableness of their purchases;
• For purchases that require IT approval, require documentation of that approval be attached to P-card statements;
• Change the approval process for Council appointees to require review by the Finance Department and referral to the Mayor’s Office or City Council in cases of potential policy violations;
• Clarify the department coordinator’s responsibility to notify Finance of all violations and that Finance only need refer personal purchases to OER; and • Establish a process to have frequent contact via email with department coordinators to remind them of important policies and procedures.
• Status: Addressed by the City
• Mitigation Strategy: Redesigned P -Card training program built around a new, simplified P -Card usage guidance document with clearly defined compliance mechanisms and punishments for non-compliance. The Finance Department is also working on actively updating policies to address this recommendation.
• Implementation Timeframe: Within One Year
64 2014 07
Recommendation #3: To improve transparency, accountability, and legibility, the Finance Department should create a pilot program that:
• Begins the transition to online approvals, payment code entries, annotations and general finance coding (office supplies, travel, etc.); • Considers requiring monthly statements of activity be signed by cardholders and approving officials to ensure that all transactions are authorized; • Allows individual departments to collect, store, and submit receipts in PDF; and • States that sufficient documentation of p-card purchases includes line -item transaction detail stored in Access Online for a list of approved vendors (e.g., Office Max). • Status: Partially Mitigated
• Mitigation Strategy: As a stopgap solution, the City is working with the financial management system vendor (Cayenta) to see if FMS can integrate with US Bank’s software. Longer term, the City should look to upgrade the City’s current financial system (FMS) to a modern, integrated system that allows for the digitization of paper procurement practices and seamless integrations with other software systems (e.g., US Bank) • Implementation Timeframe: Within Two to Five Years
74 2014 07 Recommendation #7: The City Administration should ensure that P-card expenditures accurately categorize expenditures by type of budgetary purposes. • Status: Addressed by the City
• Mitigation Strategy: Redesigned P -Card training program built around a new, simplified P -Card usage guidance document and expanded use of spot audits to capture non-compliant purchases. The Finance Department is also working on actively updating policies to address this recommendation. • Implementation Timeframe: Within One Year
64 May 10, 2022
87 Addressing Audit Findings
How the Future State Vision mitigates audit findings
Audit
Year
Report
# Audit Recommendation Future State Vision Recommendation Page #
2019 06
Recommendation #4: The Administration, as it develops Citywide guidelines on contract management, should clarify responsibilities for consultant Form 700 filing compliance, including:
• Coordinating with the City Clerk’s Office to ensure all consultants are appropriately identified in the e-filing system,
• Verifying consultants meet all filing requirements and following up with non -filers, and • Collecting alternative/personal email addresses to facilitate follow-up for consultant leaving office filings.
• Status: Mitigated
• Mitigation Strategy: Recommend new, consistent training program for contract management that is tailored to the needs of each role within the contract management process
• Implementation Timeframe: Within One Year
62 2019 07
Recommendation #1: The Finance Department should:
• Periodically (at least monthly) review list of separated employees and ensure that P- cards of employees on that list are immediately deactivated, and • Clarify policy expectations to deactivate p-cards when employees are on leaves. • Status: Mitigated
• Mitigation Strategy: Leverage a revised P-Card training program to clarify P- Card-related roles and responsibilities and develop a more rigorous P-Card recertification quiz to ensure staff understand the policy • Implementation Timeframe: Within One Year
64 2019 07
Recommendation #2: The Finance Department should:
• Develop a process to annually share recertification data with P-Card coordinators so departments can easily cross -check and verify compliance with the recertification quiz, • Require P-card holders that have not completed the recertification to immediately do so, and
• Suspend P-cards for employees that do not comply with the recertification requirements within an agreed -upon timeframe.
• Status: Mitigated
• Mitigation Strategy: Monitoring to ensure all P-Card users pass the recertification quiz and predetermined, enforceable sanctions for employees who do not pass or fail to complete the quiz
• Implementation Timeframe: Within One Year
64 2019 07
Recommendation #3: To help employees comply with applicable purchase requirements, Finance should:
• Aggregate all policies and guidelines applicable to P-card purchases, including furniture purchases, in an easy and user -friendly resource available on the City’s intranet site; and
• Work with Public Works to clarify restrictions on vehicle related P-card expenses and that any questions regarding such purchases be directed to Public Works’ Fleet Division and include such guidance in the P-card administrative guide. • Status: Mitigated
• Mitigation Strategy: Increase P-Card-related trainings and develop a straightforward, comprehensive P-Card policy document
• Implementation Timeframe: Within One Year
64 May 10, 2022
88 Addressing Audit Findings
How the Future State Vision mitigates audit findings
Audit
Year
Report
# Audit Recommendation Future State Vision Recommendation Page #
2019 07
Recommendation #4: The Finance Department should work with the Information Technology Department to clarify whether cloud-based subscriptions are considered services and whether these types of services require Information Technology Department approval.
• Status: Already Addressed
• Mitigation Strategy: Assessment Team were informed cloud -based subscriptions are considered services and are subject to ITD review • Implementation Timeframe: N/A
N/A
2019 07
Recommendation #5: We recommend Finance work with Office Depot to review past pricing and purchasing data to determine and ensure the City received:
• Discounts on non -contracted items;
• Appropriate rebates, including those based on the sales of “piggybacked” cities; and • Appropriate pricing under the terms of the agreement. • Status: Already Addressed
• Mitigation Strategy: The Finance Department reported they are already working with Office Depot to review past purchases and recover any missing benefits
• Implementation Timeframe: N/A
N/A
2019 07
Recommendation #7: The Finance Department should:
• Include in its department P-card coordinator training expectations about on-going monitoring of P-card purchases to ensure that departments are appropriately utilizing Citywide and department -specific open purchase orders when applicable; • Work with the Information Technology Department to ensure that related purchase order information is available in all browsers, or that purchase orders specifically clarify that the related information is only available through Internet Explorer Browsers. • Status: Mitigated
• Mitigation Strategy: Develop a comprehensive procurement decision tree to guide departments in selecting the proper procurement strategy and that all procurements receive the necessary reviews. Additionally, increase P-Card- related trainings and develop a straightforward, comprehensive P-Card policy document
• Implementation Timeframe: Within One Year
64 May 10, 2022
89 Research and Methodology
Ensuring recommendations meet the City’s needs
Recommendation Development
May 10, 2022
90 Approach to Developing the Future State Vision
Creating a shared ideal for procurement within San José 02 Visioning Sessions
The visioning sessions represent an
opportunity for City stakeholders to build a
shared vision of the future of procurement
within San José
04 Mission Considerations
The Future State Recommendations should
further both the City’s overall and
procurement-specific mission and vision
Future State
Recommendations
Current State Assessment
The Current State Assessment documents
where San José’s procurement processes
are now and what areas for improvement
exist
03 Leading Practices Research
Analysing what peer cities are doing
represents an opportunity to build San
José’s processes off of national best
practices
01 May 10, 2022
91 Current State Assessment
The current state of procurement in San José
Built on an in-depth review of the procurement-related people, processes, and technology within the City of San José, the Current State Assessment provided a comprehensive overview of the City’s procurement strengths and weaknesses, while identifying numerous opportunities for improvement.
Current State Assessment Methodology:
Current
State
AssessmentPeer City
Research
Tools, Process,
& Technology
Review
Workload
Modeling
Stakeholder
Interviews
Tools, Technology, & Process Review
Workload Modeling
Stakeholder Interviews
Peer City Research
As part of our assessment, and to get a holistic
understanding of procurement in San José, we
interviewed 76 City staff members. Staff
members interviewed included Purchasing
T o understand leading practices nationwide,
we compared San José’s procurement
practices, limits, and staffing to peer cities
across the country. Peer Cities included other
tech hub cities, cities with similar populations,
and cities from within California.
Division staff, City leadership,
Procurement Customers, and
department-led procurement
stakeholders.
With the aim of understanding what resources
are available to procurement stakeholders
internal and external to the Purchasing
Division, we reviewed resources available on
the Purchasing Division’s intranet page,
shadowed City staff as they used FMS, and
diagramed procurement processes.
T o calculate how the Purchasing
Division’s staffing compared to demand
for their services, we modeled their
workload over the past three financial
years.
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92 Visioning Sessions
Creating a shared vision of procurement within the City As this project’s goal is to create lasting improvements that drive comprehensive procurement-related changes, capturing the needs of key stakeholders is critical. To allow Purchasing Division staff members, procurement customers, procurement stakeholders,and City leadership to help shape the future state vision, the Assessment Team held five visioning sessions.
Visioning Session Topics and Participants
Day 1: Opening Day 2: IT Procurements Day 3: Customer Deep -dive Day 4: Procurement Innovation Day 5: Conclusion Agenda Items:
• Introduction
• Purpose of the assessment
• Assessment timeline
• Current state overview
• Goals for the sessions
• Mission statement exercise
Agenda Items:
• Current state IT deep -dive
• Aligning the IT procurement process
• Process efficiency discussion
Agenda Items:
• Customer/stakeholder support and
training
• Grants and emergency
procurements discussion
• Equitable procurement
considerations
Agenda Items:
• Aligning procurement with the City
Roadmap
• Procurement Prioritization Board
process discussion
• Opportunities for innovative
approaches to procurement
Agenda Items:
• Key takeaways
• Mission statement revisions
• Key performance indicators
discussion
• Governance model design
• Next steps
Attendees:
Julia Cooper, Luz Cofresi -Howe,
Jennifer Cheng, Jessica Lowry, and
Sarah Zarate
Attendees:
Jennifer Cheng, Vickie Davis, Rob
Lloyd, Judi Torrico, Ho Nguyen, and
Matt Loesch
Attendees:
Jennifer Cheng, Bernie Reyes, Vickie
Davis, Lisa Watt, Fletcher Barnes,
Sabrina Parra, Lauren Profeit, David
Mesa, Rachel Ramirez, Ann
Grabowski, Bob Lockhart, Walter Lin,
Jessica Lowry, and Sarah Zarate
Attendees:
Luz Cofresi -Howe, Jennifer Cheng,
Vickie Davis, Rob Lloyd, Dolan
Beckel, Jessica Lowry, Sarah Zarate
Attendees:
Julia Cooper, Luz Cofresi -Howe,
Jennifer Cheng, Jessica Lowry, and
Sarah Zarate
Visioning Session Key Themes:
City staff expressed a clear desire for the Purchasing Division to transition from simply owning a process (procurement) to leveraging a consulting-based model to serve as a strategic partner to departments.
Purchasing Division’s Role
Across both the department-led and Purchasing Division-managed procurement processes, City staff strongly requested additional training and oversight of the procurement process.
Increased Training
May 10, 2022
93 Peer City Best Practices Research
Best practices from other cities across the country
Building off the peer city research conducted as part of the Current State Assessment, the Assessment Team referenced peer City practices while developing the future state recommendations. By combining peer City processes, national leading practices, and strategies from other industries the goal is to design best-in-class recommendations customized to San José’s needs.
King County
City of San Antonio
City of San Diego
City of Austin
City of San Francisco
City of Los Angeles
Santa Clara County
Peer City:
When crafting a mission statement for procurement within San José, the Assessment T eam used on King County’s mission statement as an example.
The Assessment T eam leveraged Santa Clara County’s mission statement as an example when designing a procurement mission statement for San José.
The City of San Antonio has a unique threshold for determining when a contract needs City Council approval based on the total amount appropriated for the contract.
The City of San Diego served as a useful benchmark for determining the appropriate qualification criteria for a Local Business Enterprise.
Reason for Inclusion: Reason Peer City:
As a City with stringent Local Business Enterprise criteria, the City of Austin was a useful reference point for drafting an appropriate recommendation for San José.
The City of San Francisco’s Local Business Enterprise criteria were used as a benchmark to compare the City of San José’s against.
The City of Los Angeles served as a reference when determining potentially appropriate Local Business Enterprise qualifications for the City of San José. • Similar Population
• Technology Presence
• California
• Proposed by San José
• Similar Population
• Proposed by San José
• Similar Population
• California City
• Similar Population
• T echnology Presence
• California City
• T echnology Presence
• California City
• Proposed by San José
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94 Procurement Mission Considerations
Furthering the City’s procurement mission
Over the course of the engagement, the Assessment Team worked with City leadership to develop and refine a procurement mission statement for the City. The mission statement outlines the City’s key procurement objectives and goals, providing a clear sense of direction for City staff.
Mission Statement Development Process:
As stewards of public funds, the City of San José facilitates a transparent, competitive process that responsibly, equitably,and efficiently procures goods and services at the best value for the City.
Determine Key Values Draft Statement Solicit Input Revise Statement Communicate 1 2 3 4 5
Determine the City’s key
procurement values
Leveraging the key values,
draft an initial version of
the mission statement
Solicit input from
stakeholders to refine the
mission statement
Revise the mission
statement based on
stakeholder input
Communicate the mission
statement outwards
San José Procurement Mission Statement
Reasons for Developing a Mission Statement:
A procurement mission statement allows the City to anchor and rank improvements to the City’s procurement processes around a clearly articulated view of the City’s priorities and aspirations. Key areas addressed by a mission statement include:
1 Organizational Oversight: Across both the department-led and Purchasing Division-managed procurement processes, organizational oversight and governance should be customized to monitor if the City is on track to deliver on its procurement mission and goals. 2 Procurement Prioritization: Procurements should be prioritized based on their importance to the City’s overall and procurement-specific mission and goals. 3 Key Performance Indicators: Key performance indicators should be designed to measure the City’s progress towards its mission and vision.
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95 Model Assumptions
For both the T actical and Strategic
Procurement T eams
Staffing Needs Modeling
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96 Tactical Procurement Model Assumptions
We made limited assumptions to ensure an accurate model Model Assumptions:
1 2
3 4
5 All staff work 5 hours of weekly overtime in June and July to accommodate open season. Additionally, a Buyer III worked 50hrs per week from May 2021 through November 2021.
All new staff require 6 months to be fully onboarded and achieve full output.
The Tactical Procurement Team will not begin working on requisitions for the next fiscal year until they have fully worked through that year’s backlog.
Department IT Manager dedicates at most 2.5hrs per week to activities associated with the Tactical Procurement
Team. Similarly, for the time they are working as the
technology buyer, a Senior Analyst will dedicate at most 5hrs a week to tactical procurement activities.
The Tactical Procurement Team cancels all outstanding
requisitions at the end of the fiscal year. Of the canceled requisitions, half will be reentered as they are for critical goods or services.
6The number of requisitions the Tactical Procurement Team receives in a month remains consistent with previous years.
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97 Strategic Procurement Model Assumptions
We made limited assumptions to ensure an accurate model Model Assumptions:
1 2
3 4
5 All team members on the Strategic Procurement Team work a standard 40hr work week.
All new staff require 6 months to be fully onboarded and achieve full output.
The Department IT Manager dedicates 2/3 of their time to tasks directly associated with the Strategic Procurement Team. The Deputy Director dedicates 1/8 of their time.
Analysts and senior analysts are equally productive and can be treated interchangeably for the purposes of
estimating workload.
All projects are logged in the Strategic Projects Log and the Strategic Procurement Team does not work on any
activities that are not logged.
Strategic Procurement Team
Activity
Median Workload Units to
Complete
RFP 301
RFQ 152
Option Processing 37
Unique Services Exception 18
Amendment 56
Contract 81
Department Internal 60
Unknown 36.5
Council Memo 73.5
Change Order 46
RFB 136
Vendor Notice 14
Pilot Program 67
RFI 68
Brand Name/Sole Source 129.5
Purchase Order 42
Agreement T ermination 24.5
Cooperative Agreement 66
Service Order 14
Workload Assumptions:
May 10, 2022