CPA Texas Government Basic Public Purchasing
January, 2014
CPA TEXAS GOVERNMENT
BASIC PUBLIC PURCHASING
Provided By the
Comptroller of Public
Accounts
CPA Texas Government Basic Public Purchasing
January, 2014
Try to complete the crossword puzzle without looking in your book!
Across
3. Someone who is authorized to act on behalf of someone
else
4. A supplier of goods and/or services
8. An offer to contract with the state
10. __________Purchase - A purchase method used to order
goods in bulk
Down
1. The result of final negotiations with responsive vendors
during the RFP process
2. _________Bid - A formal written bid opened in public at
a designated time and place
5. A set of moral principles or values
6. To remove oneself from participation to avoid a conflict
of interest
7. An addition or supplement to a solicitation document
9. The performance of duties helpful to others excluding
the delivery of a tangible product
CPA Texas Government Basic Public Purchasing
January, 2014
Basic Public Purchasing Objectives
Overall Course Objectives
From this course the learner will be able to:
•
•
•
•
•
•
•
•
•
•
•
•
Demonstrate a general knowledge of Texas Public Purchasing
requirements.
Perform purchasing responsibilities in an ethical manner.
Explain the various steps in the procurement cycle.
Prepare flexible, accurate, clear, competitive, and simple (FACCS)
specifications.
Select the state approved purchasing method that will result in a best value
acquisition for the state.
Define their delegated purchasing authority.
Compare and contrast bids and proposals.
Navigate the CPA website to find needed information.
Pass each “Test your Knowledge” quiz with 100% accuracy
Pass the BPP Mini Quiz with 83% accuracy (10/12)
Enter the APP class (if required) with a minimum knowledge base.
Master the objectives of each section in the workbook.
Purchasing Profession Overview
After this section the learner will be able to:
•
•
•
•
•
Define purchasing
Name at least three current trends in public purchasing
Identify the four basic public purchasing principles
Name the steps of the procurement cycle in the correct order
Explain the State of Texas purchasing and continuing education
requirements
Ethics and the Law
After this section the learner will be able to:
•
•
•
Execute an ethical course of action in a conflict of interest
Follow proper procedure when made aware of an ethical violation
List the seven criteria required to form a legal contract
Specifications
After this section the learner will be able to:
• Identify the six specification types
• Know the advantages and disadvantages of each type
• Identify the risk associated of specification and which type of specification
to use for various purchases
CPA Texas Government Basic Public Purchasing
•
January, 2014
Differentiate between good and effective specification writing
Texas Purchasing Methods
After this section the learner will be able to:
•
Identify and explain the basic usage of the 14 state approved purchasing
methods
• Memorize the delegated purchasing table
Sourcing and Solicitation
After this section the learner will be able to:
•
•
Name the two main sources for vendor location
List the three types of basic solicitation methods and the five methods
used to solicit a bid
Receiving Bids and Proposals
After this section the learner will be able to:
•
•
•
Differentiate between the informal and formal bidding process
Identify the steps in the IFB and RFP process in order
Differentiate between Competitive Sealed Bids and Competitive Sealed
Proposals and identify instances when either is appropriate
Logistics
After this section the learner will be able to:
•
•
Distinguish FOB Destination from FOB Origin
Follow an appropriate course of action when damaged or incorrect orders
are received
Reporting Requirements and Documentation
After this section the learner will be able to:
•
•
•
•
Know when major agency reports are due
Categorize purchase vouchers into Doc types 2 and 9
Name the most common audit finding
Determine the purpose of PCC codes
Copyright © 2005
by
Comptroller of Public Accounts
-All Rights Reserved-
CPA Texas Government Basic Public Purchasing
January, 2014
TABLE OF CONTENTS
Introduction
1
Purchasing Profession Overview
What is Purchasing?
Purchasing Trends
Basic Public Purchasing Principles
Surplus Property
The State of Texas Procurement Cycle
The Purchasing Process
State of Texas Training and Certification Program
Professional Organizations
Test Your Knowledge
2
3
4
5
6
8
9
11
13
15
Ethics and the Law
Ethics in State Purchasing
Conflict of Interest
Ethical Resources
Texas Purchasing Statutes, Rules and Policies
Test Your Knowledge
16
17
19
20
21
26
Specifications
Introduction to Specifications
Specification Types
Writing Specifications
Test Your Knowledge
27
28
29
30
32
Texas Purchasing Methods
State Approved Purchasing Methods
Delegated Purchasing
Test Your Knowledge
33
34
43
45
Sourcing and Solicitation
Sourcing
Historically Underutilized Business (HUBs)
Solicitation
Test Your Knowledge
46
47
49
53
57
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CPA Texas Government Basic Public Purchasing
January, 2014
Receiving and Evaluating Bids and Proposals
Introduction
Bids
58
59
60
Proposals
Purchasing Preferences
Compare and Contrast (Competitive Bids vs. Competitive Proposals)
Test Your Knowledge
63
64
66
68
Logistics
Shipping
Carrier Shipping Methods
Receiving
Inspection
Test Your Knowledge
70
71
72
73
74
76
Reporting Requirements and Documentation
Reporting Requirements
Procurement Audit
Test Your Knowledge
77
78
83
85
Glossary
Acronyms
Class Exercises
Additional Worksheets, Information & Templates
ii
86
93
95
106
CPA Texas Government Basic Public Purchasing
January, 2014
INTRODUCTION
The Comptroller of Public Accounts (CPA) is committed to the education and professional
development of state purchasers. It is through this commitment that we provide training
opportunities that allow you, as a state purchaser, to manage your level of success and career
path.
State purchasers face many challenges. As a state purchaser, you are one of many departments
within your organization, and you may even work in a field or branch office. Therefore, you
must manage a large part of your organization that you cannot see, and work with people you
may never meet. Each department is motivated by different goals, and may have different
cultures from the purchasing department. Your toughest yet most important job is to help
identify and meet the needs of such a diverse group of customers by procuring goods and
services at the best value for the state.
Although the job of purchasing is challenging, it is through those challenges that you have an
opportunity to excel in the profession. By being a proactive purchaser you can help your
organization become more responsive, increase service levels, reduce expenditures, and achieve
best value acquisitions for the state.
This workbook is designed to provide entry-level state purchasers with a broad overview of the
purchasing profession. It was written and edited by a team of Certified Texas Purchasers (CTP),
Certified Texas Procurement Managers (CTPM), and subject matter experts (SMEs). You can
feel confident that the information presented in this workbook will provide you with the basic
information you need to begin your career as a State of Texas purchaser and help you succeed in
your goals toward state purchasing certification; however, this workbook is not a step-by-step
guide. Purchasers should refer to state statute, state procurement rules, the State of Texas
Procurement Manual, and other resources identified throughout this workbook for assistance
with daily purchasing procedures.
The staff of CPA’s Training and Certification Program wishes you success with your
professional development endeavors.
1
CPA Texas Government Basic Public Purchasing
January, 2014
PURCHASING PROFESSION
OVERVIEW
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CPA Texas Government Basic Public Purchasing
January, 2014
WHAT IS PURCHASING?
Congratulations, you’re a public purchaser. Now what? Do you understand what that means?
Do you realize your responsibilities? Let’s find out.
Please take a minute to write down your definition of “purchasing.”
How did you do? Did you struggle with a definition? Did you include key words and phrases
like purchase, materials, equipment, services, satisfy needs, best value, lowest price, highest
quality, etc? If you are new to purchasing, some of these terms may not be familiar. The
glossary at the back of this workbook provides definitions for common words you will encounter
in the purchasing profession.
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CPA Texas Government Basic Public Purchasing
January, 2014
PURCHASING TRENDS
Past vs. Present
Old Days
Current Trends
Bidding out all requirements.
Improving the process by involving multiple
parties in the planning process.
Multiple transactions.
Reducing overall costs.
Always awarding to the lowest bidder.
Obtaining best value.
Process driven without thought.
Performance driven process.
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CPA Texas Government Basic Public Purchasing
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BASIC PUBLIC PURCHASING PRINCIPLES
The following four basic public purchasing principles are inherent in the foundation of public
purchasing:
Competition
Competition is considered the anchor of most state purchasing statutes, and can be
defined as the process by which two or more vendors attempt to secure state business by
offering the most favorable price, quality, delivery, or other terms of service.
Competition reduces the opportunity for favoritism and inspires public confidence that
contracts are awarded equitably and economically. The requirement for competitive
bidding is specified in Gov’t Code, §2155.063. Since the state benefits in a competitive
environment, purchase methods like proprietary and emergency purchases that limit
competition are generally discouraged.
Public Notice
To ensure there is a competitive environment for purchases, it is essential that multiple
motivated vendors participate in the procurement process. The state utilizes several tools
to facilitate a competitive environment via public notice. The Centralized Master
Bidder’s List (CMBL) provides a list of vendors registered to receive solicitations based
on specific commodity codes, and the Electronic State Business Daily (ESBD) advertises
bid opportunities greater than $25,000 on the Internet.
Public Opening
During a public opening, the bids or proposals received from all vendors are opened and
read aloud in public. Depending on the type of solicitation, there are specific procedures
and rules of conduct that must be adhered to during an opening to prevent vendor
protests. After the public opening, the final evaluation for award is conducted by the
purchaser who will make a recommendation for award to the responsive and responsible
vendor whose bid provides best value to the state.
Open Records
The Texas Public Information Act, defined under Gov’t Code, Chapter 552, specifies
which records are available for public scrutiny. After an award, procurement regulations
make information pertaining to the solicitation, opening, evaluation, and award a matter
of public record. Open records requests should be processed according to your
organization’s procedures and in compliance with the Public Information Act.
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CPA Texas Government Basic Public Purchasing
January, 2014
SURPLUS PROPERTY
Texas Facilities Commission (TFC) operates a Surplus Property Program pursuant to
Government Code, Chapter 2175. Surplus property is defined as property no longer needed by a
state agency, and federal property declared as surplus by agencies of the United States
government and handed over to the General Services Administration for disposal. TFC’s
Surplus Property Program disposes of surplus personal property from both Texas state agencies
and the federal government.
State Surplus Property Program
State agencies are required to post all surplus property on the Comptroller’s website
(http://www.texasahead.org/lga/surplus/) for ten (10) business days. During the 10-day period,
state surplus property is available to state agencies, political subdivisions, and assistance
organizations as defined by Gov’t Code, Chapter 2175. The owning agency determines the
price, if any, for each item. State agencies have priority over all other organizations; however, if
no state agency requests the property, the first organization requesting the property is entitled to
it.
The State of Texas has three State Surplus storefronts; one each in Austin, San Antonio, and Fort
Worth. Inventories can be found at the Surplus Property section of TFC’s website
(www.tfc.state.tx.us) under “Retail Store/Locations and Inventories.” For additional
information, call the Surplus Property Program at (512) 463-3381. For storefront questions, call
(512) 463-1990.
Federal Surplus Property Program
TFC also manages the disposition of surplus and salvage property donated to the state by federal
programs. TFC must certify that participants meet federal requirements to receive donated
property. Once certified, state agencies, political subdivisions, some non-profits, and Small
Business Administration (SBA) 8(a) program participants are eligible to receive federal surplus
property through TFC.
The Federal Surplus Property program operates on a cost recovery basis and receives no funding
from state or federal governments. Participants pay a handling fee for property that is a portion
of the original purchase cost, usually five (5) to ten (10) percent.
The program distributes property through its regional warehouses in Austin, Fort Worth and San
Antonio. Participating organizations can send authorized representatives to either warehouse to
obtain property. TFC also publishes a list of available federal surplus property on its website.
For additional information, call the Federal Surplus Property Program at (512) 475-3705.
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CPA Texas Government Basic Public Purchasing
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Purchaser’s Role
The first step in the procurement cycle is to “identify need.” This is a critical step because if a
need has not been recognized or made clear, you won’t be able to pursue the other steps in the
procurement cycle. The term “Identify Need” serves two functions:
1. To identify the need of the end user.
2. To identify the need to make a procurement.
As a public purchaser, you are responsible for obtaining maximum value for the goods or
services procured by challenging wasteful and avoidable costs. If an item is available in Surplus
Property, then it may be possible to fulfill the need of the end user without the need to purchase
an item from a third party.
The best way to reduce the risk of financial loss to an organization and to avoid wasteful
spending is to transfer surplus or unwanted property to another organization. TFC aids this effort
by administering the State and Federal Surplus Property Programs.
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CPA Texas Government Basic Public Purchasing
January, 2014
THE STATE OF TEXAS PROCUREMENT CYCLE
Disposal of Property
Need Defined
Procurement
Method
Selected
Payment
Contract
Administration
Solicitation
Inspection and
Acceptance
Receipt of Bids
Evaluation and Award
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CPA Texas Government Basic Public Purchasing
January, 2014
THE PURCHASING PROCESS
The procurement cycle always begins with defining a need; however, it may not end with the
disposal of property; especially in the case of transfer of surplus property or the purchase of
recycled materials.
In a regulated environment such as a state or federal agency, the purchasing process is a multidepartmental task requiring involvement from many different groups. Please look at the table on
the next page to review the major activities associated with various responsibilities during the
procurement cycle. It should be noted that the activities listed in the table often vary in detail
and number of steps depending on the complexity of the purchase. Can you identify the people
within your agency who are responsible for each step?
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CPA Texas Government Basic Public Purchasing
January, 2014
THE PURCHASING PROCESS
Number
Task Involved
Procurement Cycle
1
Identify the Need
2
Develop the Requirement
3
Transmit the Requirement
4
Receive the Transmission
5
Review the Need
6
Check Surplus
7
Select Purchasing Method
8
Solicit Vendors
9
Review Bids
10
Evaluate for Best Value
11
Select Vendor
12
Contract Formation
13
Issue Purchase Order
14
Receive Requirement
15
Contract Administration
16
Evaluate Vendor
17
Payment
Payment
18
Close File
Disposal of Property
Need Defined
Procurement Method
Selected
Solicitation
Receipt of Bids
Evaluation and Award
Inspection and Acceptance
Contract Administration
10
Group Responsible
CPA Texas Government Basic Public Purchasing
January, 2014
STATE OF TEXAS
TRAINING AND CERTIFICATION PROGRAM
Overview
Required by Gov’t Code, §2155.078 as administered by CPA.
http://www.statutes.legis.state.tx.us/Docs/GV/htm/GV.2155.htm#2155.078
CPA’s Training and Certification Program was created to ensure that the State of Texas employs
the most qualified purchasers and rewards professionals by providing opportunities for
advancement through specified course work and certification(s).
The 75th Texas Legislature mandated by statute that all state agency purchasing personnel, as
defined by Gov’t Code, §2151.078(b), be trained and certified to the extent required by CPA.
CPA’s Training and Certification Program consists of the following three (3) training levels and
(2) certification levels:
Training Courses
1) CPA Texas Government Basic Public Purchasing (BPP)
2) CPA Texas Government Advanced Public Purchasing (APP)
3) CPA Texas Government Cost VS Market, Contract Negotiations & Contract
Administration (CNC)
Levels of Certification
1) Certified Texas Purchaser (CTP)
2) Certified Texas Procurement Manager (CTPM)
1.
CPA Texas Government Basic Public Purchasing: A two-day foundation class
covering ethics and principles of public purchasing in Texas. State purchasers must
complete the Basic Public Purchasing class within their first six months of
employment. Basic Public Purchasing is targeted at state purchasers who procure goods
or services for an amount up to $25,000.
2.
CPA Texas Government Advanced Public Purchasing: A two-day class covering
specification writing, competitive purchasing methods including formal and informal
bidding, and contract administration. Advanced Public Purchasing is targeted at state
purchasers who procure goods or services for an amount up to $100,000.
3.
CPA Texas Government Cost VS Market, Contract Negotiations & Contract
Administration: A two-day class covering cost and price analysis, contract
administration, and advanced negotiation strategies. The CNC class is targeted at state
purchasers who procure goods or services for an amount greater than $100,000.
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CPA Texas Government Basic Public Purchasing
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It is a state requirement that all state purchasing employees be certified based on their delegated
purchasing authority. CPA offers the following two certification levels:
1.
Certified Texas Purchaser (CTP): Required for delegated purchases of $25,000 $100,000. Certification requirements include attendance at both Basic and Advanced
Public Purchasing classes, one (1) year of purchasing experience, and a passing score of
70 percent or above on the CTP exam.
2.
Certified Texas Procurement Manager (CTPM): Required for delegated purchases
greater than $100,000. Certification requirements include attendance at Basic and
Advanced Public Purchasing and the CNC classes, three (3) years of purchasing
experience, and a passing score of 70 percent or above on the CTPM exam.
PURCHASING
AUTHORITY
Zero to $25,000
$25,000.01 to
$100,000
Over $100,000
TRAINING
EXPERIENCE
CERTIFICATION
BPP
BPP & APP
None Required
One Year
None Required
CTP
BPP, APP, & CNC
Three Years
CTPM
Certified purchasing employees must obtain 120 hours of continuing education over a five-year
period. For additional information about the Training and Certification Program, please see
CPA’s website at www.window.state.tx.us/procurement/prog/training-cert/index.html.
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CPA Texas Government Basic Public Purchasing
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PROFESSIONAL ORGANIZATIONS
Now that you have a better understanding of the purchasing profession, you should know there
are several professional organizations available that can serve as valuable resources. Many of
these organizations offer memberships that provide networking opportunities and some offer
nationally recognized purchasing certifications.
Institute for Supply Management™ (ISM)
“The Institute for Supply Management™ (ISM) is the largest supply management
association in the world. ISM’s mission is to lead the supply management profession
through its standards of excellence, research, promotional activities, and education.”
ISM is a non-profit organization that offers the “Certified Professional in Supply
Management” (CPSM certification) and also offers a variety of online classes.
www.ism.ws
National Institute of Governmental Procurement (NIGP)
“The National Institute of Governmental Procurement provides its membership with
education, research, technical assistance and networking opportunities in public
purchasing while promoting excellence, enhancing effectiveness and increasing public
trust.” NIGP offers the “Certified Professional Public Buyer” (CPPB) and “Certified
Public Procurement Officer” (CPPO) certifications.
www.nigp.org
National Association of State Procurement Officials (NASPO)
“The National Association of State Procurement Officials is a non-profit association
dedicated to strengthening the procurement community through education, research, and
communication. It is made up of the directors of the central purchasing offices in each of
the 50 states, the District of Columbia and the territories of the United States.”
www.naspo.org
National Association of Educational Procurement (NAEP)
“The National Association of Educational Procurement, Inc. is the professional
association serving colleges and universities nationwide. NAEP’s mission is to advocate
the development, exchange and practice of effective and ethical procurement principles
and techniques within the higher education and associated communities, through
continuing education and networking.”
www.naepnet.org
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National Contract Management Association (NCMA)
“NCMA is a membership-based, professional society whose mission is to enable the
workforce to grow professionally, assess individual and organizational competency
against professional standards, establish values, develop best practices, and provide
access to skilled individuals, enabling enterprises to improve their buyer-seller
relationships.” NCMA offers multiple levels of contract manager certification.
www.ncmahq.org
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TEST YOUR KNOWLEDGE
1.
Name three (3) current trends in purchasing.
2.
Put the following steps of the procurement cycle in the correct order.
Disposal of Property
Evaluation & Award
Need Defined
3.
Solicitation
Procurement Method Selected
Inspection & Acceptance
Which of the following might be considered a challenge for the purchasing department?
a.)
b.)
c.)
d.)
4.
Contract Administration
Payment
Receipt of Bids
The organization is staffed with people other than the purchasing department.
Managing departments and people you may never see.
Various branches may have different cultures.
All of the above.
The most important trend in today’s purchasing environment is to always get the lowest
bid.
True
or
False
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CPA Texas Government Basic Public Purchasing
ETHICS AND THE LAW
16
January, 2014
CPA Texas Government Basic Public Purchasing
January, 2014
ETHICS IN STATE PURCHASING
Ethics is a set of moral principles or values governing an individual or group. As a public
purchaser, most everything you do is subject to open records and public scrutiny; therefore, it is
imperative to maintain the highest ethical standards. It is your responsibility to:



Serve the best interests of each state organization and taxpayers in the State of Texas.
Avoid acts which are improper or give the appearance of impropriety.
Know and uphold the laws and statutes governing Texas procurement.
Many agencies have their own code of ethical conduct for their employees and for those who
conduct business with their agency. The ethics provisions of 1 Texas Administrative Code
Section §111.4 apply to employees, vendors and potential vendors acting under delegated
authority. In consultation with the Comptroller's Office, the Ethics Commission is required,
under Section 1.07 of House Bill 3560, to adopt new rules to implement the specific ethics
provisions of that legislation as they relate to Texas Procurement and Support Services (TPASS).
Likewise under Section 3.10 of House Bill 3560, the Ethics Commission is required to adopt
new rules to implement the specific ethics provisions of that legislation as they relate to TPASS.
Ethical guidelines assist purchasers and vendors in understanding what behaviors are condoned,
as well as what the agency and the state find unacceptable.
For example, TFC’s rules (1 TAC, §111.4) specify the ethical standards of conduct required of
commission employees, vendors, potential vendors, and employees of other agencies when
acting under authority delegated from CPA. These rules state that an employee may not:
(1)
(2)
(3)
(4)
participate in work on a commission contract knowing that the employee or
member of their immediate family has an actual or potential financial interest in
the contract, including prospective employment;
solicit or accept anything of value from an actual or potential vendor;
be employed by, or agree to work for, a vendor or potential vendor; or
knowingly disclose confidential information for personal gain.
A vendor or potential vendor may not offer, give, or agree to give an employee anything
of value.
A former employee who ceases service or employment with the commission on or after
January 1, 1992, may not represent any person or receive compensation for services
rendered on behalf of any person regarding a particular matter in which the former
employee participated during the period of employment, either through personal
involvement or because the case or proceeding was a matter within the employee's
official responsibility.
If you suspect a potential or discover an actual ethical violation, you should promptly file a
written statement concerning the matter with an appropriate supervisor within your agency and
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CPA Texas Government Basic Public Purchasing
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request written instructions on disposition of the matter. If an actual ethical violation occurs for
which you are aware, and it is not disclosed and remedied, you could be reprimanded,
suspended, or dismissed.
A vendor or potential vendor involved in an ethical violation may have a pending bid or proposal
rejected, be barred from receiving future contracts and/or have an existing contract canceled.
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CPA Texas Government Basic Public Purchasing
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CONFLICT OF INTEREST
Perception plays a key role when discussing ethics in the state. Situations that may involve a
conflict of interest play a key role in avoiding the appearance of impropriety. So, what exactly is
a conflict of interest?
“A conflict between the private interests and the official
responsibilities of a person in a position of trust.”
∼Merriam-Webster
As a public purchaser it is important to maintain the highest level of ethical integrity which
includes avoiding even the appearance of impropriety. It is your responsibility to recuse yourself
from any procurement where you or, a relative stand to reap financial gain or personal benefit
and have another qualified person award the contract.
Additionally, Gov’t Code, §2252.901 helps prevent agencies from entering into conflict of
interest situations by stating that “A state agency may not enter into an employment contract, a
professional services contract under Chapter 2254, or a consulting services contract under
Chapter 2254 with a former or retired employee of the agency before the first anniversary of the
last date on which the individual was employed by the agency, if appropriated money will be
used to make payments under the contract.”
Conflict of Interest Statement
All purchasing staff of a state agency who have been delegated the authority to purchase must
sign a Conflict of Interest statement each year. One copy of the signed statement should be given
to the employee, one copy should be filed in the employee's personnel file and another copy
should be filed in the employee's supervisor's file. The Conflict of Interest Statement certifies
that purchasers have read and understand their responsibilities as a public servant. See
Procurement Manual, Section 1.2, Code of Ethics and Conflict of Interest for a template used by
CPA.
Nepotism Disclosure Statement
Legislation (Gov’t Code, §2262.004) and Sec. 2262.001 requires a “disclosure statement for
purchasing personnel” from all state agency personnel working on a "Major contract" meaning a
contract that has a value of at least $1 million. Purchasing personnel includes an employee of a
state agency who is involved in making decisions on behalf of the state agency of a major
contract. The disclosure statement will require you to answer a number of questions regarding
any relationship or interest with an employee, a partner, a major stockholder, or other owner of
the business entity. The disclosure statement must be submitted to the administrative head of the
state agency prior to the award of any major contract. See workbook chapter “additional
worksheets and information” for copy of form and visit website to access form:
http://www.sao.state.tx.us/Resources/forms/Nepotismdisclosureform.pdf
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ETHICAL RESOURCES
There are several resources available where you can find answers to your ethical questions or
dilemmas.
The Texas Ethics Commission
The Texas Ethics Commission (TEC) was created in 1991 to promote public confidence in
electoral and governmental processes by enforcing, administering, and training state officers and
employees on applicable laws governing standards of conduct, personal financial disclosure,
lobby registration and activities, political contributions and expenditures, and political
advertising.
Their website is a wealth of information including ethics laws, regulations, advisory opinions,
and even ethics training for state employees.
www.ethics.state.tx.us
Professional Organizations
The numerous professional organizations named in the previous chapter of this workbook each
have a code of conduct or ethical standards they abide by. For example, in 1992, ISM’s Board of
Directors approved “Principles and Standards of Ethical Supply Management Conduct.” These
professional organizations can provide useful information if you are trying to create ethical
guidelines or standards for your program.
Where else can you turn for answers to your ethical questions/dilemmas?
_________________________
_________________________
_________________________
_________________________
_________________________
_________________________
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CPA Texas Government Basic Public Purchasing
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TEXAS PURCHASING STATUTES, RULES AND POLICIES
As a public purchaser you are responsible for creating contracts; therefore, it is important to
understand the legal authority directing your profession including what creates an enforceable
agreement, and how to ensure compliance from the other contracting party.
The legal hierarchy in public sector employment is:
1.
Texas Government Code (Gov’t Code) – The legislature passes laws or “statutes” by which
agencies must abide. Procurement statutes are the highest level of authority and overrule
TAC and policy in the case of a conflict. As a state purchaser, you should be familiar with
Gov’t Codes §§2155-2161. You can find the Texas Government Code authorizing agency
activities online as listed below.
GOVERNMENT CODE
TITLE 10.GENERAL GOVERNMENT
SUBTITLE D. STATE PURCHASING AND GENERAL SERVICES
CHAPTER 2155.PURCHASING: GENERAL RULES AND PROCEDURES
SUBCHAPTER A. GENERAL PROVISIONS
http://www.statutes.legis.state.tx.us/Docs/GV/htm/GV.2155.htm
CHAPTER 2156.PURCHASING METHODS
SUBCHAPTER A. CONTRACT PURCHASE PROCEDURE
http://www.statutes.legis.state.tx.us/Docs/GV/htm/GV.2156.htm#2156.122
CHAPTER 2157.PURCHASING: PURCHASE OF AUTOMATED INFORMATION
SYSTEMS
SUBCHAPTER A. GENERAL PROVISIONS
http://www.statutes.legis.state.tx.us/Docs/GV/htm/GV.2157.htm
CHAPTER 2161.HISTORICALLY UNDERUTILIZED BUSINESSES
SUBCHAPTER A. GENERAL PROVISIONS
http://www.statutes.legis.state.tx.us/Docs/GV/htm/GV.2161.htm
2.
Texas Administrative Code (TAC) – Each agency administers rules to comply with or
further define the Texas Government Code. You are responsible for knowing and
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abiding by your own agency’s and CPA’s procurement rules. You can find a list of TAC
Rules on the Texas Register at http://info.sos.state.tx.us/pls/pub/readtac$ext.viewtac.
3.
Agency Policy and Procedure – Each agency will have internal policies and procedures to
help further clarify and explain their rules. You are responsible for knowing both CPA’s
and your agency’s policies and procedures regarding state purchasing. You must know
what to do when you are solely responsible for a purchase based on your delegated
purchasing authority, and what to do when a purchase is not delegated to your agency and
must be processed by CPA.
EVERY state purchaser has access to legal counsel. If you are unsure of how to interpret a
statute, rule, or procedure, you should contact your procurement manager or designated
legal counsel (i.e. internal general counsel, Office of the Attorney General (OAG), etc.).
State of Texas Procurement Manual
The State of Texas Procurement Manual (Manual) is a document that serves as a set of
guidelines for action. The Manual describes the steps, policies, and procedures state purchasers
should be aware of and adhere to when making a purchase. The Manual is a living document
that is continually updated and can be found on CPAs website at
http://www.window.state.tx.us/procurement/pub/manual/
Section 1 of the Manual provides additional reference to purchasing authority requirements,
procedures, and best practices applicable to the procurement of goods and services.
State of Texas Contract Management Guide
The purpose of the CMG is to offer contract managers at state agencies recommendations on
improving existing contract management processes and practices.
Pursuant to 2262.052, each state agency is required to comply with the CMG. Additionally, the
SAO is required to periodically monitor for CMG compliance and report any non-compliance to
the governor, the lieutenant governor, the speaker of the House of Representatives and the
Contract Advisory Team (CAT). As well as assist, in coordination with the TPASS and the CPA,
a non-complying state agency to comply with the aforementioned section.
The CMG is not intended to be a manual on contract law nor does it constitute legal advice.
General principles of law are discussed but are only general principles, inclusive of exceptions.
A legal reference section provided at the end of the CMG provides general information regarding
contracting issues within the contract management process. Consult your agency's attorney for
legal advice concerning contracts.
The Guide is a living document that is continually updated and can be found on CPAs website at
http://www.window.state.tx.us/procurement/pub/contractguide/
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Purchasing Authority
What is an agent? This statement might be more correctly phrased as “who is an agent?” A
person with the authority to bind another is identified as an agent. In your agency you are
empowered with certain rights and authority to spend funds on the agency’s behalf. This can be
assigned by a dollar limit on the transaction, a category of expenditure, or both. As an agent, you
act on behalf of the organization/agency and as such have the legal empowerment to bind the
principal (the agency) within the scope of your authority. The principal has endowed you with
either actual or apparent authority.
Actual authority is the expressed or stated expression that you have a level of empowerment
through which to spend funds for the agency and as such the agency will be bound to honor your
commitment to the vendor. Only persons having actual authority to act on behalf of the state can
bind the state in a contract.
In apparent authority the parties believe and act as if they have the empowerment of the
organization, and the vendor often has reason to believe, by past performance, that your order or
commitment will be both honored and paid for by the agency.
The final party to an agency relationship is the third party. In state purchasing, we call them the
vendor. They are the party with which we make transactions that bind our principal.
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Contract Law
Purchasers operate under two primary laws in the purchase of goods and services. The first is the
Law of Contracts which has its origin in English common law of 1620. Since that time, it has
been revised to reflect current standards and usage in the procurement profession. A purchaser
falls under the control of contract law when they engage in any form of offer or acceptance to
acquire goods or services.
Statute of Frauds is a tenet of the Law of Contracts requiring certain contracts to be written in
order to be enforceable and generally applies to contracts:
• Greater than $500.
• For the purchase and sale of real estate.
• With a duration greater than one year.
A written contract can never be modified by only a verbal agreement.
The second law a purchaser operates under is the Law of Agency. Under this law, purchasers
receive their empowerment from their principal (agency) who provides rules and restrictions that
purchasers are required to follow. Some of these parameters include: dollar spending limits,
signature limitations, and items purchased.
While not a law, another area describing purchasing empowerment is the Uniform Commercial
Code (UCC) (http://straylight.law.cornell.edu/ucc/ucc.table.html). The UCC is a series of
articles used to govern business transactions in most states. Article two of the UCC discusses
sales and has the most bearing and influence on the purchasing profession.
The Texas Business and Commerce Code (TBCC) (http://tlo2.tlc.state.tx.us/statutes/bc.toc.htm )
is the state code that mirrors the UCC. Sections of the TBCC include:
Title 1: Uniform Commercial Code
Title 2: Competition and Trade Practices,
Title 3: Insolvency, and Fraudulent Transfers, Fraud
Title 4: Miscellaneous Commercial Provisions
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Criteria for a Valid Contract
The essential elements necessary to form a binding contract are:
Criteria
Application
Generally involves a promise or commitment to
do or not do a specified act in the future.
Occurs when the contracting parties agree to
accept the terms of the offer.
The objective of the contract must be for a legal
purpose. A contract may not violate criminal
law or public policy.
Both parties must understand and assent to,
receive a benefit from the other, and be equally
bound by the contract.
A party may not accept an offer so as to form a
contract unless the terms of that contract are
reasonably certain.
Requires that something of value must be
tendered in exchange for goods or services.
Parties to a contract must be competent and
authorized to enter into a contract.
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TEST YOUR KNOWLEDGE
1.
Which ethical concern has the greatest risk and long-term stigma associated with a
purchaser?
a.)
b.)
c.)
d.)
2.
Responsibility to your employer.
Perception of your actions.
Not knowing the statutes.
Reporting conflict of interest.
Name the seven criteria required to form a legal contract.
1.)
2.)
3.)
4.)
5.)
6.)
7.)
3.
CPA’s rules allow state purchasers to accept gifts from vendors as long as the value does
not exceed $50.
True
or
False
4.
The best action to take if you have a relative who is a potential bidder on an upcoming
contract is to
.
5.
State purchasers are responsible for following only statute and CPA’s purchasing rules.
True
or
False
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CPA Texas Government Basic Public Purchasing
SPECIFICATIONS
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INTRODUCTION TO SPECIFICATIONS
Even if you are new to the purchasing profession you are probably familiar with the term
“specification” or “specs,” but you may not fully appreciate how critical thorough and accurate
specifications are to the purchasing process.
What is a Specification?
Take a minute to write a definition for “specification.”
How did you do? Did you write key words or phrases like “a detailed description,” “customer
needs,” “requirements,” “performance,” “product or service,” etc.?
A specification is a detailed description of the requirements for a material, product, or service
that includes performance or design criteria necessary to satisfy customer need. The Purchase
Requisition (PR) is the most common document used to transmit the requirement.
There are generally two main functions of a specification:
1.
Internally, well written specifications ensure that the purchasing department and
all other internal parties involved in the purchasing process understand exactly
what the end user wants to procure.
2.
Externally, specifications are the primary communication document for the
vendor; therefore, well written specifications ensure that vendors understand
exactly what is required to prepare a bid or offer.
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SPECIFICATION TYPES
Performance or Functional
Performance specifications describe what the product or service the end user seeks is expected to
do. Details of how the required performance will be achieved are not specified. The purchaser
or end user is primarily concerned with the final result.
Design or Technical
Design specifications provide a complete description of what the product or service must look
like. For products, design specifications often define the process by which a product will be
made, including the required materials. For services, design specifications include step-by-step
instructions on how the service should be performed.
Combination
Combination specifications include elements of both performance and design specifications. The
end user may have some specific design requirements, but may be open to suggestions regarding
performance.
Brand or Trade Name
Brand Name specifications identify, by name, model number or other designation, a specific
product manufactured by a specific corporation. It is important to always use the terms “only” or
“equal to” when using Brand Name specifications.
Qualified or Approved Products List
Approved Products List (APL) is a list of certain products or services whose acceptability has
been tested and determined in advance of a purchase. The APL is extremely useful when a
product’s conformance to specifications is unknown and difficult to ascertain.
Statement of Work
A Statement of Work (SOW) is used in the purchase of services to define exactly what work is
being contracted. A SOW should define what is to be done, when it is to be done, and what
constitutes an acceptable result.
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WRITING SPECIFICATIONS
Although purchasers may not always write specifications, they still play a key role in ensuring
standard specifications and/or specifications submitted by the end user are effective. An
effective specification should be:





Flexible -
Avoid overly restrictive specifications which could prevent the acceptance
of a bid or offer that could provide a better value (higher quality, lower
price).
Accurate Use units of measurement that are compatible with industry standards. All
quantities and packing requirements should be clearly identified.
Clear Use correct spelling and grammar. Avoid legalese and jargon whenever
possible.
Competitive - Avoid overly restrictive requirements, and avoid unneeded extras that may
reduce or eliminate competition and increase costs.
Simple Avoid unnecessary detail and redundancy.
The accessibility of specifications directly affects the level of competition obtained. It is also
crucial that information you plan to use in making a best value determination be clearly defined
in your specification or SOW.
A good specification:




Clearly identifies a minimum requirement.
Identifies performance requirements and/or test methods.
Allows for maximum competition.
Contributes to obtaining best value.
Specification Writing Resources
Uniform Standards and Specifications
Gov’t Code, §2155.068 provides CPA with the authority, in coordination with other state
agencies, to develop specifications or adopt nationally recognized standards and/or
specifications. The Specification and Standards Program of CPA develops formal standards and
specifications for a number of commodities purchased in volume by the state. These standards
and specifications establish minimum quality requirements and are identified by a
standard/specification number and an effective or revision date, and are available on CPA’s
website at http://www.window.state.tx.us/procurement/pub/specifications-library/numerics.
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Request for Information
A Request for Information (RFI) is an optional specification writing planning tool that may be
used to gather information when an agency does not have the necessary information to prepare a
complete and accurate solicitation document. RFI’s can be used to identify industry standards,
best practices, potential performance measures, and cost or price structures.
Other Resources
There are a variety of other resources for finding and developing specifications. Many of these
resources provide pre-developed specifications that can save the agency administrative hours and
provide purchasers with industry expertise. Resources include:
1.)
Other government agencies
­ State
­ Federal
2.)
National and International professional associations
­ National Institute for Governmental Purchasing
­ Institute for Supply Management
­ International Purchasing and Supply Education and Research Association
­ American Purchasing Society
­ International Federation of Purchasing and Materials Management
3.)
Standards organizations
­ American Society for Testing and Materials
­ American Society of Mechanical Engineers
­ Society of Automotive Engineers
­ National Safety Council
­ National Electrical Manufacturers Association
­ Underwriter’s Laboratory
4.)
Catalogs and sales literature
5.)
Sales representatives
6.)
Consultants
Specifications are not static. Advancements in technology and other industries may make a
previously developed specification unsuitable for future purchases. Always be sure to customize
standard specifications to meet your specific needs.
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TEST YOUR KNOWLEDGE
1.
When using a
specification, the purchaser assumes most of the
risk for the proper performance of a product.
2.
Which of the following is not a type of specification?
a.)
b.)
c.)
d.)
3.
Performance
Design
Open Market
Statement of Work
It is important to write specifications that are open enough to allow all vendors to submit
a bid or make an offer.
True
or
False
4.
Name the five elements of an effective specification.
5.
Which specification type provides the vendor with maximum latitude to determine how
to satisfy the bid requirement?
a.)
b.)
c.)
d.)
Design
Performance
Statement of Work
Brand Name
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TEXAS PURCHASING METHODS
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STATE APPROVED PURCHASING METHODS
The State of Texas provides a myriad of purchasing methods or opportunities. Each method
provides you with the unique opportunity to make a best value determination and save state
taxpayers valuable money. This chapter will highlight the various procurement methods and
provide you with an outline on how to determine the appropriate method for your purchase.
Section 2.4 of the Procurement Manual will provide additional information on selecting a
Procurement Method
**
Department of Information Resources (DIR)
(Gov’t Code, §2157.068; & 1 TAC, §201.18)
DIR is a state agency created in 1989 that serves as the chief information office for the State
of Texas. DIR provides contracts for computer hardware, software, technical services, and
telecommunications infrastructure and services for the state. All DIR contracts are
competitively bid and comply with applicable purchasing laws. Most contracts offered by
DIR are Information and Communication Technology (ICT) contracts meaning the purchase
order (PO), with the DIR contract number referenced, is issued directly to the vendor. State
agencies are required to purchase information technology (IT) commodity items through
contracts established by DIR unless the agency first obtains an exemption from DIR.
Telecommunications
"Telecommunications services" are defined as intercity communications facilities or
services that do not include single agency point-to-point radio systems or facilities, or
services of criminal justice information communication systems. Gov’t Code, Chapter 2170
requires state agencies to procure telecommunications services through DIR. A state agency
may not acquire telecommunications services with a carrier other than DIR unless DIR’s
Telecommunications Planning and Oversight Council (TPOC) determines, and provides the
agency with a waiver, that the agency's requirement for telecommunications services cannot
be met at a comparable cost by the consolidated telecommunications system.
Hardware, Software, and Technical Services
Gov’t Code, §2157.068 requires state agencies to purchase hardware, software, and
technical services through DIR’s cooperative contracts. Hardware, software, and technical
services are defined as commercial software, hardware, or technology services, other than
telecommunications services for which DIR determines that a reasonable demand exists in
two or more state agencies. The term includes seat management, through which a state
agency transfers its personal computer equipment and service responsibilities to a private
vendor to manage the personal computing needs for each desktop in the state agency,
including all necessary hardware, software, and support services.
The Request for Offer method of procurement is mainly used to procure Automated Information
System (AIS) and Information Technology (IT) services.
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Buyer Alert
DIR provides “Buyer Alert” notices on their website to inform purchasers of special offers
and negotiated discounts. “Buyer Alerts” are updated every three (3) months. Purchasers
can subscribe at http://lists.state.tx.us/mailman/listinfo/buyer-alert to receive automatic email notices regarding buyer alerts.
**
Council on Competitive Government (CCG)
(Gov’t Code, Chapter 2162)
The Texas Legislature created the Council on Competitive Government (CCG) in 1993 to
explore how different institutional arrangements, such as managed competition, outsourcing,
reengineering and public/private partnerships can create incentives for efficiency, improve
customer service, enhance accountability, and save taxpayer dollars. CCG partners with
state agencies in order to assist them with their efforts to improve services and save money
by increasing competition within state government. Gov’t Code, Chapter 2162 mandates
agencies use contracts recommended and/or created by the CCG. Some current contracts
include:
Computer Assisted Legal and Investigative Research (CALIR) Services: A
master contract for the acquisition of online legal and investigative research
services
Document Destruction: Efficient, secure destruction of documents as well as ewaste.
Digital Imaging: Conversion of physical documents into accessible electronic
formats.
Energy Procurement: Expert support for energy procurement.
Geographic Information Services: A master contract for acquisition of
geographic imagery and geospatial datasets.
Mail Services: Fast, efficient mail fulfillment services.
Print Shops: Five state print shops providing a full range of print services.
Retail Fuel Card: Innovative fuel card program that automatically reduces fuel
costs.
Specialty Paper & Supplies: A master contract for acquisition of print shop
specialty papers and supplies.
All of CCG’s contracts can be found on their website (www.ccg.state.tx.us).
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CPA Texas Government Basic Public Purchasing
**
January, 2014
State Use Program
(40 TAC, §189.2 & Human Resources Code, Chapter 122)
The State Use Program is a statutory mandate requiring state agencies to purchase, on a noncompetitive basis, the products made and services performed by persons with disabilities,
which have been approved by the Texas Council on Purchasing from People with
Disabilities (TCPPD). The State Auditor’s Office (SAO) audits for compliance with the
State Use Program and is responsible for reporting non-compliance to TCPPD.
TCPPD is a state agency whose purpose is to further the state’s policy of encouraging and
assisting persons with disabilities to achieve maximum personal independence by engaging
in useful and productive employment activities and, aiding state institutions in conforming
with requirements of nondiscrimination and affirmative action in employment matters
related to persons with disabilities.
TCPPD’s responsibilities include:
• Promoting the State Use Program
• Determining the fair market price of goods and services offered by persons with
disabilities
• Ensuring that goods and services offered for sale by persons with disabilities are
the best value for the state
• Evaluating exception reports
• Contracting with a Central Nonprofit Agency (CNA) to market and administer
daily operations
TCPPD contracts with TIBH Vendor
Currently TCPPD contracts with TIBH Industries, Inc. (TIBH) to market and provide
program management for the State Use Program. TIBH is the essential management link
between the Community Rehabilitation Program (CRP) work centers (i.e. Goodwill
Industries), state agencies, and TCPPD.
State purchasers must check the TIBH catalog to see if the requested commodity or service
meets the specification and other requirements on the purchase requisition. Purchasers are
required to submit monthly exception reports to CPA regarding purchases that were
available but not purchased from TIBH. The only authorized exceptions are if the good or
service provided by TIBH do not meet state specifications as to quantity, quality, delivery,
and life cycle costs.
All of TIBH products and services are fully guaranteed to give 100% satisfaction in every
way. If you find something is not satisfactory, we will do whatever is necessary to correct
the cause of your dissatisfaction.
TIBH closely monitors all supplier defects; immediate action is taken to address quality
issues. In order for TIBH to be fully successful in addressing quality issues, they rely on
their customers to provide feedback about products. If at any time a product is not deemed
to be at an acceptable quality level, please report this information to TIBH:
http://tibh.org/tibh-info/contact-tibh.html
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CPA Texas Government Basic Public Purchasing
**
January, 2014
Texas Correctional Industries (TCI)
(Gov’t Code, Chapter 497; & Prison-Made Goods Act of 1963)
TCI is a division of the Texas Department of Criminal Justice (TDCJ) whose purpose is to
provide inmates with marketable job skills to help reduce recidivism through a coordinated
program of job skills training and other resources. The Prison-Made Goods Act of 1963
requires state agencies to buy prison-made products when specifications of standards and
quality are met.
If the purchase is within an agency’s delegated purchasing authority, the order can be
processed directly with TCI by including the statement “The award is made under the Prison
Made Goods Act and is noncompetitive.” If the value of the purchase exceeds an agency’s
delegated purchasing authority, an open market requisition should be sent to CPA stating
“Please award to TDCJ per attached quotation.”
PRISON MADE GOODS ACT WAIVER (TDCJ)
The Prison Made Goods Act, requires that an agency purchase goods made by and services
offered by the Texas Correctional Industries (TCI). If a product/service offered by TCI as
set forth in its catalog of products and services needs to be purchased from a source other
than TCI, a waiver from TCI must be obtained. The waiver request can be based on a
substantial difference in specifications which could include delivery, or on substantial price
differences, or both. Note: TCI is located on the CMBL list and bids for printing must
include a bid or no bid response (in lieu of the waiver) for this commodity. Visit website for
a copy of a TCI waiver and additional information at:
http://www.window.state.tx.us/procurement/pub/manual
The State of Texas Procurement Manual; 2.5.2 Texas Correctional Industries
**
Term Contracts
(34 TAC, §20.40)
CPA has established term contracts on certain commodities and services as a supply source
for state agencies. These contracts are based on forecasted amounts specified by CPA
and may be ordered as needed. There are two types of term contracts: automated and
non-automated. To ensure accurate historical data of purchases, agencies must enter
purchasing data into CPA’s online ordering system for all contracts available in
TxSmartBuy.
> Automated Term Contracts are generated using the TxSmartBuy On-Line ordering
system. A purchase order will be sent directly to the vendor and the ordering entity.
> Non-Automated Term Contracts are generated using the TxSmartBuy On-Line ordering
system. A purchase order will be sent directly to the vendor and the ordering entity. If
not issued online, a hardcopy purchase order bearing the agency’s purchase information
should be forwarded to the contractor’s point of contact.
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CPA Texas Government Basic Public Purchasing
**
January, 2014
Texas Multiple Award Schedule Contracts (TXMAS)
(Gov’t Code, §2155.502 & §2155.504)
Search TXMAS contracts at http://portal.cpa.state.tx.us/txmas/
The TXMAS program was established by CPA to permit state agencies to take advantage of
previously competitively awarded federal contracts. The price on the contract is considered
the most favored customer pricing, but purchasers may seek to negotiate lower pricing. As
applicable, orders are placed online via the TxSmartBuy On-Online ordering system.
TXMAS contracts will denote, which items must be entered in TXSMARTBUY. Below is
an example of what will appear at the bottom of applicable TXMAS contracts.
THIS TXMAS CONTRACT IS ALSO LISTED ON TXSMARTBUY. Unless this company
has TXMAS-authorized dealers all purchasing entities wanting to purchase items/services
available on this TXMAS contract must purchase through TxSmartBuy: www.txsmartbuy.com.
If this contract has TXMAS-authorized dealers, those dealers may continue to accept purchase
orders as they have been doing in their previous manner (fax, email, or hand carry). If you have
any questions, please send an email to txmas
**
Open Market Solicitations
(Gov’t Code, §2155.062)
An open market solicitation is the purchase of a good or service made by soliciting from any
available source. The open market solicitation procedure is the method for making an open
market purchase, and always involves a competitive formal or informal bidding process.
Generally, no negotiations are permitted in the competitive bid process. However, in rare
instances where there is only one bidder or during emergencies when competition is not
practical, negotiations are permitted.
Open market orders exceeding an agency’s delegated purchasing authority are sent to CPA
for processing. Purchasers should complete and submit the current Open Market
Requisition Form or enter the requisition online. Upon receipt of the request, CPA will
evaluate the requirement and determine if it can add value by performing the purchase.
If CPA purchasers determine that they can add value, then they will create an Invitation for
Bid (IFB). The IFB will be sent to the requesting entity and should be reviewed for
accuracy in relation to the submitted specification. If errors are noted, the appropriate CPA
purchaser should be contacted and changes made immediately. The final IFB will be posted
on the Electronic State Business Daily (ESBD).
If CPA purchasers determine that they cannot add value by performing the purchase then
CPA, in writing, will delegate the purchase authority back to the original agency.
Two variations of the open market purchase procedure include the Open Market Blanket
Order and the Open Market Standing Order.
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> An Open Market Blanket Order is employed when an ordering entity has a repetitive
need for products or services on an “as required” basis. The benefit associated with this
procurement method is reducing inventory costs. The essential elements required for a
blanket open market order are:
1) the start and end time of blanket order coverage; and
2) an estimated quantity required.
> An Open Market Standing Order is employed when an ordering entity has a specific and
repetitive need for products or services. The products or services are provided on a
scheduled time for the ordering entity instead of on an “as required” basis. The
quantities are guaranteed since the ordering entity has committed to a regularly
scheduled delivery time.
**
Competitive Sealed Proposals
(Gov’t Code, §§2156.121 – 2156.125)
A Competitive Sealed Proposal (CSP) may also be known as a Request for Proposal (RFP).
This procurement method is often used for items or services that represent a high risk, are
extremely expensive, or are an exceptionally technical or complicated purchase for the
ordering entity.
The RFP is a unique purchasing method because purchasers are authorized to utilize some
of the more complex Best Value criteria within the state approved procedures. A RFP
method may include a pre-conference with respondents, a modification of the offering by an
addendum, and an option of negotiating for a Best and Final Offer (BAFO).
The RFP generally consists of the following information:













Cover
Scope of Proposal
Introduction
Statement of Work
Vendor Qualifications
Contract Term and/or Option to Extend
Proposal Contents
Evaluation Criteria
Terms and Conditions
Execution of Offer
Required HUB Forms
Exhibits
Attachments
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CPA Texas Government Basic Public Purchasing
**
January, 2014
Emergency Purchases
(Gov’t Code, § 2155.137; & 34 TAC, §§20.32 & 20.41)
An emergency purchase is a situation requiring the state agency to make the procurement
more quickly to prevent a hazard to life, health, safety, welfare, or property or to avoid
undue additional cost to the state. This frequently occurs as the result of an unforeseen
circumstance and may require an immediate response to avert future loss or financial
damage to the agency. CPA has delegated to all agencies the sole responsibility to declare
an emergency; however, empowerment by CPA does not certify the existence of an
emergency situation.
Solicitation for an Emergency Purchase involves:
1)
2)
At least three informal bids are encouraged whenever possible, and the award
should be best-value based.
If an emergency purchase is greater than $25,000, notice of the award must be
posted on the Electronic State Business Daily (ESBD), but the minimum
posting times do not apply.
When justifying an emergency purchase, the agency should address what caused the
emergency, the impact on the state, and the estimated financial damage that would have
occurred had normal procedures been followed.
**
Internal Repair
(34 TAC, §20.209)
An internal repair occurs when the extent of the work that must be performed cannot be
determined until the equipment is disassembled. An internal repair PO must contain labor
and may also include parts. It must also indicate “Internal Repair” and should have a “Cost
Not To Exceed” amount. Internal repairs over $25,000 must be posted to the ESBD, but the
minimum posting times do not apply.
**
Proprietary Purchase
(Gov’t Code, §2155.067; & 34 TAC, §§20.32 & 20.4 1)
A proprietary purchase is only justifiable when an equivalent product or service is not
available. A proprietary purchase of a good or service means that the item sought has a
unique feature that is not shared by others or provides a compelling distinction which sets
one vendor apart from others in the marketplace. When the specification requirement limits
consideration to one vendor, a written justification signed by the agency head must be
provided and is subject to review by CPA. The justification letter must include:
•
•
•
An explanation of the need for the specification, specifically what restricts the
specification to one manufacturer or provider;
Why competing products are not satisfactory, justifying the proprietary
purchase; and
Any other information and details as requested by the CPA.
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CPA Texas Government Basic Public Purchasing
**
January, 2014
Scheduled Managed Contract
(Gov’t Code, §2155.064)
A Scheduled Managed Contract is a CPA method for purchasing commodities in bulk. The
Contract must:
•
•
•
Be a high-volume purchase.
Be for a definite, known quantity of a commodity.
Be delivered on a definite, known schedule.
Some examples of items conducive to schedule purchasing include fertilizer, milk, bread,
pastry, etc.
**
Professional and Consulting Services
(Gov’t Code, Chapter 2254)
Professional services are defined as those services provided by a person who is licensed or
registered as a(n):
•
•
•
•
•
•
•
•
•
Certified public accountant
Architect
Landscape Architect
Land Surveyor
Physician, including a surgeon
Optometrist
Professional Engineer
Real Estate Appraiser
Registered nurse
Providers of professional services may not be selected on the basis of competitive bids, but
must be selected on the basis of demonstrated competence and qualifications to perform
services for a fair and reasonable price. This is generally accomplished via a Request for
Qualifications (RFQ). Professional fees under the contract must be consistent with and not
higher than the recommended practices and fees published by the applicable professional
associations, and may not exceed any maximum provided by law.
Consulting services are services provided under contract that do not involve the traditional
relationship between employer and employee. A state agency may contract with a
consultant only if there is a substantial need for the consulting service and the agency cannot
adequately perform the service with its own personnel or obtain the service through a
contract with a state governmental entity.
Sections 2.4 – 2.21 of the State of Texas Procurement Manual (Manual) explain in great detail the
procurement methods and steps state purchasers must follow to ensure audit-proof purchases.
41
CPA Texas Government Basic Public Purchasing
January, 2014
DELEGATED PURCHASING
CPA delegates purchasing authority to ordering entities for specific commodities and services based
on the order amount. The purchaser certification level you achieve determines your individual
delegated purchasing authority.
Summary of Minimum Requirements for Delegated Purchases
Total
Amount of
Purchase
Order
$0.00
to
$5,000.00
Commodity Purchases
Purchases
of
Services
Direct
Publication
Purchases
Perishable
Goods
Purchases
Fuel, Oil
and Grease
Purchases
Emergency
Purchases
Competitive
Process
Not
Required
Competitive
Process Not
Required
Competitive Competitive Competitive
Process Not Process Not Process Not
Required
Required
Required
Competitive
Process Not
Required
Competitive
Process Not
Required
PCC E
$5,000.01
to
$25,000.00
PCC E
Open
Open Market
Market
Informal
Informal
Solicitation
Solicitation
PCC F
PCC Q
PCC K
PCC L
*Nondelegated
*Nondelegated
PCC P
PCC E
Open Market
Informal
Solicitation
PCC-Q
PCC M
Formal
Direct
Competitive
Publication
Formal
Formal
Formal
Process
Declaration
Competitive
Competitive Encouraged Competitive
with
Process
Process
Process
if Multiple
Purchasing
Dealers
Documentation
PCC S
PCC L
PCC P
Available
PCC K
Over
$100,000.00
PCC M
Direct
Open Market
Publication
Informal
Open Market
Open Market
Solicitation if
Declaration
Informal
Informal
Multiple
with
Solicitation
Solicitation
Dealers
Purchasing
Available
Documentation
PCC L
PCC P
PCC K
$25,000.01
to
$100,000.00
Distributor
Purchases
Formal
Competitive
Process When
Possible
PCC T
PCC M
Formal
Direct
May or May
Competitive
Publication
Not be
Formal
Formal
Process
Declaration
Delegated
Competitive Encouraged Competitive
with
with
Process
Process
if Multiple
Purchasing
CATRAD
Dealers
Documentation
Review
PCC L
PCC P
Available
PCC S
PCC K
PCC M
Formal
Competitive
Process When
Possible
PCC T
*May or may not be delegated. Refer to Sourcing & Solicitation, Solicitation, Open Market
(OM) Solicitation Methods.
42
CPA Texas Government Basic Public Purchasing
January, 2014
Exemptions
There are exceptions that apply under certain circumstances with regards to delegated
empowerment and exemptions to CPA standard rules of operations. See Gov’t Code, §§2155.138–
2155.148.
Section 4, item 4.5 Exemptions of the Procurement Manual provides additional information.
•
•
Institutions of Higher
Education
- May be exempt from CPA
rules
- Higher Education
Assistance Funds
- Group Purchasing Programs
43
Other Programs
- Exemptions of Goods or
Services of Blind or
Visually Impaired Persons
- Exemptions of Certain
Libraries and Health
Facilities
- Gifts and Grants
- Auxiliary Enterprise
- Care and Treatment
Services by the Texas
Juvenile Justice
Department
- Certain Health Care
Purchases
- Certain Purchases by
TCEQ
- Certain purchases by ERS
- Certain purchases by GLO
- Certain purchases by TRC
- Certain purchases by
TxDOT
- Certain purchases by the
Veteran’s Land Board
- Certain purchases for Texas
Statewide Emergency
Services Personnel
Retirement Fund
CPA Texas Government Basic Public Purchasing
January, 2014
TEST YOUR KNOWLEDGE
1.
The Request for Offer method of procurement is mainly used to procure…
a.)
b.)
c.)
d.)
2.
Due to a change in legislation, your agency needs to procure data entry services for a
project expected to last 2 years that will cost approximately $60,000. Under these
circumstances, which procurement method should you use?
a.)
b.)
c.)
d.)
3.
Request for Proposal (RFP)
Proprietary purchase procedure
Emergency purchase procedure
Department of Information Resources (DIR) contract if one exists
An agency may use the Competitive Sealed Proposal (i.e. RFP) method of procurement only
if CPA approves it.
True
4.
Commodities greater than $100,000.
Professional services.
Consulting services.
Automated Information System (AIS) and Information Technology (IT) services.
or
False
When using the Competitive Sealed Bid (i.e. IFB’s) method of procurement, negotiations
are permitted:
a.)
b.)
c.)
d.)
when written approval is obtained from CPA.
when all the bids exceed your budget.
on purchases when there is only one supplier or during emergencies when
competition is not practical.
None of the above.
44
CPA Texas Government Basic Public Purchasing
January, 2014
SOURCING AND SOLICITATION
45
CPA Texas Government Basic Public Purchasing
January, 2014
SOURCING
Sourcing is the process of identifying vendors to provide products or services for an acquiring
organization. Thorough and accurate sourcing and solicitation plays a key role in generating
competition for state procurements. Texas has specific statutes and rules that govern sourcing
and solicitation requirements.
Centralized Master Bidder’s List (CMBL)
The Centralized Master Bidder’s List (CMBL) is a mailing list of vendors who have conveyed
interest in doing business with the state by submitting a registration application and a fee. The
CMBL is maintained by CPA for state use in obtaining competitive bids for purchases. Unless
exempted by statute, state purchasers must utilize the CMBL for purchases of goods and services
greater than $5,000 during the competitive solicitation process. The CMBL can be found on
CPA’s website at http://www.window.state.tx.us/procurement/prog/cmbl .
NIGP Commodity/Services Codes
Vendors register for the CMBL using National Institute for Governmental Purchasing (NIGP)
commodity/services codes to identify the commodities and services they provide. Purchasers
often search the CMBL using the same NIGP codes. So, what exactly is the NIGP
Commodity/Services Code?
The NIGP Commodity/Services Code is a national classification standard that is owned and
copyrighted by NIGP, and managed by a company named Periscope Holdings, Inc. The code is
licensed by the State of Texas for use by state agencies and Co-Ops.
The NIGP Code is based on commodities and services, not individual vendors’ products, and is
organized as follows:




3-Digit Class Codes
5-Digit Class-Item Codes
7-Digit Class-Item-Group Codes
11-Digit Class-Item-Group-Detail Codes
46
CPA Texas Government Basic Public Purchasing
January, 2014
Understanding the NIGP Code Hierarchy
Class
Item
050
60
Group
Detail
38
1000
Art Equipment and Supplies
Picture Frames and Framing Supplies: Mat Cutters, Mats, Molding, Stretcher
Strips, etc.
Frames, Picture, Wood, Walnut, Non-glare Glass
EA – 8 in. x 10 in.
Generally, class codes ranging from 1 – 899 identify commodities while class codes in the 900s
identify services.
Ideally, the code can be used as a logical, systematic way to organize and track purchased goods
and services; thereby, allowing agencies to better manage their assets and increase volume
buying power.
Electronic State Business Daily (ESBD)
The Electronic State Business Daily (ESBD) is an online database of solicitations that allows
both vendors and agencies to see available procurement opportunities within the state. Each
state agency must designate at least one person to be the registered agent for posting all
procurement contract opportunities greater than $25,000 to the ESBD.
For all purchases greater than $25,000, regardless of the source of funds, agencies are required to
post either notice of a procurement opportunity for 21 calendar days or the entire bid or proposal
package for 14 calendar days on the ESBD. Minimum posting times do not apply for:
1.) Emergency Procurements
2.) Internal Repair Procurements
3.) Multiple Award Schedule Contract Purchases
If an agency anticipates that the procurement may exceed $25,000 it’s advised to post on the
ESBD to avoid re-advertising.
Each state agency must record the action resulting from the posting of each procurement contract
solicitation into the ESBD using the prescribed form or electronic file transfer, including
contracts awarded and procurement contract opportunities canceled by the agency.
Other than serving as the classified section of the Texas Marketplace, the ESBD also has several
useful links concerning how to buy from the state, how to get on the CMBL, how to become a
HUB Certified Vendor, how to view bid tabulations, and other business resources within the
state. You can view the ESBD online at: http://esbd.cpa.state.tx.us
47
CPA Texas Government Basic Public Purchasing
January, 2014
HISTORICALLY UNDERUTILIZED BUSINESS (HUBs)
HUB Mission
The State of Texas Historically Underutilized Business (HUB) program is administered by CPA
in accordance with Gov’t Code, Chapter 2161. The goal of the HUB Program is to provide equal
opportunity for HUBs to obtain state business. Please note: HUB is not a preference and
should not be used as one. It is merely an equal opportunity program.
The HUB mission statement is:
“To encourage and effectively promote the utilization of Historically Underutilized
Businesses (HUBs) by all state agencies, including institutions of higher education.”
A HUB is a business with its principle place of business in Texas in which the owner(s) have
proportionate interest and demonstrate active participation in the business’ management and are
identified as economically disadvantaged according to 34 TAC, §20.12. HUB businesses must
meet at least one of the following criteria:
•
•
•
•
•
A corporation formed for the purpose of making a profit in which at least 51
percent of all classes of the shares of stock or other equitable securities are owned
by one or more qualified owners.
A sole proprietorship created for the purpose of making a profit that is 100
percent owned, operated, and controlled by one owner.
A partnership formed for the purpose of making a profit in which 51 percent of
the assets and interest in the partnership is owned by one or more qualified
owners.
A joint venture in which each entity in the joint venture is a HUB.
A service disabled vet.
HUB Goals
The statewide HUB goals for the State of Texas, as identified in the State of Texas Disparity
Study and 34 TAC §20.13 for the following procurement categories are:

11.2% for heavy construction other than building contracts;

21.1% for all building construction, including general contractors and operative
builders’ contracts;

32.7% for all special trade construction contracts,

23.6% for professional services contracts;

24.6% for all other services contracts; and

21% for commodities contracts.
48
CPA Texas Government Basic Public Purchasing
January, 2014
Subcontracting
As stated in Gov’t Code, §2161.252 and 34 TAC, §20.14, ordering entities considering entering
into a contract with an expected value greater than $100,000 shall, before the agency solicits
bids, proposals, offers, or other applicable expressions of interest, determine whether
subcontracting opportunities are probable under the contract.
If such opportunities are available, each ordering entity’s solicitation documents shall state that
probability and require a HUB Subcontracting Plan (HSP).
HUB Subcontracting Plan (HSP)
(http://www.window.state.tx.us/procurement/prog/hub/hub-subcontracting-plan)
The HSP is part of the contract and must be submitted with the bid or proposal. Bids or
proposals submitted without an HSP shall be considered non-responsive.
I.
Some necessary criteria vendors should include in the HSP are:
a)
Is the work detail associated with the contract divided into reasonable lots and/or
portions consistent with prudent industry practices?
b)
The respondent must use CPA’s CMBL, HUB Directory, and may use other Internet
resources and directories as identified by the contracting agency.
[A complete list of all State of Texas certified HUBs may be accessed at
http://www2.cpa.state.tx.us/cmbl/cmblhub.html or
http://www2.cpa.state.tx.us/cmbl/hubonly.html.]
c)
The respondent must provide notice to three (3) or more HUBs that perform the type
of work required for each subcontracting opportunity identified in the contract
specifications or any other subcontracting opportunity the respondent can not
complete with respondent’s own equipment, supplies, materials, and/or employees.
d)
In soliciting HUB participation, some required information includes:
1) written notice,
2) detailed description for scope of work,
3) location(s) to review plans and specifications,
4) bonding and insurance requirements,
5) required qualifications and specifications, and
6) contact person name and contact information.
e)
Unless circumstances require a different time period specified by the ordering entity,
the respondent’s subcontracting opportunity notice(s) must provide HUB
49
CPA Texas Government Basic Public Purchasing
January, 2014
subcontractors with no less than seven (7) working days notice prior to the
submission of the respondent’s offer, bid, proposal or other expression of interest to
the ordering entity.
II.
III.
f)
On forms furnished by the ordering entity and prescribed by CPA, the respondent
shall document the HUBs already contacted regarding subcontracting opportunities.
The respondent should negotiate in good faith with qualified HUBs and must not
reject HUBs who were the best value and responsive bidders.
g)
The respondent must provide written justification of the selection process if a
subcontractor who is not a HUB is selected.
h)
In addition the respondent shall provide evidence to support their attempt to solicit
HUBs for their HSP such as phone records, electronic mail, or fax.
Alternatives to Good Faith Effort requirements:
a)
A respondent’s participation as a Mentor in a State of Texas Mentor Protégé
Agreement and a commitment to use their Protégé (all Protégés must be State of
Texas HUB certified Vendors) as a subcontractor to perform subcontracting
opportunities listed in respondent’s HSP constitutes good faith effort without
completing the procedures listed in Item I.
b)
A respondent who submits a HSP for a professional service contract that meets or
exceeds Annual Procurement Utilization goals for HUBs as defined in 34 TAC
§20.13 is deemed to have met the good faith effort requirement.
HUB Subcontracting Plan Reporting and Contract Compliance
(34 TAC, §20.16)
The ordering entity will receive HUB credit for the total amount of expenditures made
directly to prime contractors who are State of Texas HUB certified. In addition, if the prime
contractor is not a HUB, agencies will receive HUB credit for the total amount of
expenditures the prime contractor makes to HUB subcontractors, if applicable.
All prime contractors (HUBs and non-HUBs) are required to comply with the following
reporting and contract compliance procedures:
a)
Prime contractors must report to the ordering entity their use of HUB subcontractors
to fulfill subcontracting opportunities identified in their HSP. See form on CPA’s
website at http://www.window.state.tx.us/procurement/prog/hub/hub-subcontractingplan .
50
CPA Texas Government Basic Public Purchasing
January, 2014
b)
Prime contractors must notify the ordering entity and obtain prior approval to make
any changes to the HSP. The proposed changes shall comply with the good faith
effort requirements related to developing and submitting a HSP.
c)
The ordering entity determines if HUB values meet or exceed HUB subcontracting
provisions specified in the prime contractor’s HSP. If the ordering entity determines
that the prime contractor’s subcontracting activity does not demonstrate a good faith
effort, then the prime contractor may be subject to vendor debarment.
Most state agencies have a HUB Coordinator who keeps purchasers abreast of the latest
requirements and changes in the HUB program. This should be a critical part of your agency’s
procurement plan. Knowledge of the state’s requirements is essential in meeting agency and
state goals.
CPA’s website contains a section on the HUB program at
http://www.window.state.tx.us/procurement/prog/hub/ . This resource should be read and
understood by every state purchaser. Take time to review the forms and the tools available to
assist your agency in meeting obligations of fair access and professional responsibility to the
state.
HUB Sourcing
There are two ways to find HUB vendors to participate in solicitations. These include:
1) Centralized Master Bidders List (CMBL)
The CMBL is the first search approach when seeking all participants for a future
solicitation for the agency. Searches can be sorted by commodity codes, city, and
highway district to ensure responsible vendors are targeted.
2) Historically Underutilized Business (HUB) Search
A special search vehicle is also available to agencies that enable purchasers to sort HUB
vendors apart from others and identify those vendors that are able to provide the requested
products or services.
51
CPA Texas Government Basic Public Purchasing
January, 2014
SOLICITATION
The bid or proposal solicitation document is the first official evidence to the vendor community
that an ordering entity intends to procure a good or service. The solicitation document serves as
the official instructions explaining the ordering entity’s requirements and how the vendor(s) will
be selected. It is imperative that you include terms and conditions specific to your solicitation
regardless of the type of solicitation document used.
Terms and Conditions
Terms and conditions connected with the purchasing process are legally binding. Many contract
terms and conditions are required by statute. While certain terms and conditions are standard,
others can be very specific in relation to the contract agreement and should be amended
accordingly.
A complete list of terms and conditions is provided during CPA’s Advanced Public Purchasing
Class. It is important to review required, clauses, affirmations, and terms and conditions prior to
issuing any solicitation document.
Acceptable Methods for Soliciting Bids
a. In person
b. Direct mail
c. Over the telephone
d. Fax
e. E-mail
Solicitation Methods to Use
Invitation for Bid (IFB) applies to purchases greater than $5,000, but not greater
than $25,000. It is recommended that bids greater than $5,000 should be in writing especially
for service contracts
 IFB is the most common solicitation form used for goods and services greater.
 Price is typically the most important factor in award, but best value should be considered,
when appropriate.
 Informal bids should be requested from each vendor identified during the solicitation
process.
52
CPA Texas Government Basic Public Purchasing
January, 2014
Request for Information (RFI) is used to gather information for a future purchase;
vendors provide information on their products or services – no pricing.
Request for Offer (RFO) is used for procuring Automated Information System (AIS) and
Information Technology (IT) Services.
Request for Proposals (RFP) is a formal invitation for a vendor to submit a proposal to
provide a good or service generally used for:
 high dollar procurement; price is not the primary concern
 high risk or complex procurements; respondents are expected to provide the best solution
and evaluated on a variety of criteria
 specifications are not clearly defined
 when competitive sealed bidding is neither practical nor advantageous
Request for Qualifications (RFQ) is used for professional services; only qualifications
submitted – no pricing.
Request for Quote (RFQ) Competitive bidding is not required for purchases less than
$5,000 and can generally be taken via telephone, in person, or via fax, direct mail, or e-mail;
follow your agency’s written policy.
Open Market (OM) Solicitation Methods
You will need to make vendors aware of your needs. The following table defines the solicitation
requirements of the three (4) basic solicitation methods used in competitive purchasing.




Non-Competitive
Open Market Informal Solicitation
Open Market Formal Solicitation
CPA Administered Open Market Purchase
Solicitation
Method
Dollar
Amount
Solicitation Requirement
Solicitation
Options
Non-Competitive
5,000 or
less
Statute does not require a competitive
award for $5,000 or less. The
following is recommended:
--procurement should be in writing
especially for service contracts.
--Solicit from the CMBL vendors
Follow your
agency’s written
policy
53
CPA Texas Government Basic Public Purchasing
Open Market
Informal
Solicitation is
administered by
agency for
Commodities or
Services
$5,000.01
to $25,000
•
Open Market
Formal
Solicitation is
administered by
agency for
commodities or
services within
your delegation;
for example,
services up to
100K, purchase
fuel, oil or grease,
Over
$25,000
•
Delegated
Purchases
or CPA
Delegated
•
Solicit at least three (3) Informal
bids from the CMBL vendors who
provide the good(s) or service(s) to
your organization’s highway district
• Include at least two (2) HUB
vendors using CPA’s HUB
Directory.
Agencies should attempt to provide a
copy of the bid to the last vendor who
held the contract in addition to the
informal bid requirement. (“no bid”
constitutes an obtained bid)
Solicit formal bids from all CMBL
and HUB Directory vendors who
provide the good(s) or service(s) to
your organization’s highway
district.
Post Solicitation to the ESBD,
minimum posting times (14-21
days) unless specifically exempt by
statute.
(or)
Procurements that
have been
delegated back to
your agency by
CPA for Service
over $100,000 or
commodity over 1
million
54
January, 2014
If it will enhance
competition, you
may add nonCMBL vendors to
the final bid list
with written
approval from the
head, or designee,
of your
organization.
Prospective bidders
may request
specific bid
invitations any time
prior to the bid
opening.
You may
supplement your
list of CMBL
vendors with
vendors from the
CPA HUB
Directory if it will
increase the number
of HUBs that
submit bids.
If it will enhance
competition, you
may add nonCMBL vendors to
the final bid list
with written
approval from the
head, or designee,
of your
organization.
Prospective bidders
may request
specific bid
invitations any time
prior to the bid
opening.
CPA Texas Government Basic Public Purchasing
CPA
Administered
Open Market
(OM) is
administered by
CPA for purchases
of commodities or
services of all
open
market purchases
that are not
delegated to your
agency.
January, 2014
CPA will follow the rules for the Open
Market Formal Solicitation Process.
Commodity (Non-Delegated) Agency must
over
complete an Open Market Requisition
$25,000
Form: See Section 4.1 Forms of The
State of Texas Procurement Manual
Solicitation will be
processed by CPA
Major
Contract
solicitation
Over $1
million and
any
Services
over
100,000 per
fiscal year
If CATRAD
determines no
competitive
advantage to solicit
they will delegate
the authority to
your agency. Your
agency will procure
using the Open
Market Formal
Solicitation
Process
Solicitation documents must be
submitted to TPASS as a request for
delegated purchase authority. Send to
the Contract Advisory Team (CAT) for
review through the CPA web
application CATRAD at
https://portal.cpa.state.tx.us/. In
addition, agency personnel are
required to fill out a brief submission
form summarizing the solicitation.
In both cases, average processing time
is apprx 45 calendar days. This may
vary depending on the nature of
the purchase.
Solicitation Amendments (Addenda)
Occasionally after bids are solicited, but prior to bid opening or proposal closing, modifications
to the solicitation document need to be made, ambiguous language needs to be clarified, or errors
need to be corrected. All vendors must be informed in writing by addendum of any change that
is made to the original solicitation document.
If only a short period of time remains prior to an opening or closing, the final submission date
may have to be extended in order to provide vendors with additional preparation time to
incorporate the new information into their response.
55
CPA Texas Government Basic Public Purchasing
January, 2014
TEST YOUR KNOWLEDGE
1.
Unless exempt by statute, agencies are required to use the CMBL for purchases greater
than $5,000.
True
2.
$100
$25,000
$50,000
$100,000
Solicitation of emergency procurements greater than $25,000 are not required to be
posted on the ESBD.
True
5.
Call CPA and request an exception.
Re-advertise the procurement opportunity and post it on the ESBD.
Proceed with the award since the overage is insignificant.
Negotiate with the vendor to get the price under $25,000.
A HUB Subcontracting Plan is required for orders exceeding __________ in value.
a.)
b.)
c.)
d.)
4.
False
What should you do if you estimated a contract cost of a bid opportunity to be $20,000 so
you did not advertise the procurement opportunity on the ESBD; however, when you
opened the bids, the lowest bid meeting specifications is $25,002.94?
a.)
b.)
c.)
d.)
3.
or
or
False
The CMBL is a __________________________________.
a.)
b.)
c.)
d.)
list of preferred vendors
list of CPA approved vendors
mailing list of vendors who have paid a fee to receive notice of procurement
opportunities
list of certified HUB vendors
56
CPA Texas Government Basic Public Purchasing
January, 2014
RECEIVING AND EVALUATING BIDS
AND PROPOSALS
57
CPA Texas Government Basic Public Purchasing
January, 2014
INTRODUCTION
There are different statutes, rules, policies, and procedures regarding receiving, evaluating, and
awarding contracts depending on whether you are procuring services via an informal solicitation,
an invitation for bid (IFB), or request for proposal (RFP). However, there are certain similarities
when receiving, evaluating and awarding contracts regardless of the solicitation method. For
example:
1. All informal and formal solicitations must be documented.
2. All bids and proposals must be reviewed to ensure they are responsive.
a.
b.
c.
d.
Was the bid or proposal signed?
Was the Execution of Offer signed and submitted with the bid or proposal?
Was a HUB Subcontracting Plan (HSP) submitted if required?
Was all addenda signed and returned with the bid or proposal if required?
3. Acceptable Methods of Receiving IFB and RFP’s.
a. Hand Delivery
b. Mail
c. Email
4. Certain information regarding vendor’s character must be verified. Purchasers must check
the following information prior to awarding a contract to a vendor:
a. System for Award Management/Excluded Parties List System (SAM/EPLS) –
Purchasers shall not award contracts to vendors who have been barred from
contracting by the Federal Government. You can view a list of barred vendors on the
SAM/EPLS website at http://www.SAM/EPLS
https://www.sam.gov/portal/public/SAM/
b. Debarred Vendor List – Purchasers shall not award contracts to vendors who have
been barred from participating in state contracting opportunities. You can view a list
of barred vendors on CPA’s website at
http://window.state.tx.us/procurement/prog/vendor_performance/debarred
c. Comptroller Tax Hold – Purchasers must check a vendor’s tax status on the
Comptroller’s website at https://ourcpa.cpa.state.tx.us/coa/Index.html. If a vendor is
on tax hold, you should call the vendor and ask them to resolve their account with the
Comptroller of Public Accounts. You are not prohibited from issuing contracts based
on a vendor’s tax status. (Only applies to procurement card purchases over $500.)
d. Prior Vendor Performance – If specified in the solicitation document, purchasers must
check vendor past performance history through CPA’s Vendor Performance Tracking
System. For more information regarding this system, please see CPA’s website at
http://www.window.state.tx.us/procurement/prog/vendor_performance/VPTS
https://ourcpa.cpa.state.tx.us/coa/Index.html
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CPA Texas Government Basic Public Purchasing
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BIDS
Could require Administrative lead time: 30 – 60 days
You should recall from the “Solicitation” chapter of this workbook that there are two types of
solicitation methods agencies may use; Open Market Informal and Open Market Formal. The
type of solicitation method used is determined by the estimated dollar amount of the purchase.
The type of solicitation method correlates to the procedure used when tabulating bids.
Negotiations are prohibited in a competitive bid environment unless only one (1) bidder
submitted a bid or in the case of an emergency or a proprietary purchase. Bids shall be evaluated
based on the requirements in the IFB which may include criteria to determine acceptability such
as inspection, testing, quality, workmanship, delivery, and suitability for the particular purpose.
Bid prices may not be altered or amended after bids are opened, and prices are firm for
acceptance for thirty (30) days from the bid opening date for open market purchases and sixty
(60) days for term contracts, unless otherwise specified in the IFB.
Informal Bids greater than $5,000, but not greater than $25,000.
Receiving
Upon receipt of a bid, to preserve the integrity of the purchasing process, bids should be date and
time stamped and kept in a secure location until the bid opening. Bidders may withdraw bids by
written request any time prior to the bid opening date and hour.
Evaluation
Bid evaluation is critical for determining which bids are responsive and which bidders are
responsible.
Bid Tabulation and Purchasing File
Informal bids and formal bids should be documented and tabulated and kept with the purchasing
file for public inspection and auditing purposes. At the minimum, bid tabulations should
include:
•
•
•
•
•
vendor name(s) and identification number(s) (VID);
provide the ethnicity/gender of HUB vendor or state Non-HUB;
bid amounts;
identify awarded vendor and
include statement of reasons for award
At the minimum, the purchasing file should include the following documentation:
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CPA Texas Government Basic Public Purchasing
•
•
•
•
•
January, 2014
all associated documentation with IFB;
the names and contact information of all contacted vendors;
how the vendor was located (CMBL, HUB, etc.);
compliance
PO with authorized signature
An award should be made to the vendor who provides best value to the state as defined by Gov’t
Code, §2156.007. The act of accepting a bid resulting in a contract between the state and a
vendor is called an Award
Formal Bids (IFBs) Greater than 25,000
Receiving
Upon receipt of a bid, to preserve the integrity of the competitive purchasing process, bids
should be date and time stamped and kept in a secure location until the public bid opening.
Bidders may withdraw bids by written request any time prior to the bid opening date and hour.
Ordering entities shall publicly open bids at the time and place stated in the IFB. State agencies
shall keep a tabulation of all bids received and make it available for public inspection.
Evaluation
After the bids are opened and tabulated, they should be evaluated. Bid evaluation is critical for
determining which bids are responsive and which bidders are responsible. Ordering entities shall
reject a bid in which there is a material failure to comply with specification requirements.
A formal bid may be rejected if it
•
•
•
•
•
•
is late.
is unsigned.
is in the best interest of the state to reject the bid.
contains bid prices which are subject to unlimited escalation.
contains a material failure to comply with the advertised specifications.
fails to provide requested samples.
Award
Contract award shall go to the bidder offering best value for the state while conforming to
required specifications. The primary considerations of best value are 1) price and 2)
conformance to specifications; however, ordering entities may include other best value criteria in
their IFB including, but not limited to:
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CPA Texas Government Basic Public Purchasing
•
•
•
•
•
•
•
•
•
•
January, 2014
Bidder’s safety record
Quality, availability, and adaptability of goods or services
Scope of conditions attached to the bid
Bidder’s ability, capacity, and skill to perform or provide required service in a timely
manner
Bidder’s character, responsibility, integrity, and experience
Quality of performance in previous contracts
Bidder’s previous and existing compliance with laws relating to contract
Previous non-compliance with specification requirements
Sufficiency of bidder’s financial resources
Bidder’s ability to provide future maintenance, repair parts, and service
Upon contract award, ordering entity shall prepare and file a statement of the reasons for making
the award to the successful bidder and the factors considered in determining best value. A final
bid tabulation is prepared for the public that shows prices quoted by all responsive and
responsible bidders and clearly identifies contract award. See Bid Tabulation and Purchasing
File on page 60
Do you know the difference between a “Responsive” and “Responsible” bidder? Check the
workbook glossary for definitions.
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PROPOSALS
Could require administrative lead time of 90+ days
Request for Proposals is a formal invitation for a vendor to submit a proposal to provide a good
or service.
Receiving
Acceptance of proposals shall close on the date and time specified in the RFP. Ordering entities
shall not disclose the contents of each proposal, but shall file each proposal in a register of
proposals, which after contract award, is open for public inspection.
Evaluating
An evaluation team is generally formed to review submitted proposals for compliance with the
mandatory requirements in the RFP. Techniques that may be used to clarify a proposal include:
•
•
•
•
•
Oral presentations
Interviews
Reference checks
Benchmarking
Site audits
Generally, a point system is used to evaluate proposals in which each major requirement of the
RFP is assigned a specific point value.
Negotiations and Best and Final Offers (BAFOs)
After evaluating proposals, the ordering entity may negotiate with respondents to obtain BAFOs
before making a contract award. The ordering entity may not disclose information derived from
proposals submitted from competing vendors during the negotiation process.
Award
The ordering entity shall make a written award of a contract to the respondent whose proposal
offers the best value for the state. Best value factors may include:
•
•
•
•
Price
Past vendor performance
Vendor experience or demonstrated capability
Other evaluation factors identified in the Request for Proposal.
Upon contract award, the ordering entity shall state in writing the reason(s) for making the
award.
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PURCHASING PREFERENCES
To protect and serve the best interest of Texas vendors, and to encourage the use of recycled,
remanufactured, or environmentally sensitive products, the Texas Legislature mandated through
Gov’t Code, §2155.441 et. seq. several purchasing preferences.
See Procurement Manual, Section 2.38, Preferences for descriptions and associated Texas
Government Codes and Texas Administrative Codes.
Source Preferences - The following source preferences are used when applicable goods or
services can be supplied by these entities:
• Products of Persons with Disabilities
• Texas and United States Products
• Products and Services from Economically Depressed or Blighted Areas
• Products of Facilities on Formerly Contaminated Property
Specification Preferences - The following items are preferences regarding recycled materials:
• Recycled, Remanufactured, or Environmentally Sensitive Products
1. the product meets state specifications regarding quantity and quality; and
2. the average price of the product is not more than 10 percent greater than the price
of comparable nonrecycled products. See “additional worksheets, information
and templates” section for 10% example.
•
•
•
•
•
•
Energy Efficient Products
Rubberized Asphalt Paving
o Only if the cost, as determined by a life cycle cost benefit analysis, does not
exceed by more than 15% the bid cost of alternative paving materials.
Recycled Motor Oil and Lubricants – 25%
Vendors that meet or Exceed Air Quality Standards
o Only if the cost to the state would not exceed 105% of the cost for the goods or
services provided by a vendor who does not meet the standards.
Recycled or Reused Computer Equipment of Other Manufactures
Foods of Higher Nutritional Value
Tie-Bid Preferences - The following preferences listed below are used in breaking tie proposals
in accordance with current statutes. Priority is given in the sequence they are listed
below (see Procurement Manual, Section 2.39 Tie Bids). To claim a preference, a
respondent must mark the appropriate box on the solicitation document. If the
appropriate box is not marked, a preference will not be granted unless other
documents included in the response document indicate a right to the preference.
•
Texas Resident Bidders - Service-Disabled Veterans.
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CPA Texas Government Basic Public Purchasing
•
•
•
January, 2014
Texas Agricultural Products
Texas Produced Supplies, Materials, or Equipment
U.S. Produced Supplies, Materials, or Equipment
These preferences should be utilized if the bid or proposal meets state specifications regarding
price, quantity, quality, delivery, and life cycle costs; and the cost of the product or service is
equal to or less than the cost of other similar products that meet specifications.
First Choice - Recycled, Remanufactured, or Environmentally Sensitive
Commodities or Services
Each fiscal year, CPA, in coordination with the Texas Commission on Environmental Quality,
by rule may identify recycled, remanufactured, or environmentally sensitive commodities or
services and designate purchasing goals for the procurement of those commodities and services
by state agencies for that fiscal year.
State agencies shall prefer the following commodities or services which have been designated as
“first choice” products:
•
•
•
•
•
•
•
Re-refined oils and lubricants
Recycled-content toilet paper, toilet seat covers and paper towels
Recycled-content printing, computer and copier paper, and business envelopes
Recycled-content plastic trash bags
Recycled-content plastic-covered binders
Recycled-content recycling containers
Energy Star labeled photocopiers
A state agency that chooses not to purchase an available recycled, remanufactured, or
environmentally sensitive product or service must provide written justification signed by the
executive head of the agency stating the reasons for the determination that the commodity or
service identified by the commission will not meet the requirements of the agency.
Things to keep in mind:
 You must purchase recycled products if they are designated as “First Choice” products unless
you provide written justification that is signed by the executive head of your agency to
TPASS. (See class handout for example)
 Letter of Justification of non-recycled commodities or services only applies to purchases
over $150 (if applicable).

The average price of the recycled product is not more than 10% greater than the price of
comparable non-recycled products. (See Worksheets, Information & Templates for example)
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COMPARE AND CONTRAST
(COMPETITIVE BIDS vs. COMPETITIVE PROPOSALS)
Competitive Sealed Bids and Competitive Sealed Proposals each have a unique set of statutes
and requirements that are important for you to understand. Let’s take a minute to discuss the
information below.
Competitive Sealed Bids
1.
The delegated dollar limits for competitive sealed bids for goods and services are:
2.
When are you required to use the CMBL?:
3.
Describe what actions to take upon receipt of a bid:
4.
When can a bidder withdraw their bid?
5.
Describe the public bid opening process:
6.
What should you do with an unsigned bid?
7.
What is a bid tabulation and what must it contain?
8.
What criteria do you consider to break a tie bid?
9.
In a competitive bid what is public record?
10.
In general, are negotiations permitted in a competitive bid environment?
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CPA Texas Government Basic Public Purchasing
Competitive Sealed Proposals
1. When is an RFP used?
2. Key elements of an RFP include:
3. Can RFP responses be opened before the due date and time?
4. Describe what happens when the due date and time arrive.
5. How are RFP responses evaluated?
6. Are negotiations permitted in a competitive sealed proposal environment?
7. What is a BAFO and when do you request one?
8. Describe what you do with BAFOs once they are received.
9. How do you determine contract award?
10. In the RFP process, what is public record after contract award?
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January, 2014
CPA Texas Government Basic Public Purchasing
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TEST YOUR KNOWLEDGE
1.
Negotiations are permitted in a competitive bid environment when there is only one
bidder or during an emergency procurement when competition is not practical.
True
2.
or
False
What is the correct procedure when evaluating an invitation for bid from a vendor that
meets all of the major specifications and almost all of the minor ones?
a) Call CPA and get an approval for a variance for your situation.
b) Reject the bid as non-responsive and award to the next bidder providing the best value
and is within your budget.
c) Award the order as submitted.
d) Award the order after you have negotiated a slightly lower price with the vendor for
the minor specifications that they do not meet.
3.
In the boxes below identify which criteria belong in the Sealed Bid category and which
criteria should go in the Sealed Proposal. Put a ‘√’ in the box which best corresponds to
the criteria listed in the left column.
(Continue on the next page.)
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CPA Texas Government Basic Public Purchasing
Criteria
Sealed Bid (IFB)
Administrative lead time:
90+ days
Opened at a specified time and
Date
Evaluate against evaluation
criteria
Public bid opening
Discussions permitted
Evaluate against specifications
Read only names of respondents
No discussions with bidders
Close at specified time/date
Administrative lead time:
30 – 60 days
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January, 2014
Sealed Proposal
(RFP)
CPA Texas Government Basic Public Purchasing
LOGISTICS
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January, 2014
CPA Texas Government Basic Public Purchasing
January, 2014
SHIPPING
Each ordering entity has a unique set of needs regarding shipping and receiving procedures and
should amend their process accordingly. For example, an agency that handles hazardous
materials must have internal procedures for shipping that includes special handling instructions
in the solicitation document for receiving those materials.
CPA offers several term-contracts for courier/delivery services. If your agency has a need for
low-volume outbound shipping not covered by term-contract, you should attempt to get the best
price through informal bidding. For high-volume outbound shipping not covered by termcontract, you should solicit a formal bid for an annual contract.
Title and Freight
Carrier terms and freight charges could potentially make the difference in a best value decision.
Some questions you should always include in your solicitation document are:




Are freight charges included?
How much does shipping cost?
Is shipping F.O.B. Origin or Destination?
How many days for delivery?
One of the state’s primary concerns is the passage of title for goods in transit. “Free on Board
(FOB)” specifies when the title for shipped merchandise transfers to the purchaser. In “FOB
Origin” the title transfers to the purchaser as soon as the goods are picked-up from the vendor’s
dock. In “FOB Destination” the title transfers to the purchaser after the goods are delivered.
CPA requires that all orders be placed as “FOB Destination,” as it reduces risk to the state and
allows parity in reviewing bids.
It is important to notice that there is a difference between “FOB” (when the title transfers) and
“Freight” (who pays freight charges). FOB defines:
•
•
•
•
Where the title passes
Who is at risk
Who owns the goods in transit
Who is responsible for filing claims with the carrier
The following table provides detailed information on various carrier shipping methods:
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CPA Texas Government Basic Public Purchasing
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CARRIER SHIPPING METHODS
Carrier
Paid By
Freight
Listed on
PO
Title Held in
Transit By
Claims Filed By
F.O.B Origin Freight Collect
Agency
Yes
Agency
Purchasing
F.O.B Origin Freight Allowed
Vendor
No
Purchaser
Purchasing
F.O.B Origin Freight Prepaid and
Charged Back
Vendor
Yes
Purchaser
Purchasing
F.O.B Destination Freight Collect
Agency
No
Vendor
Vendor
F.O.B Destination Freight Prepaid
and Allowed
Vendor
No
Vendor
Vendor
F.O.B Destination Freight Collect
and Allowed
*Agency
No
Vendor
Vendor
Shipping Method
* Agency pays freight charges and deducts from invoice
Texas Business & Commerce Code § 2.601
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RECEIVING
When receiving goods, you should first locate the purchase order (PO) number on the carrier’s
shipping documents and retrieve a copy of the PO to compare against the carrier’s manifest as
follows:
PO Specifications
Yes
No
Is the shipment for your
agency?
Continue receiving procedure. Refuse the shipment.
Is “Transportation Charges
Collect” written on the PO?
Continue receiving procedure. Accept the shipment and
contact vendor to correct
billing.
Does PO Specify Inside
Delivery?
Vendor is responsible for
delivering to the exact floor
and room number on the PO.
Does PO require palletized
shipment?
If the vendor does not palletize Continue receiving procedure.
shipment and PO requires it,
give vendor the opportunity to
palletize locally.
Does PO match manifest?
Continue receiving procedure. Accept the ordered items and
contact vendor for handling
incorrect items.
Continue receiving procedure.
Does number of containers
Continue receiving procedure. Record any discrepancies on
delivered match the number on
the carrier’s shipping
the carrier’s manifest?
document.
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INSPECTION
When you receive a shipment, you should immediately examine the outside of the container(s)
for damage. If there is no visible damage, and time permits, you should open the container(s)
and compare the contents with the manifest. If there is a discrepancy, contact the vendor and
attempt to resolve the discrepancy. If absolutely necessary, refuse the shipment.
Damages
Minor Visible Damage
If you notice minor visible damage on the outside of the shipment and do not have time to open
the containers, record damage on the Bill of Lading and ensure that it is signed by the delivery
person prior to shipment acceptance. Recording minor damages provides added documentation
in the event of concealed damage.
Severe Visible Damage
In the case of severe visible damage, the process varies depending on how the order was shipped.
For, FOB Destination you may:
• Reject the entire shipment.
• Accept the entire shipment.
• Accept part of the shipment and reject the damaged part of the shipment.
For FOB Origin, you should accept the shipment and record any damage on the Bill of Lading.
Your agency is responsible for filing freight claims with the carrier.
Concealed Damage
Concealed damage is damage that was not evident at the time of receipt. In the case of
concealed damages, notify the vendor and the carrier in writing via mail, e-mail, or fax within 15
days.
Discrepancies
Purchasing plays a key role in resolving discrepancies. It is important to notify the vendor of all
discrepancies in writing via mail, e-mail, or fax, and follow-up on resolutions regarding
damages, over-shipments, shortages, and other shipment errors.
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CPA Texas Government Basic Public Purchasing
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Over-shipments
Over-shipments contain more of an item than your agency ordered. Your agency is not obligated
to pay for over-shipments unless they are allowed in the terms and conditions of your contract
with the vendor.
Shortages
You should only pay for actual items received. In case of a minor shortage, make a notation on
the Bill of Lading and adjust the invoice accordingly. If there is a major concealed shortage,
notify the vendor in writing and have them ship the needed items at their expense.
Substitutions
For non-delegated purchases, substitution of items called for in a contract is not permitted
without the CPA's prior approval. No such approval will be granted unless substituted items are
of equal quality and are offered at the same or lower price.
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TEST YOUR KNOWLEDGE
1.
What is the proper procedure to follow if during a delegated purchase you ordered twelve
(12) boxes of goods and only received eight (8) of the twelve (12) boxes?
a.)
b.)
c.)
d.)
2.
FOB determines who is responsible for paying freight charges.
True
3.
False
5
10
15
20
The acronym “FOB” stands for “Freight on Board.”
True
5.
or
Upon receipt of damaged goods you have _______days to notify the vendor in writing.
a.)
b.)
c.)
d.)
4.
Make a notation on the manifest, adjust the invoice accordingly, and notify the
vendor immediately.
Make a notation on the manifest, and notify the vendor and CPA immediately.
Refuse the shipment and notify the vendor and CPA immediately.
Make a notation on the manifest and refuse the entire shipment.
or
False
If you receive a shipment containing damaged items you may:
a.)
b.)
c.)
d.)
accept the entire delivery.
accept the undamaged goods and refuse the damaged goods.
reject the entire delivery.
All of the above.
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CPA Texas Government Basic Public Purchasing
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REPORTING REQUIREMENTS AND
DOCUMENTATION
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CPA Texas Government Basic Public Purchasing
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REPORTING REQUIREMENTS
As a public purchaser, you are held accountable for your actions through a variety of reporting
requirements and audits. Depending on the size and organizational structure of your agency, you
may or may not be directly involved with all reporting requirements, but you should be aware of
them.
Procurement Plan
Reference:
34 TAC, §20.41
Procurement Manual Section 1.3
Who - State agencies
When - November 30 of each year and as changes occur and updates are required.
Where - Comptroller of Public Accounts - TPASS SPCM/CAT-RAD
http://www.window.state.tx.us/procurement/prog/review/
What - TAC 20.41(h) State agencies shall formulate an agency procurement plan that identifies
an agency's management controls and purchasing oversight authority in accordance
with the policy guidance contained in the Commission's Procurement Manual. An
agency must submit a copy of the procurement plan during the Commission's audit of
the agency's purchasing documents or upon request by the Commission.
State Use Exceptions
Reference:
Human Resources Code, §122.016
Gov’t Code, §2155.138(a).
Procurement Manual Section 2.5
Who - State agencies
When - Fifteenth (15th) working day of each month. (A reminder may be sent on the 5th
working day of each month). If a reminder is not received, the report is still required to be
submitted.
Where - Comptroller of Public Accounts - https://portal.cpa.state.tx.us/
What - A report listing all items/services purchased as exceptions to Human Resources Code,
§122.016(a) and Gov’t Code, §2155.138(a).
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Vendor Performance Reporting
Reference:
Gov’t Code, §2155.077
34 TAC §20.108
Procurement Manual Section 2.36
Who - All ordering entities
When - Required for purchases over $25,000 but recommended for all contracts upon closure.
Where - Comptroller of Public Accounts http://www.window.state.tx.us/procurement/prog/vendor_performance/
What - A report documenting poor or exceptional vendor performance required for contracts
exceeding a value of $25,000, but encouraged for all purchases.
TAC 20.108(b) -- State agencies shall report a vendor's performance on any purchase of
$25,000 or more from contracts administered by the commission or any other purchase
made through an agency's delegated authority or a purchase made pursuant to the
authority in Government Code, Title 10, Subtitle D or a purchase exempt from
TPASS's procurement rules and procedures.
Historically Underutilized Business Progress Reports
Reference:
Gov’t Code, §2161.121(b), 2161.122, 2161.124
Procurement Manual Section 2.28
Who - State agencies
When - December 31st of each year.
Where - Governor
Lieutenant Governor
Speaker of the House of Representatives http://www.window.state.tx.us/procurement/prog/hub/hub-forms/
What - A report documenting progress under its plan for increasing use of historically
underutilized businesses.
Report of Contracts Awarded to Historically Underutilized Business
(Gov’t Code, §§2161.121(b), 2161.122)
Who - State agencies
When - March 15th and September 15th of each year.
Where - Comptroller of Public Accounts http://www.window.state.tx.us/procurement/hub/hub_report/fy0/hubpro.pdf
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What - A report relating to the use by an agency and each of its operating divisions of
historically underutilized businesses, including information regarding subcontractors
and suppliers.
Reporting of Delegated Purchases
(Gov’t Code, §2155.132(c))
TAC §20.41(j)
Who - State agencies
When - May 1stand November 1st of each year.
Where - Comptroller of Public Accounts http://www.window.state.tx.us/procurement/hub/hub_report/fy0/hubpro.pdf
What - Reporting Purchasing Activity under Delegated Authority. State agencies will report to
the Commission, not later than May 1 of each year regarding the previous six-month period and
on November 1 of each year regarding the preceding fiscal year, information related to delegated
purchasing activity for goods and services in the form prescribed by the Commission.
Construction Contract Notification
(Gov’t Code, §2166.2551)
Who - CPA or an agency whose project is exempt from all or part of Gov’t Code, §2166.003.
When - No later than 10 days after contract award.
Where - Legislative Budget Board http://www.lbb.state.tx.us/Contracts/Contract_Reporting_Instructions_78R_1004.pdf
What - Written notice of a contract for a construction project if the amount of the contract,
including any amendment, modification, renewal, or extension of the contract exceeds
$14,000.
Major State Contract Notification – Electronic Commerce
(Gov’t Code, §2177.052)
Who - State agencies
When - Upon contract award.
Where - Electronic State Business Daily (ESBD) http://www.window.state.tx.us/procurement/pub/manual/procmanual.pdf
What - Written notice of a contract whose expected value is $5,000,000 or greater.
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Major Information Systems Contract Notification
(Gov’t Code, §2054.008)
Who - State agencies
When - No later than 10 days after contract award.
Where - Legislative Budget Board http://www.lbb.state.tx.us/Contracts/Contract_Reporting_Instructions_78R_1004.pdf
What - Written notice of a contract greater than $100,000 for:
1.
2.
3.
One or more computers.
A service related to computers, including computer software.
A telecommunications apparatus or device that serves as a voice, data, or video
communications network for transmitting, switching, routing, multiplexing,
modulating, amplifying, or receiving signals on the network.
Professional Services Contract Notification
(Gov’t Code, §2254.006)
Who - State agencies and universities
When - No later than 10 days after contract award.
Where - Legislative Budget Board http://www.lbb.state.tx.us/Contracts/Contract_Reporting_Instructions_78R_1004.pdf
What - Written notice of a contract for professional services, other than a contract for physician
or optometric services, if the amount of the contract, including an amendment,
modification, renewal, or extension of the contract exceeds $14,000.
Consulting Services Reports
(Gov’t Code, §2254.028)
There are an abundance of reports and requirements associated with procuring consulting
services. If you are responsible for procuring consulting services it is imperative that you read
and comply with the requirements outlined in Texas Government Code, Chapter 2254.
http://www.statutes.legis.state.tx.us/Docs/GV/pdf/GV.2254.pdf
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CPA Texas Government Basic Public Purchasing
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Posting of Information on the Internet
(Gov’t Code, §2054.126)
Who -
State agencies that receive an aggregate amount of appropriation in the General
Appropriations Act for a state fiscal biennium exceeding $175 million.
When - During corresponding biennium
Where - Internet
What 1.
An analysis of all agency expenditures during the two preceding state fiscal years
that lists each county in the state and the amount of agency expenditures made in
or for the benefit of each county.
2.
If the information required to substantially comply with number 1. is not
available, an analysis that approximates compliance with number 1. to the greatest
possible extent by listing agency expenditures according to geographic regions of
the state, to the extent possible, and by each field office of the agency.
3.
A profile of the governing officer or of each member of the governing body of the
agency that includes, among other information, the office address of the officer or
member.
4.
A listing and description of all contracts with vendors that have a value exceeding
$100,000 that the agency has entered into and that are currently being performed
or for which performance has not begun.
5.
A brief description of the agency’s duties.
6.
An electronic link to the agency’s rules as published in the electronic version of
the Texas Administrative Code and an electronic link to any written procedure of
the agency relating to agency hearings that is not contained in the electronic
version of the Texas Administrative Code.
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PROCUREMENT AUDIT
CPA audits payment vouchers and associated purchasing data for compliance with applicable
statutes and rules. Audit results may be distributed to the agency head, agency’s directors of
purchasing, agency’s internal auditor, and agency’s fiscal and/or business manager. Agencies
repeated failure to comply with state statute and rule may result in a suspension of some or all of
their delegated purchasing authority.
Document Types (Doc Types)
In USAS, state agencies must sort their purchase vouchers into document types 2 or 9.
Document Type
2
9
Purchase Category
All non-exempt purchased
including but not limited to:
• Term Contract
• Schedule Purchase
• DIR
• Non-competitive
Purchase
• Delegated Commodity
Purchase
• CPA Open Market
Purchase
• Credit Card Purchase
• Direct Publication
• Distributor Items
• Perishables
• Petroleum Products
• Service purchase
• TXMAS
• Emergency purchases
exceeding $25,000
Exempt Purchase. Does not
require a PCC, but must
include statutory reference of
exemption.
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Audit Type
Post Payment
. Post Payment
CPA Texas Government Basic Public Purchasing
January, 2014
Purchase Category Codes (PCC)
PCCs categorize purchase types for audit and HUB reporting purposes. When the fiscal
department enters accounting transactions into USAS, only doc type 2 requires PCCs. You can
find a list of PCC codes on CPA’s website at
http://www.window.state.tx.us/procurement/pub/manual/2-61.pdf
Audit Findings
Purchasing documentation serves as a link from the purchase to the payment transaction. Proper
documentation is essential to meet agency’s internal requirements and CPA’s audit requirements.
Some of the most common audit findings include:
•
•
•
•
•
•
Using incorrect PCC codes
Not posting, or posting incorrectly, on the Electronic State Business Daily
Not including bidder affirmations and required clauses as part of an IFB
Incorrect procedures during informal bidding
Missing information in bid tabulations
Not using available contracts (Term, CCG, TCI, TIBH, DIR, TXMAS, etc.)
without proper justification
Please contact CPA’s Expenditure Audit Section Manager at (512) 463-4894 regarding any
questions about proper or required documentation.
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CPA Texas Government Basic Public Purchasing
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TEST YOUR KNOWLEDGE
1.
Which of the following is NOT correct concerning service purchases exceeding 100,000?
a.)
b.)
c.)
d.)
2.
Emergency purchases are not audited by CPA.
True
3.
or
False
Agencies are required to submit a procurement plan to CPA each biennium.
True
4.
Proprietary justification is required.
An open market formal solicitation is used.
CPA approval is required.
A HUB subcontracting plan is required.
or
False
What is the purpose of PCC codes?
a.)
b.)
c.)
d.)
To notify your supervisor that you are making a purchase.
To document the purchase method, commodity type, and dollar category of
purchases.
To search the CMBL.
To balance the budget.
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CPA Texas Government Basic Public Purchasing
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GLOSSARY
Actual Authority - Authority expressly given by the principal, or given by the law and not
denied by the principal.
Addendum -
An addition or supplement to a solicitation document. Addenda are issued prior
to the IFB opening or RFP closing date.
Advertise -
To make a public announcement of the intention to procure goods or services.
Agent -
Someone who is authorized to act on behalf of and bind someone else, called
the principal.
Apparent Authority - A mechanism to protect persons who deal with others that they think are
authorized to act but, in reality, are not.
Approved Products List (APL) - Also referred to as the approved brands list or qualified
products list. It is a product specification developed by evaluation of brands
and models of various manufacturers and a selection of the products determined
to meet a minimum level of acceptable quality. Testing is completed in advance
of procurement to determine which products comply with specifications and
standards requirements.
Audit -
An independent review and examination of records and activities to assess the
adequacy of system controls, ensure compliance with established policies and
operational procedures, and to recommend necessary changes in controls,
policies, or procedures.
Automated Information Systems (AIS) - Includes the computers and computer devices on
which an information system is automated; a service related to the automation
of an information system, including computer software or computer; and a
telecommunications apparatus or device that serves as a component of a voice,
data, or video communications network for transmitting, switching, routing,
multiplexing, modulating, amplifying, or receiving signals on the network, and
any related service.
Award -
The act of accepting a bid, thereby forming a contract between the state and a
vendor.
Best and Final Offer (BAFO) - The result of final negotiations with responsive vendors during
the RFP process.
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CPA Texas Government Basic Public Purchasing
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Best Value -
The lowest total price at the highest quality. Best Value analysis is used in the
state to promote continuous improvement in the procurement of goods or
services.
Bid -
An offer to contract with the state, submitted in response to an IFB issued by an
ordering entity.
Bidder -
An individual, or entity, that submits a bid in response to an IFB. The term
includes anyone acting on behalf of the individual or other entity that submits a
bid, such as agents, employees, and representatives.
Bidder Affirmation - Confirmation of prospective bidders that they are in compliance with state
and federal laws and CPA rules.
Bidder’s List - A list of potential vendors who have expressed an interest in doing business
with the State of Texas.
Bid Opening - The public opening of bids, in which the names and prices of the vendors
responding to a bid solicitation are publicly read and recorded.
Bid Tabulation - The recording of bids and bid data submitted in response to a solicitation. The
bid tabulation is used for comparative analysis and record keeping.
Bill of Lading - A document issued by a carrier which is evidence of receipt of the goods, and is
a contract of carriage. It describes the goods, the details of the intended voyage,
and it specifies the conditions of transportation. If issued in negotiable form, i.e.
"to order," it becomes documentary evidence of title to the goods.
Centralized Master Bidder’s List (CMBL) - A mailing list, maintained by CPA, of vendors
who have expressed an interest and registered to receive notice of bid or
proposal opportunities based on the products or services they provide.
Competition - A process by which multiple vendors supplying similar goods and/or services
attempt to secure state business.
Competitive Sealed Bid Procurement Method - Process of advertising an invitation for bids
(IFB), receiving sealed bids from vendors, conducting a public bid opening and
awarding a purchase order/contract to the lowest responsive and responsible
bidder in accordance with state law.
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Competitive Sealed Proposal Procurement Method - Process of advertising a request for
proposal (RFP), receiving proposals, evaluating submitted proposals,
negotiating with selected vendors, and awarding a contract.
Consultant -
A person who provides or proposes to provide a consulting service that does not
involve the traditional relationship between employer and employee.
Contract -
A written document referring to promises or agreements for which the law
establishes enforceable duties and remedies between a minimum of two (2)
parties.
Economically Depressed or Blighted Area - An area that is economically depressed or blighted
as defined by Gov’t Code, §2306.004; or meets the definition of a historically
underutilized business zone as defined by 15 U.S.C. Section 632(p).
Electronic State Business Daily (ESBD) - A marketplace of procurement opportunities greater
than $25,000 posted on the Internet. State agencies are required to post in the
ESBD procurement contract opportunities that will exceed $25,000 in value.
Emergency Procurement - A situation requiring a state agency to make a purchase more
quickly in order to prevent a hazard to life, health, safety, welfare, or property
or to avoid undue additional cost to the state.
Ethics -
A set of moral principles or values governing an individual or group.
Equipment -
The implements used to perform a task or activity.
First Choice - Designated recycled, remanufactured, and environmentally sensitive
commodities or services that state agencies shall give a preference for when
purchasing in accordance with Gov’t Code §2155.448(b).
Free on Board (FOB) -Specifies when the title for shipped merchandise transfers to the ordering
entity and does not relate to the actual freight charges.
Free on Board Destination - The process in which a title for purchased goods transfers to the
ordering entity as soon as the ordering entity receives and accepts the goods.
Free on Board Origin - The process in which a title for purchased goods transfers to the
ordering entity as soon as the goods leave the vendors site.
Good(s) -
Transportable article(s) of trade or commerce that can be bartered or sold that
does not include services or real property.
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CPA Texas Government Basic Public Purchasing
Hardware -
January, 2014
The physical technology used to process, manage, store, transmit, receive, or
deliver information.
Historically Underutilized Business (HUB) - A minority or women-owned business as defined
by Gov’t Code, Chapter 2161.
Internal Repair - A repair where the extent of the work cannot be determined until the
equipment is disassembled.
Invitation for Bid - A solicitation requesting submittal of a proposal response to the required
specifications.
Law of Agency - Body of law that governs agents.
Life Cycle Cost - The total cost associated with buying, owning and using a physical product or
service.
Manifest -
Accumulation of Bills of Lading for official and administrative purposes. As a
rule, cargo manifests are drawn up by the agents at the place of loading.
Materials -
Property consumed in normal use in the performance of a subcontract, program,
or experiment.
Mentor Protégé Program - A HUB program that helps businesses new to HUB learn the
program’s processes and procedures. Businesses new to HUB are matched with
businesses that have previous HUB experience.
National Institute of Governmental Purchasing (NIGP) Commodity/Service Codes Standardized national classification codes that identify commodities or goods.
Need -
End user requirement(s), and what the vendor must offer to be considered for
award.
Negotiations - A consensual bargaining process in which multiple parties attempt to reach
agreement on a disputed, or potentially disputed, matter.
Nonresident Bidder - A bidder whom does not maintain a permanently staffed office that
operates full-time in the State of Texas.
Post-Payment Audit - An audit performed by CPA to verify the accuracy of payment
processing.
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CPA Texas Government Basic Public Purchasing
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Pre-Payment Audit - Audits conducted by CPA prior to release of funds through USAS for
Comptroller payment.
Professional Services - Services directly related to professional practices as defined by the
Professional Services Procurement Act, Gov’t Code, §2254.002.
Proprietary -
Products or services manufactured or offered under exclusive rights of
ownership; including rights under patent, copyright, or trade secret law. A
product or service is proprietary if it has a distinctive feature or characteristic
which is not shared or provided by competing or similar products or services.
Proposal -
An offer submitted by a vendor in response to a Request for Proposal (RFP)
intended to be used as a basis to negotiate a contract.
Proposal Opening - The public opening of proposals in which only the names of the
respondents to a solicitation are publicly read and recorded.
Purchase Order - A signed written acceptance of an offer from a vendor. A purchase order may
serve as the legal and binding contract between parties.
Purchasing -
The act, function, and responsibility for the acquisition of equipment, materials,
services, and construction required by an organization to satisfy the needs of the
requestor at the best value for the state while conforming to ethical business
practices.
Quality -
An essential and distinguishing attribute of something used to help determine its
degree of excellence or superiority.
Recuse -
To remove (oneself) from participation to avoid a conflict of interest.
Request for Information (RFI) - An information gathering tool used when a purchaser can not
clearly identify product requirements/specifications. A document to determine what products
and services are potentially available in the marketplace to meet the agency’s needs and to know
the capability of a vendor in terms of offerings and strengths. RFIs are commonly used on major
procurements, where a requirement could potentially be met through several alternate means. An
RFI, however, is not a request for pricing, is not binding on either the agency or vendors, and
may or may not lead to an RFP or RFO.
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CPA Texas Government Basic Public Purchasing
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Request for Offer (RFO) - To be used in the Purchase of Automated Information System (AIS)
or Telecommunication procurements.
Request for Proposal (RFP) - A solicitation requesting submittal of a proposal in response to
the required scope of services that usually includes some form of a cost
proposal.
Request for Qualification (RFQ) - A tool used to determine the most qualified person(s) to
perform professional services according to the Professional Services
Procurement Act.
Requisition -
An internal document the end user uses to request goods or services. The most
common document used to identify need.
Responsible Vendor - A vendor that is capable of performing all contract requirements in full
compliance with applicable state laws, rules and ethical standards.
Responsive Vendor - A vendor who submits a timely bid to the proper place in accordance with
the terms and conditions stated in the IFB.
Reverse Auction - A real time bidding procedure that is conducted at a pre-scheduled time and
Internet location in which multiple suppliers, anonymous to each other, submit
bids for designated goods or services.
Schedule -
A list of multiple award contracts from which agencies may purchase goods and
services.
Scheduled Purchase - A purchase with a known quantity and definite delivery schedule used for
purchasing commodities in bulk.
Sealed Bid -
A formal written bid opened in public at a designated time and place.
Services -
Performance of duties helpful to others, or labor by a contractor which does not
include the delivery of a tangible end product.
Software -
The commercially available programs that operate hardware. Software includes
all supporting documentation, media on which it may be contained or stored,
related materials, modifications, versions, upgrades, enhancements, updates, or
replacements.
Solicitation -
The process of notifying prospective vendors of an opportunity to provide goods
or services to the state. Solicitations may be conducted via telephone, fax, mail,
e-mail, or in person.
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CPA Texas Government Basic Public Purchasing
Sourcing -
January, 2014
The process of identifying vendors that could provide needed products or
services for an acquiring organization.
Specification - A detailed description of the requirements for a material, product, or service that
includes performance or design criteria necessary to satisfy customer need.
Standard Specification - A pre-developed specification that may be based on industry standard
used for commonly procured commodities and services.
State -
The State of Texas
State of Texas Procurement Manual - The procurement procedure manual written and
maintained by CPA.
Statement of Work (SOW) - A statement outlining the specific services a contractor is expected
to perform, generally indicating the type, level and quality of service, as well as
the time schedule required.
Statute of Frauds - A law requiring certain agreements to be in writing in order to constitute an
enforceable contract.
Technology Services – The services, functions, and activities that facilitate the design,
implementation, creation, or use of software or hardware. This includes seat
management, staffing augmentation, training, maintenance, and subscription
services. This does not include telecommunications services or deliverablesbased, outsourced systems integration or application development projects.
Tenet -
A principle, belief, or doctrine generally held to be true.
Texas Resident Bidder A business incorporated in Texas, that has its principal place of
business in Texas, or that has an established physical presence in Texas.
Uniform Statewide Accounting System (USAS) - The accounting system controlled by the
Comptroller’s Office and used to process ITV payments and State of Texas
Treasury warrants.
Value Chain - The sequential set of primary and support activities that an enterprise performs
to turn inputs into value-added outputs for its external customers.
Supplier’s Supplier → Supplier → Purchasing → User → External Customer
Vendor -
A potential supplier of goods and/or services to the state.
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ACRONYMS
(APP) Advanced Public Purchasing
(APL) Approved Products List
(AIS) Automated Information Systems
(BPP) Basic Public Purchasing
(BAFO) Best and Final Offer
(CCG) Council on Competitive Government
(CMBL) Centralized Master Bidder’s List
(CNC) Cost and Price Analysis, Negotiations, and Contract Administration
(CPA) Comptroller of Public Accounts
(CTP) Certified Texas Purchaser
(CTPM) Certified Texas Procurement Manager
(DIR) Department of Information Resources
(ESBD) Electronic State Business Daily
(FOB) Free on Board
(HUB) Historically Underutilized Business
(IFB) Invitation for Bid
(NIGP) National Institute of Governmental Purchasing
(RFI) Request for Information
(RFO) Request for Offer
(RFP) Request for Proposal
(RFQ) Request for Qualification
(SAMS/EPLS) System for Award Systems/Excluded Parties List System
(SAO) State Auditor’s Office
(SOW) Statement of Work
(TCI) Texas Correctional Industries
(TCPPD) Texas Council on Purchasing from People with Disabilities
(TXMAS) Texas Multiple Award Schedule Contracts
(USAS) Uniform Statewide Accounting System
(VID) Vendor Identification Number
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CPA Texas Government Basic Public Purchasing
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§ 2155.061. COMMISSION
PURCHASING SYSTEM. (a)
State of
Texas Budget
$$$$$$$$$
The CPA shall acquire by
purchase, lease, rental, or
another manner all goods
and services for a state
agency, including a purchase
that does not require a
competitive bid or a spot
purchase.
§ 2155.131. – DELEGATION OF
AUTHORITY TO STATE
AGENCIES-
CPA delegates (or gives
permission to use) the
authority to purchase certain
goods and services to state
agencies.
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CPA Texas Government Basic Public Purchasing
BASIC PUBLIC
PURCHASING
CLASS EXERCISES
94
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CPA Texas Government Basic Public Purchasing
January, 2014
Basic Public Purchasing: Mini Quiz
1. Three parties involved in an agency procurement relationship are:
a. Principal, Agent, Vendor
b. Agent, Actual, Retailer
c. Contact, Manager, Agent
2. The following are steps in the procurement cycle EXCEPT:
a. Need Defined
b. Contract Administration
c. Benefit Duration
d. Payment
3. True or False: A CTPM is required to make delegated purchases of $25,000$100,000.
If false, what would make this a true statement?
_____________________________________________________________________
4. As a public purchaser, it is your duty to do which of the following?
a. Serve the best interest of each State organization and taxpayers in the State
of Texas.
b. Interpret state policy and law to the best of your ability and make rational
decisions accordingly.
c. Avoid acts which are improper or give the appearance of impropriety.
d. All of the above
e. A&C
5. True or False: Every state purchaser has access to legal counsel.
If false, what would make this a true statement?
_____________________________________________________________________
6. A _____________ is used in the purchase of services to define exactly what work
is being contracted.
a.
b.
c.
d.
Approved Products List
Statement of Work
Functional Specification
Qualified Products List
7. Which of the following situations would warrant an emergency purchase?
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CPA Texas Government Basic Public Purchasing
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a. New IT equipment is needed, but paperwork was filed in an untimely
manner.
b. Agency decided to forgo standard bidding practices to minimize work load
on purchasing staff.
c. A new computer virus was unleashed on all office computers over the
weekend and new equipment is needed to minimize damages.
d. Department head decides that all outgoing company work will be
reproduced on off white paper only, but office only has ample supply of
regular white paper.
8. True or False: Surplus property is a procurement method used to procure excess
property no longer needed by state or federal agencies.
If false, what would make this a true statement?
_____________________________________________________________________
9. CPA requires that all orders be placed as ____________?
a. Free On Board Origin
b. Freight on Board Origin
c. Free on Board Destination
d. Freight on Board Destination
10. Negotiations are permitted in the competitive bid process:
a. Always
b. When there is only one supplier
c. Never
d. When purchase is over $100,000
11. CPA will not delegate purchasing authority over $100,000 on what two types of
purchases?
a. Direct Publication and Distributor Purchases
b. Emergency and Distributor Purchases
c. Emergency and Commodity Purchases
d. Commodity and Services Purchases
96
CPA Texas Government Basic Public Purchasing
ETHICS AND THE LAW
TABLE DISCUSSIONS – ETHICAL DILEMMAS
January, 2014
Dilemma A:
You are one of three people in your department assigned to procurement project,
You are friends with one of the bidders. What actions should you/are you
allowed to take?
Dilemma B:
As purchaser for ABC agency, your job involves obtaining goods for the human
resources department. You have purchased widgets from several suppliers over
the last few months and have come to prefer dealing with the Biz-R-Us company.
Biz-R-Us' price for widgets is 10% higher than other widget vendors. Today, you
need to place an order for 30 widgets. You pick up the phone and place an order
with Biz-R-Us. (For the purpose of this discussion, widgets always cost less than
$3/widget.) Should you do something else?
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CPA Texas Government Basic Public Purchasing
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Dilemma C:
Joseph is the procurement director for XYZ agency. He attends a conference
where one of his regular suppliers, Golly Gee Whiz, Inc., offers a door prize.
Joseph wins the door prize. Should he accept it?
Dilemma D:
Tim is an employee of the Texas Education Agency (TEA). Doris, his neighbor,
is a long time school teacher that was recently laid off due to budget cuts. Tim
knows Doris is having financial difficulties and has agreed to write a personal
letter of recommendation for Doris. Doris asks him if he would please put the
letter on TEA letterhead and sign it using his official title of Education Director.
Tim is not sure if this appropriate. He has known Doris on a personal basis for
over 10 years, but they have never had a work relationship.
Is it appropriate for Tim to use his official capacity to prepare the
recommendation letter? Why or why not? What should Tim do?
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SPECIFICATION TYPES MATCH UP
Match the Specification Type up with the corresponding definition:
Specification Type
Performance or Functional
Definition
Includes elements of both
performance and design
specifications.
Design or Technical
Used in the purchase of services to
define exactly what work is being
contracted.
Combination
Provide complete description of what
the product or service must look like.
Brand or Trade Name
Describe what the product or service
is expected to do.
Qualified or Approved Products List
Identify a specific product
manufactured by a specific
corporation.
Statement of Work
Identifies products or services whose
acceptability has been tested and
determined in advance.
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Total
Commodity Purchases
Direct
Perishable Distributor Fuel, Oil Emergency
Amount of Purchases
of
Publication Goods Purchases
and
Purchases
Purchase
Services Purchases Purchases
Grease
Order
Purchases
$0.00
to
$5,000.00
$5,000.01
to
$25,000.00
$25,000.01
to
$100,000.00
Over
$100,000.00
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CPA Texas Government Basic Public Purchasing
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Proprietary Purchase Exercise
Instructions: Discuss the following sole source purchase justifications and determine if you agree with
them. This is just to get your first impressions. We realize that as a purchaser you would need to do
further research before making a final decision. What questions might you want to ask the end user?
Scenario #1 – The City Parks Department is requesting the sole source purchase of hiking boots for city
park rangers. The boots are manufactured by Boots R Us and are the same boots used by the National
Forest Service. The National Forest Service representative says that these boots are the only boots that
will hold up to the daily activities of a park ranger. The estimated annual cost of boots is $10,000.
Agree ________ Disagree_________
Discussion Notes:
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
Scenario #2 – The Wildlife Department is requesting the sole source purchase of deer feed. This deer
feed is being used in a 5-year research project on the deer population in South Texas. It is imperative to
the research that the deer involved in the project be fed the same food throughout the project period.
The original feed was purchased on a competitive basis. The cost of the deer feed over the 5-year
research period is estimated at $125,000.
Agree ________ Disagree_________
Discussion Notes:
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
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Proprietary Purchase Exercise
(Continued)
Scenario #3 – The Client Services Office of the Human Resources Agency is requesting the sole source
purchase of Modular Star brand modular furniture. This modular furniture is needed for a new Dallas,
Texas office and needs to be compatible with the furniture at the Headquarters Office in Austin. The
annual cost of modular furniture for this office is $60,000.
Agree ________ Disagree_________
Discussion Notes:
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
Scenario #4 – Henderson County’s Legal Department is requesting the sole source purchase of a paper
tray component for their printer. The additional component is needed due to high printer usage. The
paper tray component is only available from XYZ manufacturer as only an Original Equipment
Manufacturer (OEM) part is compatible with the existing printer. The cost of the paper tray, including
installation, is $2,728.00.
Agree ________ Disagree_________
Discussion Notes:
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
Proprietary Purchase Exercise
(Continued)
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Scenario #5 – The mayor of Gun Barrel City is requesting the sole source purchase of an executive search
firm to fill the recently vacated city manager position. Since the city manager left unexpectedly, the
mayor wants to use the services of People Finders Inc. as they have used this company on several other
occasions. People Finders Inc. is familiar with Gun Barrel City’s personnel requirements and
understands the needs of filling an executive position in a small town. The mayor says this uniquely
qualifies People Finders Inc. to provide these services. The cost for the executive search firm will be
approximately $55,000.
Agree ________ Disagree_________
Discussion Notes:
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
Scenario #6 – The County Hospital District is requesting a sole source purchase of a $30,000 scanning
electron microscope for the county laboratory. Medical Equipment Inc. is the only manufacturer that
provides scanning electron microscopes as this is new technology. Scanning electron microscopes use a
focused beam of electrons instead of light to image the specimen and gain information as to its structure
and composition. This microscope has a magnification range of 15x to 200,000x, whereas standard
optical microscopes have a maximum range of 50,000x. The greater magnification will greatly enhance
the research capability of the laboratory and will qualify the County for more research opportunities and
dollars.
Agree ________ Disagree_________
Discussion Notes:
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
Provided by: Government Procurement Services
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CPA Texas Government Basic Public Purchasing
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TEMPLATE EXERCISE
PROPRIETARY PURCHASE JUSTIFICATION
(Tx. Gov’t Code §2155.067)
Texas Comptroller of Public Accounts
Att’n: Texas Procurement and Support Services Division
P.O. Box 13186
Austin, Texas 78711-3186
Re: Proprietary Purchase Justification for [insert: commodity code/general item description]
I.
[State what commodity item(s) or services your agency proposes to purchase, and give general background
regarding the agency’s need for and planned use of the goods.]
II.
[Provide a clear statement why the agency specifications for the product are written as they are, and why those
specifications are necessary to accomplish the agency’s goal for the procurement.]
III.
[Explain clearly why competing products do not meet the needs of the agency for the specific commodity. Give
examples of the technical, practical, or operational issues that would occur if competing products are selected.]
Signature – NOTE: statute requires signature by the Executive Head or Presiding Officer of a state agency, or
their designee. If anyone other than the ED or Presiding Officer of the agency will sign the submission, the
agency shall have the appropriate signed delegation available, and shall provide that delegation letter to CPATPASS upon request.
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CPA Texas Government Basic Public Purchasing
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BASIC PUBLIC PURCHASING
ADDITIONAL WORKSHEETS,
INFORMATION & TEMPLATES
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CPA Texas Government Basic Public Purchasing
January, 2014
Rebus Puzzle Brainteasers
(Word Picture Puzzles)
(head over heels)
A REBUS is a picture representation of a name, work, or phrase. Each "rebus" puzzle box
below portrays a common word or phrase. Can you guess what it is?
________________
________________
________________
_______________
________________
_________________
________________
_________________
_________________
________________
_________________
__________________
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CPA Texas Government Basic Public Purchasing
January, 2014
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CPA Texas Government Basic Public Purchasing
January, 2014
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CPA Texas Government Basic Public Purchasing
January, 2014
CERTIFICATION LEVELS
Texas Government Codes 2155.078 and 2262.053 require that Purchasers and Contract Managers
receive training and/or certification. Use the chart below to identify which classes and certifications
are needed for which level of purchasing and contracting.
Purchasing less
than $25,000
Requires certification?
_ yes _ no
Purchasing
between
$25,000.01 to
$100,000
_ yes _ no
Which certification?
CTP CTPM N/A
_
_
_
_ yes _ no
CTP CTPM N/A
_
_
_
_ yes _ no
CTP CTPM N/A
_
_
_
_ yes _ no
_ yes _ no
_ yes _ no
_ yes _ no
_ yes _ no
_ yes _ no
_ yes _ no
Requires “CPA Texas
Government Basic Public
Purchasing” class?
Requires “CPA Texas
Government Advanced Public
Purchasing” class?
Requires “CPA Texas
Government Cost VS Market,
Contract Negotiations &
Contract Administration” class?
Purchasing over $100,000
_ yes _ no
Contract
Management
Requires certification?
_ yes _ no
Requires “CPA Texas
Government Basic Public
Purchasing” class?
Requires “CPA Texas
Government Advanced Public
Purchasing” class?
Requires “CPA Texas
Government Cost VS Market,
Contract Negotiations &
Contract Administration” class?
_ yes _ no
Requires “CPA Texas
Government Contract
Management” class?
Requires “Negotiation in
Procurement & Contract
Management” class?
Requires “CPA Texas
Government Project
Management” class?
_ yes _ no
_ yes _ no
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Contract
Management
(cont)
_ yes _ no
_ yes _ no
_ yes _ no
CPA Texas Government Basic Public Purchasing
January, 2014
Purchase Category Codes (PCC)
The following Purchase Category Codes (PCC) are for use in the Uniform Statewide Accounting System
(USAS) with document type two (2). PCCs are codes used to document the purchase method, commodity type,
and dollar category of purchases. USAS Document type two (2) and nine (9) are post audited after payment.
Document Type nine (9) does not require a requisition number or a PCC.
Document Type Two (2)
A - Purchases of items from CPA term contracts using the CPA automated purchasing system (Automated
purchase orders) or the Contract Purchase Requisition form sent in to CPA for data entry into the system. See
CPA Rule 34TAC 20.40 - CPA Term Contract Purchase.
B - A purchase with a pre-scheduled bid opening date, allowing CPA to confirm orders for goods (e.g.,
calendars, groceries, fertilizer, etc.). see Section 2.9 on Scheduled Purchase Contracts.
C - Purchases from CPA Non-Automated term contracts using the hard copy requisition/purchase order forms
rather than the automated purchasing system (PCC A), e.g. custom blank forms, custom printing on envelopes,
paper, etc. See CPA Rule 34TAC 20.40 - CPA Term Contract Purchase.
D – Purchases of information technology commodities or services not available through DIR contracts. CPA
Rule 34TAC 20.391 – Request For Offer Purchase Method.
E - Purchases of commodities and services when the total purchase is estimated to be $0.00 to $5,000.00. See
CPA Rule 34TAC 20.41 - Delegated Purchases.
F - Purchases of commodities (not services) in the total estimated amount of $5,000.01 through $25,000.00. See
Rule 34TAC 20.41 - Delegated Purchases.
G - Purchases on the Open Market by CPA. A purchase of goods, usually in a specified quantity, made by
buying from any available source in response to an open market requisition from an agency. Items are not on
CPA term contract. See CPA Rule 34TAC 20.33 through 20.40 - CPA Open Market Purchase.
H - Purchases in any category paid for with a procurement card. Agencies using a procurement card from CPA
term contract for commodity class 946-A1. See CPA Rule 34TAC 20.41 - Delegated Purchase.
I - Purchases of items from DIR Contracts. See Texas Government Code, Chapter 2157 - Purchase of
Automated Information Systems.
K - Purchases of publications directly from the publisher with no dollar limits. See CPA Rule 34TAC 20.41 (e)
(5) Delegated Purchases; Publications. Required documentation - The purchase order or requisition file must
contain the following signed declaration:
"Not available from any other source."
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CPA Texas Government Basic Public Purchasing
January, 2014
No proprietary justification or best value statements are required if the signed declaration is listed on the
purchase order/requisition.
Note: Purchases for Libraries are exempt [see Section 4.5 Exemptions]. These type of exempt purchases should
be coded Document type 9 and do not need a PCC code.
L - Purchases of perishable foods, e.g. fresh fruit, eggs, ice, etc. with no dollar limits. See CPA Rule 34TAC
20.41 - Delegated Purchases.
M -Purchases of distributor items, e.g. repair parts for a unit of major equipment that are needed immediately,
or maintenance contracts for laboratory/medical equipment with no dollar limits. See CPA Rule 34TAC 20.41 Delegated Purchases.
P - Purchases of petroleum products, e.g. fuels, oils, and greases - (class 405) with no dollar limits. See CPA
Rule 34TAC 20.41 - Delegated Purchases.
Q - Purchases of services in the amounts estimated to be $5,000.01 but less than $25,000.00 for the total
contract within a one year period. See CPA Rule 34TAC 20.41 Delegated Purchases.
X - Purchases of items from TXMAS Contracts. See CPA Rule 34TAC 20.47– Multiple Award Schedule.
S - Purchases of services in an amount estimated to exceed $25,000.01 for the total contract within a one year
period. See CPA Rule 34TAC 20.41 - Delegated Purchases.
T - Emergency purchases of goods and services exceeding $25,000. An emergency is defined as a situation
requiring the state agency to make the procurement more quickly to prevent a hazard to life, health, safety,
welfare, or property or to avoid undue additional cost to the state. See CPA Rule 34TAC 20.32 and 20.41(a) (2)
- Emergency Purchases.
J, N, O, R, U, V, W, Y, Z - Not Used.
Document Type Nine (9)
This document type is for the purchases of goods and services exempt from competitive bidding or from the
purchasing authority of the CPA by a specific statute. The agency requisition number/order number and PCC
are not required. The legal cite must be referenced on the purchase documentation for these purchases. Items
purchased from CPA term, open market, and schedule orders are not exempt. Please refer to the section
on Exemptions for a list of some exemptions.
REVISED DATE: 09/2007
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CPA Texas Government Basic Public Purchasing
January, 2014
TEMPLATE
PROPRIETARY PURCHASE JUSTIFICATION
(Tx. Gov’t Code §2155.067)
Texas Comptroller of Public Accounts
Att’n: Texas Procurement and Support Services Division
P.O. Box 13186
Austin, Texas 78711-3186
Re: Proprietary Purchase Justification for [insert: commodity code/general item description]
I. [State what commodity item(s) or services your agency proposes to purchase, and give general
background regarding the agency’s need for and planned use of the goods.]
II. [Provide a clear statement why the agency specifications for the product are written as they are, and why
those specifications are necessary to accomplish the agency’s goal for the procurement.]
III. [Explain clearly why competing products do not meet the needs of the agency for the specific
commodity. Give examples of the technical, practical, or operational issues that would occur if
competing products are selected.]
Signature – NOTE: statute requires signature by the Executive Head or Presiding Officer of a state agency, or
their designee. If anyone other than the ED or Presiding Officer of the agency will sign the submission, the
agency shall have the appropriate signed delegation available, and shall provide that delegation letter to CPATPASS upon request.
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CPA Texas Government Basic Public Purchasing
January, 2014
10% Average Price - Recycled, Remanufactured, or
Environmentally Sensitive Products
1. the product meets state specifications regarding quantity and
quality; and
2. the average price of the product is not more than 10% greater
than the price of comparable non-recycled products.
When comparing the prices, you use the average price of the recycled
product, but an actual price of a non-recycled product.
Sooo….
That could mean the cost of a product is more than 10% but it averages
at 10%, such as:
 If ream of recycled paper is:
1.15
1.05
1.10
$3.30 / 3 = its average cost is $1.10
 If non-recycled paper is $1.00, you may have to buy any of the
three recycled products.
113