IPG has moved Procurement Jobs and Procurement News sections to its main website www.procurement.org

IPG has moved Procurement Jobs and Procurement News sections to its main website www.procurement.org

International Procurement Group invites

One of the most important IPG goals is development of procurement as science.

IPG invites all interested parties, companies, organizations, think tanks and individuals to create strategic and mutually beneficial partnership with IPG. Our “online” and “offline” presence may potentially serve as a strong fundament for our future projects.

Areas of our interest include the following, we are open to other
proposals and ideas:

 - Building procurement alliances and lobbying groups

 - Creating independent procurement arbitrary bodies

 - Creating/developing of independent procurement ISO standards

 - Business development by exchanging of assets and areas of influence

 - Establishment of presence in different geographical areas

 - Support of existing procurement initiatives

Being open to everyone associated with procurement, IPG would be happy to receive your proposals and questions at contact@procurement.org

Rearden Commerce Partners with IBM

Rearden Commerce, a developer of personal internet assistance and standardized platforms for commerce, announced a partnership with IBM’s Managed Business Process division (IBM|PowerRating MBPS), with the goal to introduce more choice to the expense management and online procurement category.

“Rearden Commerce believes it is important to provide the market with choice, and the ability to find best of breed solutions,” said Tony D’Astolfo, VP of travel at Rearden Commerce. “We have had multiple instances where our customers and prospects have asked for this partnership and we’re thrilled that it has come to fruition.”

“One of IBM’s biggest advantages is that it offers clients the ability to select the best fitting solutions from the travel spectrum without forcing them into a specific set of products,” said Ray Curatolo, director of IBM Global Expense Reporting Solutions. “With this approach, clients can benefit from the flexibility they need, along with all the advantages of an integrated solution. IBM and Rearden Commerce will work together to provide the highest level of corporate and end user convenience and functionality around booking travel and expense management.”

According to a release, Rearden Commerce will work with IBM to deliver an integrated solution that consolidates booked transaction data from the Rearden Commerce Platform, and actual business expense data from IBM’s Global Expense Reporting Solution (IBM GERS) system. By working with IBM, the Rearden Personal Assistant can give administrators in accounts payable, finance, procurement, travel and other departments the ability to manage policies, spend and preferred providers.

Source: Trading Markets

Expert questions savings in Pentagon contractor cuts

Defense Secretary Robert Gates’ plan to cut funding for service support contractors by 10 percent annually during the next three years isn’t likely to save much money and could disproportionately hurt small businesses, said a former top federal procurement executive.
The Defense Department hasn’t provided any data to support the argument that government employees are a cheaper alternative to contractors, said Robert Burton, a procurement attorney and partner at the law firm Venable LLP in Washington.

Unless the department intends to eliminate functions those contractors now are performing, any savings associated with the cuts is unlikely, he said.

“I’ve been in this business for over 30 years, and I don’t recall any government initiative that has so negatively impacted small businesses,” he said. Burton was the top career federal procurement official in the White House Office of Federal Procurement Policy from 2000 to 2008. Before that, he spent more than 20 years as an acquisition attorney at Defense.
While Gates has said the department no longer will automatically replace contractors with civilian employees, thus ending its controversial insourcing program, Burton said he doesn’t believe insourcing is dead.

“I don’t see any indication that will be discontinued. I think these functions will be transferred to the federal government,” Burton said. “We know for sure they’re trying to get around it with temporary hires — they’re hiring the small business contractor employees.”
Burton cited one firm that had nine employees assigned to a service support contract with the Pentagon, and Defense hired seven of the employees away and ended the contract. Burton declined to name the contractor saying the firm fears retaliation if it files a protest.

“Here we have small businesses in effect doing the recruiting for the federal government, putting in the time and resources into recruitment and training only to lose these employees to the government. This is devastating to small businesses,” he said.
He cited recent data, including an analysis by James Sherk, a labor policy analyst at the conservative Heritage Foundation think tank, that shows some federal employees earn significantly more in salary and benefits than people in comparable private sector positions.

“If I was the Defense Department, I’d be very concerned about those statistics,” Burton said.
Defense officials did not provide a savings estimate associated with the cuts Gates announced on Monday. “I don’t think it’s ready for prime time,” said Gen. James Cartwright, vice chairman of the Joint Chiefs of Staff.
The 2011 National Defense Authorization bill passed by the House in May, (H.R. 5136), actually would prohibit data on employee health and retirement benefits from being used in cost analyses produced in determining whether to convert contractor jobs to Defense civilian employee positions.

Burton says this is “an admission that the government knows the private sector is cheaper than the federal government in most cases.”

Source: Government Executive

Profitable Buying Strategies: How to Cut Procurement Costs and Buy Your Way to Higher Profits

Book by By Mike Buchanan

Product Description:

Improving an organization’s profitability can only be achieved in three ways: increase prices, increase sales volumes or reduce costs.  Competitive pressures are making the first two options increasingly difficult, which leaves cost reduction as the key option available.  Profitable Buying Strategies shows a long-term, structured approach to cost reduction through smart procurement practices.  It straightforwardly explains the philosophy and psychology of buying; buying concepts, tools and techniques; changes that deliver cost reduction; market testing; outsourcing and insourcing; negotiation; e-procurement; and organizational issues.  Case studies and appendices outlining the successful cost reduction drives of a number of major organizations provide a real world explanation of cost reduction and procurement options.

Mike Buchanan has 25 years of senior-level experience in procurement, almost all within major private sector organizations, in many market sectors. He is now a procurement consultant and the Chief Executive of the UK-based consulting firm Link Procurement Services.

Medvedev orders amendments in public procurement law

Russian President Dmitry Medvedev has ordered the government to amend the procurement law after a recent overpricing row, business daily Vedomosti said on Wednesday.

Medvedev saw red after presidential aide Konstantin Chuichenko reported on a gross overpricing of medical equipment in the Rostov region, where several x-ray machines, were bought on a government contract for 90.3 million rubles ($3 million) each – almost three times the manufacturer’s price, 34.5 million rubles ($1.1 million).

The price soared because the x-ray machines were bought via two intermediaries, one in Britain and the other in Russia, Chuichenko said.

“This is an absolutely cynical and gross theft of government money. This cannot be tolerated anymore,” Medvedev said.

“First of all, it attracts wild hatred from our people and, secondly, it creates a negative image of the country,” he said.

The amendments will see that medical equipment is bought with regard to manufacturers’ prices. The government will also introduce unified requirements for the equipment and price monitoring.

But the overpricing, however gross, was quite legal, a government official said, since the maximum price of a government contract is not stipulated by law and is set by the customer with regard to the budget limit.

The procurement law originally contained mistakes and amendments would be of little help, Alexander Stroganov from the government contract center said. Unless there is a centralized control over purchases, overpricing and corruption will continue to thrive.

The Russian Federal Anti-Monopoly Service official said, however, that medical equipment should be sold in an auction.

Source: RIAN

US Bank Launches New Electronic Expense Reporting Tool

US Bank, a subsidiary of US Bancorp, has introduced US Bank Expense Management, an electronic expense reporting tool that allows employees to manage travel expenses online while enabling travel managers to better track spending patterns and identify savings opportunities.

US Bank said that the US Bank Expense Management tool is suitable for mid-size companies with revenues from $25m to $500m.

The US Bank Expense Management tool automatically posts the travelers US Bank commercial or corporate card purchases into an online account, which helps in submitting the accurate expense reimbursement requests quickly, from anywhere – including web-enabled mobile devices.

The tool also allows the managers and travel program administrators to approve traveler expenses and ensure they comply with the company policy. Procurement professionals can track  exactly where the travel dollars are going.

Jeff Rankin, senior sales and marketing officer at corporate payment systems at US Bank, said: “Most mid-sized companies still use manual or paper-based expense reporting systems. But managing travel expenses is often a part-time responsibility at companies this size, so they need a system that’s simple to use and easy to manage – which describes US Bank Expense Management perfectly.”
Kurt Adams, senior vice president of strategy and product at corporate payment systems at US Bank, said: “Instead of knowing only the total company expenditure on airlines tickets, for example, the procurement officer can know what the company spends with each individual airline and then use that data to negotiate more favorable pricing with airlines, hotel chains, car rental companies and travel service providers. Additionally, US Bank Expense Management can help ensure employees use these preferred providers.”

Source: BBR

Indonesia: Govt to address bottlenecks in public procurement bids

 
The government is working to resolve the long-standing issue of bottlenecks in the spending of state and regional budgets by revising regulations related to the public procurement of goods and services, construction services and state budget management.  

A decision to clear these legal hurdles was made during a Cabinet meeting attended also by governors, heads of state agencies and businessmen, on Friday. 

In an announcement made after the meeting, President Susilo Bambang Yudhoyono said the revised regulations were slated to come into effect for next year’s budget. 

He also said government spending was badly needed particularly in outer regions, to allow the public to benefit from the trickledown effect. 

“Efforts will be made to streamline regulations so that state and regional budgets can be spent quickly and effectively,” Yudhoyono said. 

The regulations set for revision include the 2003 Presidential Regulation on the Public Procurement of Goods and Services, the 2000 Presidential Regulation on Construction Services, and the 2002 Regulation on State Budget Management. 

Yudhoyono said the regulations’ rigidity had caused delays and inefficient budget spending. 

According to the Finance Ministry, only 35 percent of state budgets had been spent in the first half of this year, far less than the expected 50 percent. The average budget spending by local administrations has remained at a similar level. 

Over the past five years, the central and local governments have only been able to spend an average of 90 percent of their budgets, and a shopping spree usually occurs at the end of the year. 

National Development Planning Minister Armida S. Alisjahbana said the revision would make sure spending was no longer concentrated in the fourth quarter, such that economic development happen in the earliest stages of the fiscal year. 

Indonesia’s state budget this year, totaling more than Rp 1,000 trillion (US$110 billion) is expected to help drive the economy through public spending. However, with slow budget spending, few advantages from the budget have been enjoyed by businesses. 

Indonesia’s economy is set to grow by more than 5.8 percent this year, fueled mainly by public, private and household spending. 
According to Armida, among the revisions proposed was an incentive provision for treasurers and project coordinators who were able in their capacity to disburse funds or execute spending on schedule, and that they would also be advised to prudently follow all necessary legal guidelines to prevent them from being dragged into legal prosecution. 

“The principal of the revision is to remove bottlenecks, but without compromising prudent principals of good governance,” Armida said. 

Many bureaucrats at central and municipal levels have criticized the 2003 Presidential Regulation on Procurements, under which the failure to strictly comply can lead to prosecution for power abuse or corruption. 

Over the past five years, more than 200 bureaucrats have been dragged into court on corruption charges. 

Because of the risks, bureaucrats have said they would prefer to spend more time to make sure they are complying with the regulations, or in some cases, refusing to initiate procurement bids. 

Coordinating Economic Minister Hatta Rajasa said the revision would also eliminate concerns over future legal problems as the revised regulations would no longer contain loose interpretations of articles. 

Several points in the revision
The 2002 Regulation on State Budget Management
* Allowing multi-layer contracts, and the appointment of more than one treasurer to manage the budget. * Fund disbursement process will be no longer than 12 days. * Incentives for treasurers and project coordinators based on targeted tasks and attached risks. 

The 2003 Presidential Regulation on the Public Procurement of Goods and Services
* The establishment of a procurement service unit aimed at advising the legality of fund disbursement and spending. This would help bureaucrats comply with existing regulations and prevent them from being charged with corruption or power abuse. * A full implementation of electronic-based procurement * Small and medium enterprises can bid for projects worth Rp 2 billion (US$222,000) – up from Rp 1 billion at present. * Procurements worth below Rp 200 million are exempt from the bidding process. * Bureaucratic flexibility during natural disasters and emergency situations. * The procurement of motor vehicles, drugs, medical facilities, rental property (offices and warehouses) and live-in accommodation (hotels, lodges, cottages) is exempt from the bidding process. * Long-term contracts are allowed for spending below Rp 10 billion. * Local products will be given special treatment without having to undergo price comparison. 

The 2000 Presidential Regulation on Construction Services
* Local products will be given special treatment without having to undergo price comparison. * Local contractors will be given priority regardless of the demanded cost of services provided. * Priority must also be given to environmentally friendly products and processes.

Source: The Jakarta Post

Investigators blast Arlington contracting

Officials confirm millions in “questionable or improper” spending with little oversight first reported by Salon

By Mark Benjamin

Army contracting officials have produced a scathing report on
Arlington National Cemetery that documents the “questionable or
improper” spending of millions of taxpayer dollars, supposedly used to pay contractors and purchase supplies at Arlington.

The Army probe found little proof of services rendered for some contracts and payments.
Investigators mostly discovered a convoluted, incomplete and
sometimes conspicuously absent paper trail to account for the money — both at the cemetery and in the files of Army contracting officials who oversee the cemetery.

The Army launched this stand-alone financial investigation in
June as the yearlong Arlington scandal exposed by Salon rapidly became more public. Salon reported that many at Arlington had tried to blow the whistle on questionable spending to computerize burial records, under the supervision of deputy superintendent Thurman
Higginbotham, with contracts going to some of the same people more than once, even after they failed to produce a product. After spending somewhere between $5 million and $20 million, Salon
reported, the cemetery’s years-long effort to computerize its
records wasn’t completed.
Last week, Higginbotham invoked the 5th Amendment when he was
asked about the contracts during a congressional hearing.

Army contracting specialists reviewed cemetery contracts and
spending on everything from landscaping work to cellphone bills over the past five years. The resulting July 27 “Procurement
Management Review of Arlington National Cemetery” report documents a dizzying blizzard of disappearing money, missing or incomplete contracting paperwork and fishy-looking spending on all sorts of
things.

In one section of the report, investigators examined between
$400,000 and $800,000 of spending per year on various purchases at Arlington. The probe found numerous examples of “no evidence of
delivery and/or acceptance of services and supplies” in return. The report documents the purchase of cameras, refrigerators, computer
equipment, software and car parts, as well as cellphone charges and payments for car repairs. For those expenditures, investigators found “limited or no supporting documentation or validation of the location of the items.” The report called signatures on some purchase orders at the cemetery “questionable,” noting that,
“signatures purported to be signed by the same person appeared to be totally different.”
“Based on the lack of documentation, justification for the items being purchased, independent receipt and acceptance, and the location of property purchased which should be maintained in the
files, most of the purchases reviewed … would be considered
questionable or improper,” the report says. When it comes to the
Army, which oversees Arlington, the report says the Army failed to
“ensure only authorized items were purchased, and receipt and
acceptance was documented.”

In addition to the purchase of items, the Army report also looks
into millions of dollars paid to contractors for services. Here,
too, investigators found widespread lack of proper documentation and common deviation from government contracting procedures
designed to ensure fair competition among contractors and preserve taxpayer funds — but that was only when the Army investigators could find the files at all. Investigators were unable to locate more than half the files for 167 Arlington contracts awarded through the Army’s National Capital Region Contracting Center, covering everything from horticulture work to construction.

The investigators also sought to review a separate set of 34
cemetery contracts awarded through an Army Corps of Engineers office in Baltimore. Four of those files were “incomplete” enough that they could not be reviewed, investigators found.

The report is particularly critical of millions the cemetery spent on contractors to computerize Arlington’s antiquated, faulty
burial records still managed in a flurry of paper that has resulted
in thousands of burial errors at Arlington. Despite payments to
contractors who were close to top cemetery officials, Arlington
received little to nothing in return, leading to the scandal
exposed by Salon over the past year. “The contract files did not
contain evidence that the government received deliverables as stated in the contract,” the report said of this modernization effort that was supposed to prevent burial mistakes. Arlington blew
somewhere between $5 million and $20 million on this fruitless
endeavor. No one is sure of the total amount, or exactly where the money went.

The report highlights the role of cemetery deputy superintendent
Thurman Higginbotham, who handpicked the contractors who were supposed to perform that computerization work and managed the contractors to carry it out. “Contract file documentation indicated
that the deputy superintendent ANC acted with apparent authority to receive services and provided direction to the contractors,” according to the report. “Receiving reports reviewed at ANC were signed by the deputy superintendent ANC. The contract files did not
contain evidence that the government received deliverables as stated in the contract.”

The Army allowed Higginbotham and cemetery superintendent Jack Metzler to retire unscathed last month. The Army has shown no sign of any intent to hold any Army officials accountable for anything that took place at Arlington.

The report was released Tuesday by Sen. Claire McCaskill, D-Mo.
McCaskill chairs a Senate subcommittee that is investigating the scandal at Arlington and that held the hearing last week.

Source: Salon   

Bringing public sector procurement to the fore

My vision would be that procurement should be seen as a saviour against the cuts.
 
Recently I participated in a public sector procurement leaders debate. I heard sentiments of keenness and frustration from purchasing experts wanting to play their part in deficit repair. Assuming these people’s views are indicative of their peers’, procurement needs a seat at the top table in order to consult the public sector on how to affect strategic change in the way spending is managed and controlled.

David Pointon, head of procurement, Portsmouth City Council outlined common frustrations: “I think there is huge potential and despite lot of effort and commitment going into the sector we haven’t got our act together as well as we could have done. The potential is realisable providing somebody pulls the strings in a better fashion than they are now.”

Barbara Cairney, head of procurement, Northamptonshire Police concurred: “It is a shame that it has taken the current financial situation to bring procurement to the fore, but there is an opportunity to shape the future of the public sector and bring more of our commercial knowledge into play.”

Lack of education and understanding about the role and potential of procurement people in the sector compared to in commercial worlds was flagged as a key issue. Jane Turl, an interim head of procurement who has served at various London Boroughs and central government departments said: “There’s a distinct lack of understanding of what procurement means within the organisation…

“They [the board] start to see it as a panacea and they want instant results… Education should start further back and higher up. We don’t have a seat at the table until the situation becomes so desperate that they can’t think of anyone else to ask.”

Lack of time for strategy is also often manifested in excessively detailed and non-automated processes for small scale purchasing. The recent MoD £6bn inventory issue suggests that such issues are widespread. But Glenn Fletcher, director of EC services, Achilles confirmed that procurement must actively seek to change its approach too: “Procurement needs more time to concentrate on the strategic decisions rather than dealing with the downstream issues. If we want to go and sit on the top table we have to go and improve that.”

Knocking on the boardroom door is the starting point, according to Glenn Gooch, associate director of procurement, NHS South West Essex, whose commercial sector background brought an awareness of the need to ‘sell’ ones services internally. “Procurement needs board level support, if you try and do a bottom up approach it will never work in a million years. You need a mandate from the board,” said Gooch.

So why should the board listen? For Jonathan Jones, programme manager, West Midlands Improvement & Efficiency Partnership, it’s about actually preserving public services. “If procurement is done really well it can save services, by really pulling together the very best way to deliver these things… My vision would be that procurement should be seen as a saviour against the cuts because if it’s done well it can really take out a lot of cost and protect those front line services.”

In the last four or five years there has certainly been a great willingness to embrace changes in procurement but it seems there hasn’t always been the backing. My wish is that now the people with the vision and ideas are now going to get the support to enable them to deliver it. As Jones concluded: “We’ve really got to get to grips with strategic understanding, coordinating, more than just lip service approach. There’s really got to be that core buy in to deliver this well and to drive savings.”

Source: Director of procurement online