Leander ISD Purchasing Process: Contracts, Compliance, and Vendors

1. Financial leadership lisd November 15, 2018

2. agenda Background at Leander ISD Purchasing Process Contracts Statutory Compliance Solicitation Process Next meetings Feedback

3. authority Board Action Administration All other budgeted contracts • Contracts which are not budgeted • Construction • Vendors who report directly to the Board • Demographer • Financial auditor • Municipal advisor

4. HOW DO WE PURCHASE AT LEANDER ISD? • All purchases of goods and/or services are authorized by either a purchase order or district credit card. • Volume from 9/1/2017 – 8/31/2018: • 3,662 purchase orders • $74,525,020 in purchase orders • 39,387 credit card transactions • $14,138,398 in credit card transactions

5. Who PURCHASEs AT LEANDER ISD? • Mix of Centralized/Decentralized Structure. • Purchasing establishes purchasing guidelines and provides associated resources for the District. • Departments/Campuses determine needs and submit requisitions for purchase orders. • Purchasing reviews and approves all purchase orders. • Purchasing sets system rules for credit cards to control usage.

6. PURCHASING STAFF

7. Approved vendors • Approved Vendors have been awarded based on a formal solicitation process compliant with state laws. • Purchasing maintains an Approved Vendor List and publishes it on an intranet site. • District is able to use Approved Vendors for efficient means of compliant purchases. • Other vendors may be used; however, additional steps may be required.

8. Dollar thresholds • Thresholds for Vendors not on Approved Vendor List: • $0.01 – $3,500 – Single Quote  • $3,500.01 – $49,999.99 – Three Quotes • $50,000 and Up – Formal Competition • Amounts are based on an individual transaction that is not reasonably anticipated to repeat as a Component, Serial or Sequential purchase over a 12-month fiscal year period.

9. COMPONENT PURCHASES • "Component purchases" means purchases of the component parts of an item that in normal purchasing practices would be purchased in one purchase. • Example: District has a need for seven mowers at $500 each with shipping charges extra at $200 for all seven mowers. There is no Approved Vendor. District separates the total need into one order for the mowers and one order for the shipping. Each order is under the $3,500 single quote threshold but the total need is $3,700.

10. SEPARATE PURCHASES • "Separate purchases" means purchases, made separately, of items that in normal purchasing practices would be purchased in one purchase. • Example: District has a need for 10 software licenses at $500 each. There is no Approved Vendor. District divides the total need into two orders at $2500 each. Each order is under the $3,500 single quote threshold but the total need is $5,000.

11. SEQUENTIAL PURCHASES • "Sequential purchases" means purchases, made over a period, of items that in normal purchasing practices would be purchased in one purchase. • Example: District has a need for 10 televisions at $500 each. There is no Approved Vendor. District buys five televisions today then the remaining five a week later. Each order is under the $3,500 single quote threshold but the total need is $5,000.

12. Credit card guidelines • $3,500 transaction limit. • Cannot be used for controllable inventory or when there is a contract to be signed. • Any exception requests are reviewed and approved by Purchasing. • Multi-layer review process to ensure compliance: • Principal / Department Director • Finance / Accounts Payable • Purchasing

13. Annual contract volume • +/- 150 vendor contracts with operational funds • 200+ actual contracts • 100+ campus contracts with activity funds • 200+ independent contractor agreements

14. terminology • Advertising • Assignment • Compensation • Debarment and suspension • Felony conviction notice • Force majeure • Governing law and venue • Indemnification • Insurance • Non-appropriation • Ownership of product/work • Public information act • Scope of work • Term • Termination

15. CONTRACT Review • Governed by administrative regulation. • Contracts reviewed by Legal or CFO. • Contracts signed by applicable Principal or Director. • Signature authority varies based on the type of good/service.

16. STATUTORY COMPLIANCE • Governed by the Texas Education Code, Chapter 44.031B. • “all school district contracts for the purchase of goods and services, except contracts for the purchase of produce or vehicle fuel, valued at $50,000 or more in the aggregate for each 12-month period shall be made by the method, of the following methods, that provides the best value for the district”

17. COMPLIANT PROCUREMENT METHODS • Competitive Bidding – Award to Best Value. No negotiations. • Request for Proposals – Award to Best Value. Negotiations allowed. • Purchasing Cooperatives – Utilize awards that have already gone through one of the above processes by another organization. • Request for Qualifications – Award based on qualifications and fair/reasonable price. • Interlocal Contract – Contract with governmental entity.

18. Process and factors • Historically underutilized business • Past relationship with the district • Purchase price • Long-term cost to the district • Quality of vendor’s goods and services • Vendor reputation • Principal place of business • Meet district needs

19. exceptions Emergency damage or destruction Sole source Item for which competition is precluded Film, manuscript, or book Utility service, including electricity, gas, or water Overall: Only one product/service meets our needs and it is only available from one vendor. • Professional Services • Architect • Attorney • Certified public accountant • Engineer • Financial consultant • Land surveyor • Technology consultant

20. Required disclosures • Conflict of interest • Felony conviction notice • Interested parties • Non-collusion • Person indebted to district • Suspension and debarment • W-9

21. STATUTORY COMPLIANCE – CONSTRUCTION • Texas Education Code, Chapter 44.031(B) refers us to Texas Government Code Chapter 2269 for construction contracts $50,000 and greater. • Competitive Bidding is the default. Governing Board must authorize another procurement method prior to advertising.

22. CONSTRUCTION PROCUREMENT METHODS • Competitive Bidding • Competitive Sealed Proposals • Construction Manager Agent • Construction Manager At-Risk • Design Build • Interlocal Contract • Job Order Contract

23. CONSTRUCTION PROCUREMENT METHODS • Competitive Bidding • Design complete by Architect/Engineer (A/E) prior to soliciting. Award is to lowest responsible bidder. Negotiation is not allowed. • Competitive Sealed Proposals • Design complete by Architect/Engineer (A/E) prior to soliciting. Award is to Best Value. Negotiation is allowed. • Construction Manager Agent • Provides administrative support only. Does not perform any actual construction work.

24. CONSTRUCTION PROCUREMENT METHODS • Construction Manager At-Risk (CMAR) • Design completed by A/E after selection of CMAR. CMAR has input in design process. • Design Build • Solicitation is for a single award for design and construction services. • Interlocal Contract • Contract with a governmental entity to perform construction services. • Job Order Contract • Creates a list of pre-qualified contractors to perform minor construction services on an as-needed basis.

25. Federal funds • Federal funds come with additional compliance requirements. • Education Department General Administrative Regulations (EDGAR). • Leander ISD’s standard purchasing processes are designed be compliant with EDGAR. • Simplicity such that the same general processes apply regardless of funding source.

26. SOLICITATION PROCESS – customer’s role • Customer is the main sponsor within Leander ISD. • Customer’s primary expertise is in the service or goods that they are seeking. • Customer is responsible for supporting the project from a business perspective, including such things as: • Creating specifications/scope of work, obtaining drawings, etc. • Obtaining approval of other internal and external stakeholders (e.g, IT approval of requirements or Cabinet/Board approval of initiating the project). • Assessing political interest and complexity. • Justifying business decisions in case of public or Board inquiry.

27. SOLICITATION PROCESS – PURCHASING’s ROLE • Purchasing is the facilitator of the purchase. • Purchasing’s primary expertise is in the competitive process. • Purchasing ensures compliance with procurement statutes and policies. • Purchasing promotes fair and open competition.

28. ENGAGEMENT • Customer submits initial specifications, drawings, evaluation factors/weights (collectively “Requirements”) to Purchasing. • Purchasing starts incorporating Requirements into Purchasing’s solicitation template. • Purchasing may review other solicitations and/or do market research to determine industry norms.

29. solicitation finalization • Final solicitation is the result of discussions between Purchasing and Customer. • Purchasing is the owner of the solicitation process and has final say in case of dispute; however, the solicitation will not move forward without Customer approval. • Purchasing respects Customer’s expertise and endeavors for mutual agreement. • Dispute resolution may include consultation with other parties and/or written affirmation of decision ownership. • Common goal is to have a compliant, ethical, fair, open, and competitive process that results in a successful contract for the Leander ISD.

30. Solicitation phase • Purchasing advertises in newspaper and posts all solicitations in Bid-EZ (online solicitation application). • Purchasing receives vendor questions through Bid-EZ. • Customer provides answers and Purchasing reviews. Both mutually agree on all answers before Purchasing posts in Bid-EZ. • Purchasing is the single authorized point of contact. • Purchasing receives proposals electronically in Bid-EZ.

31. Evaluation team • Evaluation Team Members have a vested interest in the success of the resulting contract, including the experience and knowledge of the goods and/or services to provide valuable review. • Evaluation Team Members are free of apparent biases and conflicts of interest. • Purchasing requires each Evaluation Team Member, including Customer, to complete an Evaluator Participation Agreement that acknowledges expectations. • Purchasing generally relies on Customer to determine the team, final approval resides with Purchasing.

32. Evaluation team (continued) • Evaluation Team is at least three people and can increase depending on the project, up to a recommended maximum of seven people. • It is preferable to have a cross-disciplinary team when possible; however, importance is given to have Evaluation Team Members with relevant knowledge. Include 1-2 outside members, depending on team size. • Purchasing is not included in the above counts. Purchasing is not an Evaluation Team Member but rather the facilitator.

33. evaluation phase • Purchasing makes proposals, solicitation and related documentation available online. • Evaluation Team Members individually review and score proposals using Evaluation Worksheet provided by Purchasing. • Captures scores and associated comments supporting those scores from each member. • Matches the criteria and associated weights stated in the solicitation.

34. evaluation phase (continued) • Purchasing and Evaluation Team meet for consensus scoring. • Individual scores are averaged for a starting point; however, the outcome is a consensus score with associated supporting comments for each proposer and each evaluation factor. • Proposer with highest consensus score is recommended awardee to be presented to the Board for approval, if applicable.

35. Board approval • Purchasing represents the process. • Customer represents the business need and decision from the Evaluation Team. • Board can either approve or reject staff’s recommendation. • If rejected, staff will inform all proposers of decision to reject all bids. Staff will determine path moving forward, which may include a new solicitation.

36. Award process • Purchasing finalizes award in Bid-EZ, including upload of final evaluation matrix and award letter. • Bid-EZ notifies proposers of award decision. • Purchasing facilitates contract with Customer input. • Contract incorporates solicitation and proposal. • Pricing is as stated in the proposal, unless negotiated lower.

37. Next few meetings December 7, 2018 • Demographer report • Taxes and state aid January 17, 2019 • Human resources • Staffing February 21, 2019 • Accounting and audit

38. Gage Loots, CPPO Director of Purchasing gage.loots@leanderisd.org 512.570.0605 Lucas Janda Chief Financial Officer lucas.janda@leanderisd.org 512.570.0405