SCM CPO
Limited Operational Audit CPO Efficiency outsourced to Mobius Industries Background Procurements and contracting practices of Central Procurement Office (CPO) have a direct impact on all Port departments and on the outside contracting community doing business with the Port. It is therefore critical that the CPO processes, procedures, management controls, and established practices be efficient, economical, and effective. Review Period - Jan 1, 2010 - Mar 11, 2014 Total Number Number of Total Contract Sample Set of Contracts Contracts Sampled % Value Contract Value % Small Works 136 8 6% $32M $2M 7% Major Works 88 16 18% $266M $98M 37% Service/Consultant Related 451 36 8% $296M $89M 30% Purchasing 48 12 25% $72M $59M 82% Total 723 72 10% $665M $248M 37% Limited Operational Audit CPO Efficiency outsourced to Mobius Industries Audit Objectives The purpose of the audit was to : Assess whether the established processes, procedures, management controls, and established practices are efficient, economical, and result in an effective way to provide procurements and contracting services. Acknowledge risk and evaluate risk management practices to ensure the Port enters into sound contracts with qualified firms at fair and reasonable contract rates. Identify and evaluate best practices in government procurement for delivering procurements and contracting services. Benchmark Port procurement practices with other government agencies best practices, including applicable private sector practices and the Federal Acquisition Regulation (FAR). Limited Operational Audit CPO Efficiency outsourced to Mobius Industries Port Procurement Environment The Port's procurement process is heavily influenced by a wide array of stakeholders. The Port's divisions, management, RDRs, and CPO all play a vital role. At every phase of the Port's procurement process, each of the stakeholders has a direct impact on the results and efficiency of the phase. The Port's procurement process is dependent on a highly engaged group of stakeholders and must work in a collaborative and aligned manner in order to meet operational expectations, compliance requirements, and key milestones. The Review's analysis, comments, and recommendations made in the report are meant for all of the Port's procurement stakeholders. Limited Operational Audit CPO Efficiency outsourced to Mobius Industries Audit Result Procurement process is well managed and is meeting internally set expectations. Procurement process is flexible but very slow. Total Procurement Cycle Time (in days) Public Port 2010 2014 POS Agencies Authorities Sampled Contracts * surveyed * Surveyed * Small Public Works 83 40 49 Major Public Works 132 117 127 Service/Consultant Related 241 125 86 Purchasing 146 58 52 * Significant standard deviations noted (see report). The Port does not have a clear procurement strategy that is aligned from the Commission throughout the organization. Limited Operational Audit CPO Efficiency outsourced to Mobius Industries Audit Result Procurement process is well managed and is meeting internally set expectations. Port's procurement functions are managed in accordance with Port's Contracting and Procurement Policies and Procedures as well as Resolution 3605. The Port's procurement and contracting practices are meeting the needs of the Port's stakeholders and the firms and consultants that respond to POS solicitations. The Port's procurement and contracting practices are effective in attaining sound contracts with qualified firms at fair and reasonable contract rates. With the exception of using Key Performance Indicators and setting goals, the Port's procurements and contracting practices are consistent with best practices of other governmental agencies and port authorities. The use of technology in order to effectively deliver contracting services can be improved in order to improve efficiencies. Limited Operational Audit CPO Efficiency outsourced to Mobius Industries Audit Result Procurement process is flexible but very slow. Total Procurement Cycle Time (in days) Public Port 2010 2014 POS Agencies Authorities Sampled Contracts * surveyed * Surveyed * Small Public Works 83 40 49 Major Public Works 132 117 127 Service/Consultant Related 241 125 86 Purchasing 146 58 52 * Significant standard deviations noted (see report) Major works procurements +15 days v. public agencies // + 5 days v. other port authorities. Small works procurements +43 days v. public agencies // + 33 days v. other port authorities. Service/consultant related procurements +115 days v. public agencies // +155 days v. other port authorities. Purchasing related procurements +87 days v. public agencies // +93 days v. other port authorities. Significant standard deviations noted (see report) indicates due to self-reporting of metrics, differing process definitions, efficiencies, population, and flexibility. The longer procurement process can result in a loss of business opportunity and increase the Port's cost. Limited Operational Audit CPO Efficiency outsourced to Mobius Industries Audit Result The Port does not have a clear procurement strategy that is aligned from the Commission throughout the organization. There is no formally stated procurement and contracting practices strategy. Limited Operational Audit CPO Efficiency outsourced to Mobius Industries Recommendations Short-term (within one year) Seven recommendations addressing delegation of authority, strategy, RDR training, KPI goals, etc. Mid-term (two to five years) Three recommendations addressing process consistency, database, etc. Long term (beyond five years) One recommendation to create an association to share best practices with other Port authorities. Limited Operational Audit CPO Efficiency outsourced to Mobius Industries Recommendations Short-term (within one year) Develop a practice to reinforce consistent application of authorizations, approvals, and segregation of duties in all procurement and contracting processes. Clearly define the Port's contracting and procurement strategy. Review and adjust practices in order to achieve strategic goals. Provide mandatory RDR training as a prerequisite to initiating a procurement activity. Review all required online procurement documents in order to ensure relevance. Blueprint the departmental needs of the PeopleSoft users in order to align system capabilities with business needs. Set realistic and stretch KPI goals based upon best practices and review with the departments and commission on a quarterly basis. Conduct rate negotiation training and require a CPO certification of training for all assigned Port negotiators. Limited Operational Audit CPO Efficiency outsourced to Mobius Industries Recommendations Mid-term (two to five years) In order to have consistency of procurement processes and greater efficiencies, assign CPO contract administrators and buyers for CAT I and CAT II procurements and designate CPO contract administrators to departments that infrequently use the Port's procurement process. Develop a flowchart for both the internal and external POS stakeholders showing how the procurement process works and related procurement expectations. Develop and implement a single contract's database in order to maintain data and reduce redundancy of data entry. Limited Operational Audit CPO Efficiency outsourced to Mobius Industries Recommendations Long term (beyond five years) Create a Port Authority Contracts and Procurement Association whereas port authorities throughout the United States can share best practices, risk management controls, emerging technologies, procurement and contracting trends, and their metrics. Limited Operational Audit CPO Efficiency outsourced to Mobius Industries Questions and Answers
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