Review of Roles and Responsibilities for Procurement Related Activities Date: Tue, 04 Aug 1998 12:54:49 -0400 To: "AO - All Administrative Officers" From: "Alice A. Sabatini, Division Administrative Officer, WRD" Subject: AMC Review of the Procurement Function The following is forwarded for your information. The procurement function was the first of the administrative functional areas to be reviewed by the AMC. The next is the human resources area. If you have questions on the approach, please let me know. In Reply Refer To: Mail Stop 201 MEMORANDUM July 10, 1998 To: Bureau Operations Council Members From: Tim Calkins Chair, Administrative Management Council Subject: Review of Roles and Responsibilities for Procurement Related Activities At the request of the Operations Council, the Administrative Management Council (AMC) in concert with John Peterson, Chief, Office of Acquisition and Federal Assistance (OAFA), performed a review of procurement related roles and responsibilities. The review included both functions performed by OAFA as well as those performed by personnel within the program divisions. Also, the AMC opted to take one administrative functional area and perform an analysis of the function from beginning to end. The intent was to have a working model that could be applied and serve as a model in functional analyses to be performed in the future. In performing the review, the AMC relied heavily upon data and information gathered in preparation for the bureau's 1997 Procurement Conference as well as data maintained by OAFA in support of departmental reporting requirements related to warrants and contracting officer technical representatives (COTRs). A narrative description of the review's principal findings is attached in addition to a chart providing, by major type of procurement function, statistical information regarding FTE and workload data. The AMC and OAFA are pleased to report that the roles and responsibilities related to procurement functions are well defined and require no immediate modification. In addition, existing delegations of authority to the divisions are adequate. No needs were identified which are not being fulfilled through the present delegations. Communications between OAFA and the program divisions were found to be frequent and directed at improving services. Of particular note is the finding that because OAFA works closely with the divisions in preparing bureau policy and implementing bureau procurement systems, the need for division level guidance is quite small and division level procurement systems nonexistent. The review substantiated the success of the bureau's Procurement Conference. Principally as a result of the conference, field warrants issued to personnel in the program divisions have been reduced from 290 in FY-1996 to 175 in FY-1997. It is anticipated that additional reduction in the number of warrants will be achieved in FY-1998. In addition, numerous other actions identified during the conference have been effected to improve procurement services, both on the part of OAFA and the divisions. Our review identified several actions USGS can take in the near future, as well as several externally-driven activities we should monitor for their potential to effect further improvements in the procurement function. The AMC is prepared to pursue the internal actions in conjunction with OAFA, and to develop a proposed schedule for doing so. However, prior to scheduling further activity, we would appreciate Operations Council input regarding other priorities which may need to come first. There are many outstanding action items impacting the administrative community at large, the AMC, and OAFA. Because the review found the procurement related functions to be effectively delegated and carried out, there may be higher priority areas requiring more immediate attention, especially if the Operations Council wishes to have the AMC pursue reviews of roles and responsibilities in other administrative areas. The AMC and OAFA will be pleased to answer any questions the Operations Council may have regarding the review and the recommended actions. Attachments Attachment 1 FUNCTION NARRATIVE Background: At the request of the Operations Council, the Administrative Management Council, in concert with the Office of Acquisition and Federal Assistance (OAFA), conducted a review of the procurement function within USGS. The review included procurement related responsibilities and services performed by both OAFA and the divisions. The review drew heavily upon the data and recommendations developed from the USGS bureauwide procurement conference held in 1997. A. Policy/Implementation/Management OPS-Office of Acquisition and Federal Assistance (OAFA) provides bureau policy and procedures where higher level regulations, etc., require implementation at the bureau level. Where such bureau level policy impacts field delegated purchasing authority, the program division's administrative staff are usually brought into the loop for consultation on how USGS should implement a given process, policy, or procedure. Where necessary, divisions can provide further guidance for use within the division. OAFA also provides support for bureauwide procurement systems. Presently, the USGS is in the process of testing and implementing the Department's new procurement system, IDEAS PD. There are no division level systems dedicated to procurement processing. Because OAFA works closely with the divisions in preparing bureau policy and implementing bureauwide systems, the need for division level guidance is quite small. Consequently, no FTE estimate is provided for the divisions for policy/implementation/management. Externally Driven Changes OAFA is currently in the process of testing the DOI IDEAS PD FFS interface. Successful implementation of the interface will be followed by a DOI Web based requisition system. These initiatives may provide the basis for additional streamlining. B. Contract and Federal Assistance Operations More than 3,000 laws affect the manner in which the government enters into contracts to obtain needed services and purchases, as well as to effect Federal Assistance awards (e.g., grants and cooperative agreements). Presently, employees handling contractual relationships (hereafter referred to as personnel classified in the 1102 series) are required to have a 4 year degree with an emphasis on business related courses for entry level positions. In addition, DOI warranting procedures require biennial 40 hour refresher courses after more than 400 hours of professional training for a Level IV warranted Contracting Officer (officers with unlimited contractual authority). The function is characterized by formal delegations of authority and "warranting" of individual employees authorized to make fiduciary commitments on behalf of the Government. In DOI and other agencies, formal contracting authority is typically highly centralized. Since entering into a Federal Assistance award requires a formal written determination that the use of a grant or a cooperative agreement in lieu of a contract is legally supportable, in the USGS those awards are processed at the same level as contracts are processed. The acquisition team is made up of the procurement specialists and the technical specialists/scientists associated with the requirement. The business management portion of the overall acquisition process is centralized within USGS in the Office of Program Support at the three major centers (Reston, Denver and Menlo Park). Programmatic functions of requirements identification, technical evaluation, testing and technical acceptance of deliverables, verification of technical aspects of invoices received from vendors is retained within the program division office that originates the requirement. No estimate is available for FTE expended within the divisions by program personnel performing these functions since these personnel perform these functions on an adjunct basis as Contracting Office Technical Representatives (COTRs). In total, there are over 300 COTRs throughout the USGS. COTRs are required to have 24 hours of training initially, followed by an 8 hour refresher training course every three years. Recommended USGS Changes/Action USGS should explore the possibility of authorizing remote payment of contracts and consider post review by the OAFA contracting officers. This could serve to reduce prompt payment interest penalties since the largest interest payments are associated with the larger dollar invoices on contracts. C. Simplified Acquisitions Over $2,500 Micro-Purchase Threshold Warrants Level IIB = $100,000 Level IIA = $ 25,000 Level IB = $ 10,000 Level IA = $ 5,000 Simplified Acquisitions are defined as "open market" purchase (not orders under agency contracts) actions up to $100,000 in value and GSA Schedule orders of any value. Approximately 45% of USGS employees are located at its three largest bureau offices, for which OPS-OAFA provides a centralized purchasing function. Several decades ago, before the advent of the bankcard, email and other electronic telecommunications advances, and the "micro-purchase" threshold, OPS delegated authority to program division field offices to make routine purchases where mailing requirements back and forth to central offices was inefficient. The typical field delegation authorizes local purchases of supplies, materials, commodities, and equipment up to $10,000. Service contracting and construction contracting under $2,500 and $2,000 respectively are also delegated to field contracting officers. Field warranted contracting officers are also authorized to place orders up to $100,000 under GSA schedules and other established contractual vehicles. Statistics were compiled for FY-1996 in preparation for the bureau Procurement Conference which was held in March 1997. Since less than ½ of 1% of the total simplified acquisitions generated in the field are services and construction purchases over the above stated thresholds and given that they require specialized training and coordination with the Department of Labor to award and administer, OPS-OAFA has not delegated authority for these awards to the field. Simplified actions over $10,000 in value generated in the field also amount to less than ½ of 1% of all simplified acquisitions and are by regulation required to be performed by personnel classified as GS-1105 (purchasing agents) or GS-1102 (contract related specialists). Despite the small numbers of transactions involved, a limited number of field offices, which generate more than 35% of field transactions over $10,000 in value, have been delegated $25,000 authority in USGS. Externally Driven Changes -The advent of the bankcard convenience check under GSA's new bankcard awards may eliminate the need to generate purchase orders where vendors refuse to accept the card. This feature is scheduled for implementation beginning November 1998 and may serve to substantially reduce the number of field purchase orders in the future. -In FY-1999, DOI is scheduled to complete their review of each bureau's implementation of the new warrant system. This review may cause the need for additional changes regarding the number and location of field warrants. Recommended USGS Changes/Action -USGS should complete the ongoing review of the number and type of warrants in place throughout the bureau. The scope of the review should include evaluation of the cross servicing possibilities for at least backup support in locations where there is more than one warrant in different divisions (e.g., Hawaii). The review is scheduled to be completed by February 1999, and has already resulted in a reduction in the number of warrants from 290 to 175. -USGS should review the correct balance of resources and the appropriate servicing times for each office where procurement services are provided. The difference in resources devoted by the divisions at field sites for simplified acquisitions (51 FTE) versus those available to OPS to devote to simplified acquisitions at the three bureau regional sites (19 FTE), should be reviewed to determine the correct balance of resources and the appropriate servicing times. The review criteria should also include accessability to the service provider and quality of service provided, including development of specifications and requirements documents. Products of the review will include recommendations regarding the appropriate balance of resources dedicated to simplified acquisitions between OPS and the divisions as well as recommended customer service standards for both OPS and Division personnel engaged in duties related to simplified acquisitions. Customer service standards should include anticipated lead times to receive requested goods and/or services, feedback mechanisms when expectations cannot be met, and evaluation of the degree to which delivered goods and/or services fulfilled the stated requirements. D. Micro-Purchases and Bankcards This program was designed for "end-user" purchasing. 99.98% of bankcard purchases in FY-1997 in USGS were made outside of the OPS-OAFA environment. While a fair number of bankcard purchases were made by field warranted contracting officers, a huge proportion of them were made at the "end-user" level as contemplated by the program's intent. Field warranted contracting officers are making an estimated 65-75% fewer formal purchase order awards than they were required to make before FY-1994 when the program was expanded under the Federal Acquisition Streamlining Act. OPS-OAFA purchasing agents are making 40% fewer formal purchase transactions than were formerly made because their major center based customers are making their own purchases under the micro-purchase threshold as well. In OPS-OAFA's three offices, the reduction in micro-purchases made, coupled with the impact of raising the simplified acquisition threshold to $100,000 has enabled OPS to absorb a reduction in GS-1102 staffing of more than 20% over the past several years (exclusive of the impact of the addition of Bureau of Mines programs and the merger with NBS). Recommended USGS Changes/Action -USGS should strive for a successful and smooth transition to the use of one card for Bankcard, Travel and Government Vehicles. -USGS should pursue continued growth in the number of employees authorized to have a bankcard. -OAFA should continue ongoing efforts to support/encourage OMB to request that Congress increase the micropurchase threshold level to $5,000. If the threshold is increased, the need for field warranted purchasing officers will be further reduced. Attachment 2 is omitted from this email (it is a table that will not convert well to ASCII format).