(This blog was originally posted April 7, 2017. Updated April 30, 2018)
Procurement managers have their work cut out for them. Being responsible for making sure their organization gets the right product or service at the best price is a process. Trying to manage both e-procurement and acquisition duties can be quite stressful at times. For the procurement and acquisition process to proceed with minimal hiccups along the way, managers should evaluate whether or not their current methods are working. Should they find something isn't working right, this shouldn't be cause for alarm - finding the problem is the first step to fixing it.
With the right plan in place and a few basics to start with, organizations and the procurement managers who help them can find themselves in a better position, reaping the benefits of a streamlined, efficient procurement and acquisition process. Below are the 6 tips procurement specialists need to help improve the procurement and acquisition process:
According to Federal Acquisition Regulations (FAR), the process of acquisition should be coordinated with all personnel related to the acquisition to create a plan. The plan should include developing a strategy for not only things related to the acquisition, but managing the acquisition after purchase. Oftentimes, this plan requires the following:
- Need for justification
- Budget approvals
- Review of applicable laws & regulations
- Identification of all personnel
- Coordination of the acquisition steps per organizational and/or governmental requirements
- Managing the purchase post acquisition.
2. Market Research
Market research will help with getting to know what vendors and suppliers can fulfill the product and/or service needed. According to FAR, market research ‘means collecting and analyzing information about capabilities to satisfy’ an agency or organization’s needs. The market research required consists of what vendors are available to supply, and services needed. As part of your research, identify the vendors’ capability when providing the service or product along with price and past performance information.
3. Preparing the Solicitation
The solicitation typically specifies the following:
- Organization background
- Current state/situation
- Preferred state
- Key dates (release date, questions due date, bid due date, anticipated contract award date, and more)
- Terms and conditions
- Payment terms and more
Once a solicitation is prepared, the buying organization can invite potential suppliers to the opportunity via varying acquisition types. Depending on the organization and solicitation type, the opportunity may be advertised publicly. A few of these bid types include the following:
- Sole source
- Best price
- Best value
- Request for proposal (or information and quotes)
- Contract purchase
- Seal bid
- Private (by invite only), public, etc.
4. Selection Process
The selection process of a typical e-procurement and acquisition process takes on many steps. Procurement specialists and business users may review and compare responses from vendors, rate their qualifications, compare pricing, and evaluate how well they meet the terms and conditions of the solicitation. The decision-making process should be made with key stakeholders which lead to negotiations of the final award terms of the contract or purchase order.
5. Monitor Performance
Your work is not done now that the purchase is complete. FAR recommends monitoring the acquisition. This includes, but is not limited to, creating a plan and metrics to rate the awarded vendor as well as measuring performance. It is important to set reminders to check in on key contract and performance terms. If applicable, set tasks to check in on budgets, rebates, volume discounts, milestones, and options to cancel and/or renew favorably.
6. Close Out
Once the performance term is complete and the contract or purchase is not renewed, ensure that the acquisition is closed out. This may include items, as per the terms and conditions of the contract, to be returned, exit interviews to be conducted, and inspections to be done, just to name a few.
Successful e-procurement and acquisition starts with having the right process in place. Ensuring that the critical items are being addressed and that there is a plan in place will set you and your organization up for success. Coupled with advice from your own organization’s legal counsel, these tips can help reduce risk, standardize the purchasing process, and improve the bottom line when contracting with vendors.