NIGP - CPPB Prep Guide PDF

ntroduction ntroduction Information presented in this booklet and course is accurate as of the time of publication and consistent with generally accepted public procurement principles. However, as research and practice advances, standards, principles, and concepts may change. For this reason, it is recommended that readers and participants evaluate the applicability of any recommendation in light of their particular situations, changing standards, entity, and jurisdictional guidance based on their geographic location or political leadership. Copyright © 2021 by NIGP, Inc. All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of NIGP: The Institute for Public Procurement, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to Director, Content Research and Development, at the address below: NIGP: The Institute for Public Procurement 2411 Dulles Corner Park, Suite 350 Herndon, VA 20171 Printed in the United States of America ntroduction Preface Table of Contents Table of Contents.................................................................................................................. 1 Preface.................................................................................................................................. 6 What is professional certification?............................................................................................. 6 The benefits of certification........................................................................................................ 7 Introduction.......................................................................................................................... 8 Body of Knowledge and Competency (BOK-C)............................................................................ 8 Examination specifications........................................................................................................ 13 Preparing for the certification examination.............................................................................. 13 Examination Day........................................................................................................................ 15 Domain I Legal Framework.................................................................................................. 17 A. Interpret and apply procurement policies, guidelines, and procedures.............................. 17 B. Identify professional and legislative trends and laws........................................................... 20 C. Apply concepts of fair, open, and transparent competition................................................ 25 D. Detect and report fraud and antitrust activities (e.g., collusion, bid-rigging)...................... 26 E. Review procurements for compliance with laws, policies, and procedures........................ 27 F. Recognize and apply requirements of supplier diversity programs..................................... 29 G. Recognize and apply requirements of sustainable procurement initiatives........................ 31 H. Demonstrate compliance with confidential or proprietary restrictions (e.g., communications, public records requests)............................................................................... 34 Domain II: Procurement Planning and Analysis.................................................................... 36 A. Integrate established goals and objectives for procurement function................................ 36 B. Recognize and apply metrics and measurements to track procurement function.............. 38 C. Conduct a spend analysis and recommend a purchasing strategy....................................... 42 D. Operate under the established procurement contingency/continuity of operations plan (e.g., disaster preparedness, supply chain)............................................................................... 47 CPPB Certification Preparation 1 Preface E. Assess and utilize external procurement information resources (e.g., professional network, periodicals, associations).......................................................................................................... 54 F. Recognize the impact of budget cycle (e.g., lead times, receipt of goods, payment of goods)................................................................................................................................................... 58 G. Apply standardization programs and practices.................................................................... 62 H. Interpret the application of procurement trends (e.g., job order contracting, unavailable commodity)............................................................................................................................... 65 I. Recognize and apply risk mitigation strategies (e.g., terms and conditions, bonding, insurance).................................................................................................................................. 72 J. Conduct sourcing analyses (e.g., make, lease or buy, market research, outsourcing)......... 73 K. Conduct a financial impact analysis (e.g., total cost of ownership, return on investment, cost benefit).............................................................................................................................. 81 L. Conduct market analysis (e.g., forecasting, historical, economic conditions)...................... 89 M. Evaluate small dollar purchases for compliance................................................................. 94 Domain III: Sourcing and Solicitation.................................................................................... 97 A. Recognize the impact of funding sources to the procurement process (e.g., operating, capital grant, federal)................................................................................................................ 98 B. Differentiate and apply competitive solicitation methods (e.g., request for proposals, invitation for bid, qualification-based selection).................................................................... 101 C. Recognize and apply non-competitive/alternative procurement methods (e.g., emergency, single source, sole source, pilot programs, unsolicited offer)................................................ 111 D. Recognize elements of specialized procurement (e.g., human services, professional services)................................................................................................................................... 113 E. Develop specifications and/or scope of work for solicitations........................................... 114 F. Determine sources of services or supplies.......................................................................... 124 G. Recognize and select contract types (e.g., blanket order, term contracts)....................... 127 H. Recognize construction delivery methods (e.g., design-build, construction manager at risk, public private partnership)...................................................................................................... 132 I. Recognize unique terminology, attributes, and risk of technology commodities and services................................................................................................................................................. 135 J. Recommend methods of payment (e.g., progress, advance, incentive)............................. 137 K. Differentiate and select terms and conditions for sourcing and contract documents...... 138 CPPB Certification Preparation 2 Preface L. Identify cooperative procurement options (e.g. lead agency, government contracts, aggregate requirements)........................................................................................................ 141 M. Recognize special considerations for hazardous and/or controlled goods and services.. 147 N. Apply the established procurement workflow approval process (e.g., requisitions, contracts, solicitations, purchase orders)............................................................................... 148 O. Construct solicitation documents....................................................................................... 149 P. Determine evaluation methodology and criteria............................................................... 155 Q. Manage the solicitation process from issue to award....................................................... 157 R. Review solicitation and contract documents for completeness and accuracy.................. 163 S. Evaluate Offer/Offeror (e.g., responsiveness, responsibility, price analysis, cost analysis)167 T. Facilitate review of supplier samples and/or demonstrations........................................... 174 U. Recognize challenges unique to regional, national, and international procurements (e.g., trade agreements, customs, tariffs, documentation)............................................................. 175 V. Recommend award of contract.......................................................................................... 182 W. Conduct post-award respondent debrief.......................................................................... 184 X. Prepare for vendor disputes and protests.......................................................................... 185 Y. Recognize and apply negotiation strategies and techniques (e.g., best and final offer).... 188 Z. Conduct and document the negotiation process................................................................ 195 AA. Organize and review solicitation file contents................................................................. 202 Domain IV: Contract Management..................................................................................... 205 A. Identify Elements of a Contract.......................................................................................... 207 B. Prepare contract documents.............................................................................................. 208 C. Organize and review contract file contents........................................................................ 211 D. Manage the contract approval process (e.g., legal, risk management, health and safety) 212 E. Manage the contract administration process..................................................................... 214 1. Post-award start-up/kickoff meeting.............................................................................. 215 2. Performance deficiencies and resolutions (e.g., notice to cure, liquidated damages)... 215 3. Modifications (e.g., change orders, amendments, escalation)....................................... 221 4. Contractor/supplier performance (e.g., quality control/quality assurance, KPI reporting)............................................................................................................................................. 225 CPPB Certification Preparation 3 Preface 5. Contractor/supplier compliance (e.g., insurance requirements, licensing requirements, prevailing wage).................................................................................................................. 231 6. Disputes........................................................................................................................... 234 7. Renewal process.............................................................................................................. 239 8. Termination (e.g., default convenience, non-appropriation)......................................... 239 9. Close-out (e.g., substantial completion, transfer of warranty, release of liens)........... 242 F. Manage the ordering process from order to receipt.......................................................... 246 Domain V: Leadership........................................................................................................ 252 A. Advocate and demonstrate the value of public procurement........................................... 252 B. Demonstrate professional values and ethics (e.g., accountability, impartiality)............... 255 C. Integrate the mission, vision, and values of the procurement department into practice. 263 D. Prepare and deliver information for a target audience (e.g., business cases, presentations, reports).................................................................................................................................... 266 E. Determine and leverage outreach methods for internal and external stakeholders......... 269 F. Create a plan for professional development and continuing education............................ 270 G. Provide cross training and mentorship for procurement department personnel............ 275 H. Provide guidance and training for internal and external stakeholders (e.g., suppliers, end users, leadership).................................................................................................................... 279 I. Recognize the impact of socio-political factors on procurement........................................ 282 J. Identify conflicts and challenges and employ strategies for resolution.............................. 283 Domain VI: Business Principles.......................................................................................... 292 A. Utilize operational forms and templates............................................................................ 292 B. Identify noncompliance with procurement processes....................................................... 294 C. Propose and employ continuous process improvements (e.g., stakeholder satisfaction, remediation, eProcurement).................................................................................................. 295 D. Recommend when to use procurement cards................................................................... 301 E. Recognize and comply with asset management policies.................................................... 304 F. Recognize the impact of inventory management and logistics, techniques, and principles................................................................................................................................................. 304 G. Recognize the roles and responsibilities in the procurement process............................... 308 CPPB Certification Preparation 4 Preface H. Apply policy for disposition of obsolete and surplus equipment and materials................ 313 I. Utilize established procurement strategies and objectives................................................. 315 Global Best Practices......................................................................................................... 319 Acknowledgement............................................................................................................ 320 CPPB Certification Preparation 5 Preface Preface This Certified Professional Public Buyer (CPPB) Certification Preparation Guide was specifically created for the Universal Public Procurement Certification Council (UPPCC) Certification Examinations beginning in August 2021. What is professional certification? Professional certification or professional designation, often simply called certification or qualification, is a designation earned by a person to assure that he/she is qualified to perform a job or task. Certifications are earned from a professional society and, generally, need to be renewed periodically or may be valid for a specific period of time. As a part of a renewal of an individual’s certification, it is common for the individual to show evidence of continual learning, often termed continuing education, which may be tracked in either continuing education units (CEUs) or in classroom contact hours. The UPPCC tracks learning for certification and recertification in contact hours, rather than CEUs. The certification of specialized skill sets affirms a knowledge and experience base for practitioners in a particular field, their employers, and the public at large. Certification represents a declaration of a particular individual’s professional competence. In some professions, certification is a requirement for employment or practice. Doctors, mechanics, accountants, surveyors, and many others are all required to go through a certification process of some kind. In all instances, certification enhances the employability and career advancement of the individual practitioner or employee. A professional certification differs from an academic degree in that the certification requires actual practice in the field. Certification examinations draw from the Body of Knowledge and Competency (BoK-C) gained through on-the-job experience as well as classes and seminars. Study alone that is not combined with professional practice is not adequate to prepare for a certification examination. The UPPCC offers two levels of certification for public procurement professionals. The CPPB certification is best suited for procurement professionals who perform essential procurement functions but may or may not have management or supervisory responsibilities. They must serve in responsible procurement positions within their entities; clerical and administrative- support positions are not eligible. The Certified Public Procurement Officer (CPPO) designation is the second certification offered by UPPCC. The CPPO is best suited for procurement professionals who are employed in leadership and management positions. They must manage CPPB Certification Preparation 6 Preface at least one aspect of the procurement cycle or supervise procurement staff and must have worked in a management or supervisory role for a minimum of three. The benefits of certification The UPPCC examinations measure professional competence and the understanding of the BoK-C surrounding public procurement. Certification is a voluntary action by a professional group to establish a system to grant recognition to professionals who have met a stated level of training and work experience. Certified individuals are issued a certificate attesting that they have met the standards of the credentialing organization and are entitled to make the public aware of their credentialed status, through the use of the certification initials after their name and in all forms of address. Obtaining a CPPB or CPPO designation demonstrates a standard of competency in the public procurement profession. CPPB and CPPO designation indicates to the public that, having mastered a body of knowledge, the procurement professional can make sound decisions that reflect maximum value for the taxpayer’s dollar. The Universal Public Procurement Certification Council (UPPCC), the issuer of the CPPB and CPPO designations, is accredited by the International Federation of Purchasing and Supply Management. Many local and state governments formally recognize the CPPB and CPPO designations as meaningful standards for employment and advancement of public procurement personnel. For more information about CPPB and CPPO certification see the UPPCC website at www.uppcc.org/. CPPB Certification Preparation 7 Introduction Introduction This CPPB Certification Preparation Guide is designed to help a candidate prepare for the Certified Public Procurement Buyer examination. Both this book and the certification examination are based on the 2021 UPPCC Body of Knowledge and Competency (BoK-C). While the actual examination questions are held in strictest confidence by the UPPCC, by basing this preparation guide on the same foundation as the examination questions, it can serve as a focused study guide. Body of Knowledge and Competency (BOK-C) Periodically the UPPCC performs a job analysis study to ensure that the certification examinations are aligned with the knowledge, skills, and abilities needed for successful job performance in the public procurement profession. The Body of Knowledge and Competency is the end result of the job analysis study. A job analysis consists of several activities: the development of a survey tool, survey dissemination, compilation of survey results, and finally, the development of the Body of Knowledge and Competency. The job analysis involves the input and expertise of examination developers to guide the process, and from public procurement subject matter experts to accurately capture the important work they do. The result of the analysis is a comprehensive, research-based outline of the content to be tested of candidates for certification. This outline serves as both a guide for candidates preparing for testing and for educators in the development of training and continuing education resources which support the profession. CPPB Certification is designed for full-time public procurement professionals who are responsible for performing essential functions within the procurement cycle but may not have management or supervisory responsibilities. Candidates for the CPPB Certification have two qualification options. Option 1 requires the candidate to have completed a two-year post-secondary educational program, resulting in a degree, diploma, or certificate being earned--and three years of professional procurement experience. Option 2 is for those who have not completed the post-secondary requirement, so a total of five years of professional procurement experience is needed. Effective for the October 2021 examination window, the CPPB certification examination will cover the six domain areas which comprise the UPPCC BoK-C for CPPB. The weighting of each domain on the examination is indicated by the percentage listed to the right of each domain heading. For example, 18% of the CPPB Examination will cover content from Domain II Procurement Planning and Analysis, while 13% of the examination will cover items from Domain VI Business Principles. All content on the CPPB examination is based on the essential knowledge and competencies of a public procurement professional. CPPB Certification Preparation 8 Introduction Domain I. Legal Framework 14% The legal framework of public procurement defines the boundaries practitioners are required to adhere to in performance of their duties. It is a structure of laws, rules, and regulations which govern public procurement. A. Interpret and apply procurement policies, guidelines, and procedures B. Identify professional and legislative trends and laws C. Apply concepts of fair, open, and transparent competition D. Detect and report fraud and antitrust activities (e.g., collusion, bid rigging) E. Review procurements for compliance with laws, policies, and procedures F. Recognize and apply requirements of supplier diversity programs G. Recognize and apply requirements of sustainable procurement initiatives H. Demonstrate compliance with confidential or proprietary restrictions (e.g., communications, public records requests) Domain II. Procurement Planning & Analysis 18% Planning and analysis is a broad area of knowledge and competencies which encompasses the use of tools and data to successfully execute the various activities associated with any procurement. Procurement planning, although occurring principally prior to solicitation, can occur throughout the life cycle of any procurement. Procurement analysis refers to the collection, collation, and application of analytical techniques of data in support of business decisions. Both planning and analysis are used to maximize the success of procurement functions within the public entity. A. Integrate established goals and objectives for procurement function B. Recognize and apply metrics and measurements to track procurement performance C. Conduct a spend analysis and recommend a purchasing strategy D. Operate under the established procurement contingency/continuity of operations plan (e.g., disaster preparedness, supply chain) E. Assess and utilize external procurement information resources (e.g., professional network, periodicals, associations) F. Recognize the impact of budget cycle (e.g., lead times, receipt of goods, payment of goods) G. Apply standardization programs and practices H. Interpret the application of procurement trends (e.g., job order contracting, unavailable commodity) I. Recognize and apply risk mitigation strategies (e.g., terms and conditions, bonding, insurance) J. Conduct sourcing analyses (e.g., make, lease or buy, market research, outsourcing) CPPB Certification Preparation 9 Introduction K. Conduct a financial impact analysis (e.g., total cost of ownership, return on investment, cost benefit) L. Conduct market analysis (e.g., forecasting, historical, economic conditions) M. Evaluate small dollar purchases for compliance Domain III. Sourcing & Solicitation 23% Sourcing is the selection of the best supplier to fulfill a need. Sourcing includes market analysis, determination of procurement method, determination of contract type, selection of delivery methods, and related functions associated with a successful procurement action. Solicitation is the process of requesting offers from the marketplace prior to selection of an offeror to fulfill the need of the public entity. A. Recognize the impact of funding sources to the procurement process (e.g. operating, capital grant, federal) B. Differentiate and apply competitive solicitation methods (e.g., request for proposals, invitation for bid, qualification-based selection) C. Recognize and apply non-competitive/alternative procurement methods (e.g., emergency, single source, sole source, pilot programs, unsolicited offer) D. Recognize elements of specialized procurement (e.g., human services, professional services) E. Develop specifications and/or scope of work for solicitations F. Determine sources of services and/or supplies G. Recognize and select contract types (e.g., blanket order, term contracts) H. Recognize construction delivery methods (e.g., design-build, construction manager at risk, public private partnership) I. Recognize unique terminology, attributes, and risk of technology commodities and services J. Recommend methods of payment (e.g., progress, advance, incentive) K. Differentiate and select terms and conditions for sourcing and contract documents L. Identify cooperative procurement options (e.g., lead agency, government contracts, aggregate requirements) M. Recognize special considerations for hazardous and/or controlled goods and services N. Apply the established procurement workflow approval process (e.g., requisitions, contracts, solicitations, purchase orders) O. Construct solicitation documents P. Determine evaluation methodology and criteria Q. Manage the solicitation process from issue to award R. Review solicitation and contract documents for completeness and accuracy S. Evaluate Offer/Offeror (e.g., responsiveness, responsibility, price analysis, cost analysis) T. Facilitate review of supplier samples and/or demonstrations CPPB Certification Preparation 10 Introduction U. Recognize challenges unique to regional, national, and international procurements (e.g., trade agreements, customs, tariffs, documentation) V. Recommend award of contract W. Conduct post-award respondent debrief X. Prepare for supplier disputes and protests Y. Recognize and apply negotiation strategies and techniques (e.g., best and final offer) Z. Conduct and document the negotiation process AA. Organize and review solicitation file contents Domain IV. Contract Development & Management 21% Contract development and management are the final stages of a successful procurement event. Evaluation of offers leads to determination of best value to the requesting entity and award of a contract or contracts to the most advantageous offeror(s). Contract management is a comprehensive phrase which includes programming, planning, budgeting, sourcing, and contract execution, followed by contract administration. Contract administration is a function of overseeing supplier performance and guiding a contract to full and successful completion and closeout. A. Identify elements of a contract B. Prepare contract documents C. Organize and review contract file contents D. Manage the contract approval process (e.g., legal, risk management, health and safety) E. Manage the contract management process including: 1. Post-award start-up/kick-off meeting 2. Performance deficiencies and resolutions (e.g., notice to cure, liquidated damages) 3. Modifications (e.g., change orders, amendments, escalation) 4. Contractor/supplier performance (e.g., quality control/quality assurance, KPI reporting) 5. Contractor/supplier compliance (e.g., insurance requirements, licensing requirements, prevailing wage) 6. Disputes 7. Renewal process 8. Termination (e.g., default, convenience, non-appropriation) 9. Close-out (e.g., substantial completion, transfer of warranty, release of liens) F. Manage the ordering process from order to receipt Domain V. Leadership 11% CPPB Certification Preparation 11 Introduction Leadership in public procurement is the process of applying knowledge and competencies to achieve organizational success. Leadership includes the ability to be aware of and manage interpersonal relationships judiciously and empathetically. Procurement organizations serve the needs of the public entity, including: delivering the tools required to provide service to citizens, providing leadership in the procurement function focusing on the overall planning, policy development and execution, hiring and retaining qualified staff, fostering positive interaction with support and oversight bodies, and continuous monitoring and improvement. A. Advocate and demonstrate the value of public procurement B. Demonstrate professional values and ethics (e.g., accountability, impartiality) C. Integrate the mission, vision, and values of the procurement department into practice D. Prepare and deliver information for a target audience (e.g., business cases, presentations, reports) E. Determine and leverage outreach methods for internal and external stakeholders F. Create a plan for professional development and continuing education G. Provide cross training and mentorship for procurement department personnel H. Provide guidance and training for internal and external stakeholders (e.g., suppliers, end users, leadership) I. Recognize the impact of socio-political factors on procurement J. Identify conflicts and challenges and employ Domain VI. Business Principles 13% Business principles provide the foundation for operational efficiencies to maximize the success of the procurement function. These principles are relevant in all phases of the procurement cycle including planning, budgeting, management of inventories, internal and external audits and reconciliations. These principles guide decisions and actions which impact operations and compliance. A. Utilize operational forms and templates B. Identify noncompliance with procurement processes C. Propose and employ continuous process improvements (e.g., stakeholder satisfaction, remediation, eProcurement) D. Recommend when to use procurement cards E. Recognize and comply with asset management policies F. Recognize the impact of inventory management and logistics, techniques, and principles G. Recognize the roles and responsibilities in the procurement process H. Apply policy for disposition of obsolete and surplus equipment and materials I. Utilize established procurement strategies and objectives CPPB Certification Preparation 12 Introduction Examination specifications There are 175 questions on the CPPB examination that will count toward the total score. All questions are multiple choice questions with four possible answers. The choices “All of the above” and “None of the above” are NOT used. Questions are either application questions which require the application of knowledge to a situation to answer a question about the situation, or recall questions which require knowledge of a definition or term. Questions are allocated across the BoK-C as follows: Domain # of % of Items items I. Legal Framework 25 14% II. Procurement Planning and Analysis 31 18% III. Sourcing and Solicitation 40 23% IV. Contract Development and Management 37 21% V. Leadership 19 11% VI. Business Principles 23 13% Preparing for the certification examination Preparing for the certification examination isn’t like studying for the final examination of a course. The scope of the examination covers an entire profession. Preparation begins upon entry into the profession. Work experiences, coursework, and professional reading and research contribute to preparation. The wider the variety of preparation experiences, the better prepared a candidate will be. The BoK-C represents not only knowledge and skills associated with the core competencies of procurement, but also general business skills required for success. Preparation Timeline The following is a graphical representation of a suggested course of study once an application has been accepted by the UPPCC. Prior to test 5 4 3 2 1 test mo. mo. mo. mo. mo. date Personal Study Time X X X X X NIGP Classes and Textbooks X X X NIGP Prep Classes (CPPO and CPPB) X X Study Group X X X Online Assessment Tool X X CPPB Certification Preparation 13 Introduction Preparation Resources and Activities It is advisable that candidates take advantage of a wide variety of preparation resources and activities. NIGP Prep Classes: At the time of application, a candidate may have taken NIGP classes either virtually, face-to-face, or online. These classes and accompanying materials provide critical structure and knowledge in procurement competencies. See the NIGP website at www.nigp.org for the most current available educational opportunities. Study Groups: Experts say that studying in a group can be more effective than studying alone. Each person in a group has professional experiences to contribute to the group. Groups can provide motivation and support. Obligation to the group can keep an individual going for the sake of the group. Large topics can be better addressed when split up and assigned to several group members. Study groups can take many forms. At one end of the spectrum study groups can be formal, sponsored, and driven by a pre-set agenda. At the other end, they can be informal, self-organized, and flexible. Entities or local NIGP Chapters may sponsor a study group, perhaps providing a single instructor or facilitator and a meeting place in exchange for a fee. Students may also organize a study group among themselves. Self-organizing groups require more discipline and motivation but may be more satisfying to the individual members. They may meet in a room provided by a public library or community center, in private homes, or online. Ideally the study group size should be between five and fifteen members. If the group is too small each member is burdened with too much responsibility, and the opportunity for new input is limited. Discussion and participation is limited in groups that are too large. Study Group Logistics: The BoK-C should serve as the study guide and syllabus for the study group. The domains and knowledge statements should be divided up over the period of time that the study group meets. Create a schedule that allows the last session to be open for wrap-up and any topics that need to be revisited. It is often recommended that the group meet once a week for 12 weeks. Each meeting should be 2½ to 3 hours in duration. The schedule should be set and agreed upon by all members. It is important that the meeting place is free from distractions and of appropriate size and with the necessary accommodations. CPPB Certification Preparation 14 Introduction Study Group Activities: Each member comes prepared for the session. Relevant materials and references should be brought, and participants should be prepared with questions and issues, as well as workplace examples. Each session can be a combination of presentation by a speaker (either a guest or a group member), discussion, and questions and answers (Q&A). Unanswered questions should be noted and researched before the next meeting. Study groups should spend time at each meeting summarizing key points. They can create charts, diagrams of processes, vocabulary lists, lists of key points, mind maps, and other summarizing devices. Speakers. Outside speakers can be sourced from an entity or a chapter, and should be well versed in the topic of the meeting. It is advised that all speakers be certified. Speakers should be notified of the agenda and the time that they have to speak. Ideally, they can stay after their talk and participate in the discussion and Q&A session. Speakers from inside the group should be well prepared with their assigned topic, and adhere closely to the knowledge statements and associated tasks and responsibilities in the BoK-C. Identifying questions and issues. Study groups should actively identify areas of weakness and points of confusion. It is important to leave the comfort zone and ensure that new areas and topics are explored. Do not gloss over the areas of the BoK-C that are outside the procurement core competencies. Online Assessment Tool: The NIGP online assessment tool is a self-paced and self-guided online preparation tool that enables candidates to access review materials and sample tests that consist of the same kinds of questions that may appear on the UPPCC examinations. All six Domains are covered. In addition to practice, a simulated, timed examination is available. None of these questions will appear on the actual examination, but reflect the content and format of the questions. Personal Study Time: Because the BoK-C extends beyond core procurement competencies, knowledge statements should be identified that require additional research and reading. Frequent review of key information and thought about how to apply that information to procurement work are critical preparation activities. Topics such as benchmarking, problem solving, and communication skills can be researched through Internet searches, business journals, and general textbooks. Personal study time should be a key preparation activity that reinforces classes and study groups. Examination Day Information about what to expect and what you need to do on the day of your scheduled examination can be found on the UPPCC web site at https://www.prometric.com/sites/default/files/TestCenterRegulations.pdf. CPPB Certification Preparation 15 Introduction Using this preparation guide For studying convenience this Prep Guide reflects the structure of the BoK-C as it is presented at the beginning of this section. It is divided into domains, and each domain is organized by the knowledge statements as they appear in the BoK-C. This guide may be read straight through or used as a reference book in conjunction with a study group or the candidate’s assessment of his or her own strengths and weaknesses. Throughout this Prep Guide, there are cross references to other Knowledge Statements, definitions of terms as they are found in the NIGP Dictionary of Procurement Terms, and references to NIGP's Global Best Practices. CPPB Certification Preparation 16 Domain I Domain I Legal Framework The legal framework of public procurement defines the boundaries practitioners are required to adhere to in performance of their duties. It is a structure of laws, rules and regulations which govern public procurement. A. Interpret and apply procurement policies, guidelines, and procedures B. Identify professional and legislative trends and laws C. Apply concepts of fair, open, and transparent competition D. Detect and report fraud and antitrust activities (e.g., collusion, bid-rigging) E. Review procurements for compliance with laws, policies, and procedures F. Recognize and apply requirements of supplier diversity programs G. Recognize and apply requirements of sustainable procurement initiatives H. Demonstrate compliance with confidential or proprietary restrictions (e.g., communications, public records requests) A. Interpret and apply procurement policies, guidelines, and procedures Procurement policy is a course of action adopted by the entity that provides guidance relative to procurement actions. The procurement policy of an entity reflects: the entity’s legal system the goals and values of the entity policies and practices federal-level entities use to acquire the goods and services; this may not apply to state or local entities Purpose of a Procurement Policy To successfully serve the entity’s stakeholders and ensure that goods and services are delivered in a timely, effective, and economical manner, it is critical that the central procurement department (Procurement) develop and maintain clear policies and procedures outlining its method of operation. Policies and procedures for Procurement must be directly related to the enabling laws and regulations that establish the structure and govern the entity. The overall purpose of a procurement policy manual should be to: Establish the legal authority of the procurement function within the entity Simplify, clarify, and reflect the laws governing procurement Enable uniform procurement policies throughout the entity CPPB Certification Preparation 17 Domain I Build public confidence in public procurement Ensure the fair and equitable treatment of everyone who deals with the procurement system Provide for increased efficiency, economy, and flexibility in public procurement activities and maximize to the fullest extent the purchasing power of the entity Foster effective broad-based competition from all segments of the supplier community Safeguard the integrity of the procurement system and protect against corruption, waste, fraud, and abuse Ensure appropriate public access to contracting information Foster equal employment opportunities that are in line with legal requirements, in the policies and practices of suppliers and subcontractors wishing to do business with the entity Policy, procedure, and supplier manuals Policy and procedure manuals must be well organized and should contain a clear definition of the purpose of each manual and its intended use. To ensure proper organizational impact, the Chief Executive Officer of the entity should endorse each manual. Manuals should be produced in a manner that facilitates revision as changes will surely happen through new legislation and increased efficiencies in processes. Policies and procedures are maintained at several levels: policy manuals procedures manuals supplier manuals Policy manuals are centrally written, controlled, and used to guide behavior toward specific entity objectives. Two examples of policies that represent entity objectives are: a set-aside/goal that allows an established percentage of the business conducted with an entity to be excluded from the general competitive pool and purchased from a specialized class of business a policy that encourages and promotes a recycling program which includes procuring recycled goods. Procurement professionals involved in the establishment of policy manuals must: be responsive and adaptive to their environments act in the best interest of the entity be well-informed about the information associated with regulations CPPB Certification Preparation 18 Domain I provide the support to perform functions within established procurement policies and procedures Procedure manuals are written at a finer level of detail that sets out processes, forms and steps. Used primarily by the end user and procurement staff, the procedures manual provides guidelines and steps for preparing purchasing requisitions, developing specifications, receiving and inspection, and reporting and documenting supplier performance. They detail the business processes of Procurement and describe the entity, duties of staff, signing authorities, procedures to be followed, and forms and filing systems to be used. Supplier manuals provide formal and extensive information for suppliers seeking to do business with the entity. The supplier manual includes: general information about the entity key contacts and telephone numbers how the solicitation process is conducted how to receive an opportunity to participate in entity solicitations a description of the need to be both a responsive and responsible supplier how offers are to be submitted, public openings of offers, and the policy regarding late submissions Characteristics of these manuals include the following: well organized, clear, and easy to understand clear definition of the purpose and a consistent approach to decision making framework for training flexible endorsed by the entity’s Chief Executive Officer supplier outreach information transparent facilitate revision Governmental power to contract is generally inherent in the powers that are granted by a constitution, charter, or act. While a government has inherent power, government officials do not. For purposes of public procurement, there must be specific authorization from officials in the executive branch of government to enter into contracts. Without that authority, the officials may not do so. The existence of such authority is the foundation of any public procurement system. Legislative bodies, by passing laws and smaller entities by passing ordinances, generally define the scope of that authority and identify who may exercise it. However, executive branch directives may provide more specific procedures. The most effective procurement statutes and CPPB Certification Preparation 19 Domain I ordinances are those that establish the general parameters of an official’s contracting or procurement authority and authorize that official to promulgate rules, regulations, or policies to implement it. Additional information can be found in the following NIGP Global Best Practice: Developing a Procurement Policy Manual. B. Identify professional and legislative trends and laws Entities are guided by-laws, ordinances, policies, regulations, and procedures that impact procurement activities. Government procurement is quite different from the private sector. Government procurement is restricted to activities that are authorized by law. The authority of the central procurement department is limited by what has been included in the enabling legislation. The opposite is true in the private sector, where one may do whatever the law does not prohibit. It is important for a procurement professional to understand the hierarchy of laws within the judicial system. Enabling legislation Enabling legislation is the foundation for all Procurement activities. It includes: constitutions statutes ordinances and charters rules and regulations policy procurement procedures There are three primary sources of procurement laws in any entity. Statutory laws include constitutions, statutes, ordinances, and charters. Statutory laws are based on statutes or laws passed by governments. State or provincial statutes provide state/ provincial-directed legislative law. Ordinances and charters provide for local and municipal governments. Administrative laws are written rules and regulations and entity policy (developed and promulgated by administrative and regulatory governmental agencies). Administrative Law, provided by the applicable regulatory entity, has equal force and effect as legislative law as long as it does not supersede the context of legislative law. Common law is based on customs and traditions and codified through the legal system. Common law is based on custom and usage or confirmed by court decisions, i.e., a CPPB Certification Preparation 20 Domain I collection of court decisions. Access to published judicial decisions is available through volumes called “reporters” in major law libraries. Sometimes, procurement professionals will learn of court decisions affecting procurement practices. You will need to determine when a court decision has bearing on procurements you work on. To do that, it is helpful to understand more about how the judicial system works. Federal, State, & Local Legislation It is important for procurement professionals to understand the impact of legislation and regulations at all three levels of government. Federal Legislation At the highest level, the federal government passes regulations that affect all procurement departments either directly or indirectly--with the Constitution being the highest priority of all laws. An example of a direct impact is federal Antitrust laws. Most countries have laws to prevent anti-competitive practices and government regulations to aid the enforcement of these laws, for example, the Competition Act (Canada). These laws make illegal the following practices: price fixing territorial market allocation tying arrangements bid rigging boycotts dumping exclusive dealing In some cases, anti-competitive behavior can be difficult to distinguish from competition. For instance, a distinction must be made between product bundling, which is a legal market strategy, and product tying, which violates antitrust law. In addition, public procurement may be indirectly impacted by federal regulations when procuring with federal funds. For any purchase of goods, services, design or construction, applicable federal regulations must be followed when any (even $1) funds from a granting entity are utilized for the purchase. CPPB Certification Preparation 21 Domain I State Regulations Procurement professionals are responsible for ensuring the entity’s practices and individual purchases are compliant with their particular and applicable state statutes. States have varying procurement thresholds, procurement practices, and procurement programs. Because of the magnitude of state and local governmental spending, policy makers have used public procurement to address a variety of social and economic problems. For example, laws have been enacted requiring that contractors must: maintain fair employment practices provide safe and healthy working conditions pay fair wages refrain from polluting the air and water give preference to contractors from the same, state/province or locality award to small or women/minority-owned businesses promote the rehabilitation of prisoners and the disabled Public procurement professionals must also understand the precedence of the various levels of regulations at the three government levels. Further, they must ensure they understand how the regulation is applied, how it connects to other regulations, and how it will be effectively monitored for compliance. Local Regulations Finally, each locality has the ability to pass local regulations through the governing political body (such as local city councils and local county boards). As with the federal and state regulations, procurement professionals must understand these regulations, understand how to apply them, and ensure a clear precedence is established for the various levels to avoid conflict. In many cases, the local political authority may involve procurement officials in researching, developing, and implementing certain procurement- related regulations. Other laws applicable to public procurement Criminal Law imposes punishment such as imprisonment or fines for an act deemed to be criminal. Tort Law permits parties to sue each other for damage to a person or property. Budget/Finance Laws prohibit an entity from spending funds beyond those that the legislative body appropriates. CPPB Certification Preparation 22 Domain I Government’s authority to contract Authority: The right to perform certain acts or prescribe rules governing the conduct of others. Law of Agency: The law of agency states that an agent is someone who acts on behalf of a principal. A product of common law that focuses not only on the creation of agent relationships but also the liability for losses suffered by others who deal with agents. There are two ways to create an agency relationship: by agreement between principal and agent or by law. Principal: One who employs an agent. A person who has authorized another to act for him/her. Agent: A person authorized by a superior, i.e., principal, to act for him or her. Individuals who act on behalf of an entity, such as a corporation, partnership, or any level of government as that entity conducts business. In public procurement, this designation is usually incorporated into statute and ordinance. Types of authority Express authority: The authority that is explicitly given in direct language rather than inferred from conduct. It can be in writing or oral. Express authority can be very specific; for example, “the chief procurement officer is authorized to enter into a contract for less than $25,000.” Express authority may be generalized; for example, “the chief procurement officer has the authority to enter into all contracts according to the procurement needs of his/her government entity.” Implied authority: Authority that is not defined expressly, but is only determined by inferences and reasonable deductions that are necessary to perform the expressly authorized acts. Can consider the conduct of the principal regarding the historical actions of the agent. Apparent authority: The reasonable impression that an agent is permitted to act on their principal’s authority even though that authority has not been granted. Inherent authority: Authority based on an entity’s sovereignty, to enter into contracts, although not explicitly authorized. Professional procurement and technology trends Demand for technology in the modern world is increasing. Procurement professionals, therefore, must stay up-to-date about constantly changing technology developments, as well as CPPB Certification Preparation 23 Domain I the trends and best practices, while protecting their entity from obsolescence and the various types and levels of risk involved. Technologies that are currently available include, but are not limited to: E-commerce; more specifically, e-sourcing, e-procurement, e-purchasing, e-auctions, e- tender Electronic payment solutions Marketplaces/business exchanges Contract registers/databases Knowledge portals/supplier databases Business intelligence E-invoicing/e-payables ERP (Enterprise Resource Planning) systems MRP (Materials Resource Planning)/Inventory systems EPOS (Electronic Point of Sale) Barcoding/RFID (Radio Frequency Identification) Intranets Extranets The following is a checklist of best practices to implement the use of technology in procurement: Integration of financial system with procurement system to allow for verification of funds Prior to the order release Automated process flows for approvals Enable the entity to receive electronic requisitions Preparation of solicitations from requisition information Utilization of “push technology” to notify potential offerors of available opportunities Preparation of bid tabulations and bid analysis reports Preparation of proposal evaluation reports Preparation and distribution of notices of award Use of a commodity/service code structure to group and track purchases Automated production of purchase orders for standard inventory items Accumulation of usage data for contract items Track orders released against contracts Implementation of supplier performance reports that reflect CPPB Certification Preparation 24 Domain I Client satisfaction/dissatisfaction, etc. Automate recording and updates to the purchase history Track the status of requisitions and purchase orders Production of essential management reports and summaries Inclusion of contract administration functionality within the technology Use of e-commerce to source and order goods and services online Acceptance of electronic informal quotes Acceptance of formal competitive sealed offers Provide electronic catalogues to the user departments/divisions Use of reverse auction processes for high-volume, standardized commodities. Use of online surplus auction services Use of solicitation development software with process flow, templates, library of clauses, approval process, etc. Online posting of purchasing, award, and contract information for transparency purposes Additional information can be found in the following NIGP Global Best Practices: Technology in Public Procurement; Information Technology (IT) Procurement Series No. 1 to No. 4. C. Apply concepts of fair, open, and transparent competition Competition is essential to public procurement. Where suppliers must compete, they cannot elevate prices or reduce quality without suffering a loss of clients. The concept of competition presumes the existence of a marketplace in which there is more than one supplier providing similar goods or services. Competition can be defined as the process by which two or more suppliers attempt to secure the business of a third party by offering the most favorable price, quality, delivery terms, or service. Whenever there is an insufficient number of suppliers or the entity itself places restrictions on who can qualify to compete, the power of the free market is lost. Competition promotes free access to the marketplace, induces new businesses to enter, promotes better market performance, and encourages new technology and higher productivity. Because entities purchase so much, their procurement practices can profoundly affect markets. The best way to maximize an entity’s purchasing power is to leverage the power of competition. One of the goals of the procurement process is to obtain competition from sources that provide supplies and services; however, other mitigating factors may result in limiting competition. The extent to which procurement professionals foster competition depends on: requirements in law or regulation to use specific suppliers CPPB Certification Preparation 25 Domain I requirements for “maximum practicable” and “full and open” competition the validity and suitability of an unsolicited proposal requirements to set aside procurements for small business availability of suppliers under the small business programs Fair and open competition is also referred to as full and open competition. D. Detect and report fraud and antitrust activities (e.g., collusion, bid-rigging) Antitrust violations The government is often the victim of an antitrust violation. Procurement professionals are in a unique position to detect suspicious bidding patterns. The following are suspicious practices suggesting collusion: identical bids alternating bid patterns, where bidders rotate providing the lowest bid rotating territorial or product bidding “no-bid” responses from expected bidders simultaneous price increases Circumstances permitting other than “Full and Open Competition” There are circumstances in which the procurement cannot be conducted in full and open competition (FAOC). Each entity may have a host of such circumstances. Consider the following examples. Only one responsible source and no other supplies or services will satisfy entity requirements: o no other source is available o the contract is a “follow-on” for the continued development or production of a major system or highly specialized equipment or for the provision of highly specialized services; therefore, if switching contractors would result in unacceptable delays or a substantially higher cost o the contract is in response to an unsolicited research proposal There exists unusual and compelling urgency (e.g., delay in award would result in serious financial or other injury). In the case of industrial mobilization; or engineering, developmental, or research capability, if there is a need for: CPPB Certification Preparation 26 Domain I o maintaining a facility, producer, manufacturer, or supplier in case of a national emergency or wartime industrial mobilization o essential engineering or research and development capability to be provided by educational or nonprofit institutions or federally funded research and development centers The head of the contracting activity prepares a document that describes the terms of an agreement or treaty or the written directions, such as a Letter of Offer and Acceptance, that has the effect of requiring the use of other than competitive procedures for the procurement. Other than Full and Open Competition is authorized or required by statute, as is the case when procuring from: o specified prison industries o qualified nonprofit agencies for the disabled In the case of National security, when it would be compromised by broad disclosure of needs. In the case of public interest, when the entity head determines that FAOC would be contrary to it. E. Review procurements for compliance with laws, policies, and procedures An audit is a formal examination or verification of financial accounts or other business operations by internal staff or independent experts, concluding with a detailed report that may also include a management letter or findings. Examples include compliance, financial, and performance audits. Procurement audits are a vital component to the department, as well as to the entity, to ensure compliance with established rules and regulations that govern the overall procurement function. The audit and review plan establishes the boundaries in which Procurement operates. Once the fiscal period has ended, active monitoring of the budget shifts to the audit and evaluation of the budget. Someone responsible for the financial affairs of the entity often oversees the audit function, although it may be reported directly to the head of the entity. Whether it is the comptroller or the budget manager, someone has the responsibility to manage financial risks, understand any financial implications of decisions, properly account for financial results, and guard against fraud, infractions on financial policies and principles, and loss of assets. Simply stated, someone in the entity must be the financial conscience. Audits are also performed to evaluate the budget. There are four types of audits. Financial and compliance audits are normally performed by an independent accounting firm to determine whether financial transactions are recorded and verify their accuracy. CPPB Certification Preparation 27 Domain I Economy and efficiency audits are management or operational audits. These audits examine an entity’s managerial and administrative practices for economy and cost efficiency and strive to identify the cause of any cost inefficiencies. Program audits or evaluations monitor results to determine the extent to which an entity has achieved program objectives. They also evaluate the cost effectiveness of the alternatives that were employed. Performance audits review all the operations of an entity and encompass the following types of audits: financial, economy, efficiency, and program results. Performance audits are an increasingly common means of ensuring that those entrusted with management of public services and programs are held accountable. Regardless of the type of audit or evaluation being conducted, there are three phases to any evaluation process: 1. planning 2. data collecting 3. decision making based on findings and recommendations. The results of an audit are compiled into a management report. Normally, three kinds of audit reports are prepared and disseminated. Intradepartmental reports are designed to inform the management concerning departmental matters. Interdepartmental reports are for distribution to other departments on a need-to-know basis. Higher level management reports are issued to senior management and other key personnel. Immediate action should be taken to ensure that audit findings are appropriately addressed and that solutions for any substantial irregularities that may have been noted are implemented. The end result should be the improvement of the decentralized unit and ensured compliance with statutory requirements, policy, and procurement procedures for the entity. Post procurement audits are suggested as another way to safeguard against unethical procurement practices. While Procurement may find it helpful to have its own internal review section to evaluate and assist client departments/divisions, it is also appropriate to work closely with internal auditors and inspector generals to verify that all procurements follow procedures and meet ethical standards. Some of the purposes of an audit are to ensure: procurement policies and procedures are clearly defined, and end-users are in compliance regarding the solicitation process for the clients utilizing Procurement purchase orders are required and used for purchases The proper use of the procurement card (pCard). The pCard purchases are always an area for audits and departmental/division reviews CPPB Certification Preparation 28 Domain I the department/division has the means to make purchases (emergency) after hours Procurement maintains that the suppliers list and goods and services are properly coded for commodity and service selections Procurement determines the performance measures of the department/division and suppliers impress funds (petty cash) if applicable, are replaced frequently, balanced and have authorized transitions (note: the use of the pCard may have replaced impress funds) that the procurement staff is trained and is aware of policies and procedures affecting procurement (e.g., competitive process, supplier selection, supplier relations, direct purchases, methods of procurement, security of solicitation documents and purchase numbers, etc.) files and folders are set up properly, in order and are easily accessible verification of solicitation documents with requisition and supporting material a tracking and reporting system that documents solicitation activity the integrity, fairness, and ethical application of the procurement process in procuring goods and services from suppliers F. Recognize and apply requirements of supplier diversity programs Supplier diversity programs create preferences. Preference: An advantage given to bidders/proposers in a competition for contract award, which may be granted based on pre-established criteria such as ethnicity, residence, business location, origination of the good or service, business classification (e.g., small business), or other reasons. A governmental bias. Because of the magnitude of governmental spending, policymakers have used public procurement to address a variety of social and economic problems. Laws have been enacted requiring that contractors must maintain fair employment practices, provide safe and healthy working conditions; pay fair wages; refrain from polluting the air and water; give preference to contractors from the same nation, state/province or locality; award to small or women/minority-owned businesses; and promote the rehabilitation of prisoners and the severely disabled. The setting aside of certain contracts for competitive participation by only targeted businesses has been practiced by federal governments for many years as well as various state and local entities. Government entities often pay a premium, directly or indirectly, to accomplish socio-economic goals. Occupational, health, safety, and wage rate laws have added extra expenses to industry (thus leading to higher contract prices) but, they are believed to have resulted in improvement in workforce capabilities and productivity, helped prevent accidents that are costly and delay CPPB Certification Preparation 29 Domain I work, and encouraged better qualified persons to seek jobs coming under the wage rate laws. Similarly, the small business programs, despite their cost, have provided considerable work for small businesses and, in doing so, can be said to have been effective in creating new sources of supply, thus increasing competition. Preferences, set asides, or goals may open opportunities for selected suppliers, but overall they do restrain competition. Preferences always restrain trade because the supplier’s race or gender does not guarantee that the good will offer the highest market quality at the best price. In some entities, some or all purchases must be made from suppliers who are allowed certain legal preferences. These may be based on business size or location, the race, gender, or ethnicity of the owner, or other possible legally dictated criteria. The dictates of the law allowing the preference(s) must be followed, and additional guidance is generally provided in local rules and regulations as well as local guidance. In the case of multiple suppliers meeting the preference criteria and, absent additional guidance to the contrary, the use of some form of competition, formal or informal, between those suppliers are encouraged to ensure the entity gets the best possible deal for the taxpayer dollar. In several entities, procurement laws mandate that certain factors (location of the business, recycled material content, etc.) be considered in the comparison of proposal prices for targeted groups versus other suppliers. These may take the form of a straightforward percentage discount factor or the use of graduated percentages, depending on the value of the contract. This form of assistance is referred to as “preferences.” Another form of assistance is the establishment of goals for general contractors to achieve. A given percentage of the contract amount or a specific dollar amount is targeted for the general contractor to award to disadvantaged groups. Entities have used subcontract requirements to provide opportunities for historically underutilized, small/disadvantaged, women-owned, and other small business concerns. In some procurements, the apparent successful offeror is required to submit a subcontracting plan. The plan describes how the offeror will provide subcontract opportunities to historically underutilized, small/disadvantaged, women-owned, and other small business concerns. Whenever a procurement will be affected by preferences, the factors must be detailed in the solicitation. Following are some special preference programs: Minority and women-owned business (as permitted by the entity or law) Local or disadvantaged business enterprises Sustainable procurement program Joint or cooperative procurement Surplus disposition Materials management Low value spend (e.g. purchasing card program) CPPB Certification Preparation 30 Domain I Public procurement professionals must abide by fair and open competition principles when awarding contracts; however, socio-economic mandates and requirements may dictate supplier selection based on demographic characteristics. Preference programs are often viewed as necessary to enable such businesses to survive and expand, and generate income for owners and employees alike. For suppliers representing a minority, improved access to public procurement may be important in raising living standards and creating business opportunities as part of a wider policy to improve the group’s circumstances. Socio-economic laws and equal opportunity programs have added tremendously to the complexity of the public procurement process. Governments have the ability to change the specifics of their preference programs to meet the needs of the community they serve. Procurement professionals must continually monitor impending changes and assess the fiscal impact of changes on their community. Assessing the financial impact may include: the time and resources expended by the entity to conduct background checks on potential Minority-Owned Business Enterprises (MBEs) or Historically Underutilized Businesses (HUBs) to ensure that they meet all entity qualifications to be considered a MBE or HUB supplier the cost of the entity’s outreach program and training programs to encourage MBE participation in their solicitations conducting a comprehensive disparity study to determine which supplier groups have been historically underutilized by the entity Procurement professionals make the final determination on whether or not offers meet the requirements specified by the individual contracting entity’s rules and regulations. In addition, procurement professionals must balance the dynamic tension between competing socio- economic entities while satisfying the requirements for consistency, fairness, equity, and transparency and maintaining a focus on maximizing competition. Previously, the procurement term “set asides” was used by entities to designate certain contracts for competition by certain types of disadvantaged businesses. Current procurement protocols now incorporate the term “goals” whereby the prime contractor is required to document a “good faith effort” in offering and securing a predetermined percentage of the contract to certain types of disadvantaged businesses. G. Recognize and apply requirements of sustainable procurement initiatives Many federal, state, and local governments are adopting sustainable procurement policies. Individual entity policies, whether mandated, preferred, or recommended, establish environmental procurement responsibility in areas of best value, energy efficiency, less toxic commodities, and environmentally preferred services and construction. While working with CPPB Certification Preparation 31 Domain I businesses, the community and other external stakeholders, Procurement serves as an entity leader to implement environmental initiatives and maximize resource efficiency. The initiatives are embedded in procurement decision making in areas that include: market research planning specification preparation total cost of ownership analysis contract review disposal and surplus processes price and cost analyses assessment of awarded supplier performance through pre-established benchmarks and monitoring tools documentation of project outcomes and outputs Determining the best value of sustainable goods, services, and construction is a procurement responsibility. Best value includes the total cost of ownership and can be determined through a life-cycle cost analysis. A slightly higher purchase price can represent “best value” when it provides an opportunity for significant cost avoidance throughout the total product life. Along with economic impact, total cost of ownership may include environmental performance, durability, local production, affirmative market participation, social responsibility issues and human health matters. The need for goods and services and practices that conserve and protect natural resources and the environment has created a market for recycled materials, energy savings, conservation of resources, and reduced pollution. Pursuant to an entity’s sustainable procurement policy, Procurement may be responsible for the procurement of environmentally safe goods and services and practices such as but not limited to: reuse and recycle of goods and resources disposal of organic and other solid waste conservation efforts in regard to transportation, energy, and water disposal of hazardous waste maintenance pollution reduction or avoidance construction of buildings and infrastructure, using development practices, and accepted performance criteria that focus on the environment Key terms for sustainability A procurement professional with an environmental mandate should understand these terms: Reduce the amount of waste by requiring certain commodities to be made with recycled content and reducing the amount of packaging. CPPB Certification Preparation 32 Domain I Reuse those items that can be repurposed (for example, wooden pallets, shipping containers, etc.) Recycle items that cannot be reused in their present form (paper, cans, toner cartridges) Substitute the use of less hazardous, more environmentally preferable goods whenever possible When specifying and procuring recycled commodities, the procurement professional should be familiar with these terms. Post-consumer materials are from commodities that have been used by consumers, recycled, and reprocessed back into a consumer product. Pre-consumer materials are those that are left over in manufacturing processes and then reused in a consumer product. Reuse and recycling A challenging economy drives entities to become more aware of reusing and recycling opportunities. In addition, in many cases, there is an increased emphasis on environmental responsibility as well as legal mandates. Entities are aggressively looking to the federal, state, and local governments to purchase used equipment for their various programs in an effort to reduce entity spending and to help minimize waste of valuable equipment. Many entities have revised their solicitations to include trade-in provisions when purchasing new or used equipment. Entities are able to reduce their initial purchase expenditure while transferring the burden to the disposal of the trade-in equipment. Another practice is to require suppliers to offer an agreed “buy-back” price after an agreed upon time frame. Some local government entities give a price preference of 5% to 10% for all recycled goods offered in response to a solicitation. Governments are being asked to develop affirmative procurement programs that provide a preference for products made with recycled materials. Packaging Containers in which items are shipped and the packaging protecting the items inside the containers, in most cases, should be recyclable or recycled. The procurement professional can require containers and packaging to meet these requirements. The solicitation can be used to clearly articulate to potential suppliers that the end user requires such packaging. Example: Procurement professionals have been faced with handling STYROFOAM™ “peanuts” in their receiving area. The STYROFOAM™ was difficult to handle, re-process, and reuse in other shipping opportunities. STYROFOAM™ is not recyclable. Requiring recyclable shipping containers and recyclable packing material in the solicitation will ensure that these standards are followed. CPPB Certification Preparation 33 Domain I On long-term contracts, a requirement in the contract may stipulate that the supplier use reusable containers that are received, emptied of shipped product, and returned to the supplier empty to be used over and over on subsequent orders. Additional information can be found in the following NIGP Global Best Practice: Sustainable Procurement Practice. H. Demonstrate compliance with confidential or proprietary restrictions (e.g., communications, public records requests) Procurement operations and contracting are framed by compliance considerations. Use checklists to identify important requirements. Checklists are an effective way to reduce the risk of noncompliance. Confidential Information Keep proposers’ proprietary information confidential. Develop a formal policy on the handling of confidential information. Relationship with the Supplier Maintain and practice, to the highest degree possible, business ethics, professional courtesy, and competence in all transactions. There are times when during the course of business, it may be appropriate to conduct business during meals. In such instances, the meal should be for a specific business purpose. Association with suppliers at lunches, dinners, or business organization meetings is an acceptable professional practice enabling the procurement professional to establish better business relations provided that the procurement professional keeps free of obligation. Purchase without prejudice, striving to obtain the maximum value for each dollar of expenditure. Preclude from showing favoritism or being influenced by suppliers through the acceptance of gifts, gratuities, loans, or favors. Gifts of a nominal value that display the name of a supplier which is intended for advertisement may or may not be accepted in accordance with the recipient’s own conscience or entity rules. Adhere to and protect the supplier’s business and legal rights to confidentiality for trade secrets and other proprietary information. Refrain from publicly endorsing commodities. CPPB Certification Preparation 34 Domain I Relationships with Other Entities and Organizations A procurement professional shall not use his/her position to exert leverage on individuals or firms for the purpose of creating a benefit for the entity or entities that he/she may represent. All involvement and transactions shall be handled in a professional manner with the interest of the procurement professional’s employer taking precedent. Relationships with Professional Procurement Organizations and Associations It is the obligation and the responsibility of the procurement professional, through affiliation with professional organizations, to represent that entity in a professional and ethical manner. A procurement professional shall not use his/her position to persuade an individual or supplier to provide a benefit to an entity. Record keeping At many government levels, there are a variety of public record and open meeting statutes. These statutes provide the guidelines under which the public is entitled to review the work and records of government. This means that solicitation files and other records, as well as meetings where procurement and other kinds of contracts are discussed, may be accessible to the public. The statutes vary by locality and entity, but it is absolutely critical for the procurement professional to clearly understand and operate under these statutory laws. When a supplier submits proprietary and trade information for evaluation, this information is confidential and must be returned at the end of the evaluation process. The entity must be clear, consistent, and totally within the law in its treatment of confidential and proprietary information. Retention schedule All transactions, correspondence and other documentation in a contract file constitute part of the public record. The basic factors to consider regarding procurement records retention include: legal or statutory requirements administrative requirements historical requirements Because records retention requirements vary considerably, it is suggested that the applicable policies and procedures mandated by the entity should apply and be approved by the records or administration head of the entity. CPPB Certification Preparation 35 Domain II Domain II: Procurement Planning and Analysis Planning and analysis is a broad area of knowledge and competencies which encompasses the use of tools and data to successfully execute the various activities associated with any procurement. Procurement planning, although occurring principally prior to solicitation, can occur throughout the life cycle of any procurement. Procurement analysis refers to the collection, collation, and application of analytical techniques of data in support of business decisions. Both planning and analysis are used to maximize the success of procurement functions within the entity. This domain, Procurement Planning and Analysis, addresses the following knowledge statements: A. Integrate established goals and objectives for procurement function B. Recognize and apply metrics and measurements to track procurement performance C. Conduct a spend analysis and recommend a purchasing strategy D. Operate under the established procurement contingency/continuity of operations plan (e.g., disaster preparedness, supply chain) E. Assess and utilize external procurement information resources (e.g., professional network, periodicals, associations) F. Recognize the impact of budget cycle (e.g., lead times, receipt of goods, payment of goods) G. Apply standardization programs and practices H. Interpret the application of procurement trends (e.g., job order contracting, unavailable commodity) I. Recognize and apply risk mitigation strategies (e.g., terms and conditions, bonding, insurance) J. Conduct sourcing analyses (e.g., make, lease or buy, market research, outsourcing) K. Conduct a financial impact analysis (e.g., total cost of ownership, return on investment, cost benefit) L. Conduct market analysis (e.g., forecasting, historical, economic conditions) M. Evaluate small dollar purchases for compliance A. Integrate established goals and objectives for procurement function For the procurement professional, the ability to think strategically for both the procurement function and the larger governmental entity is critical to serving our communities. CPPB Certification Preparation 36 Domain II Procurement must take an active role in linking its activities to the operating environment of the entity. Procurement is much broader than simply assigning costs to goods and services consumed in an entity and establishing compliance‐based audit trails. Procurement involves the effective and efficient management of resources to determine the right good delivered at the right time, and at the right price to entity clients. Strategic Procurement Planning (SP2) Strategic Procurement Planning is the transformation of the entity’s mission, goals, and objectives into measurable activities to be used to plan, budget, and manage the procurement function within the entity. The ultimate goal is to effectuate positive change in entity culture, systems, and operational processes. The goal of strategic procurement planning is to establish a set of agreed-upon tactical goals and objectives within the operational context of the entity, thus linking resource allocation decisions in a priority-setting model. A thorough and well-crafted strategic procurement plan will generate an effective and efficient procurement system. Some of the most common benefits associated with strategic procurement planning are that it: focuses attention on the entity’s mission and links tactical procurement decisions to entity strategy assists in designing future procurement strategies assists in designing or redesigning the structure of the procurement functions and processes allows procurement professionals to verify the legitimacy of procurement strategy consistent with the entity’s strategy creates a framework for communicating with suppliers and cross-functional team members allows procurement resources to be assigned according to opportunities and risks gives a framework to review strategy implementation and control facilitates a better understanding of the implications of cross-functional problems and projects arising out of procurement decisions facilitates the identification of opportunities and threats for future procurement decisions A subset of the entity’s strategic procurement plan is a strategic sourcing plan. Strategic sourcing is a methodology and process that enables procurement professionals to analyze what and how they acquire goods and services, with the objectives of lowering costs to the entity and improvements in supply fulfillment from the producer level to the end user (supply chain). Other goals of strategic sourcing are to: improve supplier performance reduce waste CPPB Certification Preparation 37 Domain II eliminate non-value-add activities and costs minimize risk This methodology requires strategic planning of procurements and development of policies and procedures that are not intrusive to programs and operations. Some guiding principles of strategic sourcing are: making procurements in a manner that reflect the greater good of the entity, cost-effective and efficient procurement methods, managing suppliers for performance, and compliance with all statutes, regulatory provisions and entity policy and procedures. A fundamental tenet of strategic sourcing is continuous improvement and evaluation of methods and processes to enhance effectiveness and efficiency. SWOT analysis In virtually any planning situation, procurement professionals should be prepared to analyze the various factors an entity could potentially face. A tool to accomplish this is the SWOT analysis (Strengths, Weaknesses, Opportunities, Threats). Strengths are internal situations that will help achieve the entity’s objectives, to overcome threats and weaknesses, and to take advantage of opportunities. Opportunities can be internal or external. Threats are external challenges to the success of the entity’s objectives. The Pareto Principle Pareto theorized that 20% of the people (The Vital Few) yielded 80% of the production while 80% of the people (The Trivial Many) yielded only 20% of the production... 20% of what you do yields 80% of the results. The Pareto Principle or the “80/20 rule” can be applied to supply management situations such as “80% of procurement cost is created by 20% of the purchase orders issued.” Additional information can be found in the following NIGP Global Best Practice: Strategic Procurement Planning. B. Recognize and apply metrics and measurements to track procurement function Performance metrics is the term given to the measurement of performance. An analytical application of measurements allows the comparison of performance against standards. Activity must be measured against a metric to make sustainable improvements. There are different types of metrics: Inputs measure resources used. They include labor, materials, equipment, and supplies. Demand for goods and services may also be considered an input metric. CPPB Certification Preparation 38 Domain II Outputs record activity or effort that can be expressed in a quantitative or qualitative manner (e.g., total spend, total number of new contracts, total number of employees who obtained professional certification). Outcomes assess results of an activity and show whether expected results were achieved. (e.g., client service levels, improved performance of suppliers, employee retention). Outcomes must be benchmarked against other departments/divisions and outside entities. A benchmark is simply a point of reference that can be used as a standard to compare effectiveness and efficiency measurements. Efficiency measures represent the ratio of inputs to outputs or outcomes. When outputs are increased and inputs are decreased, more efficiency is generated (e.g., lowered purchase order administrative costs, reduced requisition to P.O. turnaround time). Effectiveness measures reflect how long it takes to process a request for procurement (e.g., purchase orders, bids/proposals, etc.) or the turnaround time to receive goods or services. Effectiveness essentially measures quality and affects client satisfaction. It should be tied back to the key objective. Setting performance targets helps to establish an expectation to measure against. Targets will vary depending on established goals and objectives, however, quality metrics will allow for the collection of meaningful data for trending and analysis of rate-of-change over time. Establishing performance measurement and monitoring systems Procurement should have a performance measurement system that assesses progress towards achievement of the strategic plan. Performance measurement is critical to any public sector activity, program, or entity. Good performance measures need to be meaningful for all participants (procurement professionals, clients, and suppliers) and stated in terms of Procurement’s higher-level objectives, or else they will lose their impact. Similarly, performance measures should be fair, easy to collect, consistent, and objective. Performance measures must also lead to demonstrable action and they must be communicated to clients. In order for sustainable strategic improvements to be made, the management of resources must be evaluated based upon some predefined criteria (metric). There is a range of methods an entity can use to measure procurement performance. Methods used to measure performance should be designed to motivate staff at all levels to contribute to entity improvement. The following are examples of methods that may be used to measure procurement performance: performance reviews to share performance measures that identify accomplishments and areas for improvement regular staff meetings to share performance measures and progress benchmarking performance indicators performance targets CPPB Certification Preparation 39 Domain II quality management tools (i.e., checklists, progress charts, graphs) Performance audits are an increasingly common means of ensuring that those entrusted with management of public services and programs are held accountable. Regardless of the type of audit or evaluation being conducted, there are three phases to any audit or evaluation process. These involve planning, collecting data, and a final phase of decision making based on findings and recommendations. In order to p

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