Review of Roles and Responsibilities for Procurement Related Activities

Date: Tue, 04 Aug 1998 12:54:49 -0400
To: "AO - All Administrative Officers"<distribution>
From: "Alice A. Sabatini, Division Administrative Officer, WRD" <aasabati>
Subject: AMC Review of the Procurement Function

The following is forwarded for your information.  The procurement function
was the first of the administrative functional areas to be reviewed by the
AMC.  The next is the human resources area.  If you have questions on the
approach, please let me know.

In Reply Refer To:
Mail Stop 201

	MEMORANDUM

							July 10, 1998

To:		Bureau Operations Council Members

From:		Tim Calkins
		Chair, Administrative Management Council

Subject:	Review of Roles and Responsibilities for Procurement 		
                Related Activities

At the request of the Operations Council, the Administrative Management
Council (AMC) in concert with John Peterson, Chief, Office of Acquisition
and Federal Assistance (OAFA), performed a review of procurement related
roles and responsibilities.  The review included both functions performed
by OAFA as well as those performed by personnel within the program
divisions.  Also, the AMC opted to take one administrative functional area
and perform an analysis of the function from beginning to end.  The intent
was to have a working model that could be applied and serve as a model in
functional analyses to be performed in the future.

In performing the review, the AMC relied heavily upon data and information
gathered in preparation for the bureau's 1997 Procurement Conference as
well as data maintained by OAFA in support of departmental reporting
requirements related to warrants and contracting officer technical
representatives (COTRs).  

A narrative description of the review's principal findings is attached in
addition to a chart providing, by major type of procurement function,
statistical information regarding FTE and workload data.

The AMC and OAFA are pleased to report that the roles and responsibilities
related to procurement functions are well defined and require no immediate
modification.  In addition, existing delegations of authority to the
divisions are adequate.  No needs were identified which are not being
fulfilled through the present delegations.

Communications between OAFA and the program divisions were found to be
frequent and directed at improving services.  Of particular note is the
finding that because OAFA works closely with the divisions in preparing
bureau policy and implementing bureau procurement systems, the need for
division level guidance is quite small and division level procurement
systems nonexistent.

The review substantiated the success of the bureau's Procurement
Conference.  Principally as a result of the conference, field warrants
issued to personnel in the program divisions have been reduced from 290 in
FY-1996 to 175 in FY-1997.  It is anticipated that additional reduction in
the number of warrants will be achieved in FY-1998.  In addition, numerous
other actions identified during the conference have been effected to
improve procurement services, both on the part of OAFA and the divisions.

Our review identified several actions USGS can take in the near future, as
well as several externally-driven activities we should monitor for their
potential to effect further improvements in the procurement function.  The
AMC is prepared to pursue the internal actions in conjunction with OAFA,
and to develop a proposed schedule for doing so.  However, prior to
scheduling further activity, we would appreciate Operations Council input
regarding other priorities which may need to come first.  There are many
outstanding action items impacting the administrative community at large,
the AMC, and OAFA.  Because the review found the procurement related
functions to be effectively delegated and carried out, there may be higher
priority areas requiring more immediate attention, especially if the
Operations Council wishes to have the AMC pursue reviews of roles and
responsibilities in other administrative areas.

The AMC and OAFA will be pleased to answer any questions the Operations
Council may have regarding the review and the recommended actions.

Attachments

							Attachment 1
	FUNCTION NARRATIVE

Background: At the request of the Operations Council, the Administrative
Management Council, in concert with the Office of Acquisition and Federal
Assistance (OAFA), conducted a review of the procurement function within
USGS.  The review included procurement related responsibilities and
services performed by both OAFA and the divisions.  The review drew heavily
upon the data and recommendations developed from the USGS bureauwide
procurement conference held in 1997.      

A.  Policy/Implementation/Management

OPS-Office of Acquisition and Federal Assistance (OAFA) provides bureau
policy and procedures where higher level regulations, etc., require
implementation at the bureau level.  Where such bureau level policy impacts
field delegated purchasing authority, the program division's administrative
staff are usually brought into the loop for consultation on how USGS should
implement a given process, policy, or procedure.  Where necessary,
divisions can provide further guidance for use within the division.  

OAFA also provides support for bureauwide procurement systems.  Presently,
the USGS is in the process of testing and implementing the Department's new
procurement system, IDEAS PD.  There are no division level systems
dedicated to procurement processing.

Because OAFA works closely with the divisions in preparing bureau policy
and implementing bureauwide systems, the need for division level guidance
is quite small.  Consequently, no FTE estimate is provided for the
divisions for policy/implementation/management.

Externally Driven Changes

OAFA is currently in the process of testing the DOI IDEAS PD FFS interface.
Successful implementation of the interface will be followed by a DOI Web
based requisition system.  These initiatives may provide the basis for
additional streamlining.  

B.  Contract and Federal Assistance Operations

More than 3,000 laws affect the manner in which the government enters into
contracts to obtain needed services and purchases, as well as to effect
Federal Assistance awards (e.g., grants and cooperative agreements).
Presently, employees handling contractual relationships (hereafter referred
to as personnel classified in the 1102 series) are required to have a 4
year degree with an emphasis on business related courses for entry level
positions.  In addition, DOI warranting procedures require biennial 40 hour
refresher courses after more than 400 hours of professional training for a
Level IV warranted Contracting Officer (officers with unlimited contractual
authority).  The function is characterized by formal delegations of
authority and "warranting" of individual employees authorized to make
fiduciary commitments on behalf of the Government.  In DOI and other
agencies, formal contracting authority is typically highly centralized.
Since entering into a Federal Assistance award requires a formal written
determination that the use of a grant or a cooperative agreement in lieu of
a contract is legally supportable, in the USGS those awards are processed
at the same level as contracts are processed. 

The acquisition team is made up of the procurement specialists and the
technical specialists/scientists associated with the requirement.  The
business management portion of the overall acquisition process is
centralized within USGS in the Office of Program Support at the three major
centers (Reston, Denver and Menlo Park).

Programmatic functions of requirements identification, technical
evaluation, testing and technical acceptance of deliverables, verification
of technical aspects of invoices received from vendors is retained within
the program division office that originates the requirement.  No estimate
is available for FTE expended within the divisions by program personnel
performing these functions since these personnel perform these functions on
an adjunct basis as Contracting Office Technical Representatives (COTRs).
In total, there are over 300 COTRs throughout the USGS.  COTRs are required
to have 24 hours of training initially, followed by an 8 hour refresher
training course every three years. 
 
Recommended USGS Changes/Action 

USGS should explore the possibility of authorizing remote payment of
contracts and consider post review by the OAFA contracting officers.  This
could serve to reduce prompt payment interest penalties since the largest
interest payments are associated with the larger dollar invoices on
contracts.  

C.  Simplified Acquisitions Over $2,500 Micro-Purchase Threshold

Warrants
Level IIB = $100,000
Level IIA = $ 25,000
Level IB  = $ 10,000
Level IA  = $  5,000

Simplified Acquisitions are defined as "open market" purchase (not orders
under agency contracts) actions up to $100,000 in value and GSA Schedule
orders of any value.  Approximately 45% of USGS employees are located at
its three largest bureau offices, for which OPS-OAFA provides a centralized
purchasing function.  Several decades ago, before the advent of the
bankcard, email and other electronic telecommunications advances, and the
"micro-purchase" threshold, OPS delegated authority to program division
field offices to make routine purchases where mailing requirements back and
forth to central offices was inefficient.

The typical field delegation authorizes local purchases of supplies,
materials, commodities, and equipment up to $10,000.  Service contracting
and construction contracting under $2,500 and $2,000 respectively are also
delegated to field contracting officers.  Field warranted contracting
officers are also authorized to place orders up to $100,000 under GSA
schedules and other established contractual vehicles.
 Statistics were compiled for FY-1996 in preparation for the bureau
Procurement Conference which was held in March 1997.  Since less than  of
1% of the total simplified acquisitions generated in the field are services
and construction purchases over the above stated thresholds and given that
they require specialized training and coordination with the Department of
Labor to award and administer, OPS-OAFA has not delegated authority for
these awards to the field.  Simplified actions over $10,000 in value
generated in the field also amount to less than  of 1% of all simplified
acquisitions and are by regulation required to be performed by personnel
classified as GS-1105 (purchasing agents) or GS-1102 (contract related
specialists).  Despite the small numbers of transactions involved, a
limited number of field offices, which generate more than 35% of field
transactions over $10,000 in value, have been delegated $25,000 authority
in USGS.

Externally Driven Changes 

-The advent of the bankcard convenience check under GSA's new bankcard
awards may eliminate the need to generate purchase orders where vendors
refuse to accept the card.  This feature is scheduled for implementation
beginning November 1998 and may serve to substantially reduce the number of
field purchase orders in the future.  

-In FY-1999, DOI is scheduled to complete their review of each bureau's
implementation of the new warrant system.  This review may cause the need
for additional changes regarding the number and location of field warrants.

Recommended USGS Changes/Action

-USGS should complete the ongoing review of the number and type of warrants
in place throughout the bureau.  The scope of the review should include
evaluation of the cross servicing possibilities for at least backup support
in locations where there is more than one warrant in different divisions
(e.g., Hawaii).  The review is scheduled to be completed by February 1999,
and has already resulted in a reduction in the number of warrants from 290
to 175. 

-USGS should review the correct balance of resources and the appropriate
servicing times for each office where procurement services are provided.
The difference in resources devoted by the divisions at field sites for
simplified acquisitions (51 FTE) versus those available to OPS to devote to
simplified acquisitions at the three bureau regional sites (19 FTE), should
be reviewed to determine the correct balance of resources and the
appropriate servicing times.  The review criteria should also include
accessability to the service provider and quality of service provided,
including development of specifications and requirements documents.
Products of the review will include recommendations regarding the
appropriate balance of resources dedicated to simplified acquisitions
between OPS and the divisions as well as recommended customer service
standards for both OPS and Division personnel engaged in duties related to
simplified acquisitions.  Customer service standards should include
anticipated lead times to receive requested goods and/or services, feedback
mechanisms when expectations cannot be met, and evaluation of the degree to
which delivered goods and/or services fulfilled the stated requirements. 
 
D.  Micro-Purchases and Bankcards

This program was designed for "end-user" purchasing.  99.98% of bankcard
purchases in 
FY-1997 in USGS were made outside of the OPS-OAFA environment.  While a
fair number of bankcard purchases were made by field warranted contracting
officers, a huge proportion of them were made at the "end-user" level as
contemplated by the program's intent.  Field warranted contracting officers
are making an estimated 65-75% fewer formal purchase order awards than they
were required to make before FY-1994 when the program was expanded under
the Federal Acquisition Streamlining Act.

OPS-OAFA purchasing agents are making 40% fewer formal purchase
transactions than were formerly made because their major center based
customers are making their own purchases under the micro-purchase threshold
as well.  In OPS-OAFA's three offices, the reduction in micro-purchases
made, coupled with the impact of raising the simplified acquisition
threshold to $100,000 has enabled OPS to absorb a reduction in GS-1102
staffing of more than 20% over the past several years (exclusive of the
impact of the addition of Bureau of Mines programs and the merger with NBS).

Recommended USGS Changes/Action 

-USGS should strive for a successful and smooth transition to the use of
one card for Bankcard, Travel and Government Vehicles.

-USGS should pursue continued growth in the number of employees authorized
to have a bankcard.

-OAFA should continue ongoing efforts to support/encourage OMB to request
that Congress increase the micropurchase threshold level to $5,000.  If the
threshold is increased, the need for field warranted purchasing officers
will be further reduced.

Attachment 2 is omitted from this email (it is a table that will not
convert well to ASCII format).