Enhancing Competition and Cost Reduction in Houston's Procurement Process

The City of Houston aims to consolidate and professionalize its procurement function to increase competition and lower costs. This involves centralizing procurement under the Chief Procurement Officer and reorganizing departments for better oversight. Activities include delegation of procurement authority, interdepartmental agreements, standardizing processes, and engaging with NIGP for best practices.

• Procurement
• Competition
• Cost Reduction
• Houston
• Centralization

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1. BUDGET AMENDMENT RESPONSE CM Travis Amendment 12.14 Increasing Competition and Reducing Cost of Procurement Jerry Adams, Chief Procurement Officer

2. CM Travis 12.14 Budget Amendment FY 2021 The City of Houston will consolidate and professionalize the procurement function with a goal of increasing competition and reducing cost. Houston uses a federated model where some procurement personnel are embedded within department with limited oversight by the Chief Procurement Officer. Under a consolidated model, all procurement activity would be under the review of the CPO. Procurement activity would be carried out by two City departments Strategic Procurement for all goods and non-construction materials and Design and Construction for all construction and construction related services.

3. Element 1 The City of Houston will consolidate and professionalize the procurement function with a goal of increasing competition and reducing cost. Chapter 15, Sec 15-43 of the City s Code of Ordinances allows that the Chief Procurement Officer may delegate procurement authority to departmental purchasing units (DPUs). Current state of delegation of authority There are three departments with delegated authority for construction projects with oversight There are thirteen departments that have delegated authority to purchase goods and services (up to $50K) with oversight There are eleven departments that SPD manages all purchases up to $50K SPD manages all formal procurements for goods and services over $50K

4. Strategic Procurement Division (SPD) Citywide Procurement Design & Construction Goods & Non Construction (with SPD oversight) SPD Direct SPD Oversees - Under $50K: 13 Depts GSD HPW Airport - over $50K: all - Under $50K: 11 Depts

5. Consolidation activities in progress SPD currently has interdepartmental agreements in place with three departments HFD, FMD and HITS Short term SPD is evaluating additional opportunities for interdepartmental agreements and / or simply absorbing procurement activities for departments with low volume procurement activities Long term Finance Department is evaluating opportunities for total centralization of Procurement and Accounts Payable activities

6. - Professionalize the Procurement Function SPD s focus in the past year has been on two main areas Updating procurement process, procedures and policies Standardization of execution Engagement with NIGP (National Institute of Government Purchasing) Membership services Webinars White papers Benchmarking with other Texas municipal procurement agencies Harris County Austin El Paso

7. Element 2 Procurement activity would be carried out by two City departments Construction and Goods and Services Agree with segregation of construction and non-construction, but not centralization of all construction. Although all construction projects must follow the same / similar processes and/or procurement methodologies, HAS projects are unique from GSD projects and HPW projects in the areas of engineering requirement, vendor base and areas of compliance (FAA / FEMA, etc.) Currently, SPD leadership participates in all construction procurement activities from cradle to grave, as noted on slide 4.

8. Questions?