Procurement

Introduction/Background

B. BALANCED SCORE CARD SELF ASSESSMENT PROGRAM

1. General

The SLAC Purchasing Department Self Assessment was conducted in accordance with the SLAC 2002 Balanced Score Card Self Assessment Plan, dated September 7, 2001, and submitted to the DOE Oakland Operations Office.

2. Purchasing Organization

SLAC Purchasing is organized as depicted in the Organization Chart (see Exhibit I). Changes that occurred within the Purchasing Department during FY02 are as follows:

1. In October 2001, a selection was made concerning the Deputy Purchasing Officer position, which had been vacant since December 2000. The new Deputy commenced work on October 29, 2001.
2. In March 2002, Purchasing eliminated the Traffic Manager position as its responsibilities were a duplication of effort with another position within Shipping Receiving Department.
3. In March 2002, in the General Stores Group a Storekeeper II was promoted to Storekeeper III.
4. In June 2002, the Associate Purchasing Officer/Materials Manager position became vacant due to a retirement. A posting was created and the Deputy Associate Purchasing Officer was selected for this position in July 2002.
5. Effective August 2002 a new Deputy Associate Purchasing Officer/Material Manager position was posted for the Shipping and Receiving group. Currently, the Purchasing Department is in the process of reviewing resumes received and will begin conducting interviews in November 2002. It is anticipated that the appointment of the new Deputy Associate Purchasing Officer/ Materials Manager will be completed by November 30, 2002.
6. In 2001, two (2) individuals comprised the Expediting Group. This was a permanent position for one individual and a temporary assignment for the other. During FY2002, the Expediting Group expanded to three (3) by assigning an additional individual to serve as an Expeditor on a permanent basis.  This individual was selected from the Stores Group and is considered as a promotion from within the Department.
7. In January 2002, the Purchasing Officer assigned the Small Business Subcontracting effort to the Deputy Purchasing Officer. The Small Business Subcontracting Liaison/Senior Buyer now reports to the Deputy.
8. The E-Commerce Team that was established in July 2001 continued this year and interviewed several software suppliers. The Team is still determining SLAC's requirements and financial considerations for this project. However, budget constraints for FY03 will limit Purchasing's advancement in this area.
9. In addition to h) above, as part of our E-Commerce initiative, Purchasing proactively established a team of Buyers to explore the possibility of issuing blanket orders with companies such as Grainger and Newark Electronic when ordering commercial items directly against these company's online catalogs. These agreements offer our customers a streamlined method of placing low dollar value orders directly with the supplier without having to generate a purchase requisition every time. In addition, this methodology is a cost effective tool for the Purchasing Department, as we no longer have to assign a Buyer to process these low value requisitions.
10. During FY 2002, the Purchasing Department hired four (4) summer students to perform various tasks as warranted throughout the Department.  The summer students began their assignments in June 2002.  One student worked through August 21st and the other three (3) through September 13th providing Purchasing with four (4) months worth of additional assistance in the areas of filing, closing out files and performing special projects. 

3. Status of Open Items from the 2002 Self-Assessment Review

(None)

4. Participation In General

SLAC Purchasing Officer participated with the other DOE Office of Science laboratories at the Purchasing Managers Workshop held in May 2002 at Fermi National Accelerator Laboratory to discuss common issues and exchange information. SLAC also participated in the annual DOE Small Business Conference held in June 2002 in Orlando, FL.  Please see Section 2.2.9 entitled “Good Corporate Citizenship through Purchasing” for specific small business events in which SLAC was involved in this fiscal year.

5. Training

Training of personnel in FY02 continued to be aided by Stanford University’s educational allowance of $1,200 per year.  This assistance helps defray the costs of training, conferences, workshops or seminars for every employee in order to further their education. In FY02 Purchasing introduced a more robust training program department-wide. With the help of Stanford’s allowance, Purchasing was successful in becoming more aggressive in providing training for our Subcontract Administrators within the Construction Purchasing Group. This group was chosen to receive supplemental training this fiscal year in order to prepare for several large dollar-value construction projects anticipated to begin in FY03 and continue through FY07.  As a result, Purchasing sent two (2) Construction Subcontract Administrators to a Construction Contracting course presented by George Washington University. The class provided a thorough overview of the basics in the construction contracting process.  Some of the topics discussed were contract interpretation and risk, changes and claim allocations, differing site conditions, delays, suspension and work acceleration, cost recovery, payment and discharge, bonds and the liability of Architect and Engineering (A&E) firms. In addition, to this training one (1) Construction Subcontract Administrator attended an outside Occupational Safety and Health (OSHA) Compliance seminar presented by Padget-Thompson on April 3, 2002.  A second Contract Administrator is schedule to take this same class in October 2002.

In September 2002, the newly appointed Associate Purchasing Officer/Material Manager enrolled in a Management Certificate Program offered by the University of the Pacific, Eberhardt School of Business. This certificate program was selected as it offers specific practical points of management that can be taken back to each participant’s workplace and immediately implemented.  Once enrolled, students are required to take classes consisting of nine (9) different topics covering Presentation Skills, Team Building, Developing Effective Leadership, Legal Issues in Employee Relations, Increasing Customer Satisfaction, Financial Analysis and Decision Making, Managing Projects for Success, Quality Productivity Management and Strategic Management.   The Associate Purchasing Officer/Material Manager will complete this program in December 2002.

The annual Purchasing Ethics Training session was held on August 6, 2002. This was a mandatory training session for all department professionals involved in the purchasing function. In addition to reminding buyers of the various University procedures covering code of conduct, a videotape produced by the Office of Government Ethics was shown to the group. The videotape was entitled "A Battle for Avery Mann" and discussed four (4) different scenarios of ethic related issues. They were the use of government property for personal gain, a Supervisor's acceptance of gifts by employees, acceptance of gifts from outside suppliers and the importance of identifying a conflict of interest. A total of thirteen (13) Buyers and Contract Administrators attended the session. In a separate training session conducted on August 9, 2002, this videotape was also presented and discussed with the Shipping/Receiving group.

The Deputy Purchasing Officer, Administrative Services Manager and a Senior Buyer attended a course on how to write policies and procedures in July 2002.

All Purchasing personnel attended training sessions on Integrated Safeguards and Security Management (ISSM) and Allowable Costs (Exhibit II) in September 2002.

Purchasing conducted training sessions for our Credit Card users and our 50 Purchase Requisitions Operators as required during this fiscal year.

C. BALANCED SCORECARD REVIEW AND ANALYSIS

1. Source of Data used in the Self-Assessment

The principal data generation source for the Four Perspectives was from the Business Information System (BIS). System data was collected from the period October 1, 2001 through September 30, 2002. All other data was obtained through the use of checklists and questionnaires as discussed later on in this report.

2. The Four Perspectives

The four perspectives discussed below were measured as part of the self-assessment process. Each measurement was rated using the Balanced Score Card Summary Sheet format.

1. CUSTOMER: This perspective captures the ability of the organization to provide quality goods and services, effective delivery, and overall customer satisfaction.
2. INTERNAL: This perspective provides data regarding the internal business results against measures that lead to financial success and satisfied customers.
3. FINANCIAL: How effectively and efficiently SLAC meets the needs of its constituencies. This perspective captures cost efficiency, delivering maximum value to the customer for each dollar spent.
4. LEARNING AND GROWTH: This perspective captures the ability of employees, information systems, and organizational alignment to manage the business and adapt to change.

2.1       CUSTOMER PERSPECTIVE

2.1.1        Transaction Customer Survey

SLAC obtained its measurement of this perspective from its internal customers (Requestors). A Transactional Customer Satisfaction Survey was employed via telephone and in-person interviews in June 2002 to twenty-five (25) customers.  Out of the twenty-five (25) people sent surveys, twenty-four (24) individuals responded.  Each participant was asked to respond to a series of statements (see Exhibit III) pertaining to specific purchase orders. The statements were based upon the suggested core and optional questions of the “DOE Balanced Score Card for the Business Systems Performance Measurement and Management Program” guidebook. Areas assessed were timeliness, quality, communications, schedule, best value, overall satisfaction, and performance. Recently awarded purchase orders, randomly selected from the BIS data report, were used for the survey.

Objective:       Customer Satisfaction

Measure:        Transactional Surve

Core Elements:   

Timeliness - Extent of customer satisfaction with timeliness of procurement processing, planning activities,    and on-going communications.

Quality - Extent of customer satisfaction with the quality of Procurement services.

Communications - Extent to which Purchasing communicates accurate information, which impacts the work of the organization.

Optional Elements:   

Schedule - Extent to which Purchasing is supportive of schedule requirements.

Best Value - Extent to which Purchasing strives to obtain the best price.

Performance - Extent to which Purchasing is committed to certain standards.

Overall Satisfaction - Extent of overall customer satisfaction with Purchasing.                  

Target:            95% (national target) customer satisfaction rating in 2002.

Results: A rating of 100% (15 points - BSC Measured Rating) was assigned based upon an analysis of the internal customer questionnaire responses. There were twenty-four (24) respondents to the survey whose satisfaction level was calculated as follows:

1. The transactional survey had seventeen (17) statements the customer was asked to respond to with each response assigned a mathematical identity as follows:

5 points Strongly Agree

4 points Mostly Agree

3 points Agree (deemed as the Satisfactory level for the survey)

2 points Somewhat Disagree

1 point   Strongly Disagree

0 points for No Opinion; and

2. The number of points for each statement for every respondent was added up; and
3. We calculated the average rating by dividing the total points by the number of questions responded to by that respondent; and
4. We counted the number of satisfied respondents (average rating of 3 or above) and divided by the total number of respondents to arrive at the percentage gradient

(24) Number. Of Satisfied Customers =  (100%) Satisfaction Rating

(24) Number Of Customers Surveyed

2.1.2        Establishment of Departmental Performance Measurements

During FY02 SLAC’s Business Services Division (BSD) instituted a performance measurement program in order to survey the overall health of the division.  The Associate Director for Business Services asked each Department to identify various elements that would be representative of key activities performed within their department.  The time period selected for the review was January 1, 2002 through April 30, 2002 on all elements selected.  The Purchasing Department reviewed its functions and identified the following groups and their assigned measurements, to be included in this program:

Buying Group

1.      Average Cycle Time of Purchase Order (Exhibit IV)

The efficiency of the purchasing process will be reviewed on a quarterly basis by measuring the time between Buyer assignment of an approved purchase requisition in the

Business Information System (BIS) and the actual award (dispatch) of the purchase order.  Average cycle time will be defined by the following formula:

Total Number of Calendar Days Between Buyer Assignment of PR and Award of PO

Total Number of Awards

Results:                                 

2.      Customer Service Satisfaction – Operators Purchase Requisitions (Exhibit V)

This measure was established to determine the level of customer satisfaction concerning the Purchasing Department’s level of service to the Operators who are responsible for on-line entry of the purchase requisition.  This review is to be performed bi-annually by the completion of a satisfaction survey by our customers.  This survey as shown in Exhibit VI was sent out to the twenty-five (25) Purchase Requisition Operators in April 2002.  In the survey, the Operator was asked to rate their level of satisfaction, on a scale from 1 to 5, with 1 representing a response of “strongly disagree” to 5 representing a response of “strongly agree”. A simple set of questions was devised and the Operators were asked to rate their level of satisfaction on the five (5) different elements of their job identified below.

1. When dealing with your PeopleSoft Purchasing software, the Purchasing personnel respond to your questions and/or problems in a timely manner.
2. Your questions are thoroughly answered and clearly explained when dealing with Purchasing personnel on the PeopleSoft software
3. You believe you are sufficiently trained to efficiently perform your Operators duties.
4. You are treated with respect when dealing with Purchasing personnel on PeopleSoft software concerns
5. Overall, in dealing with Purchasing personnel on PeopleSoft matters, you are satisfied with the customer service provided.

Results:    The average rating received by the Operators on each question are as follows:

1. 4.47
2.  4.14
3. 3.9
4. 4.29
5. 4.24

Questions 1, 2, 4 and 5 received a rating of 4 or greater thereby stating that the Operators “agree” or are satisfied that the Purchasing Department is providing good customer service in these areas.  Question number 3 concerning the area of training was rated at the “neutral” level suggesting that Purchasing needs to be more attentive to our customers needs in this area.  As a result of this survey, the Purchasing Department decided to assign the Operator training program to another individual in Purchasing who is more customer service oriented and computer literate.  This change of personnel was made effective August 2002.

3.      Average Cycle Time of Shippers Approved

A decision was made not to collect any data for this measurement for the period of January 1, 2002 through April 30, 2002, as not enough information was available.

4.      Average Cycle Time of the Placement of Construction Subcontracts (Exhibit VII)

The overall average cycle time for the placement of construction subcontracts for the time period of January 1, 2002 through April 30, 2002 was as follows:

The number of days for placement of construction subcontracts for both over and under $100K was found to be well below the departmental average allowable days of 30 for orders >$100k and 10 days for orders <$100K for processing orders.

5.      Average Cycle Time to Approve Invoices for Payment (for the Construction Group Only) (Exhibit VIII)

The average number of calendar days between the receipt of an invoice and submission to Accounts Payable for payment was found to be 3 days for all construction subcontracts.  This was the first time this activity has been measured in the Purchasing Department; therefore, a comparison between previous cycle times for this measurement cannot be made.

6.      Average Cycle Time from Receipt to issue a New Credit Card Account to the Completion of Processing Request to Bank of America (Exhibit IX)

The average number of calendar days from receipt of a request to issue a new credit card account to the actual issuance of the credit card was found to be 36.3 days.  This was the first time this activity had been measured; therefore, no comparison can be made with the length of time experienced on previous requests.  Based upon this result, Purchasing will look into the credit card acquisition process and see where it can be expedited for our customers.  Purchasing will complete this review by December 31, 2002.

7.      Average Cycle Time of Payment of Invoices (for Accounts Payable Group)

A decision was made not to collect any data for this measurement for the period of January 1, 2002 through April 30, 2002, as not enough information was available.

8.      Customer Service Satisfaction for Stores (Exhibit X)

This measure was established to determine the level of customer satisfaction concerning the level of satisfaction from our customers for Stores.  This review is to be performed bi-annually by the completion of a satisfaction survey by our customers. Stores customers were asked to rate their level of satisfaction in dealing with Stores. The customer was asked to rate Stores on a scale from 1 to 5.  By marking 1 the customer stated that they strongly disagreed with the statement and if the customer marked 5 they strongly agreed with the statement. The questions on the survey were as follows:

1. I received the material that I needed or I was advised by Stores Personnel where to obtain the material
2. The Stores customer paperwork is easy to complete
3. I believe Stores personnel care about the customer services they provide
4. I believe I was treated respectfully and listened to by Stores personnel
5. I felt that the Storekeepers did all they could do to help me.

   Results: The average rating received by the Operators on each statement was as follows:

1. 4.2
2. 4.2
3. 4.8
4. 4.6
5. 4.9

In all areas Stores received a rating of 4 or above indicating that our customers agree that the Stores group is meeting their requirements.

9.      Average Cycle Time of Processing Receiving/Deliveries

A decision was made not to collect any data for this measurement for the period of January 1, 2002 through April 30, 2002, as not enough information was available.

10.  Inventory Accuracy

A decision was made not to collect any data for this measurement for the period of January 1, 2002 through April 30, 2002, as not enough information was available.

In summary, these are internal measurements established by the Purchasing Department to monitor performance in specific areas.  At this point in time it is unclear as to if there is a need to continue our surveillance of these elements. However, if our monitoring is to continue we will review each of these functions quarterly, except for the Customer Service Satisfaction Survey of the Purchase Requisition Operators, the P-Card measurement and the Customer Service Satisfaction for Stores which will be reviewed bi-annually.  The inventory accuracy measurement for Inventory Control will be tracked on a monthly basis.

2.1.3. The Internal Procedures and Practices (IPaP) Committee

In 2002 the Director of SLAC appointed a committee to examine internal procedures and practices of a wide range of activities that cross SLAC divisions.  In cases where these activities were found to be outdated, inefficient, problematic, or questionable, the Committee is tasked with recommending streamlined, cost-effective, and user-friendly solutions.  Purchasing participated with IPaP by addressing specific questions as asked by the Committee as a whole (see Exhibit XI).  A separate issue concerning the use of the “Requestor Name” field in PeopleSoft has already been discussed and a resolution is currently in the process of being implemented.  

2.2       INTERNAL BUSINESS PROCESS PERSPECTIVE

This perspective assures that customer requirements and expectations are understood and that appropriate procurement processes are in place to support customer needs. The self-assessment is the principal data generation or gathering source for this perspective. The core objectives and measures listed below were used by Purchasing to monitor its business processes and for the establishment of a baseline against which future performance will be compared.

2.2.1    Effective Internal Controls

To ensure compliance with applicable laws, regulations, prime contract terms and conditions, SLAC policies and procedures, Purchasing conducted its annual review of procurement transactions during the period of July 23, 2002 through September 6, 2002. The files reviewed consisted of 300 purchase orders randomly selected via the PeopleSoft system from the period September 2, 2001 through May 31, 2002. The team reviewed the following files using the Self-Assessment Checklists (See Exhibits XII and XIIa):

                        Ninety Nine (99) files from $0 -10,000; and

                        Ninety Eight (98) from $10,000 - $25,000; and 

                        One Hundred Three (103) files from $25,000 and over.

These 300 purchase orders represented $6,682,479, or 18% of the total value of $37,403,486 for all purchase orders awarded during this period. The calculation is as follows:

A.        SELECTED SAMPLE                                                                                                         

B.        UNIVERSE

Total Number of actions in the review sample period was 5,806.

Total Value of actions in the review sample period was $37,403,486.

C.        PERCENTAGE         (sample/universe)

Total Number               300/5,806 = 5%

Total Value             $6,682,479/$37,403,486  = 18%

The following areas were designated as a focus for the FY2002 self-assessment review process:

• Purchase Requisition processed timely.
•  Discount for Prompt Payment.
• Pre-Work Hazard Analysis obtained.
• Adequacy of sole source justification documentation.
• Price Analysis adequacy.
• Proposal accepted as proposed.
• EEO certification obtained.
• Representations and Certifications properly completed.
• Appropriate use of DOE ICPT Agreements and other BOA’s.
• Accuracy of Conflict of Interest listing citation.
• Correct Debarred Listing Citation.
• Determination of financial and technical responsibility.
• Buy American Waiver completed.
• Non-excessive verbiage in purchase order.
• Correct Optional Clause (s) used.
• Overall adequacy of file documentation.        

Objective: Effective Internal Controls

Measure: % of systems in full compliance with stakeholder requirements (e.g. applicable laws, regulations, procedures, terms and conditions of contracts, ethics, etc.) based on self-assessment.

Target:  Meets or exceeds expectations

Results: Of the Purchasing System actions reviewed for compliance with applicable laws, procurement regulations, SLAC Purchasing procedures, prime contract terms and conditions and Government and University ethical provisions, a total average of 92.3% (25 points - BSC Measured Rating) were found to be compliant. 

Narrative       

The findings are as follows:

Total Average of Actions Reviewed Found Compliant (1477/16) = 92.3%

Issues and Corrective Action

(For those actions found to be less than 95% compliant)

1.         Purchase Requisition Processed Timely

Corrective Action:        With only 79% compliant, Buyer training/reinforcement in timely placement of awards is necessary. We will need to reinforce the need for all buyers to align themselves with the published lead times. Root cause has been attributed to lack of management attention on a monthly basis for monitoring buyer progress on placement of awards. Managers will generate monthly award reports and discuss in their monthly meetings with all buyers.

Target Completion Date:           October 31, 2002

2.         Discount Taken

Corrective Action:                    None Required (97% compliant)

3.         Pre-Work Hazard Analysis Obtained

Corrective Action:        There were two instances when the Buyer failed to obtain the Pre-Work Hazard Analysis for work to be performed on SLAC premises. Management corrective action was required. As a result, a procedural change was made to the Construction contracting process whereby the letter announcing the award of the subcontract to the Contractor now includes the PWHA form.  A copy of the completed PWHA is now required to be submitted to the Contract Administrator at the kick off meeting instead of prior to work commencing on-site.

Completed as of:          September 13, 2002    

4.         Sole Source Justification Adequate

Corrective Action:        Purchasing Procedure No. 42-10 requires buyer and reviewing official (Associate Purchasing Officer) signatures on the justification. The signatures were not indicated on the justification in some instances. In other instances the correct web format was not used.  Reinforcement training of Buyers and the Associate Purchasing Officers on proper documentation requirements of sole source procurement is necessary.

Completed as of:          September 13, 2002

5.         Price Analysis Adequacy

Corrective Action:                    None Required (95% compliant)

6.         Proposal Accepted As Proposed

Corrective Action:                    None Required (96% compliant)

7.         EEO Certification Not Properly Filled Out

Corrective Action:  With a 93% compliancy factor, reinforcement training of Buyers on a properly completed certification is still necessary.

Completed as of:          September 13, 2002

8.         Representations And Certifications Complete

Corrective Action:  Reinforcement training of Buyers is necessary to emphasize the importance of assuring the representations and certifications are complete in every regard.       

Completed as of:                September 13, 2002.

9.         Use of DOE ICPT Agreements

Corrective Action:              None Required (95% compliant)                      

10.       Accuracy of Conflict Of Interest Citation

Corrective Action:                    None Required (99% compliant)                      

11.       Debarred Listing Citation

Corrective Action:                    None Required (97% compliant)          

12.       Financial/Technical Responsibility

 Corrective Action:                    None Required (97% compliant)

13.       Buy American Waiver

Corrective Action:  There was one instance where the Buyer filed to obtain, from the Purchasing Officer a Buy American waiver. This issued was discussed with the Buyer and reinforcement training of the BSD procedure was emphasized.

 Completed as of:          September 13, 2002.

14.       Non-Excessive Verbiage

Corrective Action:              None Required (100% compliant)

15.       Correct Optional Clauses (s) Used

Corrective Action: None Required (97% compliant)          

16.   Overall Adequacy of File Documentation

Corrective Action:           There were some instances where the Buyer checklist was not properly completed and documents were missing from the official file.  Purchasing management will need to reinforce the requirement to all Buyers that files must provide a complete and accurate audit trail of the purchase transaction.

Completed as of:   September 13, 2002

2.2.2    Stanford University Audit Group Reviews

During FY2002, the Stanford University Internal Audit Department performed various audits for the Purchasing Department. 

• REVIEW OF STORES INVENTORY RECONCILIATION PROCESS (Audit Reference Number: 02-218)

Observations and Recommendations

1.      Give Priority to Automation of Stores Procedures

Recommendation: 

 The Associate Purchasing Officer and the Business Application Support Manager should consider giving higher priority to the request for automation of the stores inventory request process and utilization of the backorder features of the PeopleSoft Inventory system, and request SLAC senior management for appropriate resources.

Management Response: 

 The Business Application Support Manager (BAS) and the Associate Purchasing Officer indicates that site-wide input on MSRs by local requestor is not feasible with the current 7.5 version of PS.  The BAS Manager added that in about two years, SLAC may have version 8 up and running and receiving input online from site-wide users will likely be possible.  The Associate Purchasing Officer and the Business Application Support Manager will request SLAC management for appropriate resources and will give higher priority to automation of the store inventory request process and utilization of the backorder features of the PeopleSoft Inventory system. 

Date of Completion: Not available until PeopleSoft Version 8 is implemented

2.      Develop reports that facilitate monitoring and decision-making.

Due to the lack of management reports that could provide pertinent information, neither the Associate Purchasing Officer nor the Purchasing Officer knew of the financial magnitude of the physical inventory variances in the stores.  Currently, the only report that management reviews for inventory control is the daily “SLAC Cycle Count Event Inventory Report.”  This report shows the daily results of reconciliations for each store inventory item.  It is not adequate as a management level report because it does not provide management with the total impact (daily summary) of the store inventory variance, nor does it show whether discrepancies are resolved adequately, and in a timely manner.

Of the 29 reports reviewed, only six (6) or (21%) were resolved by the end of fiscal year 2001.  The remaining 23 reports (79%) had not been resolved.

The trend of the year-end balances of the Inventory Physical Loss (Charged number 08-9994) fluctuates as shown by the following analysis:

*The Inventory Physical Loss shows the physical inventory variance for the year.  A positive figure to this account is a loss to stores inventory while a negative figure is a “gain”, which is an addition to the inventory.

Recommendations:

1. The Associate Purchasing Officer, the Purchasing Officer, and the Business Application Support Manager should collaborate to develop management reports that would facilitate monitoring and decision-making.
2. The Associate Purchasing Officer, Purchasing Officer, and Accounting Officer should closely examine the reasons for the fluctuating trend in the year-end balances of Inventory Physical Loss and make necessary adjustments.
3. The Associate Purchasing Officer should routinely spot-check inventory records and reconciliations to ensure stores inventory procedures and management expectations are met.

Management Response:

1. The Associate Purchasing Officer indicated that two new reports are now utilized.  The Inventory Loss (08-9994) and Inventory Physical Loss (08-9994 and 08-9997) reports will be reviewed periodically to monitor inventory trends.

Date of Completion: March 31, 2002

2. The Associate Purchasing Officer and the Purchasing Officer now analyze inventory variance trends on a monthly basis to identify necessary training or initiate procedural changes in the General and Metal Stores area or PS Inventory system.  The tools to analyze the trends would be the daily count event sheets and the two new reports. 

Date of Completion: March 31, 2002

3. The Associate Purchasing Officer routinely spot-checks inventory records and reconciliations to ensure stores inventory procedures and management expectations are met. 

   Date of Completion: February 15, 2002.

3.   Document and strengthen store functional procedures

Due to a lack of adequate written functional procedures on the use of inventory panels, troubleshooting problems is very time consuming.  It is not easy to determine which processing steps need to be performed by storekeepers or the inventory control group.   Due to the lack of warning prompt indicating errors, storekeepers are not aware whether a transaction entered into the system was processed as intended.  Although there is a report showing actual transactions posted by the PeopleSoft Stores Inventory system, storekeepers did not review this transaction report until recently.

Recommendations:

1. The Associate Purchasing Officer, in collaboration with the BAS Manager should document store functional procedures, and communicate these to appropriate Stores personnel. 
2. The BIS Manager should provide storekeepers with sufficient online prompts to inform them of the status of transaction input and processing. 
3. The Associate Purchasing Officer should include in the stores functional procedures the matching of manual control totals to system generated control totals to ensure that all input to the PS Stores Inventory system is processed accurately.

Management Response:

1. Assistant Purchasing Officer, in collaboration with the Business Application Support Manager, documented store functional procedures and communicated these to the appropriate Stores personnel. 

Date of Completion: March 31, 2002

2. The BAS Manager will provide storekeepers with sufficient prompts to inform them of the status of transaction input and processing. 

 Date of Completion: July 30, 2002

3. The Assistant Purchasing Officer included in the store functional procedures the matching of manual control totals to system generated control totals to ensure that all input to the PeopleSoft Stores Inventory system is processed accurately. 

Date of Completion:  The matching procedure was implemented on February 15, 2002 and the documentation was completed on June 1, 2002.

• REVIEW OF SLAC PURCHASE CARD PROGRAM (Audit Engagement Number: 02-236)

 Observations and Recommendations

 General Controls

 1.                Immediately Follow-up on Credits (Refunds) for Sales Tax Payments

 Recommendation:

 The Purchasing Officer and the Purchase Card Coordinator should immediately contact the vendors and follow up on obtaining credits (refunds) for sales tax payments.

 Target Completion Date:                        September 30, 2002

 Management Response:

 SLAC received the refund of $41.48 for one of the three sales tax payments on August 19, 2002.  The vendors for the remaining two sales tax payments were contacted for refunds and follow up will continue until credits are posted.

 Date of Completion:                                October 10, 2002

 2.         Enforce Sections 3.1 and 18.2 of the Purchase Card Manual

 Recommendation:

 The Purchasing Card Office and the Purchase Card Coordinator should enforce Section 3.1 and 18.2 of the Purchase Card Manual.

 Target Completion Date:                        October 31, 2002

Management Response:

All Cardholders and Approving Officials will be retrained on the policy set for each of these Sections in the Purchase Card Manual.  Section 3.1 states that 

“the approving Official shall ensure compliance with the procedures…review and approve individual Cardholder statements and forward for receipt in the Accounting Department no later than the 10th working day of the month following the cycle close.”  Section 18.2 mandates that “all statements must be received by Accounting within the first 10 working days of the month following the cycle close or Cardholder privileges will be suspended.”  Retraining on the procedures for review in the absence of the Approving Official will also be included in the reminder.

Procedures for statement reconciliation in the absence of the Cardholder will be developed and included in the retraining.

Notification will be via e-mail, our standard form of communication.

 Date of Completion:                                September 20, 2002

3.           Enforce the Current Requirements on Receipts

Recommendation:

The Purchasing Officer and the Purchase Card Coordinator should enforce the current requirements on receipts stipulated in Section 3.2 and 18.3 of the manual.

Target Completion Date:                        October 31, 2002

Management Response:

All Cardholders and Approving Officials will be retrained on the policy and procedures for receipts set forth in Section 3.2 and 18.3.  Further, the procedure for documenting any missing receipts will be restated.

Notification will be sent via e-mail, our standard form of communication.

Date of Completion:                                October 9, 2002 

4.            Remind Cardholders to use the Standard Purchase Log Forms

Recommendation:

The Purchasing Officer and the Purchase Card Coordinator should remind Cardholders to use the standard Purchase Log form.

Target Completion Date:                        September 30, 2002

 Management Response: 

All Cardholders will be supplied with an electronic copy of the standard Purchase Log template and instructed to use this format only.  Any information added to the standard format necessary for their transaction oversight is acceptable; however, editing the standard format by removing existing column headers is prohibited.

Notification will be sent via e-mail, our standard form of communication.

 Date of Completion:                                September 20, 2002

 Purchase Controls

 5.           Provide additional training on "split" purchases to Cardholders

 Recommendations: 

 5.a   The Purchasing Officer and the Purchase Card Coordinator should provide additional training on "split" purchases to Cardholders.

Target Completion Date:            September 30, 2002

5.b  The Purchasing Officer should review and consider using other acquisition procedures for all purchases made with Dell Marketing L.P.

Target Completion Date:        November 30, 2002

Management Response: 

5.a   Cardholders and Approving Officials will be retrained on the single purchase limit and “split” transaction policy.  Notification will be sent via e-mail, our standard form of communication.

 Date of Completion:                          September 20, 2002

5.b  The Purchasing Department will encourage the use of purchase requisitions through the ICPT/DOE Dell Blanket Order Agreement.  In addition, Purchasing will explore increasing the single purchase threshold for the one individual purchasing computers should the need warrant this action.

Date of Completion:                          Pending

Property Controls

6.                Ensure that the property is properly tagged and recorded in property records

Recommendations: 

6.a   The Purchasing Officer and the Purchase Card Coordinator should ensure that the property is properly tagged and recorded in property records. 

Target Completion Date:             September 30, 2002

6.b  The Purchasing Officer and the Purchase Card Coordinator should remind Cardholders of property control procedures.

Target Completion Date:             September 30, 2002

Management Response:

 6.a   Responsibility for initiating the request for tagging and recording in the property database resides with the Cardholder, with       oversight by the Approving Official (Please see 6b.)

Date of Completion:             September 20, 2002

6.b  The Purchasing Officer and the Purchase Card Coordinator will ensure that all Cardholders and Approving Officials are retrained on the policy and procedure for tagging equipment per the guidelines supplied by the Property Control Department.  Retraining will be sent via e-mail, our standard form of communication.

 Date of Completion:          September 20, 2002

Approval Controls

7.            Reassess the Number of Cardholders Assigned to the Eleven (11) Approving Officials

Recommendation: 

The Purchasing Officer and the Card Coordinator should reassess the number of Cardholders assigned to the eleven Approving Officials.

Target Date of Completion:           November 30, 2002

Management Response:

 SLAC Management will review all of the eleven (11) Approving Officials identified and assess the span of control on their respective Cardholders.

Date of Completion:                  September 30, 2002

8.           Enforce compliance with advanced approval requirement and determine whether additional training for Cardholders and Approval Officials is necessary.

Recommendation: 

The Purchasing Officer and the Purchase Card Coordinator should enforce compliance with advanced approval requirements and determine whether additional training for Cardholders and Approving Officials is necessary.

Target Date of Completion:                 December 31, 2002

 Management Response: 

The Purchasing Officer and the Purchase Card Coordinator will revisit the pre-authorization requirement for telecommunications/telephone hardware and for computers and peripherals over $1,000, as the existing policy may be outdated.

For all other instances, Purchasing will republish the pre-authorization policy to all Cardholders and Approving Officials as follows:

5.3* “Advanced, written approvals is required for, but not limited to, the following list.  Advanced approval to purchase is requested by email or memorandum to the Program Coordinator….”

         6.0* “Prior to making training registration arrangements with the vendor, submit a fully approved Staff Training Request Form (when STAP funds are used to reimburse classes paid for by a credit card) to the Personnel Department for   authorization…Attach your Staff Training Request Form and vendor registration form to your reconciled statement as verification of charges.”

In addition, the following e-mail will be sent to all Cardholders:

5. 3*  Telecommunications/telephone hardware:

1.      SLAC Government Purchase Card and Procuring Residential DSL,

Broadband/Commercial ISP Services

Effective immediately, the procurement of residential DSL, and “broadband” access services (i.e.; cable modems) will be centralized through SCS and use of the SLAC Government Purchase Card to pay for these kinds of services will be discouraged.  In brief, SCS will work with you to secure these services through our existing agreement with Stanford University. However, if you do not qualify for Stanford’s DSL service you will need to investigate other service provider options within your area.  For detailed information and instructions, refer to http://www2.slac.stanford.edu/comp/net/dsl/.

The reason for this new policy shift is that a review of current purchase card usage for these services surfaced the following concerns: unallowable taxes being charged, card holders signing multi-year contracts, questions regarding the stability of the provider to continue service through the life of the contract, limited audit accountability, missed opportunities for quantity discounts, and difficulty capturing planning and usage data from the limited information supplied by the current purchase card provider.

Those who may currently have these network access service charges attached to their government purchase card will be required to submit justification for continuance to the Purchasing Officer, Bob Todaro (rocker@slac.stanford.edu).  It may be deemed appropriate, upon review to move your existing service off the credit card and to a purchase order.  You will be notified in advance of this decision. 

To initiate a new request for exemption from centralized purchasing, allowing individual procurements using the SLAC government purchase card, a justification for approval in advance of any purchase card transaction must be provided to Bob Todaro (rocker@slac.stanford.edu).

2.      SLAC Government Purchase Card and Cell Phones / Cellular Network Services

Effective this date, SLAC will change its procurement practices for cellular phones and cellular network services.  Purchase card procurements will be discouraged except in special instances.  Purchasing and SCS will provide centralized procurement.  All new cell phone service must be procured centrally.  Waivers to that must be approved in advance by the Purchasing Office.

Existing individual contracts will be migrated to central management during the next several months on a case-by-case basis.  Groups who already manage their own procurement for cell phones and cellular network services, and wish to continue, will need to demonstrate that their processes meet the needs of accountability, auditability, visibility, and effective pricing.

Please contact Brenda Eberle for AT&T cell phones and service, and Teri Church for Cingular Wireless cell phones and service.

Users must get a waiver to use a vendor other than the contact for Cingular Wireless as documented in the SLAC Purchasing System.

This policy shift is a result of many influences not the least of which is a need to have clearer usage visibility for the coordination of volume discounts, greater accountability and accurate audit information in line with DOE accounting practices.  Requests for exemptions from adherence to this policy, allowing for individually purchased cell phones and services using the government Purchase Card are to be directed to the purchasing Officer, Bob Todaro, (rocker@slac.stanford.edu) in advance of any purchase card transaction.

Those who have cell services automatically posted to their government purchase cards are required to submit justification for continuance to the Purchasing Officer, Bob Todaro.  It may be deemed appropriate, upon review to move your existing service off the purchase card and to a purchase order.  You will be notified in advance of this decision.

3.            SLAC Government Purchase Card and Common Telephone/Telecommunications Hardware, i.e.: Cordless phones, desk phones, fax machines, fax modems.    Teri Church will advise.

* Reference numbers used in the SLAC Purchase Card Training Manual

Best Practices

 9.                 Remind Cardholders to record any unusual transactions or amount differences on the Discrepancy Logs.

 Recommendation: 

The Purchasing Officer and the Purchase Card Coordinator should remind Cardholders to record any unusual transactions or amount differences on Discrepancy Logs.

 Target Date of Completion:                    September 30, 2002  

 Management Response:     

Purchasing will retrain all Cardholders and Approving Officials in the use of the Discrepancy Log.  

Retraining will be conducted via e-mail, our standard form of communication.

 Date of Completion:                                October 9, 2002

• Review of the SLAC Payment Process for Contractors' Invoices (Audit Engagement Number: 02-217)

 Observations and Recommendations

 1.       Enhance the Process to Document Review and Approval of the Accuracy of Contractors' Invoices.

 Recommendations:

1.a.     The Head of Site Engineering and Maintenance and the Purchasing Officer should remind UTRs of their responsibilities in the UTR Guide dated October 2000 to sign invoices to document their review of the accuracy of the percentage of completion.  This signature on invoices would aid Purchasing Office/Construction personnel in their responsibilities for final review and approval of contractors' invoices for payment.

Target Completion Date:             September 30, 2002

1.b.             The Purchasing Officer should review and enhance the Red Book's section on current responsibilities of Purchasing Office/Construction personnel. In addition, the Red Book's section on the review of invoices should reflect the actual procedures, taking into account the recommendation above.

Target Completion Date:               March 31, 2003

1.c.        The Purchasing Officer should monitor to ensure that all Purchasing Office/Construction personnel consistently implement the enhanced procedure for processing construction invoices.

Target Completion Date:               September 30, 2002

 Management Response: 

1.a.   The Purchasing Officer and the Head of Site Engineering and

Maintenance (SEM) will reinforce with the UTRs their responsibility to sign invoices to attest their review of the accuracy of the percentage of work completed on a project and as stated on the invoice.  In their regular standing meetings, SEM discussed this procedure with the UTR’s who are now in agreement to review and approve contractor’s invoices for payment.

 Date of Completion:              September 30, 2002

1.b        SLAC management will revise the Purchasing Procedures Manual (Red Book) to include UTR responsibilities as discussed.

Target Date of Completion:              March 31, 2003

1.c.   The Purchasing Officer or his designee (Deputy Purchasing Officer) will monitor the Purchasing Office/Construction personnel to ensure that they are in compliance and consistently adhering to the enhanced procedures.

Target Date of Completion:              March 31, 2003

2.           Communicate Immediately Any Problems on Contractors' Invoice and Document Such Communication and Follow Up

Recommendation: 

The Purchasing Officer should remind Purchasing Office/Construction personnel to communicate immediately to contractors any problems on invoices that may delay payments and to document such communications and follow up.

Target Completion Date:                  August 30, 2002

Management Response: 

The Purchasing Office/Construction personnel will be instructed to immediately and clearly communicate to the contractors any problems with invoices.  Documentation of the issue will be in the Contractor Invoice Report that is currently being maintained by a Buyer in the Purchasing Office/Construction Office.

Date of Completion:                          August 30, 2002

 3.           Review the Reasons for Late Payments to a Contractor

Recommendations:

3.1     The Purchasing Office should review the reasons for the delay of      payments to contractor W.L. Butler, and take appropriate action.

Target Completion Date:                  August 30, 2002

3.2     The Purchasing Office should continue to consider implementing a monitoring system, using date form the PeopleSoft purchasing/payables system, which would periodically provide data as above.

Target Completion Date:                  August 30, 2002

Management Response:

3.1     The Purchasing Officer and the Deputy Purchasing Officer will review the reasons for the delay of payments to the contractor W. L. Butler and take appropriate action.

Date of Completion:                          August 30, 2002

3.2     Implementation of a manual invoice monitoring system began in April 2002 and was fully operational in May 2002.  As September 1, 2002, a monitoring system became fully functional in PeopleSoft.  Monthly reports are now available concerning the status of payment on construction invoices.

Date of Completion:                          September 1, 2002

2.2.3    Internal Review Board

The Internal Review Board (IRB) is comprised of the Purchasing Officer, the Deputy Purchasing Officer and one (1) Associate Purchasing Officer, with Staff Counsel serving as an advisor as necessary.  All procurement actions to be submitted to the DOE for approval are required to be reviewed by the Board prior to submittal. In addition, all procurement actions exceeding $100K are to be reviewed by the IRB whether or not they are to be submitted to the DOE.  The review focuses on the following areas:

• Overall completeness of the procurement.
• Compliance with mandatory requirements of regulations.
• Quality of documentation in support of contract type, source selection, and price.
•  Proper application of SLAC Purchasing Procedures.
• Compliance with prime contract provisions.
• Legal adequacy as a contractual document.

A total of 88 actions were reviewed by the IRB for FY 2002.  The reviews disclosed weaknesses in price analysis, incomplete representations and certifications, exceptions to terms and conditions not explained sufficiently in terms of resolve, purchase orders lacked appropriate language/conditions, contractor travel requirements not explained sufficiently, inconsistency or lack of file documentation and other minor errors and omissions.

2.2.4                Effective Supplier Management

Measure:        % delivery on time (no later than 3 days after the Purchase Order due date)

Target:                        85% on time delivery

Results:    Per the Narrative below, 65% (2 points - BSC Measured Rating) of the purchase orders were delivered on time.

Narrative

SLAC has designed a PeopleSoft query to capture vendor performance by line item.

After discussions with Procurement Manager’s at DOE Office of Science Laboratories, it was determined that on time delivery was calculated by others to include those items delivered up to 3 days after the Purchase Order due date so as to accommodate internal processing of the delivered items.

The data indicates that of the 15,225 Purchase Order line items measured during FY 2002 and out of this total, 65% were delivered on time.  This equates to a Balanced Score Card Measured Rating of 2 points.  This falls short of the Target for FY 2002 of 85%. Root cause analysis was determined to be across all commodity lines but particularly in office furniture and machine shop procurements.  Unrealistic delivery due dates were also a mitigating factor.

For fiscal year 2003, SLAC Purchasing Management has designated this area as a need for special attention by the Buyers and Expeditors.  Increased monitoring of a vendor’s performance in this area will be conducted. This includes management analyzing late deliveries to identify those vendors that need to improve their on-time deliveries. 

2.2.5    Effective Utilization of Alternate Procurement Approaches

This objective measures the transfer of traditional purchasing activities such as supplier selection, best value determination, ordering and receiving, from the purchasing organization directly to the user organization. The percentage of this volume is determined by the total number of transactions (Just In Time, Purchasing Authorization Card, Releases against Basic Ordering Agreements) placed directly by the user divided by the total number of actions awarded (includes Purchasing awards).  The period covered is October 2001 through September 2002.

2.2.5.1         Objective:       Traditional Purchasing Activities Transferred

Measure:        Optimum % of transactions placed by users (JIT, Purchase Card, Blanket Order Releases) divided by the sum of total transactions.

Formula to be applied to obtain the percentage of transactions placed by users is as follows:

                                                Total number of transactions placed by users

                                                            Total number of transactions

Target:                        75% or greater

Results:          A 74% (5 Points - BSC Measured Rating) measurement was obtained as follows:

 2.2.5.2                         Objective:       Rapid Purchasing Activities Transferred

Measure:      Optimum % of transactions placed through Rapid Purchasing Techniques (RPT) (JIT, Purchase Card, Blanket Order Releases, E-Commerce, ICPT, Oral Purchase Orders, Strategic Agreements and supplies Programs) divided by the sum of total transactions.  Formula to be applied to obtain the percentage of transactions placed by RPT is as follows:

 Total number of RPT transactions placed

Total number of transaction

Target:            85% or greater

Results:    A 75% (5 Points - BSC Measured Rating) measurement was obtained as follows:

2.2.6    Acquisition Process

This objective measures the efficiency of the acquisition process by measuring the time between receipt of an approved purchase requisition and award of the purchase order.  The average cycle time is determined by dividing the total of time between receipt of requisitions and award by the number of awards.

Objective:       Acquisition Process

Measure:        Average cycle time (exception Purchasing Authorization Card)

Targets:          Average of 35 to 40 days (CAPS)

Narrative

For Fiscal Year 2002, the average cycle time for BIS procurements under $100,000 was 2.1 calendar days (7629 transactions), for procurements over $100,000 it was 30.7 calendar days (69 transactions), and for All procurements it was 2.4 calendar days (7698 transactions). See Exhibit XIII depicting Requisition Processing Time. Transactions are defined as both Purchase Orders and Subcontracts.  Processing time is not tracked for the remaining dollars, which are attributable to credit card purchases, blanket order releases, and modifications to existing purchase orders and subcontracts.

Measured cycle time begins with the approval by Purchasing Management of the purchase requisition (subsequently assigned to the buyer) and ends with the award of the purchase order or subcontract.  Important to note here is that efforts normally defined as pre-procurement planning are not represented in the information system calculations. Purchasing staff is oriented to the customer service process of initiating the request for proposal/bid package as early as possible, which often precedes receipt and approval of the purchase requisition from the requesting organization. This process is deemed to be more responsive to the customer’s needs and supportive of SLAC’s mission.

A comparison of fiscal year 2001 and fiscal year 2002 data is as follows:

As can be seen in the chart above, purchase requisition processing time remained approximately the same for transactions under $100K and all Actions.  However, there was a significant jump in the number of processing days for actions over $100K.  This increase was due to an unanticipated number of purchase order line items received by the department to be processed toward the end of this fiscal year.  As stated above in Section 2.2.4 “Effective Supplier Management”, Purchasing processed 15,225 purchase order line items during FY 2002.   This equates to 1,208 more requisition line items processed by Purchasing in FY02 than in FY01. 

Some of the factors that affected our cycle time include a directive from the SLAC Director, within the last six (6) months of FY02 that encouraged SLAC Staff to use as much vacation time as possible in order to minimize the impact against our FY03 anticipated budget cut.  Also this fiscal year, Purchasing unexpectedly had one (1) Buyer take medical disability for a two-month period (June through July).  This individual handles a high volume of small dollar requisitions that needed to be disseminated to other Buyers for processing during this time period.   The temporary loss of this individual had a moderate impact on the workload of the remaining Buyers in the Department. 

Purchasing sent two (2) Construction Contract Administrators to separate outside training classes on construction contracting this year.  The duration of this training session was for one week therefore impacting the workload of the other two (2) Construction Contract Administrators during this time.

In addition, several purchase requisitions were left in “open status” as Buyers waited for follow-up information (i.e., specifications, drawings and completed statements of work) from their Requestors. 

Corrective action will be as stated under Section 2.2.1 “Effective Internal Controls”, Issues and Corrective Action, Paragraph 1, Purchase Requisitions Processed in a Timely Manner.  During FY02 SLAC was only 79% compliant, which indicates to Purchasing Management that Buyer training/reinforcement in the timely placement of awards is necessary. As a corrective action measure we will reinforce the need for all buyers to align themselves with the published lead times.  Management will also monitor, on a monthly basis, a buyer’s progress on the placement of purchase order/subcontract awards. Managers will generate monthly award reports and discuss in their monthly meetings with all buyers.

2.2.7                Good Corporate Citizenship through Purchasing

This objective measures the success in achieving business practice goals.  This will be measured by dividing the number of socio-economic goals achieved by the total number of goals.

Objective:       Good Corporate Citizenship through Purchasing

Measure:        % of economic and social diversity and local participation program goals achieved including: SB and SDB Goals, Regional/Local Outreach/Support Good Neighbor Program. Note: Not weighted for BSC purposes.

Target:           

Far exceeds expectations          = >106% of goals.

Exceeds expectations                =   101% to 105% of goals.

Meets expectations                   =    92% to 100% of goals.

Needs improvement                  = <92% of goals.

Results:          As of September 30, 2002, SLAC attained 116% of the goals set with the DOE. 

Narrative

With the hiring of the Deputy Purchasing Officer in October of 2001, SLAC’s Small Business Program became more robust this fiscal year.  Prior to coming to SLAC the Deputy served as the Acting Manager of the Business Affirmative Action Office at Lawrence Livermore National Laboratory.   The primary responsibility of this office was

to serve as a representative to small businesses (including small disadvantaged and woman owned businesses) by identifying and targeting procurement opportunities for small business participation. The Deputy brought a new dimension to SLAC’s small business program by introducing the Small Business Assistant to various small business organizations such as the Northern 8 (a) Association and the Northern California Supplier Development Council (NCSDC) as well as governmental agencies such as the Minority Business Development Agency (MBDA) and the National Minority Supplier Development Council (NMSDC).  In addition, the Deputy is personally involved in various community activities such as serving on a task force for the Oakland International Airport and acting as a Commissioner on the Alameda Juvenile Justice Commission. 

Goal Performance

During this fiscal year the SLAC Purchasing Department’s performance against its socio-economic goals fell short of the established goals for the small business, small disadvantaged business and small woman-owned business categories (see Exhibits XIV for the total percentages awarded to each small business category and XIVa for the total dollars expended under each category).  However, SLAC did exceed its goal for the 8(a) Pilot Program by 1.8% or $999,007.

SLAC's efforts in fiscal year 2002 are summarized as follows:

SLAC’s actual reportable dollars for FY02 ($51,405,657) were $2,405,657 more than the projected socioeconomic base of $49,000,000. If we performed our analysis on dollars alone, SLAC exceeded our projected dollars for Small Business usage by $852,330. However, due to the increase in reportable dollars ($51,405,657) experienced this fiscal year, SLAC fell short of meeting its percentage goal of 56% based upon a total projected socioeconomic base of $49.0M.  This same argument can be made for our achievements under the Small Woman-Owned Business category where we projected a utilization of $2.9M for the year and actually experienced a total of $2,987,162, thereby, adding $87,162 to our achievement. 

SLAC’s socioeconomic achievements for FY02 are the direct result of several obstacles that we encountered during our efforts this fiscal year.  SLAC’s credit card program continued to have a major impact on our socioeconomic results again this fiscal year.  In FY02 we experienced an increase in our credit card usage, from $5.2M in FY01 to $5.4M. Albeit this increase is slight, the use of the credit card continues to eliminate a large portion of the procurement dollars ($5.4M) from the reportable base that might have been made available for award to small, small disadvantaged, and small woman owned businesses. 

The DOE Headquarters Integrated Contractor Purchasing Team (ICPT) initiative also contributed to a decrease in available dollars for the socio-economic goals.  Although using ICPT agreements is a cost effective means of procuring goods and services and is an efficient way to achieve product standardization, the program has a substantial impact on the socio-economic program.  For example, SLAC has historically purchased desktop and laptop computers from small disadvantaged and small woman-owned businesses.  However, since FY 1998, by utilizing an ICPT BOA, SLAC has standardized on Dell computers.

In addition, SLAC took the initiative this year to seek out and award purchase orders to Veteran-Owned and HubZone companies even though we were not specifically goaled in these areas.  Our efforts resulted in a 2.7% increase in our overall goal effort.  The motivation and individual efforts of each of our procurement personnel is to be commended in view of the substantial obstacles that have been placed in their way.

Outreach Efforts

SLAC participated in the High Tech 2001 Small Business Procurement Fair and Conference in Los Angeles in March 2001, sponsored by JPL and NASA.  The two-day event included 200 Prime Contractor booths and was attended by representatives of over 1000 small businesses.  The conference included numerous workshops on doing business with federal agencies, prime contractors, and technology commercialization.  SLAC successfully established several new SDB and woman owned sources at this conference.  SLAC also participated in the Third Annual DOE Small Business Conference and Procurement Fair in Orlando, FL in June 2002. In attendance were over 1,000 participants consisting of individuals from DOE Program Offices, other M&O Contractors, and over small businesses throughout the country.  In addition to this conference, SLAC also engaged in a variety of outreach efforts throughout the fiscal year in order to provide small businesses with the “maximum extent practicable” concerning procurement opportunities.  Some of these efforts are reflected by the following events:

• CISCO Systems Trade Fair
• DOE Day
• Industry Council for Small Business Development (ICSBBD)
• The U. S. Small Business Administration’s 8(a) Showcase (as scheduled)
• MedWeek Celebration hosted by the San Francisco Region’s Minority Business Development Agency (MBDA)
• National Minority Supplier Development Council (NMSDC) Awards Dinner

In addition to the activities identified above, the Laboratory also maintains memberships and/or liaisons with the following:

• Area Chambers of Commerce:

Menlo Park Chamber

Oakland Chamber

San Jose Hispanic Chamber

• Women’s Construction Owners and Executives (WCOE)

• National Association of Women Business Owners (NAWBO)

• Minority Business Development Agency (MBDA), San Francisco Regional Office
•  East Bay Women in Business Roundtable Breakfasts
• Small Business Administration (SBA), San Francisco Regional Office
•  Professional Business Women of California

• Northern California Supplier Development Council (NCSDC)

•  National Minority Supplier Development Council (NMSDC)

• National Council of La Raza

“Inreach” Efforts

The Purchasing Officer, in his role as Subcontracting Plan Administrator, routinely reports socio-economic program progress to the Associate Director, Business Services Division, for his information.  He, in turn, disseminates such information to other members of the Directorate so as to keep them informed of SLAC's progress in meeting the Department of Energy's socio-economic goals. The Subcontracting Plan Administrator, in his capacity as Purchasing Officer, reviews goals, reports progress, and salient ideas and innovative methods during scheduled buyer meetings.  On a monthly basis each buyer is provided a printout of individual accomplishments and overall cumulative progress in meeting the total goals of the Laboratory.  All personnel are encouraged to develop new small, small disadvantaged, and small woman-owned sources and assist such firms in becoming viable sources of services and supplies to the Laboratory.

In order to increase subcontracting opportunities for all small businesses, the Purchasing Department continued to support a Senior Buyer with 20 years of experience in the role of Assistant Small Business Liaison.  The duties of this individual are to locate qualified small, small disadvantaged, small woman-owned, and 8(a) businesses and introduce these companies among the SLAC buying and programmatic communities so that they can be added to bid lists and compete for work.

During our yearly employee performance appraisals, we stress to each Buyer the importance of the program and encourage them to solicit small, small disadvantaged, and small woman-owned business concerns at every opportunity.  We have in place means for monitoring each buyer's performance and utilize results as one tool in our salary setting process.  This process has proven itself to be very satisfactory for SLAC as evidenced by our year-to-year achievements, which we consider to be outstanding.  Individual buyer achievements are acknowledged and discussed at buyers meetings along with progress toward meeting SLAC's goals.

Special Events

In April 2002, the Department of Energy’s newly appointed Director of the Office of Economic Impact and Diversity, Ms. Theresa Alvillar-Speake, visited SLAC.  The purpose of this visit was to collect information concerning issues/obstacles that SLAC encounters in meeting its’ socio-economic goals.  The Deputy Purchasing Officer provided the Director with a presentation that covered a brief history of SLAC, types of procurements SLAC issues, past achievements against our socioeconomic goals, a description of our Small Business Program and a list of future initiatives that would assist us in continuing to make our Small Business Program a success (see Exhibit XV for a copy of the presentation).   After the presentation, the Deputy, Business Manager and Senior Buyer participated in a discussion with the Director on the implementation of issues that would assist SLAC in meeting its socio-economic goals. The meeting concluded with a reaffirmation from the Director that the utilization of small businesses is of the utmost importance to DOE and they will be looking at SLAC to actively embrace a more assertive small business program.

Additional Small Business Activities

During FY2002, SLAC received 116 letters from small, small disadvantaged and small woman-owned businesses seeking inclusion on our bidders list.  Each letter of inquiry was reviewed and personally responded to by the Purchasing Officer, giving the vendor the name and phone number of the assigned buyer.  A copy of the letter and any vendor literature is forwarded to the appropriate buyer for reference and inclusion on their bidder's lists.  With implementation of the Business Information System, we have also been sending questionnaires to these new vendors.  Both the SLAC Buyers and requisitioners load the information they provide into our PeopleSoft vendor database that can be utilized.

In summary, the Stanford Linear Accelerator Center continues to provide a very aggressive, positive, and outstanding small, small disadvantaged, and small woman-owned business program.

2.3       FINANCIAL PERSPECTIVE

This perspective measures the functional cost efficiency of the purchasing organization. This will be measured by establishing a cost to spend ratio, which will be calculated by dividing Purchasing organizational costs divided by the business volume.  Organizational costs are the total costs for acquisition, i.e., labor, direct, indirect, fringe benefits, overhead, travel, training, etc. Business volume is defined as the total of all dollars obligated.

Objective:       Optimum Cost Efficiency of Purchasing Operations

Measure:        Cost to Spend Ratio:    Purchasing Operation’s Operating Costs Divided by Purchasing Obligations

Target:            $.025 per $1 of Goods and Services Procured.

Results:    The Purchasing Administration cost to acquire $1 of goods and services at SLAC during fiscal year 2002 was $.025 (10 points - BSC Measured Rating).  This is calculated as follows:

Total Salaries and Fringe Benefits = $ 1,508,000

Total Procurement Dollars in FY 02 = $58,501,875

Cost to Procure $1 of Goods and Services:

$1,508,000/$58,501,875  = $.025

Narrative

Purchasing administration includes salaries and fringe benefits and related M&S costs for those Purchasing staff directly involved in the procurement of goods and services.  Excluded are such items as salaries associated with temporary duty assignments for Purchasing personnel outside of their regular assignments within the Purchasing Department. During FY02, one (1) Senior Buyer served as the Sexual Harassment Officer, attended monthly breakfast meetings of the Menlo Park Chamber of Commerce at the Director’s request and participated on committees for SLAC’s 40^th Anniversary and Family Day celebrations.  The involvement in these activities equated to 28% or $19,000 of the Buyer’s time throughout the fiscal year. 

The metrics included in the FY 2002 Balanced Score Card Self Assessment Plan are as follows:                       

Outstanding = <$.025

 Excellent =   $.025 to $.0279

Good =   $.028 to $.0309

Marginal = >$.031 to $.0339

Unsatisfactory = >$.0344

2.4       LEARNING AND GROWTH PERSPECTIVE

The learning and growth perspective measures Purchasing’s ability and potential to develop and grow. This perspective looks to the future and sets objectives that strive for benefit at a later date.

2.4.1    Employee Satisfaction

This objective measures the level of satisfaction Purchasing staff experience with their working environment. As part of this measurement, data was reviewed regarding employee voluntary termination from the Purchasing Department. In the review Year 2002, the Department’s work force remained relatively stable with only one (1) retirement and one (1) termination. The Department is fortunate in the fact that it does not exhibit a high transitory workforce.  There is virtually no turnover rate among the Buyers and Contract Administrators where the length of SLAC service runs from four (4) to twenty-four (24) years. Absenteeism is defined “as leave without pay” and there were no instances of absenteeism during the review period.

The primary measurement used to determine employee satisfaction was by the Climate Survey Questionnaire (see Exhibit XVI) conducted in July 2002.  The survey was distributed to twenty-two (22) individuals within the Purchasing Department.  A total of fifteen (15) individuals were responsive to the survey and seven (7) individuals were non-responsive. The survey asked for the employee’s view of his/her working environment in the following categories:

• Training Adequacy
• Working Environment
• Management Support and Leadership
• Employee Empowerment
• Information Availability

Survey Results

On the Employee Satisfaction survey a response above the 3.00 level was considered a positive outlook on the working environment. Any average response below 3.00 was considered as a negative outlook.  The results of this survey found the majority of responses, ten (10), registered an average of 4.00 or higher, four (4) responses registered 3.00 or above, and one (1) response registered at 2.00 or above. Out of the fifteen individuals who responded fourteen (14) employees gave the Department a rating of 3.0 or greater providing satisfactory ratings for their surveys.  One (1) individual rated the Department 2.86 thereby providing an unsatisfactory response to the survey.  The areas of concern from the unsatisfied individual were reflected in a rating of 2 on two survey questions. One question, located in the Management and Support section, asked if Purchasing Management supports an employee’s effort to succeed in their job. The other question that received a rating of 2 from this individual is in the Employee Empowerment section and asked if Management’s current, as well as future, vision for the Purchasing Department was clear to the employee.  This issue has been addressed by Management and will be presented to the Departmental employees in a PowerPoint presentation entitled “The Purchasing Journey, What Path Lies Ahead?” (Exhibit XVII) by November 30, 2002.    

Satisfaction levels of the survey respondents was calculated as follows:

1. The climate survey had 6 statements the Purchasing staff was asked to respond to with each response assigned a mathematical identity as follows:

5 points Strongly Agree

4 points Mostly Agree

3 points Agree (deemed as the Satisfactory level for the survey)

2 points Disagree

1 point   Strongly Disagree

0 points for No Opinion; and

2. The number of points for each statement for every respondent was added up; and

3. We calculated the average rating by dividing the total points by the number of questions responded to by that respondent; and

4. We counted the number of satisfied respondents (average rating of 3 or above) and       divided by the total number of respondents to arrive at the percentage gradient

                        (14) No. Of Satisfied Staff        =  (93.3%) Satisfaction Rating                                 

                        (15) No. Of Staff Surveyed

The percent of satisfied employees was measured by dividing the number of satisfied employees (14) by the number of employees responding to the survey (15). (14 divided by 15 = 93.3%)

Results:     A 93.3% weighting for this perspective was assigned per the above.

2.4.2    Employee Alignment

This objective measures the alignment of individual goals with the organizational goals. Goals are normally established with the employee at the time of performance evaluation. The SLAC one-year evaluation period runs April through March. A review was conducted of the 2001/2002 Purchasing staff’s Performance Evaluations to determine if the goals established as of April 2002, are consistent with and supportive of the organizational goals. Employee alignment was measured by dividing the number of aligned employees by the total number of employees with buying functions.

Survey Results:   The following organizational goals were validated against individual goals for alignment:

• Continue to be compliant with all Environment, Safety and Health (ES&H) training requirements. (Site-wide goal)
• Continue to support and foster Communication Quality Initiatives (CQI) techniques in day-to-day functions and responsibilities. (Business Services Division goal)
• Continue to establish new small vendors and small disadvantaged vendors ensuring SLAC meets its goals established with DOE. (Purchasing Department goal)

All of the performance evaluations reviewed were found to contain the above goals and deemed to be in alignment with SLAC organizational goals. As a result, employee alignment was obtained at a rate of 100% of the total of twelve (12) employees involved with buying functions.

2.4.3    Information Availability

This objective measures the availability to Purchasing employees of current information on strategic goals and objectives, on customers, on vendors, on internal processes, and on financial consequences of their decisions. A survey (see Exhibit XVIII) was conducted in July 2002 to determine what information tools are necessary for the employees to do their jobs better and faster. This was measured by dividing the number of information items available by the number of information items needed.

Survey Results:     Verification was made of the following information resources available to each Buyer:

Purchasing Buyers Handbook (BIS)

Purchasing Procedures

Conflict of Interest Listing

Debarred Listing

Business Information System Web Site

Thomas Register

DOE Integrated Contractor Purchasing Team (ICPT) Homepage

FAR and DEAR web sites

SBA 8(a) and SDB Certification Homepage

Purchasing Department Homepage

Of the ten (10) information tools available, all were considered necessary for the employee to perform his/her responsibilities more efficiently. This translates into a measurement of 100%.

(For Items 2.4.1 through 2.4.3 above)

Objective:       Employee Satisfaction; Organizational and Employee Alignment; Strategic Information Availability.   

Measure:        Employee satisfaction index (includes data from employee survey, focus groups, absenteeism, and voluntary termination’s.

Employee alignment % of employees whose actual performance is aligned with Key Success Factors.

There is a measure of useful information (policies, procedures, operational reports) available to employees.

Target:           Employee Satisfaction - 85% satisfied employees.

Employee Alignment - 90% aligned. (National)

Information Availability - 90% of work groups have the data they need to do their jobs. (National)

Results:       Employee Satisfaction  -  93.3% (5 points - BSC Measured Rating)

Employment Alignment- 100% (5 points - BSC Measured Rating)

Information Availability- 100% (10 points - BSC Measured Rating)

D.        SUMMARY

The analysis of the Four Perspectives (Customer, Internal, Financial, Learning and Growth) of the FY 2002 SLAC Balanced Score Card Review concluded that the processes and procedures of its Purchasing System are adequate and compliant with applicable laws, regulations, and prime contract terms and conditions to support the continued approval by the DOE. 

The Balanced Score Card Summary (Exhibit XIX) depicts the total points available and total points achieved for each of the Four Perspectives. As a result, a total point evaluation of 94 was attained which translates into an adjective rating of OUTSTANDING. 

It is the opinion of the Review Team that the SLAC Purchasing System is consistent with and supports the DOE core values and critical success factor strategies of providing services that are responsive to customer needs, in accordance with established compliance requirements, and employment of best business practices to the maximum extent possible.

SLAC | BIS  |BSD

For Questions or comments, Please contact Ziba Mahdavi, Last Updated 10/30/02