Operational Services Division

Procurement Overview

/ The Commonwealth of Massachusetts
Operational Services Division
One Ashburton Place, Room 1017
Boston, MA 02108
Procurement Information Center
Policy: / Procurement Overview
Issue Date: / September 30, 2013

List of Topics in This Document

Executive Summary / Conflict of Interest Law
How the Procurement Information Center Is Organized / Using the Commonwealth Procurement Access and Solicitation System - Comm-PASS
Statutory Authority and Oversight of Procurement / Training, Outreach and Quality Assurance
Compliance with 801 CMR 21.00 / How to Purchase Using Statewide Contracts
Procurement Principles – Best Value / Procurement Snapshot
Roles and Responsibilities in Procurement and Contracting / Conclusion and Procurement Information Center Preview
Associated Regulations and Policy Guidance

Executive Summary

The Procurement Information Center (PIC) is a set of companion documents to the Commonwealth’s procurement regulation, 801 CMR 21.00, Procurement of Commodities and Services, Including Human and Social Services. The PIC provides comprehensive guidance to departments on what is required when conducting public procurements, managing contracts and recommended best practices for consideration. The guidance in this document must be followed by all Executive departments and Non-Executive departments that have elected to follow 801 CMR 21.00. Other public purchasers, such as exempt entities that are not bound by policies contained in the Procurement Information Center, may review the documents for sound guidance in conducting their own procurements. The PIC covers the procurement of commodities and services, including the procurement and purchase of human and social services (an additional regulation, 808 CMR 1.00, Compliance, Reporting and Auditing for Human and Social Services, addresses human and social services including approved private special education programs). In addition to public purchasers, the Procurement Information Center is available for use by any entity who is interested in learning about open, fair and competitive procurement within the Commonwealth of Massachusetts.

The Operational Services Division (OSD) and departments work together as partners on Strategic Sourcing/Procurement Management Teams (SST/PMTs) to develop solid contracts that meet all Commonwealth customer needs in a manner that is consistent with OSD’s mission statement:

OSD administers the procurement process that ensures best value, provides customer satisfaction and supports the socio-economic and environmental goals of the Commonwealth by establishing statewide contracts for goods and services and providing specific operational services.

This overview provides the framework for conducting procurements including the statutory authority and oversight responsibilities of OSD and the procurement and contracting responsibilities of Commonwealth public entities that fall under 801 CMR 21.00. More detailed policy documents and associated guidance can be found in the Procurement Information Center.

How the Procurement Information Center (PIC) Is Organized

The Procurement Information Center consists of a series of electronic documents available online with the following organizational structure: a) a list of topics at the beginning of each document, b) existing and new policy requirements, best practices, suggested guidance and examples specific to the subject matter and c) associated policy documents and guidance at the end of each document. The Procurement Information Center follows the logical sequence of a procurement from the planning stages to conducting the procurement (including detailed instructions on how to write a Request for Response, or RFR), to awarding contracts and managing contract performance. Each policy document focuses on a major component of the process and provides guidance, policy and step-by-step instructions where warranted. In addition to the Procurement Information Center, the OSD website contains regulations, forms and other information referenced in the policy documents. Links to OSD regulations and forms are available at the end of this document.

Readers will find two kinds of direction in the policy documents and their associated guidance. By far the largest portion is advisory in nature, with an emphasis on explaining the meaning of certain regulatory provisions, providing examples of best practice and suggesting strategies for effective contract management (e.g., look for the words “should,” “may,” “recommend,” or “consider”). However, in some cases, mandatory language such as “must,” “requires” or “shall” is used. These policy determinations are binding upon departments and contractors.

The Procurement Information Center uses the phrase “commodities and services” when describing the procurement of commodities and services, which include human and social services, also known as “purchase of service” or POS. Because there are often specialized and unique requirements associated with POS procurements, in some instances, the words “? For POS Only” precede a section or selected text. This phrase is intended to alert readers to those areas where there is additional guidance or requirements specific to POS. For the purposes of the Procurement Information Center, “? For POS Only” refers to human and social services classified under the “MM3” or “M03” object codes in the Office of the Comptroller’s Expenditure Classification Handbook. Where you have questions, please contact OSD.

Note: A list of commonly referred to acronyms used in procurement and contracting activities is available via a link at the end of this document.

Statutory Authority and Oversight of Procurement

The statutory authority vested in the Assistant Secretary for Operational Services, or designee, and OSD to oversee the procurement of commodities and services by Commonwealth entities is found in M.G.L. c. 7, s. 22, M.G.L. c. 30, s. 51 and M.G.L. c. 30, s. 52. These statutes form the basis of OSD’s issuance of its procurement regulation, 801 CMR 21.00, which provides all Commonwealth departments with uniform rules and standards governing the procurement of commodities or services, or both, including human and social services for clients. While these statutes specifically exempt the legislative branch and military division from their applicability, they also do not apply to all or part of the procurements of the following Commonwealth entities:

·  The judicial branch pursuant to Article 30 of the Declaration of Rights of the Constitution of the Commonwealth of Massachusetts, which sets forth the separation of powers principle in the Massachusetts Constitution. There is also case law, which supports the separation of powers of the three branches of state government but specifically states that it does not preclude participation on a voluntary basis.

·  Cities and towns and other public purchasers, which follow M.G.L. c. 30B, may purchase from OSD statewide contracts per M.G.L. c. 7, s. 22A and M.G.L. c. 30B, s. 1(c), as well as purchasing from contracts procured by Commonwealth Departments that issue procurements subject to 801 CMR 21.00. See the Contract Categories section in this document regarding municipalities use of Commonwealth Statewide and Department contracts. OSD has no oversight authority over M.G.L. c. 30B or these entities. Although not required to do so, cities and towns frequently purchase from statewide contracts because it saves them the time of conducting their own procurement under M.G.L. c. 30B and the prices available on statewide contracts are often more competitive due to the Commonwealth’s purchasing power.

·  The University of Massachusetts, State Colleges and Community Colleges and the Higher Education Consortium, which have statutory authority to conduct certain procurements pursuant to M.G.L. c. 75, s. 13, M.G.L. c. 73, s. 15, M.G.L. c. 15A, s. 24 and M.G.L. c. 15A, s. 24A. However, where these statutes are silent, these entities fall under OSD’s statutes and authority.

In addition, OSD has the authority, pursuant to MGL c. 7, s. 22N and M.G.L. c. 29, s. 29B to oversee the procurement of human and social services by Commonwealth human and social services departments. These statutes form the basis for issuance of OSD’s regulation, codified as 808 CMR 1.00, which governs contract compliance, financial reporting and auditing requirements applicable to all procurements of human and social services and to M.G.L. c.71B approved private schools subject to the authority of OSD. Regulation 808 CMR 1.00 also describes the methods used by OSD in authorizing prices for approved private school special education programs. For more information on OSD's legal and regulatory authority, please contact OSD's Legal Bureau, available via a link at the end of this document.

Compliance with 801 CMR 21.00

What Is Covered by the Regulation?

Absent a superseding law or regulation, 801 CMR 21.00, Procurement of Commodities or Services, including Human and Social Services, covers the acquisition of ALL commodities and services by departments within the Executive Branch.

Who Is Covered by the Regulation – Procurement Levels III, II and I

For the purposes of delineating which departments follow regulation 801 CMR 21.00, the Operational Services Division and the Office of the Comptroller have defined three levels of departments:

·  Level III: All Executive Branch departments must follow 801 CMR 21.00.

·  Level II: Non-Executive departments, such as constitutional offices, elected offices and public institutions of higher education, may choose to follow 801 CMR 21.00 and many have elected to do so by filing a document with OSD and the Office of the Comptroller attesting to their compliance with 801 CMR 21.00. Non-Executive departments are, however, required to follow MGL c. 7, s. 22, M.G.L. c. 30, s. 51 and M.G.L. c. 30, s. 52 (public institutions of higher education as described in the Statutory Authority section above) and are strongly encouraged to voluntarily use 801 CMR 21.00.

·  Level I: Exempt departments, such as the legislative and judicial branches, the military division and independent public authorities are not required to follow 801 CMR 21.00. However, they may also elect to adhere to the procurement principles and process under 801 CMR 21.00.

OSD and CTR have provided extensive guidance pertaining to adherence to the regulation, the underlying statutes and compliance with State Finance Law. Please see Commodities and Services for additional information on procurement delegation available via a link at the end of this document.

Commodities and Services Not Covered by 801 CMR 21.00

·  Horizontal Construction: The Massachusetts Department of Transportation (MassDOT) is the oversight department for horizontal construction.

·  Vertical Construction: The Division of Capital Asset Management is the oversight department for vertical construction.

·  Real Property Sales and Leasing: The Division of Capital Asset Management is the oversight department for real property transactions.

·  Interdepartmental Service Agreements and Chargebacks: The Office of the Comptroller is the oversight department for these agreements and chargebacks; 815 CMR 6.00 is the governing regulation.

·  Grants and Subsidies: The Office of the Comptroller is the oversight department for grants and subsidies; 815 CMR 2.00 is the governing regulation. If the federal grant will result in a named partner, other than the Commonwealth, then the process for selecting the named partner must be subject to competitive procurement regulations.

Using the Office of the Comptroller’s Expenditure Classification Handbook

The Office of the Comptroller issues a handbook of expenditure object classes and object codes known as the Expenditure Classification Handbook, which is helpful in determining coverage of 801 CMR 21.00. Object classes are identified under lettered categories such as “JJ - Programmatic Operational Services.” Object codes are more specific expenditure breakdowns within an object class, such as “J50 - Instructors/Lecturers/ Trainers.”

In addition to providing a description of the types of expenditures that should be classified under specified object classes and object codes, the Expenditure Classification Handbook includes helpful information on relevant legal citations, regulations, restrictions and contract and encumbrance requirements. Departments should review the Expenditure Classification Handbook (available on the Comptroller’s website and via a link at the end of this document) for information on the specific object codes which are covered under 801 CMR 21.00. Departments must determine what object code applies to their anticipated purchase PRIOR to beginning the purchasing process in order to determine what procurement requirements apply.

Procurement Principles - Best Value

801 CMR 21.00 empowers departments to procure commodities and services at the “best value” for the department and the Commonwealth. Departments may pursue procurements that achieve a balance of interests and offer the best “deal” or “value” by developing solicitation evaluation criteria that measure factors beyond cost. A procurement is considered in the best interest of the Commonwealth (providing the best value) when it balances the nine guiding principles of procurement. A procurement achieves best value when it:

1) Supports the Achievement of Required Performance Outcomes

801 CMR 21.00 enables a procuring department to focus on determining what it needs and the best way to get it. Two questions that a department should ask are, What is the desired outcome? and What is the best way to obtain this outcome? A procuring department is then able to design a procurement process that obtains the desired results in the most efficient and effective manner.

2) Generates the Best Quality and Economic Value

Procurement research has revealed that the lowest cost may not necessarily result in the best value for a particular procurement. Procuring departments should consider other factors when determining how to procure commodities and services. In certain cases, a commodity or service of higher quality, with greater options or incentives or a longer life span may be a better value and long-term investment of public funds, even if the initial expenditure is higher. For example, replacement, administrative, maintenance and repair costs or other operational costs, including disposal/recycling and final disposition, may add significantly to the overall cost of an item in the long run and make the lifetime cost more expensive. By determining this lifetime cost, e.g., life-cycle analysis, departments can decide what makes the best economic sense for the long term, or for the Commonwealth as a whole, in addition to satisfying the immediate needs of the department.

While cost may not be the most heavily weighted factor in an evaluation process, departments must research and be knowledgeable regarding benchmark prices and industry averages where available. Knowing what other states, the federal government and private industry are paying for a particular commodity or service can assist departments in their negotiation process and in ensuring that the Commonwealth achieves best quality and economic value.

3) Is Timely

Achieving best value procurements is defeated if the procurement process is cumbersome and inefficient. Although the Procurement Information Center defines several minimum procedural steps for a procurement, departments are empowered to design a procurement process that achieves results within their required time frames. Simple procurements may be done quickly, allowing departments to devote the appropriate amount of time to more complex or larger procurements.