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Sourcing Flashcards

1
Q

Where should you include any incentives or disincentives?

A

In the scope of work

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2
Q

Define benchmarking

A

The act of measuring a: Process Service Product Against the characteristics of recognized leaders

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3
Q

You could use best practices and __________ when you want to provide a more cost-effective way to accomplish a task.

A

Benchmarking

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4
Q

What are two areas where an organization might want to use benchmarking?

A

When measuring Internal efficiencies Customer satisfaction

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5
Q

What three characteristics should good benchmarks have?

A

They should be attainable, quantifiable, and realistic

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6
Q

Who should be put in charge of changes in a process and the success and failure of these processes?

A

Management

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7
Q

Name two ways besides benchmarking that organizations can measure performance

A

Staff meetings Performance reviews Performance targets

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8
Q

What are the three phases of an audit?

A

Planning Collecting data Decision making based in the data collected

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9
Q

Name six types of data

A

Qualitative Quantitative Longitudinal (repeated observations over time) Cross sectional (many subjects observed at the same point in time) Primary Secondary

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10
Q

What ways should specifications be stated?

A

Functions Physical characteristics Performance required Combination of above

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11
Q

Name four categories of procurement

A

Lowest responsible and responsive bidder Best value Gathering information Special methods

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12
Q

Name the types of bids for lowest responsible and responsive bidder

A

Competitive bid/invitation for bid Quotes RFQ (usually small dollar value, do not have to advertise, predetermined date) Informal bid - quote based on letter, fax, email (low value)

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13
Q

Name types of bids for best value

A

RFP ITN RFQu

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14
Q

Give examples of procurement methods OTHER than competitive, best value or information gathering.

A

Notice of Intent - no formal competitive sourcing Small dollar or pcard - this reduces administrative burden, buy directly from contract Emergency procurement Sole source procurement - only one supplier, inability to obtain competition

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15
Q

Who should exercise control and direction for any cross functional team who is developing the scope of work?

A

The procurement staff

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16
Q

What is the definition of best value

A

Return on total cost of ownership or life cycle cost

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17
Q

Name three things you consider when determining total cost of ownership

A

Licensing fees Site prep. Costs Training costs

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18
Q

What does life cycle costing consider?

A

Operating, time value of money, residual value, disposal.

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19
Q

What is Value Procurement

A

When total cost to the environment is included in the value formula during the planning phase

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20
Q

Should you calculate TCO/LCC for all proposals?

A

Only those that make the short list.

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21
Q

Name the principles for Make or Buy Analysis

A
  1. Consider all costs… Eg. Contract management. 2. Only consider costs that will differ - if the costs will be the same regardless if make or buy, don’t consider them 3. Ensure you consider costs for the same level of service and quality
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22
Q

What are the four steps to make or buy analysis

A
  1. Define the outputs you are considering 2. Determine the costs SAVED if outsourced 3. Determine the costs you will PAY if outsourced 4. Compare the costs and make decision
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23
Q

How do operating and finance leases differ in terms of reporting them on financial statements?

A

Operating is an expense on the income statement Financial is a liability on the balance sheet

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24
Q

If obsolescence is an issue and you just have short term requirements, what kind of lease is best?

A

An operating lease

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25
Q

What are the steps for lease or buy decision making?

A
  1. Capture up front costs 2. Determine the sum of all lease payments and other costs (eg. Insurance) discounted to present value 3. Calculate purchase price 4. Compute these costs over the planned period of time
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26
Q

What is a financial advantage of leasing?

A

The burden of the investment is shifted to the lessor.

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27
Q

Define market research

A

Collecting and analyzing the capabilities of the marketplace to satisfy needs

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28
Q

What is the four step process to market research?

A

Market surveillance - high level review, reading journals etc. Investigation - collecting and analyzing data, narrowed to the commodity you’re researching Identification - reaching out to suppliers, determining availability Procurement

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29
Q

What is the best way for Procurement to determine how competitive the supply market is?

A

Market research into various areas

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30
Q

For mission critical items, when should you perform market research?

A

It should be ongoing

31
Q

What type of solicitation would be best for conducting market research?

A

The request for information

32
Q

What systems does demand analysis use?

A

ABC principle of material classification, and Pareto principal

33
Q

What analysis should a buying plan have?

A

Demand Supplier Market Value

34
Q

What is a service function?

A

A designated unit does a function that is common to all units in the organization

35
Q

What is a staff function?

A

To advise. Eg. New products, trends, new materials, legislation

36
Q

What is the definition of line function

A

Day to day functions of procurement

37
Q

What is the greatest cost to maintaining an inventory?

A

Product obsolescence

38
Q

When would maintaining an inventory be a good idea?

A

When: The items are essential You can receive volume discounts There are long lead times

39
Q

What is the average cost of carrying inventory?

A

25 - 35%

40
Q

Define “Recovery”

A

The ability of procurement to get urgently required materials and services from a supplier at a premium costs.

41
Q

Define Central Stores Management and which of the service, staff or line functions is it?

A

It is determining which and how many times to maintain. Receiving and inspecting is part of this. It is a line function.

42
Q

Where would you find information regarding procurement’s various authorities?

A

Policies, procedures, and practices

43
Q

What are information gathering solicitations?

A

RFI Letters Of Interest Pre solicitation conference

44
Q

What is value analysis applied to the writing of specifications?

A

Requirements analysis. This is done in the planning stage of solicitations.

45
Q

What types of specifications are there?

A

Design Performance Combination

46
Q

Who is responsible for making the clean up process difficult?

A

Matthew.

47
Q

If you use design characteristics for your specification, who is bearing the risk?

A

The agency. If product fails to meet the agency’s need, the agency bears the cost.

48
Q

What are performance specs also called?

A

Functional specifications

49
Q

When would design specs be used?

A

Highly technical, construction, specialized items.

50
Q

What type of contract might have a large group of related items, which is a more sophisticated version of a blanket order?

A

Systems contract

51
Q

What is an incentive contract?

A

Rewards the contractor for reaching predetermined goals

52
Q

Who bears all risk with a fixed price contract?

A

The supplier bears the risk

53
Q

Which fixed price method is used when market stability is a concern, and which fixed price method has the best cost control incentive?

A

Fixed price with economic price adjustment Firm fixed price because the contractor keeps all savings

54
Q

What fixed price contract would be used if you want to reward high quality performance?

A

Fixed price incentive

55
Q

What kind of price would you use, if you can only determine a price for the first period but not subsequent ones?

A

Fixed price plus redetermination

56
Q

When there is uncertainty and many potential cost risks, what type of pricing structure would you use in your contract?

A

One of the Cost reimbursement types or pricing structures.

57
Q

What pricing reimburses the supplier for all reasonable allowable costs?

A

Cost plus fixed fee

58
Q

What kind of procurement is also known as a “directed contract”?

A

Sole source procurement

59
Q

When are partial payments made?

A

They are made as work is completed

60
Q

Are progress payments are made, is this equal to acceptance of the work?

A

No

61
Q

What type of payments are best for software?

A

Milestone, because they are tied to successful completion of certain milestones.

62
Q

What are incentive payments?

A

They are tied to certain goals, for example reducing costs or delivery above a certain level.

63
Q

What payment type holds back a portion of payment until the agency knows all contract obligations are met?

A

Retainage payments

64
Q

When would progress payments be used?

A

To assure performance A method for financing the contractor during the contract Made as progress is made on the contract Does not indicate acceptance

65
Q

What are the characteristics of incentive pricing types?

A

Made as contractor reaches predetermined goals

66
Q

What pricing type is used to ensure that the contractor pays his sub-suppliers?

A

Retainage

67
Q

Describe the two stages when you could encounter a protest?

A

During the solicitation stage, and during intent to award

68
Q

If a contractor protests requirements during the solicitation stage, does the agency have to change them?

A

No, not if it the change would interfere with the agency’s mission.

69
Q

What is the usual path of steps that a protest may take?

A

Protest, if denied hearing, if denied then litigation

70
Q

What is transitional language in a contract?

A

Language that indicated both parties have agreed to something

71
Q

What is another name for “whereas clauses”?

A

Recitals

72
Q

What is severability in a contract?

A

If a court says part of the contract is not valid, The rest of the contract is still valid.

73
Q

If you take into consideration how acceptance is defined in the contract, what type of contract risk are you addressing?

A

Performance Risk

74
Q

If you are considering how disputes are handles in the contract, what type of risk are you considering?

A

Contractural Risk

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