ERIC ED395160: Purchasing and Accounting. MAS-116. Waste Isolation Division (WID). Management and Supervisor Training (MAST) Program.

42 Pages·1996·0.53 MB·English

by  ERIC

DOCUMENT RESUME
CE 071 583
ED 395 160
Purchasing and Accounting. MAS-116. Waste Isolation
TITLE
Division (WID). Management and Supervisor Training
(MAST) Program.
Westinghouse Electric Corp., Carlsbad, NM.
INSTITUTION
Department of Energy, Washington, D.C.
SPONS AGENCY
PUB DATE
[96]
42p.; For related modules, see CE 071 569-588.
NOTE
Instructional Materials (For
Classroom Use
Guides
PUB TYPE
Learner) (051)
MFO1/PCO2 Plus Postage.
EDRS PRICE
*Accounting; Adult Education; Behavioral Objectives;
DESCRIPTORS
Case Studies; Compliance (Legal); *Ethics; Hazardous
Materials; Learning Modules; *Management Development;
*Purchasing; Supervisor Qualifications; Supervisory
Methods; *Supervisory Training; Vocational Education;
*Waste Disposal
*Radioactive Wastes
IDENTIFIERS
ABSTRACT
This learning module, which is part of a management
and supervisor training program for managers and supervisors employed
at the Department of Energy's Waste Isolation Division, is designed
to prepare trainees to perform purchasing and accounting tasks
efficiently and effectively. The first section is an introduction to
the module. The next three sections explain the following phases of
the procurement process: presolicitation (needs identification,
quality assurance requirements, environmental/health/safety concerns,
descriptions of requirements, and cost estimates); solicitation and
award (preproposal meetings, evaluation of proposals, discussions,
awards); and postaward (postaward meetings, receipt and inspection,
evaluating/reporting subcontractor performance). Lessons learned from
procurement experience are summarized in the next section. Discussed
in the next section are the purposes and principles of accounting.
The following are among the purchasing and accounting practices
examined in a section on ethics: interactions with suppliers,
conflicts of interest, coemployment, personal services, untimely
marketing, gifts, entertainment, kickbacks, financial reporting,
illegal payments, and antitrust laws. Each section includes some or
all of the following: enabling objectives, exercise requiring
trainees to evaluate a manager's effectiveness in a given scenario,
and lists of good practices and practices to avoid. Concluding the
module are a 20-item reference list, practice test, and test answers.
(MN)
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Reproductions supplied by EDRS are the best that can be made
from the original document.
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MAS-116-Page 1
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Waste Isolation Division
Management and Supervisor Training (MAST) Program
U.S. DEPARTMENT OF EDUCATION
PURCHASING AND ACCOUNTING
Oui e of Eaucational Ilesearcn anl Improvement
ED CATIONAL RESOURCES INFORMATION
CENTER (ERIC)
MAS -116
This document has been reproduced as
re eived from the person or organization
riginating it.
Minor changes have been made to
improve reproduction quality
Points of view or opinions stated in this
This module was preDlred by:
document do not necessarily represent
official OERI position or policy.
Date
Professional Development
Trainer
This module is approved for use:
Date
Manager, Human Resources
Development and Total Quality
Date
Controller
TRAINEE INFORMATION
Trainee Name:
Trainee SS4:
Date Module Started:
Last Possible Date
For Completion of
Module Examination:
BEST COPY AVABABLE
2
MAS-116-Page 2
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TABLE OF CONTENTS
3
INTRODUCTION
A.
4
THE PRE-SOLICITATION PHASE
B.
15
THE SOLICITATION AND AWARD PHASE
C.
18
THE POST-AWARD PHASE
D.
21
LESSONS LEARNED FROM PROCUREMENT EXPERIENCE
E.
26
ACCOUNTING
F.
32
ETHICAL ISSUES
G.
35
MODULE CONCLUSION
H.
36
MODULE REFERENCES
I.
37
PRACTICE TEST
J.
MAS-116-Page 3
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A. INTRODUCTION
Terminal Obiective
Upon completion of this module, the trainee will be able to perform
purchasing and accounting tasks in an efficient and effective manner.
Mastery of the terminal objective will be demonstrated by scoring 80 percent
or higher on the module examination.
This module is intended to provide basic information necessary to
successfully accomplish your purchasing and accounting responsibilities.
The first part of the module focuses on purchasing (procurement).
Accounting is discussed in the latter part of the module.
The success
This module is one of the most important in the MAST program.
of Waste Isolation Division (WID) is dependent on sound business management,
and purchasing and accounting are two of the cornerstones of business
You can promote sound business management at WID by learning
management.
and applying the good purchasing and accounting practices presented in this
module.
Prior to reading this module, it is recommended that you obtain a copy of
"the requisitioner's bible," WP 15-009, Planning for and Preparation of
Reference is made to this
Requisitions for Materials and Services.
procedure throughout the purchasing portion of this module.
When specific
sections of WP 15-009 are mentioned, locate and scan that section of the
This will help you become more familiar with the procedure and
procedure.
supplement the information you derive from reading the module.
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B. THE PRE-SOLICITATION PHASE
Enabling Obiectives
able to perform the
Upon completion of this section, the trainee will be
following:
Identify good pre-solicitation practices.
1.
Identify pre-solicitation practices to avoid.
2.
Given a scenario, evaluate the manager's effectiveness in
3.
performing pre-solicitation activities.
and
The procurement process is that process which creates financial
contractual obligations for the WIPP.
The first phase in the procurement process is the pre-solicitation phase.
The purpose of the pre-solicitation phase is to complete activities that
A "solicitation" takes place
must take place before a solicitation is made.
when technical and contractual requirements are transmitted by WID's
Procurement Department to potential suppliers for the purpose of obtaining a
The term "supplier" means individuals, business
proposal, quote, or bid.
entities, transportation carriers, and companies from which WID may buy
Solicitations explain WID's requirements and the
goods or services.
competitive basis for supplier selection.
activities in
In this section, we will discuss the major pre-solicitation
the sequence in which they usually occur.
Needs Identification
When the lack of something is
Identifying your needs is not difficult.
The key is
preventing you from doing your job, the need becomes apparent.
This allows you to obtain
to identify future needs and plan to meet them.
The benefits of planning for
what you need before the need becomes acute.
your procurement needs include the following:
Need dates can be met without incurring premium costs for expediting
o
Value can be planned into the workscope and the procurement action
o
Procurement can use the best purchasing methods consistent with
o
Department of Energy (DOE) approval procedures and federal regulations
Competition, a key requirement in W/PP procurements, can be maximized
o
You are more likely to get exactly what you want, delivered when you
o
want it, at the best price
The importance of effectively planning for procurements cannot be
Unexpected delays and problems can sometimes delay
overemphasized.
Expect unanticipated delays and allow sufficient time for
procurements.
procurements through advance planning.
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Checking for On-Site Sources
services from an
Before assuming you will have to purchase materials or
To see if materials are available,
off-site source, look within WID.
To determine whether or not services
contact Material Control and Property.
For instance, if you
appropriate department.
are available, contact the
Technology
require computer programming services, contact Information
Meeting needs from internal sources is usually less expensive
Resources.
and quicker than using the procurement process.
Contact Procurement Early
Procurements can require many steps and the involvement of persons from
Thus, it is to your benefit to contact Procurement early
other departments.
This is important because there are many
in the pre-solicitation phase.
issues which must be addressed when planning a procurement, e.g., type of
contract, financial audit requirements, DOE approvals, sourcing, advance
When you contact Procurement early, a buyer
notification requirements, etc.
expedite your procurement.
can begin to lay the groundwork necessary to
Consider Quality Assurance (QA) Reguirementg
2, and selected 3 procurement
QA approval is required for Quality Code 1,
When planning for such procurement actions, include sufficient
actions.
If questions related to QA requirements arise,
time for QA review.
contacting QA and/or Procurement prior to initiation of the Purchase
Requisition (PR) can help prevent delays.
Consider Environment, Safety and Health (ES&H) Implications
ES&H approVal is required before certain types of items can be purchased.
Goods and services that do not require ES&H approval prior to purchase are
listed in WP 15-009.
It is especially important to obtain ES&H review before chemicals or
potentially hazardous materials such as the following are purchased:
Chemicals (paint strippers, lubricants, etc.)
o
rods, aerosols,
Materials that release chemicals during use (welding
o
solder wire, etc.)
Materials that change shape during use (grinding wheels, urethane
o
foams, etc.)
If you require one of the previously mentioned types of goods, contact ES&H
If none is available,
for a copy of the Material Safety Data Sheet (MSDS).
When you receive
ask Procurement to contact the supplier to obtain a MSDS.
it, make notes on the MSDS to explain (1) how you intend to use the material
(2) the location of usage, and (3) the amount required (how
or chemical,
Then take the MSDS to Industrial Safety for
much you want to purchase).
Because if
Why?
This is to be done prior to completing the PR.
review.
the material or chemical is not approved for purchase by Industrial Safety,
Allow at least
you will still have time to find an acceptable substitute.
one week for Industrial Safety to review the MSDS and provide you with an
answer.
It is also a good practice to cJntact Industrial Safety prior to purchasing
They will
electrical equipment such as fans, lamps, or coffee machines.
assist you in selecting electrical equipment which meets applicable safety
Many commercially available items of electrical equipment are not
codes.
acceptable for use at the WIPP.
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Guidelines for requisitioners of hazardous materials are contained in WP
Questions about ES&H reviews
02-507, Management of Hazardous Materials.
should be directed to Industrial Safety.
Producing a Description of Your Requirements
To initiate a purchase, a written description of your requirements is
For simple purchases of commercially available items, an Item
required.
An Item Description should
Description written on the PR is sufficient.
contain the following:
The common name for the item you want
o
If no common name is applicable, give a generic description of the
o
item.
A part number or catalog number (if appropriate and available)
o
The phrase "or equal"
o
When ordering complex items by part number or catalog number, the
o
requisitioner should use the term "or approved equal" and require
the supplier to submit a description or catalog for review and
approval before ordering the item.
A well-written Item Description frees the buyer to seek what you want from a
number of sources.
For nonroutine procurements, a Statement of Work (SOW) is required.
SOWs
are normally required for procuring services and for fabrication, design, or
A SOW is a complete description of what you require
construction projects.
SOWs are submitted as an attachment to the PR with an
from the supplier.
appropriate reference within the body of the PR.
The SOW will be the basis for accepting or rejecting the end product or
It is important to carefully prepare SOWs because
services you are seeking.
the quality of the SOW determines the quality of the purchase.
Suppliers
cannot give you what you want unless they can understand your SOW.
Well-written SOWs clearly, completely, and concisely describe what you need.
When preparing SOWs, follow good writing practices outlined in MAS-106,
Communications.
SOWs should contain the following six sections:
Section One - Introduction and Background
o
In this section, give an overview of the procurement and briefly
explain the results that you expect from the procurement.
Section Two - Scope
o
Here you provide a concise overall picture of the procurement.
State
the objectives of the subcontract and major tasks to be performed to
attain the objectives. The scope indicates the various phases, i.e.,
design, development, fabrication, test, delivery, etc.
Section Three - Applicab3e Documents and/or Specifications
o
This section should contain a list of the technical requirements and
specifications so that prospective subcontractors can understand all
A procurement is often controlled in some way
performance constraints.
by previous documentation that details earlier efforts, indicates the
current state of a problem area, or establishes background in a
Prospective subcontractors need to be made aware
technical discipline.
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of these documents.
Section Four - Technical Tasks and Quality Assurance
o
In this section, describe in detail the subcontractor's and WID's
Define the work to be accomplished in terms of
responsibilities.
specific steps or tasks and quality assurance requirements.
Include a
detailed breakdown of required tasks. Information you provide here
will help you later to develop a realistic cost estimate. The better
your task breakdown, the easier it will be to do a good cost estimate.
In some cases, it is advisable to inspect subcontractor work prior to
This is called an "in-process inspection."
Any required
completion.
in-process inspections and hold points should be listed in Section
A "hold point" is an established point where a supplier must
Four.
stop performance until a WID representative performs a review,
inspection, witness, or approved actions before the supplier can
proceed.
Section Five - Reports, Data, and Deliverables
o
This section establishes exactly what the supplier is to deliver, such
as reports, manuals, technical data, materials or equipment.
Any
required in-process submittals also should be listed here.
A
"submittal" is any document, sample, drawing, progress report, or other
item that the supplier must submit to WID.
A job hazard analysis
required in a construction subcontract is an example of a submittal.
Weld test procedures and material test reports are examples of
submittals which might be required in a fabrication subcontract.
Be
sure to specify schedule or submittal requirements for these documents
tied to the contract activities they support.
Section Six - Other Special Considerations
o
Here you need to detail any special relationships between the
subcontractor and WID.
Examples of other special considerations which
should be cited include the following:
The use of any DOE/WIPP property to be loaned or furnished by WID
o
Any applicable ES&H requirements
o
Any on-site work interfaces with other in-process projects
o
The following are characteristics of good SOWs:
They do not unnecessarily restrict subcontractors from using their
o
unique skills, experience, resources, and knowledge to provide the best
product at the best price
They include clear and precise task descriptions
o
This is essential to the proper qualification of a subcontractor
o
and the successful administration of the subcontract.
Make sure
you describe your requirements in sufficient detail to ensure
clarity.
They use the word "shall" whenever a binding provision is being
o
described
They do not include unnecessary technical terms
o
SOWs that are unnecessarily technical can discourage some
o
suppliers, reducing the number who are willing or able to bid on
the requisition.
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They spell out abbreviations and acronyms the first time they are used,
o
followed by the abbreviation or acronym in parenthesis, i.e.,
"...pounds per square inch (psi) ."
They reflect optimum value as a result of coordination with other WID
o
departments and organizations to ensure that everyone's needs are
satisfied
When writing SOWs, avoid the following practices:
Using imprecise language or trade jargon
o
Phrases like, "first-class workmanship," "in accordance with
o
standard practice," and "to industry standards" should be avoided.
Using the passive tense ("Performance shall occur...")
o
The active tense is easier to read ("The subcontractor shall
o
perform...")
Putting unduly restrictive requirements in the SOW
o
For example, a requisitioner may impose requirements for a
o
particular supplier's technical capability or equipment
This can restrict competition, increase costs,
characteristics.
and lead to formal protests from other suppliers.
Repeating requirements or specifications that are detailed in other
o
contractual documents attached to or accompanying the PR
To avoid redundancy in your SOW, use a statement such as, "...as
o
specified in Attachment 1."
Including inappropriate information in the SOW
o
Avoid the disclosure of sensitive or proprietary information,
o
whether from WID or from other organizations, such as suppliers.
If you are unsure about whether to include an item of information,
contact Procurement and/or WID's Legal Counsel.
After you have written your SOW, assess it tor completeness by asking
yourself the following questions:
If I were a supplier making a proposal based upon this SOW, would I
o
feel confident that I could price my efforts realistically?
Definition: A "proposal" is a written offer prepared by a supplier
o
in response to a solicitation from WID.
The proposal describes
how the supplier proposes to satisfy WID's requirements and gives
the price desired for performing the subcontract.
As a supplier, would I feel confident that I could perform the
o
subcontract with minimum risk to my company?
Can I find loopholes, voids, or "I gotchas" in the subcontract?
o
Is a required delivery date specified for each deliverable item?
o
If elapsed time is used, does it specify calendar or work days?
o
It is a good practice to have a peer review your SOW before it is submitted
Your peer may find ambiguities or other difficulties you
to Procurement.
A good example of a SOW can be seen in Appendix B.
may have overlooked.
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r
Preparing a Cost Estimate
Requisitioners must prepare cost estimates for all PRs except when seeking
A cost estimate is an assessment of the probable cost of a
quotations only.
It is your
product or service under fair and reasonable conditions.
estimate of how much money it should cost a supplier to provide what you
Cost estimates enable the buyer to evaluate proposals and negotiate
need.
When you provide carefully prepared cost estimates, you
business deals.
A buyer who has been
help the buyer negotiate effectively with suppliers.
provided with a good cost estimate is better able to negotiate with
suppliers because he/she has a better idea of reasonable costs.
A good cost
estimate assists the buyer in evaluating the reasonableness of supplier
This is especially true when the solicitation process yields
proposals.
only one offer and a single source is required.
When preparing cost estimates, do not contact suppliers to obtain cost
This leads to cost estimates that are built around suppliers'
information.
Later, if a supplier you contacted is awarded a subcontract, it can
prices.
This does not, however, mean
lead to formal protests from other suppliers.
Contacting suppliers to find out if
you should never contact supplierq.
they offer something you need or to obtain published price lists or catalogs
Building cost estimates and PRs around information from a
is acceptable.
particular supplier is not acceptable.
The level of detail required in cost estimates is directly related to the
dollar value and complexity of requested items or services; the higher the
value or level of complexity, the more detailed the estimate.
PRs over
$25,000 must include an independent in-house detailed fair cost ("should
This is required unless the item is specifically exempted
cost") estimate.
such as with standard off-the-shelf items with published catalog or
Independent in-house detailed fair cost
established market prices.
estimates require the requisitioner to provide an elemental breakdown of the
estimate and backup data necessary to support the estimate.
The three methods used at WID to develop cost estimates include the
following:
The comparative method is used when estimating the costs of materials
1.
or services similar to or the same as those previously purchased
The price list method is used when standard off-the-shelf components
2.
are being procured
The detailed method is for all other types of procurements
3.
When estimating costs using the detailed method, the overall cost
o
is broken down to reflect as many cost components as possible.
Cost categories, such as labor, materials, etc., are identified
and assigned estimated cost ranges.
This yields a more accurate
cost estimate than attempting to guess an overall cost.
For more information on how to prepare a cost estimate, see WP 15-009.
Additional guidance can be obtained by contacting Procurement.
Identifying Possible Sources
Developing possible sources is the next step in the procurement cycle.
WTD
is contractually required to make the most effective use of competition.
Thus, one of Procurement's most important goals is to encourage competition
Effective price competition requires the identification of
among suppliers.
Whenever possible, assist the buyer in developing a list
multiple sources.
You often are in the best position to
of sources for what you require.
identify sources because you understand what you need better than anyone
If you know of any possible sources, list them in the designated
else.
10