Jul 15 2013

Why We Need IT Procurement Reform in Local Government

Government and vendors alike describe current contracting processes as slow and expensive.

In this era of tight budgets, we must transform the way state and local government programs are run, boost effectiveness and efficiency, and radically improve cost control.

Achieving those goals requires the procurement of goods and services.

State CIOs recognize the need to improve the government technology acquisition process to maximize the impact of IT investments. Most IT leaders acknowledge that government procurements are often time-consuming, resource-intensive, expensive, risky and just plain painful for both the public sector and vendors. The current approach unnecessarily increases costs, which isn't in anyone's best interest.

From the vendors' perspective, the frustrations run deep. Many believe that overly prescriptive generic contract terms aren't well suited to complex IT projects. The protracted procurement cycles are driving competition and innovative solutions out of the market. All too often, states try to shift as much risk as possible to the contractor. It's time to enact contracting reforms that align states with practices used in the private sector.

The acquisition processes must be streamlined to speed procurement. In many states and localities, IT procurements often stretch from 12 to 18 months, which makes the procurement time-consuming and expensive for everyone. Lengthy contracting processes delay deployment of solutions.

Role Models

Several states have managed to better balance risk in government IT contracts, which TechAmerica sees as a driver for more robust competition in bids and an enabler of more creative partnerships between the client and the contractor.

For example, the state of California has a unique statutory power to use a negotiations process when procuring IT goods and services. Section 6611 of the state's Public Contract Code allows use of flexible procurement techniques to better define California's needs, identify different types of solutions, accommodate constraints of bidders and realize "best value" for the state.

Maryland is examining its IT terms and conditions and expects to adopt a set of standard terms that will reflect those that other states have employed successfully. And the commonwealth of Massachusetts is evaluating its IT procurement processes to determine how to make them less burdensome and more efficient.


Percentage of CIOs who are moderately dissatisfied or very dissatisfied with the current IT procurement system in their state

SOURCE: "The 2012 State CIO Survey" (NASCIO, October 2012)

In addition to recognizing that procurements need to be fair, open and competitive, state officials are also seeking ways to improve procurement outcomes, especially for large, mission-critical projects.

These examples are a mere glimpse at the progress we've seen lately. Many other states either recognize they have a problem or are actively taking steps to change their procurement rules and processes.

Collaboration Is Key

State CIOs have offered suggestions for re-engineering and streamlining the IT procurement process, such as tapping consortium procurement and enterprise agreements. Some CIOs have cited the need to partner and collaborate with the procurement office, help them obtain additional staffing, change approval limits to allow for expedited purchasing, and move the IT procurement function to the CIO's office.

Finally, technology advancements such as cloud computing, present new challenges. A new way of thinking is needed for terms and conditions in areas such as portability, security and records management.

Nearly everyone can agree that open, robust competition among suppliers is the goal. To that end, contracting practices and terms that balance the risk between the client and contractor are imperative for state and local government.