Public agencies have been working to improve how they find and purchase technology for decades, and yet one of government’s most sensitive pain points remains, in the words of San Francisco Chief Innovation Officer Jay Nath, “procurement, procurement, procurement.”
Much public-sector technology today is unrecognizable from that of the mid-1990s, when streamlining IT procurement could mean quickening the purchase of a half-dozen PCs from six months to two weeks. But while the pace of technology innovation has grown exponentially since then, timelines for procurement haven’t kept up.
In an IT public procurement practice standard released earlier this year, authors at NIGP: The Institute for Public Procurement said the typical RFP process remains too traditional to be effective at purchasing technology hardware, software and services.
“The RFP process, as it has evolved, does not always allow enough creativity and flexibility for the effective procurement of IT,” NIGP wrote. “Rigid terms and conditions directed toward the purchase of traditional products inhibit IT procurement, now more of a service than a product.”
The organization pointed out that the National Association of State Chief Information Officers (NASCIO) and the National Association of State Procurement Officials (NASPO) have called for changes to process and policy “to better integrate the flexibility and agility necessary to align with the rate of innovation and the services aspect of IT.”
Brent Maas, NIGP executive director of business strategy and relationships, told Government Technology that public agencies are historically reluctant to go first with untried technologies and ways to purchase them — but that, he said, should and will change.
“No one wants to be the guinea pig, but I think that has to change, and potentially from a generational perspective it will change because anything technology-based is driving day-to-day life,” Maas said.
Observers of state and local purchasing agree IT procurement has yet to be modernized in many agencies. The specialized task of buying IT still often falls to busy mid-level staffers; and asymmetrical or out-of-phase projects potentially run afoul of budget and election cycles.
Resolving governance and financing questions remains an issue for many agencies. But some have managed to move past more basic questions to focus on redefining IT procurement by uniting like agencies in a single request; prequalifying bidders; or carefully scrutinizing contracts for signs of age or ineffectiveness.
These agencies, in turn, may face more exciting challenges that lie closer to the heart of IT procurement, said Rick Howard, research vice president at Gartner. Chief among them, he said, is the issue of scalability — ensuring solutions have sufficiently broad application to find wide usage.
“Modular contracting, blanket agreements, pre-qualified vendor lists — they’re all vehicles that help you achieve the end, and it really is situational,” Howard said, referring to working solutions.
Scaling new creations into production-level apps remains uncommon, he said, but should be a focus for agencies that have not achieved it — noting that in some cases, deconstructing monolithic solutions into their components can reveal common applications.
“You abstract out that business function as a service that has to interoperate with, say, the core true differentiated functions of any one of these large systems, that’s where you’re trying to go,” Howard added.
Jay Nath, chief innovation officer of San Francisco. (Photo by David Kidd.)
A similar issue, standardization, is key for San Francisco, Nath said, “so that we are really being more equitable and allowing for smaller businesses to participate in the process.”
A long-term goal for his agency, standardization could enhance scalability of procurement processes “so that a contract in San Francisco is essentially the same for Austin and for others across the U.S.”
Ohio CIO Stu Davis said that qualifying newer, smaller vendors is also a concern for his agency, one officials addressed in an early 2017 RFP aimed at streamlining the process by reducing the liability burden and work history requirement for smaller vendors.
“The challenge in some cases is to refocus the culture on being a trusted procurement adviser as opposed to a procurement jailer,” Davis said. “Sometimes procurement views themselves as trying to keep you out of trouble instead of trying to get you what you need. Yes, you’re supposed to keep us out of trouble, but we still need to get what we need.”
Davis, Nath and Joel Munter, statewide group procurement manager for Arizona’s technology and IT team, agreed IT procurement must change with the times, becoming quicker and less onerous while still addressing basic concerns shared by virtually all governments. And all three have agencies that could provide models for other jurisdictions looking to make a similar move.
Each of the Arizona state procurement office’s five teams — units focused on commodities, professional services, construction, technology and IT, and “category,” which Munter described as a “catch-all bucket” — faces a similar challenge: keeping up with changing technology.
“The technology is changing so rapidly, and I think we need to be nimble. We need to establish contracts of the right duration and renew them as often as needed to make sure that they’re aligned with how technology is changing,” Munter said.
Arizona’s communication on procurement is generally good, with regular meetings and discussions, he said, but a key issue is educating state agencies about potentially money-saving statewide contracts.
Chandler Unified School District, Munter gave as an example, recently proposed doing an RFP around media and public relations — areas where Arizona may already have a statewide contract in place.
“Because we’re somewhat decentralized, we’re writing things from the state procurement office, we’re doing things on behalf of the other agencies, but getting them to fully utilize the benefit of those contracts can be a challenge at times,” said Munter, who joined the state in October 2016. “And I think that’s true for everything, not just technology.”
A second issue, he said, is making procurement more nimble, potentially developing new RFPs where ones might not have been needed in the past — and possibly renewing contracts more frequently than the customary two years to keep technology fresh.
The job of procurement, Munter said, is to anticipate agencies’ needs and be ready with a new contract should one be needed. He characterized the relationship as a cooperative “dialog” between agencies and the state procurement office.
This extends to the area of cloud procurement, where Arizona — which takes a hybrid approach to cloud and has few direct contracts — is scrutinizing NASPO ValuePoint for cloud options. The IT procurement manager said 32 vendors were awarded on the national cooperative contract, and in reviewing their coverage, he’s identified several gaps.
Arizona has signed as many as nine participating addendums to address gaps in these contracts and may seek to negotiate others, possibly in coverage areas dealing with platform- and infrastructure-as-a-service, said Munter.
“There are benefits to the state by having this hybrid approach that will have a limited number of direct contracts and also look at the national contracts where appropriate,” Munter said.
Inspired, like San Francisco, by federal General Services Administration innovators, officials in Ohio released a data analytics RFP on Jan. 5 that targeted new, smaller companies for what the state describes as “expert-level analytics exploratory projects.”
Six months in, officials have made 50 awards and planned to release statements of work later in the summer and receive proofs of concept in the year’s fourth quarter.
Ohio CIO Stu Davis. (Photo by David Kidd.)
A key issue, state CIO Davis said, is the sheer cost of doing business with the state — anywhere from $800,000 to $1.5 million just to respond to a complex RFP. Revising terms and conditions on a trial basis and simplifying RFP response requirements generated more than 70 proposals, and attendance of more than 500 at a pre-bid conference held via Skype, a state first.
“We could have made them come to Columbus. We wouldn’t have had 300 folks. We wouldn’t have had the opportunity to convey to that broad of an audience,” Davis said.
Updating its IT procurement process has reinforced to state officials the importance of looking closely at so-called mandatories, and making sure, Davis said, “they pass the logical sense” test.
Agencies should also make sure their evaluation criteria align closely with their statement of work, to ensure they get responses to RFPs that match what they’re looking for. Failing to do so, Davis said, increases the likelihood an agency will not get the response it’s seeking “because it’s not clear enough.”
Terms and conditions should be looked at, and potentially reduced to seven or eight non-negotiable “holy grails,” he said.
Public agencies contemplating transforming their own IT procurement processes should also consider speaking to officials elsewhere who have already done so, and hosting what Davis called a “competitive dialog” between agency heads, procurement officials and potential vendors prior to developing an RFP or statement of work.
The underlying issue motivating transformation, the CIO said, will likely remain.
“We’re always going to be in a challenge because the technology is changing so rapidly,” Davis said, noting that many agencies are trying to identify “the best way to procure agile application-development-type solutions.” (See Agile Acquisitions, p. 22)
“We’re going to have to figure those kinds of things out, and we need to be able to in a way that provides a quick response so that we can get moving on these projects,” he added.
Spreading government investment to ensure local and smaller and medium-sized tech businesses are included, as well as focusing on innovation, is key, said Nath, chief innovation officer of the consolidated city-county — noting that failing to do so means agencies can lose funding as well as forward-looking ideas.
“How do we create better solutions for government, for our partners, our nonprofits and for society? When you think about how quickly technology evolves, the desire for local governments to really create a growing ecosystem of entrepreneurs or startups — I think there’s a big opportunity,” Nath said.
With those goals in mind, last year the city-county created an “RFP bus” — a stripped-down, accelerated batching of RFPs that replaces highly prescriptive rules with simpler challenge statements written by participating municipal and county agencies that focus on needs.
The idea grew out of San Francisco’s Startup in Residence (STiR) program, one of the most recent change movements in IT procurement, that embeds young tech companies within government to deepen their understanding of government’s problems, resulting in more effective public-sector-facing products. The idea, which has expanded in recent years, helped create products like a navigation system for the visually impaired at San Francisco International Airport — but proved deeply frustrating when RFPs took more than two-and-a-half years.
Similar to San Francisco’s counterparts in Ohio, federal GSA innovators 18F were “an outsized influence,” Nath said — but so was the Defense Innovation Unit Experimental (DIUx), called the “Pentagon’s so-called ‘embassy to Silicon Valley’” by Business Insider, which has taken technology from solicitation to contract in 60 days.
San Francisco’s RFP bus has the same timeline and is moving at scale, incorporating a cohort of cities that share transaction costs.
“By having the RFP bus … you have a schedule of when it’s starting and stopping, and having that certainty that it’ll be complete by this time creates a lot of confidence and predictability, and allows for better coordination,” Nath said.
He pointed to the company Binti, which used STiR to develop software that speeds the approval process for foster parents, as a success story for its work automating manual processes for San Francisco’s Human Services Agency.
The agency, Nath said, is “extremely happy with the outcomes from that partnership.”