December 21, 2010 By Andy Opsahl
The open-procurement bid process is frequently seen as a costly, time-consuming headache for state and local agencies. But hardly anyone disputes that it’s what’s best for taxpayers.
Spending tax dollars obligates public servants to demonstrate that they’ve found citizens the best deal available. When revenue streams collapse, however, government officials end up backed into corners, desperate for any justifiable shortcuts they can find. Ways of cutting through an open bid’s red tape do exist, which IT departments might want to evaluate as maneuvers for surviving their budget shortfalls, as some departments are facing cuts of up to 20 percent.
There are two avenues to pursue that aren’t commonly utilized:
One strategy is buying off of another state or local government’s existing contract, assuming no statutory obstacles exist. This is often called “piggybacking.” Similarly other remedies include purchasing off of pre-negotiated cooperative contracts, like ones offered to multiple states by the Western States Contracting Alliance and the Texas Department of Information Resources.
Another option sometimes used is persuading an already contracted vendor to hire another company that’s being eyed by that government for additional services. This is sometimes called “indirect hiring.”
One way for state and local governments to bypass the open-bid process is to “piggyback” off of a contract already negotiated by another state or local government. Often, vendors with those contracts allow other governments to use them if the transaction doesn’t increase the cost, according to Jeff Holden, director of the South Dakota Office of Procurement Management. It’s typically a rule that the vendor can’t charge the additional government more than it charged the agency that established the contract. Buying computers this way is typically a good fit because computers frequently don’t have shipping charges.
Nearby state and local governments are often good places to find contracts for piggybacking because the freight charges are less likely to be different. Holden said to seek contracts from manufacturers rather than distributors. Distributor contracts tend to have territory restrictions on who can purchase off of them. Agencies can get information about the major manufacturer contracts available across the country by querying the different state and local government purchasing organizations, Holden said. They can also search procurement office websites, which usually have lists of such contracts. The director of that office is usually the first person to consult about using the contract, according to Holden.
Another way state and local governments sometimes bring on additional vendors without an open bid is to get a vendor already contracted with the agency to do the hire, according to Glenn Davidson, managing director of public sector for EquaTerra, a procurement consulting firm. This is called “indirect hiring.” The agency pays the initial vendor extra money in such an arrangement.
“You can do this as long as it is consistent with what the overall contract was for,” Davidson said.
He correctly predicted Government Technology would have difficulty finding a government willing to acknowledge that approach, but said he has heard that it’s happening.
Governments scrambling for procurement shortcuts don’t get much sympathy from Brad Douglas, commissioner of the Georgia Department of Administrative Services (DOAS).
“Some of what you’re hearing is some opportunistic bellyaching where people want to do things quicker and sort of have this environment be the rationale for them doing so,” Douglas said.
All state and municipal agencies in Georgia have access to the state’s preapproved cooperative purchasing contracts, according to Douglas. No bid is necessary for those. The DOAS also offers Georgia state and local agencies a Web-based purchasing tool called eQuote for soliciting items when price is the only concern. The application solicits and chooses the cheapest offer. The procurement official simply enters the specs for whatever item the agency needs, and vendors are alerted. The vendors then submit the offers with a few clicks. In Georgia, procurement officials can hold these bids open for as few as two days.
Douglas said governments in other states would need to check how such a tool would be affected by their procurement laws. He said governments from other states might be able to use Georgia’s code for the application.
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