Colorado, Utah Will Share E-Procurement System

DENVER -- Instead of building their own electronic-procurement systems in-house, Colorado and Utah crunched the numbers and decided to seek out a vendor that could build a single e-procurement system that both states will use.

"Utah is pretty close to where we are in terms of e-maturity, and our business models are very similar on the procurement side so they decided to go in with us," said Richard Pennington, purchasing director of Colorado.

Although states are tinkering with various models, Colorado and Utah are adding a new wrinkle to the progression of e-procurement.

"We didnt recognize that we were plowing as new a ground that we are plowing in this area," said Douglas Richins, Utahs director of purchasing. "Thats been a fun, synergistic aspect -- its put us in the position of not looking inward just at our own systems. Weve tried to look more globally, and as weve done that, its challenged us to look at our own business processes."

Currently, the two states are in the "user-acceptance testing," Pennington said, adding that the live-ordering date is set for August 27th.

Three agencies from both states are using the system now in an attempt to ferret out potential bugs and familiarize themselves with the system, he said.

"Colorados Department of Personnel, the Department of Human Services and the Department of Labor and Employment are using the system now," Pennington said. "Utahs Department of Transportation, the Division of Taxation and the Division of Central Administration are also using the system. Were trying to get a combination of white-collar purchases -- office supplies and those types of things -- with a department that handles inventory so we can see what sort of challenges were going to face as we get into the accounting-system integrations and some people with facilities experience so we get a broad range of buying."

The shared system will be available to local governments, municipalities, public education institutions and political subdivisions in both states. Ultimately, the system will include such functionality as dynamic workflow, support for vendors, legacy systems integration, interoperability with existing financial infrastructures and integration of existing state price agreements and state contracts.

A 1 percent transaction fee paid by participating vendors will support the ongoing development and maintenance of the shared e-procurement system, which was built by the e-procurement arm of National Information Consortium.

"These reverse revenue models are a challenge for people," Pennington said. "What our political subdivisions are learning -- as well as states -- is that youve got to get together and try to aggregate some of the demand to make this attractive."

The two states went with an outside vendor because they werent sure that they could build their own systems quickly, Richins said.

"Our analysis was that this was an excellent area for an ASP model because of the economies of scale [and because] NIC is up-to-date, has the software, has the technology and understands this marketplace," he said. "We decided that to outsource would provide us with a much earlier adoption and roll out than we would have achieved had we elected to do it in house."