Who's Defining Procurement Reform?

Sept 95 By Rita C. Kidd Amidst all the well-intentioned debate and legislative activity on procurement reform, something else is happening. Some public administrators and vendors appear to have read procurement reform as permission to break the rules, but not necessarily the same rules that legitimate debate is exploring. There have been some excellent forums such as the Institute for Electronic Government session in March 1995 on "Procurement Reform and Electronic Commerce" and the Kennedy School of Government, Strategic Computing Program session in June 1995 on "Information Technologies and Procurement Reform: Better Quality? Lower Cost? Electronic Commerce?" Responsible policy setters are setting new rules for oversight, reengineers are designing streamlined processes, and innovators are setting standards and devising cost-effective, best-value methods for purchasing IT equipment and systems. At the same time, tens of millions of dollars in contracts are being let outside of the competitive arena because short-circuited thinking has labeled doing so in the best interests of the public. Under the guise of "partnering," some very large non-competitive sole-source IT procurements have recently been carried out

Perhaps it is because technology purchases enjoy a certain mystique that the rational for deviating from normal competitive practices can appear to be believable

At a 1993 forum on IT, the head of one of the nation's largest social services data centers portended that the time delay and cost inherent in getting IT projects moving was in the competitive procurement itself, and advocated more use of sole-source contracting, or "partnering" for major IT projects

Federal funding agencies recently permitted what appears to be a "first" by permitting a sole source procurement for a FAMIS system transfer and development effort in an Eastern state when its home-grown system couldn't pass certification criteria for enhanced funding

A Western city's plan to let a $40 million communications system contract to "the only company who can supply the equipment required" was recently derailed by the governing body. The administrator responsible bullied policy setters with added cost, stating it would cost $3 million to hire a consultant to write the specifications for a competitive RFP. It boggles the mind how he knew this was the "only company" without having detailed business and technical requirements and a model contract already in hand

In yet another state whose sole-source contract for a state pilot project has more than doubled - and is now at over $100 million - the legislature has called a halt and required the IT administrator to negotiate a final fixed price for given work with the vendor sharing risk for system performance. The IT manager publicly warned the legislature that opening negotiations would drive the cost much higher

Hidden Agendas According to Jerry Mechling of the Strategic Computing Program at the Kennedy School of Government, the public expenditure for goods is $5,000 annually for every man, woman and child in the country. At over $1 trillion in purchases per year, we need to ensure that hidden agendas don't drive procurement reform and set us back nearly a century

Let's not lose sight of the fact that government process and rigidity is the culprit, not open competition between competent vendors for best-value products and services. To quote the Strategic Computing Program's June forum announcement letter, "The procurement systems which control these purchases are widely agreed to be flawed: they take too long, they cost too much, and they get generally poor results." It is the systems, not the competition for cost and quality, that are flawed

Reform, however, may be limited until someone decides that time is money in government as it is in the private sector. It doesn't matter if government can communicate electronically with vendors if intra- and inter-departmental review processes add weeks to months to the purchase timeframe; specialization among buyers has desktops backlogged; vendor resources are limited by lack of buyer creativity; specifications value the wrong