Arizona is building a Web-based system to manage the state's complex contract and bid solicitation process. While other states have chosen to develop electronic purchasing systems, state procurement administrator John Adler opted to defy prevailing wisdom, calling the current crop of commercial online catalog tools immature. Adler said what the state really needs now is a custom-developed, electronic contracting system for bid notification, automated bid tabulation and other computerized services that support the state's RFP process.

The system is badly needed to aid the Department of Administration's staff of less than a dozen procurement workers who must sift through as many as 150 proposals for one contract. The department processes nearly 1,500 contracts annually. "Contracting is a big challenge and we need to focus on reengineering the process to create new applications and to better communicate with vendors," explained Adler.

Because the state's government is so highly decentralized, a number of Arizona's 109 agencies have already developed their own e-catalog systems to purchase commodities. However, little had been done to address the unique service requirements of the state's complex contracting process. According to Adler, the proposed electronic contracting system will not only automate some labor-intensive steps, but will reengineer and streamline operations, making the process more efficient and cost-effective.

By January 2002, the department plans to have a Web-based service up and running that will completely centralize and manage the state's bid solicitation process. The application will process all information about customers, vendors, buyers, commodities, requisitions, solicitations and contracts. It will enable the state to receive and distribute all proposals electronically to its agencies and to the state's various political subdivisions, including local governments, which will have the opportunity to use the same online service for managing their proposals and bids.

Reducing the Time Lag

The electronic contracting system, which has been custom-developed by Apex Interactive, will push e-mail notifications to vendors using a Lotus Domino Enterprise server, which will also be used for workflow management. The open system platform will reside on a Sun Microsystems Sun Fire 3800 server running Solaris 8. Oracle's version 8i database software will handle the system's data management requirements.

In addition to centrally managing the state's bids and proposals, the electronic contracting system will significantly reduce the lag time in proposal evaluation. More importantly, it will free up precious staff time to focus on bid analysis and negotiations, according to Adler. "In the private sector, purchasers focus on procurement of material and services for products. But in government, our core focus is on services," he said. "This [application] will leave time for my staff to focus on service contracts."

The online contracting system is one of several electronic procurement activities going on in the state. The state's portal developer, IBM, is developing a new online vendor registration module. Vendors will be charged a fee to register with the state and receive e-mail notification of bids from both the state and local governments using the system. An electronic catalog, currently in place for large agencies, will be augmented to increase its workflow capabilities and will be available to other agencies that lack their own e-catalog and purchase order system.

By using technology based on open standards, the state can build the various procurement components, including the e-contracting system, as modules that can be scaled and upgraded as needs change. "I like the modular approach, because e-procurement and e-government is like holding water in your hands," said Adler. "You can't build a system and then sit back for 10 years, you have to be ready to adapt constantly."

Arizona isn't the only state that has tackled the complicated contracting process with technology. Both Missouri and South Carolina have built similar systems. Missouri started using a contracting system in May 2000 developed by American Management Systems. The e-contracting module provides online vendor registration, e-mail notification of bids, electronic submission of responses and bid tabulation. South Carolina also has an online bidding module, which was built onto its procurement system in June 2000. In local government, Orange County, Calif., is using an e-contracting system developed by AMS.