For decades, procurement in state government has operated with a series of checks and balances to keep the purchase process fair and competitive. Slow and cumbersome, the process, largely developed during the heyday of World War II when computers were nonexistent, seemed to work anyway.
Lately, the procurement system has failed to keep pace with our growing government, now the biggest "industry" in the U.S. economy, accounting for 41 percent of the gross national product, according to Harvard's John F. Kennedy School of Government. Weighed down by rules, regulations and statutes -- many of which are woefully archaic -- the government procurement system has not only been slow and cumbersome, but also increasingly costly to taxpayers.
Just when tales of $600 toilet seats and $100 million computer systems that didn't work appeared to dominate the news about government, a new breed of procurement officer has emerged. A perfect example is Gary Lambert, president of the National Association of State Procurement Officials (NASPO) and deputy purchasing officer for Massachusetts.
Lambert doesn't flinch at the notion of change or reform. Nor is he afraid of technology. He has overhauled Massachusetts' procurement system, reducing the regulatory burden from more than 100 pages of process-driven requirements to 12 pages of value-based regulations.
He worked with NASIRE (National Association of State Information Resource Executives) to embrace best-value and other procurement reforms to improve the purchase of technology and helped to create one of the earliest Internet-based procurement systems to publish and distribute solicitations.
Today, Lambert is leading the first multistate effort for electronic procurement -- known as the EMall -- and is championing the strategy of the purchasing official as a knowledge worker. These last two initiatives are high-reward, high-risk propositions, but he believes the time has come for new ideas as the economy and government become increasingly digital.
A tireless promoter of electronic commerce in the public sector, Lambert is constantly courted to speak at conferences and symposiums. Government Technology recently caught up with him between travel engagements.
GT: Massachusetts and several other states launched EMall last fall as a pilot project to test hypotheses concerning electronic procurement. What have you learned so far?
Lambert: A couple of things. First, as we know with any good systems-development effort, it always takes longer than we budgeted. We hit some bumps along the way between October and early February that slowed us down by about four months, but we are now in production. We have 12 companies representing four or five states and we are actually doing transaction activity, purchasing from a number of those companies.
We've learned that the effort is going to take a bit longer than we originally anticipated, although when you compare it to systems initiatives of this nature from three or four years ago, that's still pretty quick. In less than 12 months we went from concept to production pilot.
We've also learned a lot about certificate technology and the opportunities to use digital certificates. We're finding that a lot of folks, both public and private, don't really have a good handle on public key infrastructure yet, and are just now starting to figure out what it all means and how to appropriately use it.
We're also finding that a number of companies are not necessarily ready to do business-to-business solutions. They are learning as much as we are as we go forward. That's a good thing because everyone is starting to gain some experience. We are also learning a lot about the reengineering activity that needs to take place around this kind of effort. One of the pleasant surprises though, beyond reengineering, is there really is among the states an active dialogue about cooperative purchasing through the mall.
Idaho and New York have formed some relationships, Idaho and Massachusetts have formed some relationships and New York and Massachusetts are in conversation on some contract sharing, so there's dialogue under way about mixing and matching contracts across state boundaries.
GT: Is there an issue that poses a bigger hurdle to electronic procurement at a multistate level than you anticipated?
Lambert: So far, no. Things from the community development aspect are progressing better than we thought. Things from the technology standpoint have progressed slower than we had hoped, but not slower than we thought might happen.
We knew we were going to hit a wall somewhere along the way. We didn't know what that wall was going to be, and we didn't know how long it was going to take to break through. But we've gotten past that and have broken through the wall. We are now at a place where we are focusing on ramping up the transaction volume and working through the discussions about multistate cooperative purchasing, and are beginning to set the table for the discussions about governance on a go-forward basis in multistate environment -- meaning governance of the system itself.
GT: How would you describe procurement in state government today?
Lambert: There's a lot of change going on in procurement right now. If you look around the country, there are probably eight or nine state procurement directors who have recently left government. That has led to some holes in the state level in terms of moving agendas forward, but it is an also an indication of how dynamic procurement is becoming in the marketplace.
A number of the procurement officials have left either for other government positions, being recognized for their skills in the procurement domain, or have moved into the private sector. That is something that wasn't anticipated by NASPO, in particular, a few years ago.
For the most part, things were pretty static. People had been around for a while and those who changed in different states usually changed because of re-elections or a change in governors. But this is a different change. It's primarily being driven by the market, not by the politics.
GT: Is procurement keeping up with the changes taking place in the economy and with technology?
Lambert: Sure. North Carolina just passed a law regarding best-value procurement for information technology within the last few months. Kentucky, in the last year changed its legislation to a best-value environment. You have the things like the multistate EMall. You have the California procurement network coming up. You have a number of states reviewing their current practices and procedures, moving in a best-value direction.
You have cooperative agreements springing up more frequently. You also have what I'll call the "interstate compact" between Washington and Oregon, in which they are sharing contracts. All of that is recent. It's not been around for 10 or 20 years in the way that it is today.
Think about all of the reengineering efforts that have been under way in the last three or four years across the country, the consolidation of contracts, the use of longer-term contracts and the use of statewide agreements as opposed to strictly low-bid, one-year contracts done year-in and year-out in the same old way.
Then in Washington, you have the pilot in which they took a bid back using digital signature technology over the Internet.
GT: NASPO worked with NASIRE a while back to develop a series of model procurement-reform measures to improve how states purchase information technology. Do you see evidence these reform measures are being adopted?
Lambert: I do. North Carolina's most recent legislation, for example. Some progressive things went on in Florida with their contracting efforts and Missouri's move to a single-source, one-stop shop for desktop machines and software. Pennsylvania's partnership with Microsoft for the exclusive rights for desktop software. Those are indications of what those measures were driving at.
GT: NASPO has published a white paper called "State Procurement: Strategic Positioning for the Twenty-first Century" that discusses moving from a process-based procurement system to a knowledge-based procurement system. Could you elaborate on what sort of benefits could come from such a strategy, and how states might move in this direction?
Lambert: This is an extension of best-value. Take the evolution of procurement over the last few years and look at how procurement has been a process-driven function. If one followed the process, one was considered successful. You may not have gotten what you needed, but you were successful if the process was applied appropriately.
We have now moved into best-value environments where people are beginning to think about: What are the outcomes? What is it we really need and how is it we should go get those things, be they goods or services?
The next evolution moving into the 21st century is going to be: What level of knowledge worker do you have in the procurement division? Who can take best-value to its next level? How do we effectively leverage the marketplace to get delivery of a particular service or product that actually meets the customer's need, and actually engages the customer or supplier in that solution? How do we work smart to accomplish the goals as opposed to how do we process things to get a contract? What kinds of skills do we need in procurement around certain industries, as opposed to what skill sets do we need in terms of professionally processing them?
That's where we are going. Also, what skill sets do we need to take advantage of the business-to-business solutions in an electronic commerce environment? How can we leverage that opportunity within the procurement domain? What kinds of workers do we need for that? What kinds of changes to the organization does that generate?
GT: What is NASPO going to do to create a fertile environment for the knowledge-based procurement approach to work?
Lambert: Part of what we are doing is the white paper. This is the precursor to future efforts. Other things being explored and considered are some additional dialoguing with the industry about where the industry is going, whether that's the office-product industry, the information technology industry, or any other industry we do business with, so we can get a better understanding of how things are evolving in those particular business areas.
We are also going to continue to try and work internally to develop training and outreach efforts for NASPO members around best-value, knowledge-based workforce development. There's also discussion about developing some type of enhanced training program or certificate program for procurement officials at the state level.
GT: Massachusetts has implemented a number of procurement reforms and improvements. What sort of results are you seeing in the commonwealth in terms of the way it procures products and services?
Lambert: Since we started doing procurement reform in 1996 there's been a significant change. Our workforce that's centrally managed by this [Operational Services Division] office has decreased since 1991 from 134 to about 60 people. That has been without degradation in outcome, meaning we now have 75 percent of all goods purchased at the end of fiscal year 1998 done off of statewide contracts.
In 1996, when we started the effort, the number was around 61 percent. So there's been a 14 percent increase in the number of products purchased by departments off of statewide contracts. We also started in 1996 with zero volunteers, because we did not run teams. We now have 358 people on 16 teams.
GT: What do these teams do?
Lambert: These are the procurement teams. They actually develop the solicitations and manage the contracts once the solicitations are done for statewide services or goods. The other interesting dynamic is the mix of the membership on those teams. It's not just state departments. We have local representation and [representation] from other states.
The teams help decide what sort of procurements should take place and what details should be in the procurements because the team is really the end user, the customer. By having the customer at the table doing the development effort, the customer winds up with the goods or services they really need to do their business. So it's a very different dynamic from the past when one would sit down and try and anticipate what the customer needed, but not necessarily engage them.
GT: Finally, you spend a lot of time on the road, talking about electronic procurement and reform. Do you see yourself taking on a more national role at some point in the future?
Lambert: The potential is always there. Given the dynamics of procurement these days and the rapidly changing environment, particularly in electronic commerce, it's awfully difficult to predict what's going to happen or what opportunities are going to present themselves. My goal right now is to continue to promote the use of electronic commerce and improve operations within government, and I will keep doing that as long as I am working for both NASPO and the commonwealth.