Sales Pitch

Virginia and Wichita woo suppliers for new e-procurement systems.

by / June 8, 2001
Along with the typical potholes that need to be filled when traversing new e-commerce territory came a crater-like void in the plans of procurement officials who developed the first state and local government e-procurement sites.

The problem was that getting suppliers interested enough in the system to convert their paper catalogs to electronic ones was considerably more difficult than imagined; an e-procurement system devoid of supplier catalogs is like a grocery store without groceries.

When procurement officials from Virginia set out to develop their e-procurement system, they were armed with this information and took steps to involve vendors in the design of the application. In March, Virginia rolled out its e-procurement system, eVA, and immediately boasted 80 online supplier catalogs. This was a remarkable feat, considering the dead ends that other states encountered when trying to sign up suppliers.

As Virginia breaks new ground and becomes an e-procurement model for states, Wichita, Kan., is doing the same on the local level, having rolled out a system last August that puts the city on the fast track to follow in Virginias footsteps.

Virginia Reaches Out

"Before we even put our solicitation on the street, the governor [Jim Gilmore] said, I want it done right and I want it done right now," said Donald Williams, director of Virginias General Services Department.

That edict came in March 2000. This year, Virginia set about doing it right. That meant reaching out to vendors and finding out what would and would not work in getting vendors to partner in an e-procurement system. "We wanted to find out what their hot buttons were, how they would react to fees, how they would react to the technology. We got a lot of good feedback, a lot of good suggestions and built our funding model around their comments," Williams said.

In January, Virginia took its show on the road, inviting thousands of vendors to a "roll-out meeting" to show off the system and let suppliers know that e-procurement was coming and how it was going to work. Virginias sidekick in setting up eVA, American Management Systems (AMS), attended the roll-out meeting to help sell the system. The company started signing up vendors on the spot.

The March rollout implemented the first of two phases of the project that should result in a complete electronic-procurement system by Christmas.

Phase one concentrated on vendor registration, the key process of getting suppliers signed up and online. Besides the 80 or so vendors with catalogs already online, Virginia has registered about 500 suppliers to sell through the system and hopes to have hundreds more vendors online by the end of June.

It took a bit of a sales job to interest suppliers in the system, and Virginia was well prepared to pitch it. Virginia assembled an internal solicitation development team that set out to convince vendors that registering with eVA would be a good business move.

For a $25 fee, vendors are considered in good standing and are part of the governments selection process. For another $175, vendors can take part in the systems "e-mail push" feature, which sends suppliers an electronic notification whenever the commonwealth contemplates releasing a bid.

During registration, vendors designate the types of bid information they want to receive. "Thats going to save them a lot of time," Williams said. "They wont have to buy all those newspapers and sit there and read them, and they wont have to go to the posting board at an individual agency to make sure they dont miss anything."

In addition to registration fees, vendors pay a 1 percent transaction fee, up to $500, on each sale.

Phase two of the project will consist of "everything that relates to procurement that you can think of [that was] not previously accounted for," according to Bill Kilmartin, vice president of AMS. "In other words, solicitation development, bid distribution, bid response, bid evaluation, contract formulation, strategic sourcing, auctioning and reverse auctioning."

Another key eVA feature is a data warehouse designed to track vendor registration, catalog purchases, bid distribution, bid receipt and spending patterns. This information is shared with suppliers. "Many of the best practices indicate that if you knew what peoples buying habits tend to be, you would be in a position to leverage that knowledge," Kilmartin said. "The problem previously was that purchasing entities couldnt really tell who was buying what."

Smooth Rollout

Like Virginia, Wichita sent out feelers and educated vendors about the citys e-procurement plans. When it came time for the Wichita systems August rollout, the city and its suppliers were on the same page.

A couple of mass mailings were sent to signal the coming of e-procurement and to advise vendors that they would be receiving a secure login name and a password to sign up. Vendors that werent ready to submit online bids could use a manual process initially, but they must convert to e-procurement in the near future.

"It has worked out very well," said Melinda Walker, Wichitas purchasing manager. "The one true benefit that we have is that the vendors now have the ability to see all bids and all proposals at one place. Before, we had different departments doing their own proposals. Its a communication tool for the vendors to show, Here are all the bids the city does and here are all the proposals."

Wichita, like Virginia, uses the National Institute of Government Purchasing commodity codes to allow suppliers to designate which goods or services they want to bid on and be notified of. And the city charges no additional fees for using the system.

"From a purchasing standpoint, it makes sure everybody has a chance to bid on our projects and can see them out there," Walker said. "We do the legal advertisements in the paper and all that, but then you have to read the newspaper and figure out where its at."

Wichita purchased the system from KPMG Consulting in Chicago after having seen a demonstration at a user conference. "We were one of the first cities to do this," Walker said. "Everybody else was looking at it but nobody had it. Were kind of an innovative city and we dont wait around to see what other people are doing. We saw the idea and thought it was a good idea and went with it."

Walker said that the system cost about $300,000 to implement and that the city has already seen tangible benefits. "The time that it takes to prepare a bid has been reduced, and it has cut our mailing costs, our copying charges and other support costs nearly in half."

The city plans to have direct deposit in place by July and sees online catalogs as the next step. "What we have is great, but were looking at people putting their catalogs online as the next deal," Walker said. "Were happy with what weve got but were looking to move forward."
Jim McKay, Justice and Public Safety Editor Justice and Public Safety Editor