Procurement Reform Stalled Over Privatization Issue

A major overhaul of California's outdated procurement process appears unlikely this year, according to the sponsor of sweeping legislation to rewrite the state's 20-year-old purchasing laws.

"We're pretty much dead in the water," said a legislative staff member of the state Department of General Services, sponsor of SB 1132. "It's a shame because I think everyone recognizes that there has got to be some reform in state contracting."

SB 1132, also known as the California Acquisition Reform Act (CARA), would expand the state's use of best-value and performance-based contracting, educate state employees on using these contracting techniques and streamline resolution of disputed contract awards. The Department of General Services contends the measure would replace California's current patchwork of procurement rules with a unified statutory framework emphasizing results rather than process.

Union Opposition

The bill has been stalled since April in the Senate's Governmental Organization Committee due to opposition from the powerful California State Employees Union (CSEA).

The union believes CARA would make it easier for California agencies to privatize state services contracts, displacing public workers, according to CSEA chief legislative advocate Sherrie Golden.

"It's basically a 'contracting out' issue," she said. "We've been fighting that for years."

Information provided by the Department of General Services says CARA neither expands California's use of private services contractors, nor modifies existing legal standards governing their use. But Golden contended the bill makes it easier for General Services to issue exemptions to the policy.

"We're not real happy with the way the whole thing was put together," she said. "There are some areas where we think that the director [of the Department of General Services] has too much discretion. There are a lot of loopholes.

"If the personal services contracts came out of the bill, we'd probably have a little less of a problem with it," said Golden.

The Department of General Services may be willing to carve out the portions of CARA dealing with services contracts in hopes of clearing the way toward quick approval, according to a member of the agency's legislative staff who asked not to be identified.

But even with the changes, Golden gave the department little chance of shepherding the measure through the legislative process before California lawmakers wrap up their current session in September. "I think it's a little too late," she said. "They've missed so many deadlines."

Bill Mabie, chief aid to CARA's author, state Sen. Richard Polanco, said talks were continuing in an effort to iron out union objections. "It's a very large piece of legislation," he said. "I think they [the union] are being cautious about it and making sure there aren't elements that will hurt them."

While unwilling to write off the measure's chances this year, Mabie said CARA could easily turn into what is known as a two-year bill. Under that process, the measure would be placed on hold until state lawmakers return to work in January, giving the parties more time to hammer out an agreement.

Sweeping Reform

Despite the current impasse, Mabie called CARA the state's "best hope yet" at comprehensive procurement reform. He added that the bill's chances for success are enhanced because Polanco, who has authored procurement reform legislation in the past and is recognized as an authority on the subject, is carrying the measure.

Among other things, CARA expands the state's ability to base purchases on best value rather than lowest price. While California agencies currently may use best-value procurement for information technology, CARA would extend the concept to all state purchases, according to the Department of General Services.

The measure also includes a training component designed to educate state procurement officials on how to use best value, and innovative techniques where the state and private contractors share the risks and rewards of major projects.

Ken Dineen, associate partner with Andersen Consulting, said CARA would deliver a crucial message to state agency buyers.

"While we've done some creative things, it's clearly not the norm," he said. "There's still a lot of confusion out there about what's doable and what isn't. So many of the procurements still follow what I call the old pattern -- 'specing' the solution and looking for the lowest possible cost."

CARA also proposes creating a new administrative process to handle disputed contract awards. The process, to be developed by the Department of General Services, would emphasize open communication and informal problem solving over quasi-judicial hearings, according to the agency.

The department describes California's current award protest process as rigid, costly and slow-moving. "Because the resolution process is so inflexible and takes so long, many bid awards are just canceled shortly after receipt of a protest, and then rebid with an adjusted solicitation," according to information provided by General Services. "Sometimes this process can be repeated for one to two years."

In addition to improving the handling of protests, the department expects CARA to reduce the number of disputes by consolidating regulations governing services contracting, information technology acquisition and commodities purchasing into one statute.

"One of the biggest problems for suppliers and state officials alike is the confusion caused by so many duplicative and conflicting rules," according to the agency. "There simply is no uniform set of rules for everyone to follow, and this costs both the public and private sectors time and money."

Falling Behind

Peter Stamison, director of the Department of General Services, underscored CARA's importance during the Government Technology Conference Sacramento this May. Speaking at a roundtable discussion between state officials and information technology vendors, Stamison described the state's current procurement process as among the worst in the country.

"Our fear, particularly as business people, is that unless we change this process, the best and the brightest vendors won't even be knocking on our door," he said.

Stamison contended CARA's reforms would have tremendous impact in California and sweep across the nation, as well. He urged industry representatives attending the roundtable session to support the measure.

"As California goes, so goes the rest of the country," said Stamison. "You have a tremendous opportunity to affect procurement for the better."

Dineen agreed that California's procurement system demands reform, saying it hampers the state's ability to respond to technology needs.

"I think California, at one time, was viewed as a leader on many fronts as it relates to automation and technology," he said. "I think there are many states today that are getting somewhat ahead of them as far as the ability to implement change."

Current regulations set up an adversarial situation that not only makes dealing with the state difficult for vendors, but often stack the odds against successful completion of major technology undertakings, Dineen added.

"It's imperative for the state to ultimately take a hard look at this," he said. "This is not about the private sector taking public workers' jobs anymore than it's about public workers pushing the private sector out. It's about the state of California keeping pace with what taxpayers are looking for."

For more information, contact Bill Mabie 213/620-2529.

Steve Towns is the editor of Government Technology Reseller.




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