State purchasing directors from 15 Western states formed the Western States Contracting Alliance (WSCA) in 1993 as a cooperative multistate contracting venture to secure volume discounts on IT products.
Though WSCA has had tremendous success, the Texas Department of Information Resources (DIR) wondered if it could do better.
After Larry Olson became the state's CIO in 2004, the DIR began to feel out the major manufacturers in the state -- including Dell, Hewlett-Packard and IBM -- about how the state might secure savings beyond those available through WSCA.
"We didn't set out to leave WSCA," said Leslie Mueller, customer support manager at the DIR who oversees its IT purchasing initiatives. "We simply wanted to do the best we could for the citizens of Texas."
At its core, the WSCA idea is simple: Combine purchasing power so all government entities in member states can receive significantly lower prices on computer hardware and software -- the kind of prices previously given only to large state agencies or Fortune 500 companies.
Merging state and local purchasing power worked so well that cumulative purchases through WSCA have now topped $4 billion, and projected sales this year are $1.8 billion. Additionally WSCA's price-reducing contracts now include commodities and services such as wireless telecommunications and public safety communications equipment.
At one time, the DIR purchased all its IT hardware through WSCA. However, in seeking further savings, DIR officials considered two factors.
"For one thing, we felt it was important not to sit on a contract that is the same price for years to come," said Mueller. "The reality is that things change too quickly. So we do all our cooperative contracts now as a percentage off the standard price."
WSCA's contract prices typically are set for years, often three or more. To get better prices, the DIR began negotiating three-month contracts with vendors. Adopting shorter time periods meant manufacturers were more certain about their costs. They were not committing themselves to deliver a significant discount too far into the future.
But even more importantly, the DIR did not seek a blanket price reduction on a range of hardware. Instead, the department set out to negotiate for a single standard configuration in each hardware category.
"In essence, we went to our vendors and said, 'Your 10 or 12 percent discounts across the board are well and good, but we want to look at a standard configuration for PCs, printers, notebooks and servers, and talk to you about a special pricing offer based on those standard configurations,'" Mueller said.
To set these standard configurations, the DIR surveyed the largest agencies in the state to see what they were buying and talked to vendors to see what they were selling.
"The first contract done this way was for an HP desktop with a price decrease of $244 over the already reduced DIR price," said Mueller. "This brought the price for a standard configuration desktop from $906 to $662. And once HP stepped to the table, we had Dell, Gateway and IBM pretty quickly in line offering comparable savings for the same desktop configuration."
Mueller said that in defining standard configurations, the DIR didn't simply go for the cheapest units vendors were selling. Rather, the agency picked a model that would be an upgrade for most government entities.
"Our goal has always been not only to get the best price for our customers, but also the best value," Mueller said. "As it turned out, we met or beat WSCA in every single instance since last September, when we started this program."
The actual program operates under the mantle of Buyer Alerts -- e-mail notifications to list subscribers outlining new cooperative contracts negotiated. Additionally a full list of negotiated contracts appears on the department's Web