Who's Defining Procurement Reform?

Who's Defining Procurement Reform?

by / August 31, 1995
Sept 95 By Rita C. Kidd Amidst all the well-intentioned debate and legislative activity on procurement reform, something else is happening. Some public administrators and vendors appear to have read procurement reform as permission to break the rules, but not necessarily the same rules that legitimate debate is exploring. There have been some excellent forums such as the Institute for Electronic Government session in March 1995 on "Procurement Reform and Electronic Commerce" and the Kennedy School of Government, Strategic Computing Program session in June 1995 on "Information Technologies and Procurement Reform: Better Quality? Lower Cost? Electronic Commerce?" Responsible policy setters are setting new rules for oversight, reengineers are designing streamlined processes, and innovators are setting standards and devising cost-effective, best-value methods for purchasing IT equipment and systems. At the same time, tens of millions of dollars in contracts are being let outside of the competitive arena because short-circuited thinking has labeled doing so in the best interests of the public. Under the guise of "partnering," some very large non-competitive sole-source IT procurements have recently been carried out

Perhaps it is because technology purchases enjoy a certain mystique that the rational for deviating from normal competitive practices can appear to be believable

At a 1993 forum on IT, the head of one of the nation's largest social services data centers portended that the time delay and cost inherent in getting IT projects moving was in the competitive procurement itself, and advocated more use of sole-source contracting, or "partnering" for major IT projects

Federal funding agencies recently permitted what appears to be a "first" by permitting a sole source procurement for a FAMIS system transfer and development effort in an Eastern state when its home-grown system couldn't pass certification criteria for enhanced funding

A Western city's plan to let a $40 million communications system contract to "the only company who can supply the equipment required" was recently derailed by the governing body. The administrator responsible bullied policy setters with added cost, stating it would cost $3 million to hire a consultant to write the specifications for a competitive RFP. It boggles the mind how he knew this was the "only company" without having detailed business and technical requirements and a model contract already in hand

In yet another state whose sole-source contract for a state pilot project has more than doubled - and is now at over $100 million - the legislature has called a halt and required the IT administrator to negotiate a final fixed price for given work with the vendor sharing risk for system performance. The IT manager publicly warned the legislature that opening negotiations would drive the cost much higher

Hidden Agendas According to Jerry Mechling of the Strategic Computing Program at the Kennedy School of Government, the public expenditure for goods is $5,000 annually for every man, woman and child in the country. At over $1 trillion in purchases per year, we need to ensure that hidden agendas don't drive procurement reform and set us back nearly a century

Let's not lose sight of the fact that government process and rigidity is the culprit, not open competition between competent vendors for best-value products and services. To quote the Strategic Computing Program's June forum announcement letter, "The procurement systems which control these purchases are widely agreed to be flawed: they take too long, they cost too much, and they get generally poor results." It is the systems, not the competition for cost and quality, that are flawed

Reform, however, may be limited until someone decides that time is money in government as it is in the private sector. It doesn't matter if government can communicate electronically with vendors if intra- and inter-departmental review processes add weeks to months to the purchase timeframe; specialization among buyers has desktops backlogged; vendor resources are limited by lack of buyer creativity; specifications value the wrong project or product qualities; or if contracts permit product deliverables to be accepted when they don't meet stated user expectations

SCARY STORIES To taxpayers anxious to encourage streamlined, efficient government, the examples cited above are scary stories. No one wants to "throw the baby out with the bath water." We've worked too hard and long to correct and control even a hint of fraud or mismanagement in the payout of public funds for services. One of the initiatives of procurement reform is directed at empowering managers through greater latitude in purchasing goods and services. With this move, ethical management must be an expectation, and managers must be held accountable for their actions

In state hearings held in the state cited in the last example above, to review what has been labeled "mismanagement", legislative representatives stressed over and over that they weren't blaming anyone, or trying to hold anyone responsible or accountable, but simply trying to move ahead responsibly. To taxpayers who watch necessary services cut to trim what seems like minimal dollars, mismanagement charges relating to a $100 million procurement boondoggle should result in someone - or several people - being held accountable

Tagging on to GSA pricing, government stores and electronic commerce are all tools that make our jobs easier, but they aren't procurement reform. It is our nature to look for simple, non-demanding solutions for complex problems, .like InfoKiosks for delivering government services. It feels good and it looks good. But if traditional, convoluted government practices remain in place behind the scenes, we haven't really done anything for the taxpayer except potentially increase the cost of the service overall if our procurement approach allowed us to "partner" on a proprietary product that we have to live with forever

We may not yet have defined the real problems in procurement. Until the real issues are properly defined and corrected, and we address the needs of the most critical stakeholders - the people who pay the bills - reform will only superficially produce better services. It is questionable whether measurable lower costs will result. Integrity, responsible leadership and management accountability are the bottom line, with or without reform. We need to expect public managers to see themselves as fiduciaries, holding taxpayer dollars in trust. Unfortunately, it is easy to play with someone else's money, unless there is potential personal liability

Rita Kidd provides commentary and analysis on human services and other large-scale automation efforts in state and local government. Her experiences as former deputy director of Merced County, Calif.'s Human Services Agency, and as director of MAGIC - Merced County's welfare automation system - provide valuable insight into the complexities of welfare automation and approaching welfare reform. She is now a government reengineering consultant residing in Cathey's Valley, Calif. Her opinions are her own, and not necessarily those of GT or its editors

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