5 Steps to Better State IT Procurement

IT procurement remains a complex issue. It seems like we have been talking about how to better the process for many years now, with no real results. But thankfully, the National Association of State Chief Information Officers (NASCIO) recently developed and released a five-step process, Call To Action: Recommendations for Improved State IT Procurement, that guides state leaders to improve their IT procurement process.

Meredith Ward, Senior Policy Analyst at NASCIO, and Doug Robinson, Executive Director at NASCIO, sat down with Emily Jarvis on GovLoop’s State and Local Spotlight to discuss the call to action and what it all entails. 

“CIOs still don’t understand why the process takes so long. In general, it takes 18 months for the IT procurement cycle to begin and end. And although there is a good reason, a good purpose for the protections put in place, laws do not get updated overnight,” Ward said.

In their recent interview, Ward and Robinson detailed five steps they believe will improve IT procurement in state government.

1) Remove unlimited liability clauses in state terms and conditions: The report noted, “As state CIOs continue to deploy IT solutions, it is important to recognize the fiscal benefits of transforming the procurement process to meet the needs of a smaller workforce, budget constraints, and consolidation efforts. States who have eliminated unlimited liability have also experienced an increased innovative and competitive contract culture.”

“It is not the norm in the marketplace, but it is the provision for states,” Robinson said. Large, multinational corporations do not want to put their assets and their company at risk with an unlimited liability. When limitations are put in place, competition among the vendors is encouraged, which leads to a healthier procurement system.

2) Introduce more flexible terms and conditions: Ward and Robinson explained that the role of procurement officials is to level the playing field, to reduce the risk to state government and its taxpayers. Additionally, procurement officials should promote healthy competition within the state, but sometimes these two roles can cause friction with one another.

That may explain why some states continue to be unwilling to waiver on their terms and conditions. Robinson referred to these terms as “absolutes,” and explained that they lead to companies’ refusal to accept the standard terms and conditions because they are too onerous. Instead, NASCIO hopes to instill the mentality that the more flexible terms are, the more agile and adaptive an agency can be in their IT adoption.

3) Don’t require performance bonds from vendors: Investopedia defines a performance bond as “a bond issued to one party of a contract as a guarantee against the failure of the other party to meet obligations specified in the contract.” The website uses a construction project as an example and explains that “if the contractor fails to construct the building according to the specifications laid out by the contract, the client is guaranteed compensation for any monetary loss.”

Not only are performance bonds becoming harder and harder to obtain, but they also hinder progress and diversity among potential contractors. “Small companies, in particular, find that they have to post a performance bond just to do the work, which is a financial hardship for them,” Robinson said. “It doesn’t improve or motivate the company to do a good job simply because they are concerned about forfeiting their bond.”

4) Leverage enterprise architecture for improved IT procurement: Robinson defined enterprise architecture as “a roadmap for rationalizing your IT investment” and a way to “make sure that everything you do fits into the big picture, the big vision.” States need to remember the ultimate reason for procuring IT services and solutions. Robinson even recommended that, “Every solicitation coming out of state government that involves information technology should have a provision that states in the request for a proposal that respondents must agree to comply with the state’s enterprise architecture.”

5) Improve the Negotiations Process: “This is probably the hardest one,” Robinson said. The way state government is set up, states only get to interact with the potential reward recipient. The second or third candidates are removed from the process, which means there is very little room for negotiation or leveraging, Ward explained. Therefore, the negotiation process must change. “As technology changes, services change and we have to continue to be agile and adaptive to what needs to happen,” she concluded.

Bottom line: state IT procurement systems must become more agile and smooth. Otherwise, we will continue to see statistics like 47 percent of state CIOs expressed negative outlooks on IT procurement processes.