Power to the People. A Conversation with State Procurement Officers on NASPO ValuePoint and the Power of Cooperative Purchasing. Power to the People

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1 Power to the People Power to the People A Conversation with State Procurement Officers on NASPO ValuePoint and the Power of Cooperative Purchasing Underwritten by 1

2 State procurement officers are pressed to deliver solutions as efficiently as possible, which is no easy task considering the multiple challenges they face on any given day. Staffing shortages, limited resources, and thinning budgets necessitate a level of resourcefulness and planning that is rarely matched by other professions. To explore how states are addressing these challenges, Government Business Council (GBC) interviewed state procurement officers from Utah, Idaho, and Alaska on the value of leveraging NASPO ValuePoint s cooperative framework. Together, their insights present a revealing portrait of the procurement needs and challenges common across the country, and make a strong recommendation for the power of cooperative purchasing as the ideal solution for overcoming such constraints. Challenges Staffing Shortage Without a doubt, says Christopher Hughes, the first challenge is staffing. Hughes serves as Assistant Director for the State of Utah s Division of Purchasing. We don t have unlimited resources and we have to use the resources that we have in the best way. That doesn t necessarily mean we re always going to have enough staff to handle all the procurements coming through our office. He says this sometimes puts his department in a tough spot, requiring personnel to work long hours to keep pace with a constant flood of contracts. Valerie Bollinger agrees. As State Purchasing Manager for Idaho s Division of Purchasing, she s very aware of the demands placed on her team. The number one challenge across the board [for most states] and absolutely for us is staffing workload. We are an extremely small office with an incredibly huge workload, so that s always a challenge. For Bollinger, those limitations make managing agency expectations especially important, given the vast oversight her office exercises over both agency and statewide operations. Knowledge Spread Thin An added difficulty is the sheer variety of contracts that procurement divisions must cull through. On a given day, says Hughes, we may have a procurement for a fish finder, on the next day a procurement for bed sheets, and the next day something a little more complex perhaps a system that s going to be used by a department to maintain all of their data. Hughes extols his department s expertise, but acknowledges it s simply not possible to pack that much background knowledge across such a range of products. At times, it s very difficult because we don t have somebody on staff that is going to be an expert on knowing what is the most up-to-date fish finder or what type of data management system would best be used in this facility. Ideally, he says, [we want to] add value to the service we re providing to these agencies because they re coming through us to make their procurement. 2

3 Leadership and Culture For Jason Soza, Chief Procurement Officer for the State of Alaska, that kind of understanding is integral not just to purchasers, but to state leadership as well. The whole doing more with less vibe is true here. And I think that adds a whole other layer of challenge when you re not fully understood When you have a culture that promotes the mentality hey, you re a procurement official: go innovate, find new ways to bring savings to the state, go be proactive then that s really positive. or not fully taken advantage of, it adds a whole other layer of complexity. Sometimes you get new leadership, and the value of procurement isn t understood. This could happen in an office where a new manager comes in and they view procurement along the lines of oh, I need something; go buy it ; but occasionally you get an administration who comes in that really values procurement, and that s where I ve seen the big difference. Culture is critical, says Soza. When you have a culture that promotes the mentality hey, you re a procurement official: go innovate, find new ways to bring savings to the state, go be proactive and help agencies with market research and find opportunities to save money then that s really positive. It lets the procurement office provide value to the entire organization. Uniting States, Unleashing Value Strapped for resources and facing greater cuts to budget each year, what can states do to overcome the challenges? Fortunately, there s a way forward: the power of cooperative purchasing. The rise of cooperative purchasing agreements in the last half century gave states a level of bargaining power that has helped tackle many of the difficulties plaguing purchasers across the country. NASPO ValuePoint, while not the first of its kind, is the latest and arguably most effective iteration of the model. Formed in 2013, ValuePoint is a non-profit cooperative purchasing organization entirely managed by an elected group of state procurement officers from across the country. Leveraging The Nation s Expertise Because it s a purely state-run enterprise, NASPO ValuePoint s board of officials are especially keen to the challenges experienced by officers every day. After all, they re officers themselves. What ValuePoint does, says Hughes, is pull together different states to use resources and abilities to create a cooperative contract that can be used by any state that needs it. Why s that important? By pulling together staffing, not as many staff from our own office needs to be a part of a solicitation. We can rely on ValuePoint 3

4 4 finding staff members from other states to help out on procurements, thereby alleviating those problems. Hughes says leveraging the expertise of other states proved critical in a recent ValuePoint acquisition of cloud computing services. Even though Hughes s state of Utah took lead on the contract involving eight other states, he stresses it wouldn t have been possible without that collaboration. When we were working on the cloud solicitation, we didn t just rely on procurement officers to help us develop specifications. We reached out to NASCIO [National Association of State Chief Information Officers] and asked them to provide us relevant specifications for their function in each state, as well as the Center for Digital Government (CDI) to help us [negotiate] terms and conditions. Given the success his team had sourcing knowledge from all corners, Hughes is quick to describe ValuePoint as more than just a cooperative purchasing model: It s a collaborative purchasing model as well. We weren t just utilizing our own staff, we were able to spread out the workload amongst those that were willing to participate. For a small state like Utah with limited buying power, that just wouldn t have been possible on our own. Combined Buying Power Bollinger couldn t agree more: the collective buying power ValuePoint offers is essential to addressing the procurement constraints of smaller states. We shouldn t have to reinvent the wheel every time, and we re not. Instead, we re getting pricing based on leveraging an entire country s worth of spend. For states that generally have less spend and staff than their peers, the thinking was, Why don t we get together and do some contracts together? If we leverage our spend, we can get better pricing and not all have to do the same work over and over again. We shouldn t have to reinvent the wheel every time, and we re not. Instead, we re getting pricing based on leveraging an entire country s worth of spend. The efficiency is great. Vendor Relationships States aren t the only ones benefiting from ValuePoint, either. According to Soza, both state purchasers and the vendors they work with appreciate the perks that come with a ValuePoint contract. The benefit to [vendors] is they have one contract vehicle now instead of fifty. So there s one master contract and a number of participating agreements underneath it. For the vendor, having one master agreement means they don t have to deal with those hundreds of individual agreements on a recurring basis; they only have to deal with the one. The administrative burden is greatly reduced. Moreover, says Soza, a cooperative purchasing organization like ValuePoint is always going to bring with it some amount of volume that [vendors] can count on, as opposed to them

5 having to go out and pursue the market on a project-byproject basis. If they can market a ValuePoint contract and say, you know what, we ve given our best terms and pricing under this contract. If you use this, you can t do any better then that s a hugely beneficial selling point for them. ValuePoint In Action So what does ValuePoint look like at the ground level? GBC asked each expert to relate a specific experience involving their state s use of ValuePoint. Here s what they said: Utah (Christopher Hughes): For the cloud solicitation, we first reached out to our Department of Technology Service and Salt Lake City to see if they had any IT directors willing to help out. We heard they were interested and eager to build it in their model to prepare for the solicitation s eventual release. As we issued a draft of the solicitation to ValuePoint, we heard from states who said this is what we re looking for, and we d like to participate. If their laws required it, then these states would sign a notice of intent to participate. At the same time, they appreciated the option to participate on the contract and provide any feedback they felt could improve the solicitation. What we definitely learned from this experience is that state and local organizations want to participate in a collaborative effort. The ValuePoint model is set up so that states lead the solicitation, meaning it has to follow state procurement codes. For a vendor that responds to the solicitation, they know that it s going to follow a detailed process and need to meet this code. In doing so, [the process is] open and transparent to all those who are involved. With NASCIO s help, we issued specifications that vendors could understand and answer appropriately. Even when some vendors weren t awarded, they ultimately understood why and informed me that they would be participating again because of how efficiently and openly this process was run. Idaho (Valerie Bollinger): We re currently leading a ValuePoint contract on laboratory supplies. Our sourcing team led by my colleague Chelsea has met on a regular basis to discuss objectives, progress, and next steps. Together, they put together an RFP with input from everyone on the team and then Chelsea made a recommendation to the ValuePoint management board. Now Chelsea administers those contracts both on a national scale in the master agreement and at a regional level with our state participating addendum. Even though it s run in conjunction with NASPO ValuePoint terms and conditions, it s more or less run just like any other solicitation we do. 5

6 How does Bollinger s office decide on the items being procured? Once a month, she says, our whole team comes together with the opportunity to brainstorm. We ask, hey, does anybody have an idea for a good ValuePoint contract? Perhaps a good or service that lots of states are buying? Or maybe not everybody is buying it, but it s really complex and challenging so if we could gather five to ten states together, then could we consolidate our efforts and deliver this solution together? Take hazardous waste, says Bollinger. There s no state out there that doesn t have hazardous waste, and every state out there has to find a way to dispose of it. In other words, it s ideal for a consolidated effort. I had a staff member who really wanted to lead a contract and I asked her, Hey, are you interested in leading hazardous waste? Because they re looking for someone to lead it. She said, Yes, absolutely. So I reached out to ValuePoint and said, We re interested in leading. They said, Great, the management board voted, and now Idaho is leading the first-ever ValuePoint hazardous waste contract. Alaska (Jason Soza): We ve been a member of sourcing teams for years, but just led our first ValuePoint contract ever for transcription services. When the officer in my department took lead on it, she began like Insights from CenturyLink NASPO ValuePoint provides a chance to leverage the unique strengths of different states into a single consolidated effort, a genuine meeting of the minds. Faced with increasing cuts to budget, states needed a system that could remove the burden of tracking vast amounts of individual solicitations and provide the expertise needed to keep pace with technology advancements, expand shared services, and secure government data. ValuePoint addresses these limitations by creating opportunities where expertise can be leveraged across state lines. It also significantly increases speed-to-market. To complete an RFP without the aid of a cooperative vehicle can take anywhere from six months to a year and a half. But with a NASPO ValuePoint contract take the Utah cloud contract, for example there were over 20 state CIOs involved in the creation of that contract alone. Together, they were able to aggregate that knowledge base and create a valuable solicitation in record time. When you combine the resources and experts of all the states, cities and counties under one roof, what you have is a level of spend and influence that far exceeds the spend of any one state agency. That s powerful, and it s why ValuePoint is uniquely positioned to drive collaborative innovation. Gray Sigler Director, Government and Education Services (GES), CenturyLink 6

7 she would for any other project: learning, researching, scoping out the best offerings in the market. That involved looking at different vendors websites, asking We definitely see the effects of these contracts far and wide, and can t overstate enough the value of cooperative purchasing for Alaska. what made for the best service, even reaching out to other jurisdictions to see what had been tried before, and finally putting out a call for sourcing volunteers. Together, these volunteers did a deep dive into the market research. They did a pre-proposal conference to make sure that they were capturing everything the industry had to offer and that best practices were reflected. At the end of the day, what the sourcing team wants to accomplish on behalf of NASPO ValuePoint is a best-in-class contract, and everything they did supported that goal. The increased responsibility at the end of the day, [the fact that] it s Alaska s contract being signed on behalf of the entire nation I have to say it feels pretty good to join the club of lead states that have been able to do that. We ve just seen time and time again the benefits of cooperative purchasing. I can t stress enough that it s not just executive branch state government that sees these benefits, but other entities as well: the University of Alaska, the town of Bethel out in western Alaska, Dutch Harbor out in the Aleutians, and many more. We definitely see the effects of these contracts far and wide, and can t overstate enough the value of cooperative purchasing for Alaska. 7

8 Research Methodology GBC and CenturyLink launched a qualitative research campaign in July From July 2017 to August 2017, GBC conducted a series of 30-minute interviews with state procurement officers on the value of cooperative purchasing frameworks like NASPO ValuePoint. The list of featured interviewees is as follows: Valerie Bollinger State Purchasing Manager, Idaho Division of Purchasing Christopher Hughes, J.D. Assistant Director of Contract Review, Utah Division of Purchasing Jason Soza, CPPO, CPPB Chief Procurement Officer, State of Alaska As Government Executive Media Group s research division, Government Business Council (GBC) is dedicated to advancing the business of government through analysis, insight, and analytical independence. An extension of Government Executive s 40 years of exemplary editorial standards and commitment to the highest ethical values, GBC studies influential decision makers from across government to produce intelligence-based research and analysis. CenturyLink helps government, education and public safety sector organizations implement proven IT solutions to address public infrastructure continuity, ensure safety and security, facilitate economic growth, build stronger educational systems and augment technology needs. Our services are used by public sector customers of all sizes from the largest and most critical government agencies to rural schools. Learn more at Report Author: Daniel Thomas Contact: Nicholas McClusky Director, Research & Strategic Insights Government Business Council Tel: nmcclusky@govexec.com 8

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