The rapidly evolving world of information technology has wrought changes in virtually every area of state and local government, but its most immediate impact may be on the procurement process.
The rapidly evolving world of information technology has wrought changes
in virtually every area of state and local government, but its most immediate
impact may be on the procurement process. The need for speedier procurement
and increased interaction between state or local agencies and the vendor
community is driving procurement officials to seek new ways of buying IT
products and services.
In the commonwealth of Kentucky, the pace of change has resulted in
a new procurement program designed to do away with the venerable requests
for proposals (RFPs) that have been the basic instrument of virtually every
government procurement process for decades.
In place for nearly a year, the state's Strategic Alliance Services
(SAS) program establishes a long-term contract with a pool of 15 IT vendors.
The wide-ranging program covers "milestone-based" services, such as enhancements
and modifications to existing systems, and project-oriented IT services,
such as life-cycle development, integration and outsourcing of nonstrategic
responsibilities. The SAS program does not cover hardware and software procurement
and task-based hourly services.
"With the RFP process, you spend weeks crafting a tedious set of technical
requirements, and then you put it out there for vendors to respond. There's
limited interaction between the vendor and the agency. It's not a good procedure
for us," said Robin Morley, executive assistant for the governor's Office
for Technology. "With SAS, agencies craft a business problem statement and
then let the vendors provide their experience to solve the problem."
The state's Revenue Cabinet was the first beneficiary of the new procurement
approach. The agency crafted two RFPs for a $12 million to $15 million integrated
tax system over a three-year period, but neither resulted in a contract
being issued. The project then became the first to be "shopped" to vendors
with the SAS program. The resulting interaction between the Revenue Cabinet
and IT service suppliers led to the selection of a vendor in about six months.
"The members of the Revenue Cabinet feel that the SAS process gave them
a much better understanding of what they will receive from the vendors,
and the vendors feel that they have a much better understanding of what
the job requires," Morley said.
Although the SAS approach helped to speed the cabinet's tax system procurement,
saving time is not the primary benefit, Morley said.
"We had initially hoped that SAS would make the procurement process
faster than it was with the RFP process. In practice, we've found that some
procurements do proceed faster, and some don't. But the real value is in
the quality of the interaction between the commonwealth teams and the vendor
teams," Morley said.
However, the system does have drawbacks. When the state's Labor Cabinet
issued an SAS request for a special fund management system, it received
no response from the vendor community. The agency eventually asked that
the request be closed and has scheduled the work to be completed internally.
The project's small size and the special expertise it required were
the main reasons for its failure to attract a response from the SAS service
suppliers, Morley said.
But whatever the specifics of a particular procurement, the overall
aim of replacing the RFP process remains focused on defining and solving
IT business problems and increasing the amount of interaction between agencies
"It's a challenge to get agencies to let go of the technical specifications
that they are used to including in the RFP process and to get them to focus
on their business environment instead," Morley said. "But we have seen the
need to replace the RFP with a problem-oriented approach. It's a much more
interactive process for vendors and agencies because we no longer presuppose
that we know the best solution to the problem at hand."