Purchasing in Internet time
- By Patrick J. Walsh
- Dec 03, 2000
Of all the influences transforming the information technology buying process
for state and local government officials, a key yet frequently overlooked
factor is the sharply increased speed at which most IT service vendors are
now accustomed to doing business.
Fueled by a vastly expanded demand for computer hardware, software and communications
equipment, the market for consulting, training, support and related services
is more competitive than ever. For vendors providing such services, the
ability to do business at Internet speed carries with it the need to secure
more business in less time to maximize the opportunities of the newly compressed
sales and delivery cycle.
For government IT buyers accustomed to working at request-for-proposal
speed, that's a problem.
Despite its longevity as the primary means of finding and selecting
vendors of everything from paper clips to lawn trimming services, the RFP
is increasingly viewed as too cumbersome for procurement officials trying
to keep pace with the evolving IT marketplace. Several states have introduced
programs that essentially end-run the RFP, replacing it with streamlined
Launched in 1996 as a pilot for the procurement of local-area network
services, Pennsylvania's Invitation to Qualify (ITQ) program is the epitome
of such efforts. It's a groundbreaking example of how to structure a speedier
approach to IT buying.
Frequently refreshed and greatly expanded since its successful pilot,
the program evaluates and pre-approves vendors in a variety of categories
such as IT consulting, computer training, programming and systems analysis.
Typical criteria that the ITQ team uses to evaluate a vendor include
the length of time the vendor has been in business (a minimum of two years
is required), the client references that they submit as part of the qualification
process and the vendor's suit-ability to provide the types of services in
question. Companies that fail to qualify in a particular category are locked
out of providing those services for 120 days before they can re-apply.
Because firms are screened in advance, agencies looking to fulfill specific
procurement needs can select a provider from the list of approved companies
and immediately execute a purchase order. This allows them to avoid the
often complex and lengthy procedures typified by the traditional RFP.
For example, if a vendor is approved, a purchase can be made within
a day or two instead of a week or two.
"With an RFP, you might have eight or 10 individuals reviewing proposals
a day or two a week for several weeks," said Paul Bluhm, Pennsylvania's
ITQ project office manager. "With the ITQ program, the vendors are already
on contract, so an agency with a statement of work under $100,000 can go
ahead and hire the vendor that it wants with a minimal amount of paperwork."
In addition to streamlining the buying process for purchases less than
$100,000 — the ITQ cutoff point at which agencies can hire a single vendor
without considering competitive bids — the program also aims to encourage
the participation of minority- and woman-owned companies. This is done
by mandating that purchases of $100,000 or more must be bid on by at least
three vendors, at least one of which must be minority- or woman-owned.
The attempt to shorten purchasing cycles while also reaching out to
a large pool of vendors has proven a good mix for agencies and vendors alike,
Bluhm said. In the 12 months from October 1999 to September of this year,
the state has purchased $121 million worth of services via the ITQ program,
with agencies writing about 1,400 purchase orders against ITQ contracts,
"We know it's much faster, the administrative overhead is much lower
and it's less costly than an RFP for the vendors," Bluhm said. "It's much
cheaper for them to do business. And I know agencies are happy because it
vastly reduces their red tape and makes it much easier and faster for them
to go out and get the vendors they need."
Walsh is a freelance writer based in Peekskill, N.Y.