Power in numbers
- By Patrick J. Walsh
- Mar 04, 2001
Sometimes the most innovative contracting begins with a simple premise.
In the case of the Western States Contracting Alliance (WSCA), the proposition
was: Volume purchasing of computers for education, state and local governments
should lead to discounted prices.
The alliance's first computer contracts went into effect in October
1999 with New Mexico, the lead state for the contracts, managing procurement
and administration. A year later, the WSCA computer buying program had purchased
a total of $295 million in computers and peripherals, enabling contract
participants to reap the benefit of six permanent price reductions from
involved vendors, which include Gateway Inc., Dell Computer Corp., IBM Corp.,
Compaq Computer Corp. and CompUSA Inc.
As additional state and local purchasing authorities begin using the
contracts, the volume is expected to pass $500 million this year and top
the $1 billion mark in 2002, according to Terry Davenport, WSCA national
computer contracts administrator.
Twenty states participate in the program on a statewide basis, and the
agreements are also used by cities, counties, public schools and universities
in an additional 10 states, he said. The program's users currently include
the states in the alliance, Vermont and Rhode Island, and local governments
in Connecticut and Maryland.
Underlying the obvious advantage of earning price discounts for large
scale cooperative purchases, the program is structured to make it easy for
additional state and local entities — large and small — to participate,
and to ensure that the benefits of big volume buying are realized by buyers
and sellers alike.
"One of the things that makes this program work is the way that the
contract is structured — in two pieces. In addition to the basic contract,
there's a participating addendum that allows an individual jurisdiction
to tweak the terms and conditions for its unique requirements," Davenport
Barriers to participating in the agreement generally lie not in the
contract model but in the regulatory climate of the government's own statehouse.
In North Dakota, for instance, an opinion from the state's attorney general
forbids the use of cooperative purchasing contracts, while Nebraska is currently
seeking clarification from its legislature to ensure that it can participate,
Davenport said. California's participation in the WSCA contracts also required
the passage of special legislation, he said.
"To some extent, we've accomplished two things in that some states have
found that they need to make a special provision in their statutes to allow
them to use these kinds of contracts. By doing so, we're encouraging participation,
but we're also breaking down the barriers to large scale cooperative purchasing,
because we think that's really the future of government buying," Davenport
For vendors, the agreement adds volume while streamlining the selling
process. Eliminating the need to compete for and administer contracts with
hundreds of individual state and local government customers, the WSCA program
enables PC makers to cut their administrative costs and pass along their
per-transaction savings to a larger pool of buyers, without the loss of
margin they would incur with groups of smaller sales.
"The big state agencies and big cities have always received good prices,
and they still do under the terms of the contract. The difference is, those
purchases are now counted in the cumulative volume discount pool, and when
we hit a preset volume level, the baseline price drops for everybody," Davenport
The streamlined buying process also works on the buyers' side, as purchasing
officials avoid the time- consuming tasks of formulating and issuing a request
for proposals, evaluating vendors, negotiating contracts and responding
For all its intricacy, however, the program's bottom line still fulfills
its original mandate of making volume discounts available to smaller buyers,
with real world results for its constituents.
"Most of the states in the West and the Midwest suffer from digital
divide issues. There's a lot more technology and a lot more money on both
coasts than there is in the middle of the country. By combining our purchasing
power with state and local governments and with universities and other users,
we've been able to drive down prices and put more and better equipment in
our public schools," Davenport said.
"In one of our school districts locally, for the same exact amount of
money they spent on their previous contract, their new WSCA contract put
computers in 17 additional classrooms. Smaller users are seeing prices like
they've never seen before."
Walsh is a freelance writer based in Peekskill, N.Y.