This week, I teamed up with my friends at HighGround to give you our take on the top five procurement trends shaping the Arizona government market in 2015.
- Efficiency through Standardized IT Acquisition Terms and Conditions
As the state embarks on its IT modernization efforts, including several legacy system replacements, the need to negotiate reasonable IT terms and conditions is greater than ever. As a follow up to a 2013 Special Performance Audit conducted by the Arizona Auditor General that made a series of recommendations to better manage the state’s IT procurement process, the State Procurement Office intends to develop new IT contract templates for both computer hardware and software purchases. The first template for computer hardware is slated for release this June. The State Procurement Office will also be working with industry this year to revamp the IP ownership and indemnification, limitation of liability, warranty and general indemnification terms.
- Strategic Acquisition through use of Cooperative Contracts
New state regulations now permit state agencies to purchase off cooperative contracts subject to a list of factors, including that the contract was arrived at through a competitive process, has acceptable terms and conditions, and has had a cost analysis performed to determine the price is fair and reasonable. The State Procurement Office is also making a push to advertise its cooperative purchasing program to local cities and school districts. But, vendors should be cautioned that with the increased availability of cooperative purchasing comes increased scrutiny of whether the cooperative contract abides by the principles of public procurement.
- Vendor Performance as a Component of Contract Administration
The Arizona State Procurement Office has begun work on a new vendor performance and past performance program to evaluate state contractors. Currently, the state is looking at an administrative review once per year with a weighted scoring system. The process will allow for supplier feedback and an appeal to the State Procurement Administrator. While this program will not apply retroactively to contracts in place, expect to see a new term added to solicitations explaining the new administrative oversight.
- Procurement Process to Reduce Delays
A recent study from Washington Technology Magazine revealed that 88.5 percent of companies say that their projects are frequently delayed (FCW.COM, February 2015). According to industry leaders, the two main reasons for these delays are trouble developing project requirements and budget issues. Agencies shuffle staff between projects, put off investments, and procrastinate on starting internal and external discussions. The regulatory changes that went into effect on February 2, 2015, increase speed in some areas of the procurement process. For example, state officials no longer have to wait for written determinations to issue an RFP and the procurement file must be available within three days of contract award. The State Procurement Office is also turning its attention to training procurement professionals to make the process more efficient.
- Increase of Attention to “Anything-as-a-Service”
As hosted services and infrastructure become more popular, the state must respond with new procurement approaches. Effective contracting for cloud services reduces the risk of vendor lock-in, improves portability, and encourages competition. This year, expect to see more attention paid to cloud procurement methods, especially shifts from ownership to shared services in the area of software. The state’s challenge will be to further develop its terms and conditions to take into account data ownership, security and service levels to name a few.