Centralization and strategic leadership continue to be focus areas for state procurement offices around the country in the new year. This article recaps key takeaways from the 2018 NASPO Annual Conference townhall session on the leading role of the state central procurement office and three existing procurement authority models: centralized, decentralized/delegated and the hybrid procurement authority models. All three models create efficiencies and savings for the state. However, the centralized procurement authority model maximizes resources and outcomes while providing increased oversight, accountability and consistent application of standards and policies statewide.
Continue reading if you are a public procurement leader looking to improve your strategy in 2019!
In 2018, NASPO continued its long-held tradition of offering a vast array of educational sessions at its annual conferences. State procurement office leaders and professionals from around the country came together for the closing townhall session. The townhall moderator, Mike Smith (NASPO Life Member) engaged in a conversation with three state leaders, each of them representing a different procurement model. From Colorado and representing the decentralized/delegated procurement authority model (Cindy Lombardi, CPO), Idaho representing the centralized procurement authority model (Valerie Bollinger, State Purchasing Manager), and New York representing the hybrid procurement model (Sean Carroll, CPO). Panelists’ insights about ways to maximize the leadership role were followed by audience questions. The audience was interested in learning about organizational designs that may create efficiencies and aid CPOs in their role, strategies for monitoring agency compliance in decentralized and hybrid states, and skillsets needed to adapt to the new role of central procurement as a strategic leader. Understandably, a one-hour session provided limited time to address such a complex topic. Each of the topics discussed could be delved into at future NASPO conferences and through written research products, as suggested by the evaluation feedback received from attendees after the conference.
Some key points and valuable information were shared through this interactive discussion. 75% of the state central procurement offices across the country have an office with statutory authority across all procurements statewide1. In practice, authority for preparing solicitations and oversight for contracting for goods and services statewide may reside with the CPO’s office or another agency in the state, depending on the type of procurement authority (centralized, decentralized/delegated, or hybrid) and the degree of delegated authority and autonomy granted to state agencies. Not surprisingly, developing definitions and trying to classify various state iterations of procurement authority and organizational design available around the country in three separate molds can be challenging. This is due to how each state interprets the terms “authority” and “autonomy”, how CPOs view their role, and how each procurement authority model dictates the office governance and organizational design. Before delving into a discussion about definitions and roles under each model, the following assumptions were made:
- Federal highway procurement at state transportation agencies is typically not under the state central procurement office’s jurisdiction.
- Construction (broadly defined) is often outside the scope of state central procurement.
- Only a few states have significant authority over higher education procurement
- Transportation (other than federal) and IT procurement vary among the states, in terms of authority, but often will have some autonomy.
- Elected officials are typically exempt from procurement statutes.
- Almost all states play a significant role in leading and managing master/statewide contracts.
Benefits to having a central procurement office, as allowed by all three models, were identified by the panelists as follows:
- Significant level of oversight, authority and decision-making over the procurement approach
- Increased cost savings through statewide contracts
- Consistent rules and policies
- Standardized templates and processes
- Improved statewide spend and contract management
- Consolidated resources and maximized results
- No agency redundancies due to centralization.
Make sure you download your copy of the handouts prepared for the NASPO townhall session to familiarize yourself with the definitions, challenges and benefits for the three models presented at the conference.
- Handout: Centralized Procurement Authority Model
- Handout: Decentralized/Delegated Procurement Authority Model
- Handout: Hybrid Procurement Authority Model
Regardless of the organizational structure or leadership model, all states are striving to maximize the benefits of their individual procurement authority models. As noted by the NASPO panelists, some challenges exist in those states employing a more decentralized model with delegated authority and higher levels of autonomy granted to state agencies, as well as those fitting under a hybrid model (even though it provides a higher degree of oversight for all statewide procurement than the decentralized model). Challenges of these two models include:
- Lack of insight into daily spend and small purchases
- Inconsistent processes at agency level
- Potential redundancies at agency level
- Inability to monitor delegated authority to ensure compliance
- Lack of direct performance management of procurement staff statewide
- Difficulty in providing oversight due to expertise and resources residing at agency level
- Unsatisfied customers, agency relations issues
The general consensus was that while some states have a way to go in order to maximize their own model’s potential and leadership role in the state, all three procurement authority models work well and produce efficiencies. Below are a couple of key recommendations from the NASPO panelists:
- Regardless of the procurement authority model employed by your state, know that they all provide value as long as they mitigate the risk to the integrity of the public procurement process, create savings and efficiencies.
- Best practice suggests that the most efficiencies are created by a procurement authority model where:
- procurement law covers all state agencies and types of procurement statewide;
- the central procurement office/CPO retains centralized management and oversight of statewide procurement; and
- the CPO leads and participates in decision-making, policy generation and implementation, and procurement authority statewide.
If your state is shown in grey, we need your information. Email Elena Moreland at emoreland@naspo.org with your procurement authority model and help us paint your state’s color on the map.
For the complete resources and supporting materials from all 2018 Annual Conference sessions check out the member-only Annual Conference repository in the NASPO Network.
[1] 2018 NASPO Survey of State Procurement Practices and Executive Summary available at: /2018Survey