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Tuesday, April 27, 2010

Tennessee procurement reform

Panel approves procurement bill
Legislation overhauling the way state government contracts for the purchase of up to $25 billion in goods and services has been approved by the Senate State and Local Government Committee.

The legislation, Senate Bill 3598, sponsored by Senator Bill Ketron, R-Murfreesboro, is designed to implement cost saving strategies taken from the best practices implemented by procurement officials nationwide.

The bill uses information contained in a State of Tennessee Procurement Assessment showing state authority for contracting is divided with one path for procuring goods and routine services and another path for the purchase of professional services.

Each path has its own rules, players, decision makers, databases, technology, policies and staff. Without a single entity in charge of or accountable for statewide procurement spending, there is currently no easy way to manage a coherent, comprehensive, statewide cost saving strategy for procurement.

The report also said it was confusing for vendors to do business with the state due to inefficient and redundant processes.

The proposed legislation would combine procurement of goods and services for the state into one central office housed in a department to be chosen by the governor. The governor would also appoint a single Chief Procurement Officer who has extensive qualifications and experience in contract administration to head the agency. The Chief Procurement officer would lead a staff of 88 well trained professionals to carryout the function of procurement management, contract management, contract compliance /quality assurance, and vendor customer relations.

An Advisory Council for State Procurement would be established to provide counsel to the new agency, replacing the present Board of Standards and Review Committee. It would consist of representatives from state agencies, the legislative branch and those with expertise from the vendor community.

COMMENT: I have been advocating that Guam also constitute an Advisory Council composed of knowledgeable broad procurement industry representation from public and private participant groups. The concept of and recommendation for an Advisory Council is provided in the ABA Model Procurement Code.


FOLLOW UP: Wilson: Streamlined purchasing will save taxpayers money
Thankfully, the General Assembly recently approved legislation sought by my office that will simplify and streamline the purchasing process.

The new law, which was approved with strong bipartisan support, requires the purchasing of goods and services to be combined under the oversight of one office with a single leader.

The law requires policy decisions to be made in one place - with strategic planning - after input has been received from state agencies and vendors.

The law also requires more emphasis on professional development and training for employees and for qualified vendors involved in the procurement process.

This is not revolutionary; Georgia adopted similar reforms five years ago. Those reforms have already saved Georgians tens of millions of dollars.

There are several ways we should be able to save money under the new law. A fairer and simpler system should encourage more vendors to participate, which should help drive down the prices we pay for goods and services. Also, centralized purchasing will allow us to purchase items in greater quantities, which can help us negotiate price discounts.

It will not be easy to match Georgia's cost savings in Tennessee. Vested interests here, particularly those that have been benefitting from our closed system, resisted the legislation and will throw up roadblocks to the changes that we will be making.

Making the new system work will take leadership and vision. Real change does. But we will save the taxpayers money.

Best of all, we will inject fairness, opportunity, competition and accountability into our purchasing system.

And shouldn't that be the bottom line?

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