A view of Hawaii's "procurement mess" sounds an awful lot like Guam's

I begin this post with the reminder that Guam and Hawaii have adopted the ABA Model Procurement as the framework for their respective procurement regimes. It's also useful remembering that a central purpose of this blog is to point out some almost universal issues of procurement, so none of us take this too personally.

Seriously, yes. Personally, no.

State procurement squanders cash and delays services By Dennis Hollier

One expert with strong views on Hawaii’s procurement mess is Terry Thomason, education chair of the Hawaii Procurement Institute, and an attorney specializing in public contracts at the law firm of Alston Hunt Floyd & Ing.

Thomason divides Hawaii’s procurement troubles into three categories.

There are a few “bad eggs,” he acknowledges, officials like the state’s former chief elections officer who operate in bad faith.

The second kind of procurement problem, and more common, Thomason says, is like the airport official, “kind of a slow thinker – they don’t know how to do it correctly, so they give out periodic payments. But 99 percent of these are honest mistakes.”

However, according to Thomason, the greatest cost to taxpayers is the third category: the state’s piecemeal approach to contracting. "For instance, you will see DOE projects for schools that include individual contracts for roofing, plumbing, painting, etc. Often, these requirements are at the same school or schools in the same area. All of those contracts were competed separately through the entire solicitation process."

What’s more, Hawaii’s slow, incremental approach to procurement may cost the state federal money. The state’s procurement system simply can’t get contracts out the door quickly enough.

There’s no sign, though, that the state is prepared to make changes.

To begin with, the understaffed State Procurement Office (SPO), which should be the center for innovation and reform, has a very narrow definition of procurement.

State procurement officer Aaron Fujioka likes to point out that procurement technically takes place in a very short window, usually 30 to 90 days. Strictly speaking, he says, procurement is simply the process of announcing an invitation for bids or a request for proposals, the steps used to select among bidders, and the rules for identifying winning bids.

For instance, he says, the beginning of the process – writing accurate and unambiguous requests for proposals – is outside the scope of procurement. That’s planning. Likewise, making sure contractors fulfill their obligations in a timely manner is not procurement. That’s project management.

Many experts believe the SPO should take a more expansive view of procurement. State auditor Marion Higa argues that, because of the principles involved – creating a level playing field for contractors and getting good value for the taxpayers’ dollars – procurement should extend down to the departments and agencies writing RFPs.

“He (Fujioka) is correct in that it’s not within his jurisdiction, per se; but as SPO, shouldn’t he also be promoting that the key here is how you spec out your acquisition?”

Others point out that the SPO has not done a good job conveying the importance of procurement laws to state employees.

State Rep. Blake Oshiro (also an attorney at Alston Hunt Floyd & Ing) notes that government officials continually complain that the process is difficult and cumbersome. “You have to wonder if they know what the Procurement Code is supposed to accomplish,” he says. “Fairness, openness, competition. My guess is they don’t.”

The result is widespread contempt for the norms of government procurement.

The irony is that Hawaii’s procurement law, patterned after the American Bar Association’s model code adopted by 27 states, is flexible and more than adequate.

What’s lacking is the leadership to enforce existing rules and develop new approaches. Instead, the state seems to be moving the other way.

Last year, the Legislature passed laws that limit the ability of companies to protest contract awards – a key check on procurement misbehavior.

Perhaps worse, insiders say, the SPO is circulating draft legislation designed to “simplify and streamline” the procurement process by eliminating basic safeguards, like requiring pre-bid conferences and cost analyses.

Yet, at its roots, procurement law is simply about ensuring a fair playing field and getting good value for the taxpayers’ dollar. In fact, as Terry Thomason puts it, “A dynamic procurement system is the very measure of good government.”

Mr Hollier includes in his article Seven Steps to Better Procurement, which he attributes to Danielle Conway. professor of Law at the University of Hawaii, and Director of the Hawaii Procurement Institute. Again, these appear universal.

1. Develop a fulltime, professional procurement staff in all departments: For most staff, state procurement is now an added responsibility to their usual duties.

2. Make salaries of procurement professionals competitive with private industry: You get what you pay for.

3. Recentralize supervision of procurement in the State Procurement Office: Decentralizing, which was meant to expedite the process, resulted in waste and fraud.

4. Remove exemptions from state procurement code: Far from promoting autonomy, granting exemptions from the code to certain agencies exposes them to litigation, waste and fraud.

5. Encourage, rather than discourage, reasonable protests of contract awards: A lively, expeditious protest system is our most effective way to check misconduct and inefficiency in the solicitation process.

6. Educate, educate, educate: And not only about Hawaii procurement laws, but about innovative procurement practices in the federal government and elsewhere. Remain open to novel or mainstream procurement innovations.

7. Invest time and resources in acquisition planning: Up-front planning will make for a smooth process during the formation and administration of a contract.

I might reiterate that Number 6 is what this blog is all about.

I also want to reiterate what I previously posted about the Policy in Favor of Planning, in contradistinction to Mr. Fujioka's blinkered approach -- read it here.
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