Governor Deval Patrick's Budget Recommendation - House 1 Fiscal Year 2012

Governor's Budget Recommendation FY 2012

Procurement Reforms


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Governor Patrick    FY2012 House 1 Budget Recommendation:
    Issues in Brief

    Deval L. Patrick, Governor
    Timothy P. Murray, Lt. Governor

 

The Governor’s fiscal year 2012 budget proposes a series of procurement reforms that are estimated to generate approximately $30 million in operating budget savings.  This proposal builds off of recent successes and substantial savings, most notably evidenced by a cooperative effort between MassDOT and the Operational Services Division (OSD), and is also supported by a recent report from the Pew Center on the States which concluded that “conservative estimates suggest that reform of government procurement practices could save 5 to 10 percent of that total spending.”  While this level of savings would be ambitious for FY12, there are opportunities to produce immediate savings through better procurement practices. 

Procurement Reform Initiative

The average budgeted spending for non-construction goods and services, exclusive of rent, energy and space costs, is almost $1 billion annually.  The Governor’s budget proposes savings of approximately 3% on such purchases for FY12.

While the Commonwealth’s purchasing activity and procurement of “statewide contracts” is overseen by the Operational Services Division (OSD), goods and service purchases are often uncoordinated, and thereby not aggregated, among the various state agencies.  Moreover, the state’s current process imposes terms and conditions that, while highly favorable to the Commonwealth, may scare off potential bidders because they are complicated, increase risk or cost to bidders and thereby make individual purchases more expensive for the Commonwealth.  The recently consolidated MassDOT has made procurement savings an area of emphasis for its shared services administrative model, with impressive results.  Working with OSD to improve bidder interest through terms and conditions amendments and to utilize “reverse auction” technology to drive down the price, MassDOT will save approximately $9 million on the purchase of road salt in FY11.  The FY12 budget seeks savings from a comprehensive set of reforms to the state’s procurement management approach, including:

  • Procurement Cabinet: Through increased authority to share services between departments, the budget proposes the creation of a Chief Procurement Officer (CPO) for each Secretariat.  The CPOs, working with OSD, will create a Procurement Cabinet that develops forward-looking plans for purchase of goods and services and improves communication between state agencies, Secretariats and OSD in order to develop better aggregation opportunities and thereby save taxpayer money.  In addition, OSD will provide additional procurement tools to help state agencies reduce prices, including Quick Quote and reverse auction bidding technologies and negotiation skills training for all procurement staff.
  • Process Improvement:  Today, OSD utilizes a standard Request for Response (RFR) template when issuing solicitations for statewide contracts.  Based on the success of this template and the standardization of terms that it provides for bidders, OSD will be directed to create a standard RFR template for state agency contracts as well, which will help to streamline the procurement process and standardize the terms for agencies and potential bidders.  Finally, a task force will be assembled in order to examine the state’s standard terms and conditions and other procurement terms and bid requirements in an effort to increase bidder interest, simplify the procurement process and reduce costs.

  • Prepared by Lori Hindle, Executive Office for Administration and Finance ·
    www.mass.gov/budget/governor
    For more information contact: contactanf@massmail.state.ma.us (617) 727-2040



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