MEET THE EXPERT:
Krista S. Ferrell is the Deputy Director for the National Association of State Procurement Officials (NASPO). Prior to her work with NASPO, she was a Buyer Supervisor for the State of West Virginia Purchasing Division and is a Certified Public Procurement Officer (CPPO) and Certified Professional Public Buyer (CPPB). Krista currently serves on the National Council of Public Procurement and Contracting (NCPPC) and Intergovernmental Policy Advisory Committee to the U.S. Trade Representative (IGPAC).
Onvia’s Market Research team spoke to her to include her expertise in the 2018 State & Local Government Contracting Forecast.
What have been some of the biggest trends, issues or developments you’ve been seeing this year so far (in 2017)?
Technology: This year continued to highlight the continuous changes in the landscape of technology acquisition. Technologies such as autonomous vehicles, internet of things (IoT) integration across multiple state systems, and the replacement of large scale legacy systems. Procurement is responding to the changing market and is now buying things like software, IT infrastructure, and IT platforms on a subscription basis (versus the traditional model that mirrored a goods acquisition).
States are also looking closely at leasing versus buying decisions to find ways of balancing the need for up-to-date technology at a fair and reasonable price. These changes require that purchasing leverages the procurement process in different ways while managing the integrity of the bidding process. See NASPO’s TechNext Series for more information.
These changes result in a greater than ever need for collaborative and crossfunctional enterprise strategies for project planning, acquisition and management. In 2017, NASPO joined with the National Association of State Chief Information Officers in a special task force to examine this relationship and to work together on improving IT negotiations. This resulted in joint recommendations which are available in “State IT Procurement Negotiations: Working Together to Reform and Transform.
Infrastructure: Other areas, such as state infrastructure and vertical building, are looking to leverage private public partnerships. Currently, states tend to pass legislation on a project by project basis, versus enacting legislation which enables the practices as a blanketed procurement tool. Focus on sustainability and the decline in fossil fuel technologies require state procurement to consider the environmental impact of buying decisions.
Additionally, a change in risk dynamic in some states has caused the refocus on design-build and shifting more risk to the construction manager in return for a more integrated approach to the design, bid and build.
Purchasing Tools & Processes: Not only is what is being purchased changing, but so are the tools needed to maximize quality, reduce cost, and leverage state spend in a more planned approach. States are focusing on performance outcomes to achieve state objectives like small, women-owned, and minority business programs, social impact programs, and technology solutions. States are adopting more agile procurement processes, leveraging e-procurement and ERP systems, and working with other state governments on cooperative contracts.
These changes also require additional focus to be placed on contract and vendor management to assure that competition and fair bidding practices remain intact and maximize opportunities. Finding ways to work collaboratively with vendors while maintaining the integrity of the bid process is at the forefront of making these new and innovative solutions effective and successful. NASPO provides multiple guides and toolkits, such as our recently released, “Contract Administration: Best Practices Guide” to the public on these new and emerging processes, available for free download on the website.
Do you see these trends continuing through next year?
In 2018, we should continue to see evolutions in these trend areas as well as seeing new emerging technologies such as artificial intelligence and smart cities and buildings. The increased national focus on infrastructure will also have impacts in the construction and vertical building areas. States will continue to look at more agile procurement methods, maintaining fair and open competition, and maximizing vendor relationships to their fullest potential.
How would you describe your overall outlook for government procurement in 2018?
At this point, it is difficult to predict as states are vastly divided into those who are experiencing growth and those facing budget cuts due to loss of tax revenues.
…states are vastly divided into those experiencing growth and those facing budget cuts…Krista Ferrell, Deputy Director, National Association of State Procurement Officials (NASPO)
Fossil fuel prices have had an impact on oil, gas and coal severance taxes, which have been a driver of budget reductions. Additionally, states are experiencing the effects of more environmentally-friendly vehicles at the pumps, which have for many years fueled transportations programs. Other impacts include Medicaid expenditures, human services projects and technology expansion; however, it is too early to predict how these may change during 2018.
What kind of an impact do you think the major hurricanes this year might have on procurement trends or buying patterns?
The impact of hurricanes, wildfires and other natural disasters will be hard felt for quite some time. Initially, there will be an increase in spending as disaster cleanup begins, especially in the areas of construction, human services and emergency management supplies and services. However, over the longer term, the dollars allocated to disaster relief and cleanup will likely cause reductions in other areas to support and sustain efforts. An influx of federal disaster funds will also initially assist to offset impact, but state impacts will still be substantial.
In the coming year, what are your expectations for further evolution in cooperative purchasing methods?
Cooperative procurement provided at the state level (that can typically be used by local agencies as well), often referred to as “statewide contracting,” continues to remain a steady procurement method for leveraging state spending power to maximize quality and reduce price. As new markets emerge, states will examine possibilities for cooperative type contracts in those areas where public benefit can be achieved, as well as analyzing existing contracts where market conditions have shifted. In most states, contracts are examined yearly and a determination made as to the most advantageous procurement method.
National cooperatives also remain a steady method for achieving value for state government, and are contingent upon the laws, rules and regulations in each state for participation, like their statewide contracting counterparts.
National cooperatives are expanding their portfolios of offered goods and services as well as expanding product lines available to better suit the ever-changing needs of government. Moreover, national cooperatives, like NASPO ValuePoint, encourage use of small and/or regionalized vendors in the fulfillment of contract deliverables, and allow for small or regional vendors to bid in a specific area or on a given item or items within the contract, thus maximizing bidding opportunities.
Many states post cooperative bidding opportunities on their state website to assure that vendors have maximum access to all cooperative bidding opportunities, both in-state and national. Those interested in national and local cooperatives should contact the lead entity for more education on how to participate.
Additionally, events, like NASPO’s Exchange Conference, explore market changes and look to engage the vendor community in these discussions at a national level. Locally, most states provide vendor education programs, as well as hold open houses and other events, to educate, open meaningful industry conversations and gather market intelligence.
To what extent are further changes in these areas likely to affect the number of bids that are issued?
The number of bidding opportunities vary from year to year depending on each state’s budget, types of needs and complexity of those needs. Also, the number of bids corresponds with the economic environment ebbing and flowing as it changes state to state. Focus should not be placed on the number of bids, but rather, on the quality of the bids and the ability for vendors and government to work together toward meaningful solutions and provide the public with the highest yield for tax dollar expenditures.
In the event that significant cuts are made in federal spending, how could that impact state level contracting?
There is no debate that some functions of state government rely more heavily on federal funds than others. However, reductions in available government funds may impact not only the funded agency but other departments and categories, as state legislatures consider 2018 budgets. Critical areas of service delivery such as education, human services, corrections, public safety and homeland security that rely heavily on federal dollars, may be greatly impacted by cuts as well as the highways and infrastructure.
This article appeared originally in Onvia's 2018 State & Local Government Contracting Forecast. You can download a complimentary copy of the report below.