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State IT Procurement Reform: Accessing Pro Bono Expertise and Best Practices in Service Delivery (Robert Gordon)

About the Author: Robert Gordon is the former Director of the Michigan Department of Health and Human Services. Gordon previously served under the Obama Administration as acting Assistant Secretary at the Department of Education and acting Deputy Director and Executive Associate Director at the Office of Management & Budget. During the Biden presidential transition, Gordon co-chaired the agency review team for the U.S. Department of Health and Human Services. Gordon is now serving in the Biden Administration, but wrote this article previously in his personal capacity. The views presented are not the views of the Biden Administration.

States are at an information disadvantage compared to their integrated benefits vendors. Vendors see across states, but states see only themselves. Vendors pay top salaries to secure top talent, but states often have challenges creating or filling positions. Vendors execute long-term strategies, but states often change priorities with elections.

In part to address these asymmetries, states sometimes engage major consulting firms. These firms have deep expertise in procurement and vendor management developed through decades of effective work with private companies. When engagements are successful, the firms can make state RFP processes more open, generate cost savings through contract renegotiation and smarter subcontracting, and improve vendor oversight to lower operating costs and improve outcomes. However, hiring consulting firms can itself be time-consuming and expensive, and these firms are businesses, not public utilities. While they often share their expertise, it is not their job to make their learnings universally available at no cost.

Create an independent entity to assist states through the procurement process: A major funder or pooled funding could provide resources to create an entity empowered to offer pro bono procurement support for the states. The entity would be staffed by cross-sector subject matter experts and veteran practitioners to develop and deploy deep expertise in vendor selection and management on behalf of and in concert states.

This work could begin with a loose group of perhaps six states which together rely on no more than two major vendors, and which seek better outcomes from their systems. If the work is philanthropically funded, states could participate easily without going through a procurement for a consulting firm themselves. In exchange for recommendations and implementation support from the new initiative, states could contribute in-kind by providing open access to documentation and staff time for interviews. High-level state commitment to the initiative would be key.

Ideally, all participating states would be aligned about the challenges they first wish to tackle, but first movers might center work in areas such as:

  • Cost challenges: Detailed breakdowns of historical and current spending levels for benefits delivery, including the total cost of ownership across programs—what was spent and what was delivered, with comparisons to benchmarks (total system costs, project rates, labor rates in time, and materials contracts) from other states and industries;
  • Delivery challenges:
    • Reviews of KPIs and other formal accountability metrics, their power and alignment with actual goals, and other contractual systems for holding vendors accountable;
    • Review of operational oversight approach, including the division of labor between state staff and vendor staff, and on the state side, who is responsible for oversight, their approach (e.g., degree of true project management), and the level of independent judgment they can offer, versus simply channeling the vendor.
  • RFPs: To address cost or quality challenges, or vendor lock-in over time, review of RFP terms and bids to determine reasons for outcomes and roads not taken

The project could initially provide recommendations and support only to participating states, but in time would make detailed playbooks and artifacts (such as cost comparison data) available to all states, or simply the public—the largest investor in government operations.

State IT Procurement Reform: Accessing Pro Bono Expertise and Best Practices in Service Delivery (Robert Gordon)

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Reconceptualizing Public Procurement to Strengthen State Benefits Delivery and Improve Outcomes: Essay Collection