State Alliance a Boon to E-Buying, Vendors

By Steve LeSueur, Staff Writer



An alliance of Western states is giving a shot in the arm to electronic procurement by using a multistate contract to buy computer equipment and software from five of the nation's leading computer companies.

The ambitious effort by the Western States Contracting Alliance already has seven states buying off the contract that took effect in September, said Terry Davenport, an information systems procurement specialist with New Mexico and administrator of the contract.

Participating states can purchase at discounted prices such items as desktop and laptop computers, servers, printers, components and spare parts, along with computer software and maintenance services.

"We expect to see a tremendous upside in business," said Jim Weynand, director of education and state and local government markets for Compaq Computer Corp., Houston. Weynand said the multistate contract allows Compaq to reach a larger number of state and local governments than if it had to negotiate separate contracts with these governments.

Compaq is one of five companies selected for the contract from a field of 18 vendors. The others are: CompUSA Inc., Dallas; Dell Computer Corp., Round Rock, Texas; Gateway Inc., San Diego; and IBM Corp., Armonk, N.Y. These companies were selected based on such criteria as geographic coverage, technical and marketing support, and value-added services.

The Internet is playing a key role in administering the contract, said Davenport. The alliance issued its request for proposals and conducted contract negotiations over the Internet with computer vendors, and now all participating governments go online to access electronic catalogs.

"This type of procurement wouldn't have happened without the Internet," said Davenport, who runs the project's Web site with links to the vendors and their catalogs.

But the contract is only one step toward e-procurement because not all purchases are made online, said Davenport. Many state and local governments, such as Davenport's own New Mexico, still require paper documentation for their transactions. The alliance intends to study ways to move toward full e-procurement, he said.

WSCA, which consists of 15 states, was formed in 1993 to allow the members to aggregate their purchasing power to obtain special discounts for products and services.

"A big advantage of the alliance is that it allows smaller states to take advantage of cooperative purchasing," said Marvin Eicholtz, administrator of Montana's procurement and printing division.

Government agencies using the contract in New Mexico already are saving about 5 percent on their purchases, said Davenport, who expects savings of 10 percent as the program matures, said Davenport.

Not all state governments belonging to WSCA have signed up for the contract. California, for example, does not have statutory permission to purchase from cooperative agreements. But a few colleges and local governments in California, such as Long Beach County, are participating, said Davenport.

WSCA officials have opened the contract to non-member state and local governments. Local governments in Texas and Maryland, for example, are making plans to use the contract, said Davenport.

WSCA officials hope that state and local governments from at least 30 different states will join the computer contract and generate $1 billion annually in purchases.

One of the alliance's most successful cooperative agreements is for pharmaceutical products, which are purchased by state universities and institutions. This year the alliance intends to develop a contract for buying data communications equipment.

Although California does not participate in the contract, legislation is being drafted that would enable California's government agencies to use cooperative contracts with other states, said Gaylord Moulds, manager of technology and acquisition support in California's procurement division within the Department of General Services.

"Having our purchasing volume as part of the contract helps everyone," said Moulds.

Governments that participate in the multistate computer agreement are not obligated to buy from these vendors, but many governments are finding that the alliance's prices are better than they have negotiated individually, said Davenport.

Other states also are exploring ways to use both the Internet and their collective buying power in cooperative purchasing agreements. One of the best known is the Massachusetts E-Mall. After completing an 18-month pilot project with five member states, Massachusetts officials in November decided to move forward with a production system, which they want to be ready in the second quarter of 2000, said Nancy Burke, project manager for the effort.

Many cooperative buying agreements in the past have not lived up to their expectations, said Tom Davies, a senior vice president with Current Analysis, a Sterling, Va., market research firm.

"At the end of the day, if it doesn't result in better selection, pricing and other advantages, it simply becomes a more streamlined way of contracting without fundamentally changing much of anything," he said.

But the WSCA computer contract appears headed in the right direction, according to Weynand, who pointed to the local governments that are signing up for the contract even before their own state governments.

"This is the first real example that seems to be getting traction with other municipalities," he said.

Davenport agrees. "Cooperative purchasing is a model that works," he said. Companies selected as preferred suppliers of computer systems and services for the Western States Contracting Alliance



Compaq Computer Corp., Houston

CompUSA Inc., Dallas

Dell Computer Corp., Round Rock, Texas

Gateway Inc., San Diego

IBM Corp., Armonk, N.Y.