The Department of Administrative Services’ Division of Purchasing has developed and tested a new procurement model called value-based procurement. The objective of the new model is to provide quicker results and better outcomes for both agencies and vendors.
One of the biggest problems with the traditional procurement process is government agencies prescribe the solution as part of their solicitation without clearly articulating the core problem. These complicated and lengthy solicitations often result in complicated and lengthy vendor responses, delayed delivery, lack of competition and unqualified vendors. This approach rarely meets the agency’s goal to complete any given process at a lower cost and with higher quality. Vendors respond to the solicitation by retrofitting their solution into the agency’s current process, which strips them from utilizing their expertise and best practices.
Under the new, value-based procurement process, the State of Utah seeks vendors that are experts in solving a core business problem as identified in the agency solicitation. Solicitations and vendor responses are simplified. An agency does not prescribe the solution and a vendor does not offer one until it can demonstrate process expertise. These changes allow vendors to exhibit flexibility, demonstrate ability to innovate and typically result in better, lower-priced solutions. Under the new process, the solicitation period is shorter, vendor responses have been reduced to around six pages and average procurement costs have been reduced by 50%.
In addition, the agency and vendor rely on simple-to-understand metrics that demonstrate vendor expertise and the skills necessary to resolve any issues over the life of the contract. Clear metrics result in quicker turnaround times and increased vendor accountability.
The new process has generated positive feedback from both sides. State agencies like that vendors come up with solutions and vendors appreciate shortened submissions that more accurately reflect a specific expertise. Both sides appreciate the fact that the process can be completed in weeks rather than months and find value in the performance metrics that ensure effective solutions.
Moving forward, the Division of Purchasing will encourage agencies to use value-based procurement solicitations because of the added flexibility to meet procurement needs while decreasing time commitments and overhead costs. However, the traditional procurement process may still be used when appropriate.
To learn more about the value-based procurement process, contact Director of Purchasing Chris Hughes (firstname.lastname@example.org).