Oregon missed out on $1.6bn savings due to poor IT procurement

posted by Lucy Patchett
11 January 2019

The state of Oregon in the US missed out on savings of up to $1.6bn on IT spend between 2015-17 because of poor procurement, according to an audit.

The Secretrary of State Audits Division, in examining the Department of Administrative Services (DAS) and the Office of the State Chief Information Officer, investigated procurement practices around IT projects across 10 agencies and found the current IT systems outdated and procurement processes lacked centralised, integrated services.

“During the 2015-17 biennium, the state missed the opportunity to potentially reduce costs between $400m and $1.6bn, based on DAS Procurement Services’ estimate of $8bn in procurements during that time,” said the audit.

Oregon’s Basecamp Program, started in 2016, aims to provide better access to IT solutions for both state agencies and local jurisdictions through an online catalogue for IT goods and service contracts.

However, the use of legacy systems with poor data analysis has resulted in statewide failure to effectively analyse purchasing, creating poor procurement strategy and practices, which continues to limit effectiveness of Basecamp.

The report cited research that said spending analysis is “a critical best practice that procurement organisations should use to leverage buying power, reduce costs, provide management and oversight of suppliers, and support the development of an informed procurement strategy”. 

The audit recommends digitalising traditional paper-based procurement processes, strengthening the IT investment oversight process, tracking quality assurance reports and providing improved training and guidance for project managers. The report found that managers were given projects above their ability without consideration of the risk level.

DAS is in the process of purchasing a new e-procurement system and intends to make a funding request this year, said the audit team.

In 2015, DAS started working alongside eight other state agencies to find a solution to the state’s immature and fragmented procurement process. This resulted in work towards aquisition of a system called OregonBuys, which is described as enabling “paperless workflows for proposals and quotations as well as tracking of purchases from catalog to invoice”. OregonBuys was initiated in 2017 as a pilot programme. However, it has not been fully implemented so it was not included in the audit.

Oregon ranks 11th in the US for overall procurement practices, with Georgia and Virginia in the top two places, having adopted e-procurement systems in 2001, according to The Governing Institute, an independent three-year scheme focused on helping government performance and increasing public sector innovation. Virginia said they had saved an estimated $30m per year through improved spending analysis and $11m per year by replacing manual purchasing processes.

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