A procurement policy memo issued last week by the Department of General Services (DGS) has caught the attention of some in the state’s technology industry. The DGS sent a broadcast memo to state agency procurement officers reminding them of certain restrictions under the Western States Contracting Alliance (WSCA) Contract for computer equipment, as outlined by the State of Minnesota. WSCA provides a way for California and 14 other states to participate in cooperative multi-state contracts where they can make cost-effective purchases of computers and other technology commodities. According to online records, under this WSCA contract, the State of California spent more than $326 million on technology equipment in the first three quarters of 2011. This WSCA contract is but one procurement vehicle used by companies such as Cisco Dell, EMC, HP, IBM, NetApp and Xerox to sell technology items to the state. In this case, DGS advised state officials to adhere to the original language cited for categories of servers and storage as well as other computer-related system unit/configurations:
Quoting from the memo and WSCA language:
"This Agreement is NOT for the purchase of major, large hardware or hardware and software offerings. In general, individual units/configurations for servers and storage (SANs, etc.) should not exceed $300,000 each. Desktop per unit/configurations costs should not exceed $100,000. Printers of all types and monitors per unit/configuration costs should not exceed $50,000 each. It is the expressed intent of some of the Participating States to set this level at not to exceed $25,000 each, or $50,000. Contractors must be willing to comply with these restrictions by agreeing to supply products in those price ranges only. This IS NOT a restriction on how many units/configurations can be purchased, but on the value of each individual unit/configuration. Individual Participating States and Participating Entities may set specific limits in a participating addendum above these limits, provided that if such purchases are under this Agreement, they will be with the prior approval of the WSCA Directors; or may set specific limits in a participating addendum below these limits."
The industry reacted to the memo with concern about the impact it will have on future business, particularly in the near term. Carol Henton, TechAmerica’s vice president of state and local government, spearheaded a conference call for about 20 TechAmerica member companies last Thursday to discuss the issue with a DGS official. Henton, while grateful that the department was responsive and listened to concerns, said she sees it as an abrupt change in policy that is not good for the state which has struggled with IT procurement issues. "This change or clarification seems arbitrary and shortsighted," she said via email. "Such low dollar caps don’t exist on other contract vehicles such as CMAS. It seems unwise in the long term for the State to adhere to this low dollar threshold amount". Henton went on to say that "current purchases are being caught up, which will result in some agencies and departments not being able to procure needed goods."
DGS public affairs director Eric Lamoureux said in an email the memo was issued in response to requests for clarification by departments and to ensure all of them were aware of the category limitations. "It is unusual for WSCA contracts to limit the value of purchases. As a result, users may be unaware of such restrictions. Additionally, the existence of the limits seemed to conflict with the DGS policy of allowing purchases of any amount on WSCA contracts. So, we needed to clarify that the limits apply to individual configurations, not orders and that the Minnesota contract could be used for purchases of any dollar amount as long as the individual configurations met the limit restrictions," he said.
