By Constitution Staff

Several states have seen significant savings after either privatizing their procurement and technology services or dramatically restructuring them for better efficiency, members of a joint House and Senate budget committee were told in a January meeting.

"I am encouraged by the information presented today," said House Speaker Chris Benge (R-Tulsa). "We have a real opportunity to seek tremendous savings for the state of Oklahoma."

The meeting was part of study requested by State Representative Jason Murphey (R-Guthrie) who is seeking to modernize state government, including upgrades and streamlining in technology and improvements to the state's procurement process. "There are several reasons to streamline government, including improved services and cost-savings," said Rep. Murphey who is chairman of the House Government Modernization Committee. "It is our duty as lawmakers to make sure our tax dollars are spent efficiently, and we will continue to push for savings to indefinitely ensure Oklahoma taxpayers are protected from frivolous spending of their hard-earned dollars."

"Technology is producing a quickly changing world with great opportunities for increased effectiveness," said House Appropriations Chairman Ken Miller (R-Edmond). "We have made some progress in the last several years toward modernizing our government, but there is much more to be done. We have to fight the status quo, especially given the current revenue outlook."

Making the state's purchasing practices more efficient will continue to be a priority this year. Last year, legislation by Murphey (HB 3325) was signed into law that enabled e-procurement and allowed vendors to be paid electronically, but bureaucratic paperwork continues to delay the process.

Reforms proposed in the legislation last year were formulated in a 2007 interim study which analyzed a 2005-2006 report from IBM. That report identified at least $70 million in possible savings if the state put in place industry best practices for purchasing. "We have a chance to save millions of dollars, increase efficiencies and improve services, all without a cost to the state at all," said Tim Clem, senior managing consultant for IBM Global Services.

A second study was presented by Treya Partners, who was contracted by the Department of Central Services to identify areas of savings and efficiency within the agency. The Treya study verified that the savings potential ranges from $24 million to $71 million and could be realized within 12-18 months. The study showed that Oklahoma state government could be paying as much as 14 percent more than it should for goods and services, said Rahul Ahuja, the Treya Partners DCS project manager.

The Treya study, like the IBM study, suggests that DCS officials should leverage the agency's purchasing power, develop a greater understanding of supplier markets and economics, increase supplier competition and unbundle pricing for greater transparency, which will move the focus from the individual purchase price of a specific good instead to the total cost of the entire purchase.

Leonard Gilroy, director of government reform at the Reason Foundation, said Florida's e-procurement system has led to an improved understanding of purchasing patterns, less paperwork and faster transactions with vendors. Since moving its purchasing online, Florida has seen at least $71 million in savings, with 91 percent satisfaction from users of the system.

"Today was a good first step toward bringing Oklahoma State Government into the 21st Century," said Sen. David Myers (R- Ponca City}, vice-chairman of the Senate Appropriations committee. "I'm optimistic that the cooperation of Senate and House members -- Republican and Democrat alike, working together with state agencies to develop solutions, will allow us to move forward in bringing cost savings and new efficiencies on behalf of Oklahoma's taxpayers."

Experts testified that Information Technology (IT) is well suited for privatization because government is neither flexible nor fast enough to adapt to new technology. Members also learned that there are plenty of private companies ready and willing to help state government achieve efficiencies and costs savings in both procurement practices and IT management, often without any up-front cost.

This year, House and Senate Republicans will continue to push to centralize the state's information systems and information technology, and centralize all the financial and management information services for the state. Currently, Oklahoma's state agencies have many separate strategies for managing technology and equipment, some more or less effective than others A coordinated approach to information technology will help achieve technological compatibility among state agencies, ensure that all state agencies are using information technology to its best advantage, and better utilize the state's purchasing power.

Jerry Simonoff, director of IT Investment & Enterprise Solutions for Virginia's Information Technologies Agency, told committee members that the states' savings have been significant by centralizing the state's IT services. Had Virginia's IT services not been centralized, Simonoff said the state would have spent more than $120 million on failed major IT projects; $200 million more over the next decade supporting an aging IT infrastructure; an additional $120 million on energy consumption over the next decade; and paid $45 million more for IT products and services without central IT procurement management.

House and Senate Republicans have pledged to make Government modernization a priority.