It's been two years since Oregon's Smart Buy initiative was implemented, and the savings have proven substantial, says a recent GovPro.com article entitled State of Oregon Saves With Smart Buy. By the end of 2004, state agencies counted over $4.1 million in cumulative savings, just shy of initial projections of $4.3 million. What's more, local governments and school districts are benefiting as well, saving some $3.8 million by the end of 2004 through state price agreements and contracts. And because of Smart Buy's data-rich approach, the state has also been able to carry out several procurement best practices that further boost cost-effectiveness.

For instance, Oregon increased the rigor of its bid process with several rounds of competitive negotiations. According to Dugan Petty, Deputy Administrator, state services division, department of administrative services, State of Oregon, this more detailed process secured better deals for the state. "If you talk to our analysts that were involved in those negotiations, they will probably tell you that the multiple round strategy resulted in much better pricing in almost all categories," he tells GovPro.com. "It's a dynamic that hadn't been used before."

Additionally, the state rewrote specifications for goods and services and set up bids to more accurately reflect the underlying cost structure. "For example, in our office supplies contracts, aside from negotiation for steep discounts for a comprehensive spread of items in the catalog," comments Petty, "we negotiated even more aggressive discounts for an essential products list of commonly purchased items and tracked those on a line-item basis."

As part of the initiative, which applied to all purchasing and contracts except for construction and public works procurements, Oregon has also...

• fulfilled contracts centrally
• executed fact-based negotiations
• enforced procurement compliance with established contracts
• used demand management tools
• adjusted the size of copier and cell-phone plans accordingly
• monitored savings
• kept track of agency contract usage
• established standards on PC configurations
• made bulk purchases occasionally on PC contracts
• evaluated automatic renewals according to market conditions
• took a "managed service provider" approach to IT services
• assessed bid responses using cost/benefit and total cost of ownership models

Fully utilizing Oregon's purchasing power was a key goal of the project. To that end, the state has implemented more mandatory contracts to enable it to gain volume purchase leverage in negotiations with suppliers. It also carefully considers each spend category and sourcing opportunity and arrives at the recommendation that will provide the best value to the state.

And strategic sourcing, at the state level, is paying off. Says Petty, "It's a terrific opportunity to strategically contribute to the mission of this organization."