An audit of the state’s purchasing practices recommended deploying a statewide e-procurement system that, had it been in place last year, could have sharply reduced or even eliminated a state budget shortfall of over $600 million.

Oregon has a lot of good reasons for building and running an e-procurement system. In fact, more than one billion reasons—as in more than $1 billion in potential savings.

Current state agency procurement processes rely on legacy systems and manual processes that are inefficient.

Every two years under the state’s 24-month budgeting cycle Oregon spends about $8 billion buying a wide variety of goods and services for the various state agencies that support Oregon’s population of about 4 million residents.

Gov. Kate Brown has called for the statewide rollout of the Oregon Buys e-procurement system.

But how the state purchases those goods and services is expensive, repetitive and in some instances downright wasteful, says a recent audit of the state procurement system by the Oregon Secretary of State. The main culprit, according to the 37-page summary report, is a hodgepodge of outdated legacy procurement systems and business processes that resulted in widespread overspending.

“We analyzed vendor-supplied purchase-level data for all information technology price agreements from 2016 and 2017 and identified 3,193 products and services that were purchased multiple times at varying prices,” the report says. “If these purchases would have been made at the lowest price paid, the state could have potentially saved as much as $7 million, a 5% cost reduction, of the purchases we analyzed.”

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Time to rid legacy procurement systems

To become more efficient at buying business products and services, the report from the Oregon Secretary of State calls for building and launching a centralized statewide e-procurement system. “Due to a reliance on legacy systems and outdated procurement processes, department of administrative services procurement services does not adequately analyze state spending data,” the report says. “As a result, during the 2015-17 biennium, the state missed the opportunity to potentially reduce costs.” Had the state been using an e-procurement system during that period, the report noted it could have saved between $400 million and $1.6 billion.

Oregon currently has e-procurement pilot project called Oregon Buys that has been underway since 2017 and is now used by 10 state agencies. But the time has come for a more robust statewide effort for a bigger e-procurement system, the report says. Last year Oregon had a state budget shortfall of about $623 million, a deficit that could have been reduced or even erased altogether with savings the report figures the state could achieve through e-procurement.

“Current state agency procurement processes rely on legacy systems and manual processes that are inefficient and redundant and some of these processes and systems date back to the 1990s and have received limited enhancements over time,” the report says. “As a result, many business solutions have been developed from a programmatic or agency-specific perspective, rather than a statewide enterprise perspective.”

‘A tremendous opportunity to save money’

In its report and audit of state agencies that use their own disparate procurement processing and tracking systems, the Oregon Secretary of State says it identified at least six different data systems used for procurement and order tracking. State agencies also lacked universal business processes that made statewide procurement more mainstream.  “Only two agencies have a documented methodology for regularly conducting a limited spend analysis, with agencies citing a lack of detailed purchase data and time-consuming manual processes as primary barriers,” the report says.

Going forward, Gov. Kate Brown is calling for the rollout of the Oregon Buys e-procurement system statewide over the next two years and asked the state legislature for $9.7 million funds to expedite the rollout.

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But key details such as a final completion date, total cost of the project and other items have yet to be announced. “Oregon’s state agencies spend about $8 billion each biennium purchasing goods and services and this amount represents approximately 10% of the state budget—close to the amount of state funds spent on the K-12 education system,” Brown says. “Creating efficiency in procurement brings a tremendous opportunity to save money, opening up more state funds to be spent directly on education or critical social services.”

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