State Contracting Needs Help

I noted with interest this article on problems with Virginia’s contracting  system. I’ll take the liberty of quoting most of it:

Virginia’s $6 billion-a-year contracting system has serious flaws — including multi-million dollar contracts managed by untrained staff and contracts that are prepared without legal review, according to a new state report issued Monday.

The General Assembly’s watchdog agency, the Joint Legislative Audit and Review Commission, said in a report that the state’s procurement system sometimes leads to the state overpaying for services or receiving poor quality goods and services.

JLARC said some public funds have been wasted because some state contracts don’t have sufficient built-in legal protections. The report identified one unnamed agency that paid $25,000 for materials and work that were never used and another agency that paid $325,000 for “faulty equipment.”

The report said many agencies do a poor job of managing a contract once procured by the state. JLARC found that “many agency staff have no prior contract administration experience or training,” including on some contracts worth $50 million or more.

“This just blows my mind,” said House Appropriations Chairman S. Chris Jones, who was one of several lawmakers briefed on the report Monday.

The report outlined 30 recommendations to improve state contracting, including giving more training to procurement officials.

Legislators also expressed surprise with the report’s findings that procurement staff at most state agencies don’t seek legal help from the attorney general’s office when developing contracts, including those with unique provisions. Of those who responded when surveyed by JLARC, only 21 percent of procurement staff said they sought help from the AG’s office.

“It is like ludicrous that you could have people like this drafting contracts that aren’t lawyers,” said Republican Del. Dave Albo.

Hmm. Untrained staff. Inadequate oversight. Poor outcomes. Why am I not surprised?

I suspect that part of the problem is that it has long been fashionable in some circles to righteously proclaim that the gummint isn’t the solution, it’s the problem! So you starve government of resources, thereby making sure that it really is a problem.

But I’m also not surprised simply because the contract process at most organizations could be greatly improved—why should states be any different? What distinguishes states is that they’re subject to public scrutiny. If we were all under a magnifying glass like Virginia’s contracting system, I suspect we’d see a lot more red faces.

Some states appear to have their act together. For example, in this post last year I wrote about Oregon’s move to standardize contracts. (I don’t know what has happened since.) Nevertheless, I expect that agencies in many other states are experiencing the same sorts of difficulties as Virginia. So what’s to be done?

Yes, more training is in order. (Hey, Virginia, call me!) But as I detail in this ACC Docket article, training goes only so far. You also have to fix templates, and you have to automate. When considering what that would involve, you have to take into account that the fifty states are all buying billions of dollars of stuff. It would make sense to exploit considerable economies of scale by building automated templates that all the states could take advantage of.

That’s something I wrote about in this 2014 post. In it, I suggested that the National Association of State Procurement Officials (NASPO) would be a plausible candidate to promote such a notion. Since I wasn’t successful in my attempts to get NASPO to discuss the notion, I’m no longer sure that’s the case. But I take this opportunity to revive the idea.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.