Procurement in paradise

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How the State of Hawaii is rethinking one of its crucial core systems

When a place is famous for being paradise, it seems almost sacrilegious to glimpse what lies beneath its celebrated beauty—unless, of course, its inner workings are as compelling as the scenery. That is the case in the State of Hawaii and its newly transformed procurement operation.

The Aloha State is a fervent innovator whose vision for modernization informs every aspect of its government.

In the debut of the state’s strategic plan for IT in 2019, they developed a mission statement that aims to “(s)eamlessly blend innovative Information Technology with well-engineered business processes to deliver and support sustainable systems that empower our workforce to accelerate excellent outcomes for business, citizens, and the aina (land) in support of the State’s policies, decisions, operations and services.”

That blend of digital tech, commerce, and systemic support is showcased in the state’s procurement operation, which has been evolving over the past few years to bring best practices in both disciplines to bear on the complexities of running a department with an annual $1 billion spend. The vision of the state’s procurement office, or SPO, is to “act as a strategic partner to foster public confidence by promoting procurement life-cycle excellence, program success, and government accountability.”

There’s a lot of ground to cover on island time. Hawaii’s SPO has 18 departments, and purview over the Executive Branch and all of the state’s government agencies at both the state and county levels. All of the agencies adhere to the same procurement code. Non-competitive procurements, such as when there’s only one available provider of a particular service or supply, or emergency purchases and exemptions, are funneled through the SPO for review and approval.

The department’s procurement officers can’t purchase goods or services on behalf of their agencies until completing comprehensive procurement training. In 2019, over 13,000 professionals took part in the state’s curriculum, which features 39 courses. Professional development is key to the success of the high-powered SPO team, whose kpi’s are performance based.

The modernization effort, dubbed the eProcurement Vision, “(i)s the implementation of a robust eProcurement System covering the entire procurement life cycle — from Planning to Conclusion — for the Executive branch as well as optionally for all other Hawaii CPO Jurisdictions,” according to the SPO. “Before we can provide a great system, we must be sure we have processes that can transfer from the manual or hybrid way we are doing it now to this new digital landscape.”

There are multiple complex challenges in administering procurement for the state government, including navigating the intricacies of cross-functional authority, dealing with deep silos of information built over six decades of statehood, obtaining clear, effective legal guidance, and defining what constitutes emergency procurements and who has the authority to make decisions related  to those purchases.

As with any digital transformation, the streamlining or elimination of manual repetitive processes is part of the puzzle. In addition to enabling busy departments to slim down paper-heavy processes, and add a dimension of convenience to policy revisions, digitization will result in consistent uniform document formatting, assist with audit trails and compliance, contract management, and provide important expenditure data for decision making.

The SPO is taking a page from Bucky Fuller’s philosophy that dares innovators to discard existing models that don’t work in favor of creating new models that render them obsolete. Their efforts are built on a platform of deep knowledge management, and the community sharing of best practices and lessons learned.

To bolster buying power across the state, the SPO is implementing a catalog eMarket system. Procurement catalogs contain the services and products that may be purchased, past and present contract information, and may also act as a guide to procurement policies and regulations. The eMarket catalog system represents the first time any state has developed catalogs with a solid historical basis; the self-funding financial model is designed to bring more contractors to the table.

The Hawaiian Islands are served by five major airports, overseen by the state’s DOT. According to the state, the airports division has volunteered to “participate in a review of their internal procurement policies and procedures for the purposes of finding efficiencies and becoming ‘system-ready’ for our new eProcurement vision.” Their civic initiatives included a thorough walkthrough of the procurement process, including how the workforce is organized, the types of procurement used by the state, as well as reviewing forms and workflows. The integration lean and agile methodologies will be central to the initiative.

“We are working as one team, developing a future state for the airport system in how we deal with the full life-cycle of procurements and contracts,” DOT-Airports administrative services officer Ford Fuchigami said. “We believe there are many opportunities to achieve cost savings and efficiencies as we reimagine our internal procurement processes and policies, and we are excited to be first in the executive branch to do this kind of review to be ready for implementing the eProcurement system vision.”

The undertaking is emblematic of the Hawaiian proverb, pupukahi i holomua, unite to move forward. Together in culture and in the desire to lead within the discipline, the SPO is revolutionizing the way Hawaii does business, and it looks beautiful from here.