NSI News

New York State Proposes New Agency to Streamline Spending Rules

Bloomberg — January 27, 2009 — New York Governor David Paterson wants to create the Office for Procurement Services to improve buying practices as the state prepares for a wave of federal money for infrastructure projects, budget documents show.

As President Barack Obama pushes Congress to adopt an $825 billion stimulus package, New York and other states want to be ready with projects they promised are “shovel-ready.”

“We’ve been in close touch with officials in Washington and provided lists of projects and other information as proof of our readiness to use the money,” said Errol Cockfield, a spokesman for Paterson. He declined to comment specifically on the new Office for Procurement Services.

Stimulus expenditures will aid local governments facing budget deficits. In New York City, the federal program plus aid for education and health care for the poor could provide $3.4 billion, or cut next year�s deficit by half. New York state, facing a $13.8 billion shortfall next year, has 1,922 projects totaling $11.7 billion ready to go, Paterson said in a Dec. 29 letter to Obama.

“A streamlined procurement process can help the federal stimulus package achieve its goal, and help jumpstart job creation and the economy in New York,” Ruth Walters, head of The Walters Group, an Albany-based procurement consultant, said in an interview. The state and its local governments spend $44 billion a year on goods and services, she said.

The proposed Procurement Services office could help the state adopt new technologies and more efficient practices, Walters said. The agency would be funded with $7.56 million next year, and a staff of 103 transferred from the Office of Services, according to state budget documents.

Legislative Approval
The Legislature must approve the new agency before its management can be named.

If states continue with business as usual for approving spending projects, “I have concerns that bureaucratic processes could get in the way,” said Walters, a former assistant comptroller who oversaw New York’s contracting process. Too often, “procurement has become an insiders game and insiders love rules and regulations; the more complex the process, the more necessary they become.”

Responsibilities for the Office for Procurement Services would include evaluating and recommending changes to buying policies of state agencies, implementing new approaches such as reverse auctions, standardizing policies, and leveraging the purchasing volume of the state and local government to get the best value for goods and services.

Reverse Auctions
In reverse auctions, a seller advertises their wares and seeks bids from buyers, often using the Internet.

“If the Obama administration evaluates its spending as they say they will, the riches will go to those governments that are ready to implement and show job creation,” said Arthur Brown, a vice president at Walters. If New York can’t spend the money quickly and effectively, “other states are in the wings, wanting that money.”

The Walters Group is a subsidiary of National Strategies, Inc., a Washington, DC-based consulting firm.

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To contact the reporter on this story:
Michael Quint in Albany, New York, at +1-518-426-9921 or mquint@bloomberg.net.

To contact the editor responsible for this story:
Michael Weiss at +1-212-617-3762 or mweiss13@bloomberg.net.