State of Washington adopts NIGP Code to manage spend
Coming into 2008, the state of Washington faced a common dilemma related to public procurement: What does the state purchase and how can the process become more effective?
The state spends approximately $2.4 billion a year across agencies on goods and services from 50,000 vendors. However, Washington lacked a common structure to tie it all together. “We were facing declining credibility about the scale and scope of business the state brought to market,” says Servando Patlan, procurement reform policy manager at the state Department of General Administration.
Over the years, Washington’s procurement systems had lost a common commodity/services code structure. As a result, the state was not able to create accurate spend reports or advertise effectively for bid opportunities through its WEBS electronic vendor registration and bidding system. Analysis showed that the state was using five different code sets across five different lines of business. Some agencies used various forms of the Federal Supply Code, others used homegrown taxonomies that were built and maintained internally. With no common standard, comprehensive spend management would be impossible.
The state adopted a strategy to standardize commodity coding using the NIGP Code to enable it to categorize and communicate to vendors what the state wants to buy, thus enabling more firms to participate and get more value for the state (See diagram on page 10).
The identified benefits of adopting the NIGP Code included:
- Promote data sharing across procurement systems in the state;
- Promote common IT practices;
- Provide vendor transparency;
- Enable hierarchical spend transparency;
- Provide multiple spend transparency;
- Improve decision making;
- Develop an integrated end-user experience; and
- Enable investments in common systems.
The Department of General Administration took the lead, and in February 2008, the Roadmap Positioning Activity Coordinating Team recommended the adoption of the NIGP Commodity/Services Code for the state. In May of that year, the NIGP Code was adopted under a statewide license agreement. In addition, the state opted to include crosswalks from other coding systems as part of the project: NAICS to NIGP, UNSPSC to NIGP, and MCC to NIGP. Over the course of 2008, training and rollout plans were developed and executed to introduce the Code to users.
Parallel to that effort was an initiative to consolidate the various code structures, inventory and contract databases in the state agencies’ systems. Twelve different commodity files were identified to be converted to the NIGP Code as part of this effort. Some were simple conversions to the five-digit NIGP Code. Others were inventory and contract databases to be coded to the seven- or 11-digit level. Agencies included:
- General Administration
- Department of Transportation
- Liquor Control Board
- Department of Social and Health Services
- Department of Information Resources
- Department of Licensing
- Department of Corrections
“The challenge was finding and removing many duplicate and obsolete commodity descriptions in order to reduce the per code cost of the commodity code conversion,” says Patlan.
Progress was slowed in 2009 and part of 2010 due to budget constraints. In the fall of 2010, the coding project began in earnest. The final number of commodities to be converted was more than 27,000. The NIGP Code Services team at Periscope Holdings was tasked with the effort of making the conversion happen. Beginning in October, Periscope ramped up its coding team, hiring an additional 22 coders to perform the work.
By the end of March, the coding work was completed. The coding process is iterative, with coders investigating items in conjunction with agency users, cleansing duplicates, enhancing descriptions and making code assignments. “It’s very detail-oriented work,” notes NIGP Code Services Manager Deborah Hail. “With varying item description quality, a coding team member sometimes faces many challenges in making the correct code assignments.”
In April, the state switched over its bidding system, WEBS, to the NIGP Code. Using the crosswalk between the old commodity file and the NIGP Code, the state automatically converted vendor profiles to the NIGP taxonomy. Vendors were notified to review their profiles and add/modify commodity codes as needed.
The rollout continues, with agency training and implementation support being the primary tasks. Ancillary cleanup of non-priority files continues as does coding new products and services for inventory of contracts. As the state’s consolidated spend data builds, the stage is set for reaping the rewards of a common spend database.
Reflecting on the project, Patlan notes, “In hindsight, we learned that commodity codes are the keys that open many doors to state business, and that key must be handled carefully in order to effectively manage the scale and scope of state government business passing through those doors.”
For additional information on Washington’s plan, go to: http://www.ga.wa.gov/purchase/EACBusinessCase.pdf
About the author
John Walters is president of NIGP Code Services at Periscope Holdings, the custodian of the NIGP Code on behalf of NIGP. He has been involved in public procurement since 1997 and has served as a consultant, trainer and speaker. Contact him at firstname.lastname@example.org.