Procurement Power

When the FBI hauled away files related to Los Angeles Unified's massive purchase of iPads and curriculum, it highlighted potential failures in the procurement practices districts have abided by for decades. Are there any lessons there for the rest of us?

• By Dian Schaffhauser
• 05/14/15

While the 1-to-1 maelstrom continues buffeting the Los Angeles Unified School District, whose technology procurement practices are under investigation by the FBI as part of a federal grand jury probe, school leaders in other districts may be wondering whether they're on the right side of the law when it comes to their own activities. Some might worry, in particular, as they head off to education technology events, that one-on-one meetings with vendors could one day lead to accusations of undue influence over the purchasing processes for their schools' computing devices.

Policies and regulations related to procurement can actually hinder the education technology buying process, according to a report issued by a consortium of organizations in 2014. For example, rules related to limiting communications between the vendor and the buyer make sense in the context of "playing fair" for all participants. However, that also prevents districts from taking advantage of outside expertise that could "help inform the buyers of new approaches and methods." At the same time it's also possible to view such offers of expertise as a furtive effort to mold purchasing criteria to benefit a single vendor.

Daniel Owens, a co-author of that report, spoke to THE Journal about the problems of applying traditional procurement techniques to technology. Owens is a partner in The Learning Accelerator, a nonprofit that works to speed up implementation of "high quality blended learning in school districts" across the country.

Applying Standard Procurement Practices Doesn't Work
There are multiple challenges to device procurement. For one, a computer is more complex to buy than standard school items such as desks and tables "and things that really don't change that frequently," Owens pointed out. "While you might have three different vendors for pencils, most are the same." But that can't be said for devices, he added, which may have the same manufacturer and overall model but innumerable options for configuration of processors, RAM and visual display, making each device "a completely different computer."

On top of that, the market evolves quickly, he said. "Computers now compared to computers from two years ago and computers two years from now are very, very different."

Plus, pricing itself can change from month to month, even as the typical procurement process — with competitive bidding, an open question and answer period and issuance of a request for proposal — can take months or even as long as a year.

"By the time everything is purchased and actually reaches the classroom, it could be yesterday's model, when the contract was agreed on the current day's pricing." The result: "You end up paying for a higher cost device that is not as good as the current offering."

Future State: A 'Due Diligence' Portal
After years of working with schools, districts and states, The Learning Accelerator sees a need to simplify the coordination of device buying information. Currently, Owens noted, districts recreate the wheel every time they go out shopping for new devices: performing due diligence on manufacturers, vetting specific devices, checking references, hunting down prices and so on.

Owens' organization has created a prototype of a portal where all of that type of information can be shared. "Instead of everybody making all of these individual calls all across the country that are point to point, the information is shared centrally," he explained — akin to the kind of information travel sites like Kayak and Expedia make available to their users.

With the portal in place, he said he anticipates that districts could stop doing their own due diligence and simply access data there. If a district is considering "three different devices by three different manufacturers," somebody will be able to go to the site and see how each is rated, what districts are paying for it and how the devices stack up against each other. "It will all be there in an easy-to-digest way that you don't need to be a IT expert to understand and you don't need 10 to 14 pages of contracting language to show this is why this is the best device," Owens said.

The prototype site has already been tested with districts; now Owens's team needs to find the funding to support a scaled-up version of the portal. He said he expects it to be launched this year and fully functional in time for the purchasing cycle of the 2016-2017 school year.

Forget about State Contracts for Buying Power
An obvious benefit of a centralized portal for school technology purchases will be price transparency. According to Owens, districts "are paying different prices for the same devices, depending on how the device was purchased, off of what type of contract, when it was purchased, etc." By enabling districts to share price information, "those price variances [will] go down and districts will have more powerful information in negotiating their contracts." Arming them with that data, Owens said, will help them "get better deals."

The portal will also enable districts to team up in doing joint purchases for greater buying power and help vendors come up with volume deals that'll work for multiple districts as long as they're willing to band together.

If that sounds like what districts already get when they take advantage of standard contracts put together by state agencies or regional cooperatives, it isn't, insisted Owens. The only case where he finds it worthwhile for a district to use state procurement deals is when they're too tiny to have their own procurement or IT department that can "go out and negotiate with vendors." In those cases, he said, "it's worth their time and money to purchase off that contract."

Otherwise, the district is probably paying too much. "The procurement process or bidding process to get that contract in place takes such a long time, by the time it's in place, the price has probably changed, given technology's rate of evolution. I haven't seen a lot of standard contracts that are good value."

2 Procurement Recommendations
Although the No. 1 recommendation Owens offers regarding procurement practices is to "make sure that you're purchasing according to the guidelines or laws that your district needs to follow," his underlying message is also to make sure those policies make sense.

Some states have introduced innovations intended to "modernize" their policy environments to provide more flexibility to schools.

For example, according to the procurement report, Pennsylvania allows schools to request waivers from regulations that would enable them to "improve [an] instructional program or operate in a more effective, efficient or economical manner." More than two-thirds of the waiver requests during its nine-year history — it expired in 2010 — were related to procurement, the report stated.

In another innovation, Pennsylvania also came up with a two-step procurement process. Step 1 is a pre-qualification stage that allows buyers and vendors to have discussions regarding needs and potential solutions. The outcome is that suppliers are qualified during this phase to supply specific services. Step 2 is when agencies go out for specific quotes. Going that route doesn't necessarily speed up the overall procurement process; but when a purchase needs to be made, the due diligence has already taken place and, as the report expressed, "vendors and agencies [can] have discussions and negotiations without violating the procurement process."

The second procurement recommendation offered by Owens relates to technology purchases: Start with instructional goals. "Have specific goals for your schools, for your students, for your teachers, and then working backwards from there, say, 'All right, to meet these challenges or goals, what sort of instructional elements are we going to need? What sort of software or digital curriculum are we going to need?' [Given those], which device specifications meet this criteria?' Once you've outlined and know that, being competitive and understanding the market, getting as many price data points as you can for the devices you're looking at, negotiating individually with vendors — these are all great ways to help save money in the short term — until we can launch that database where all of that becomes a lot easier."