Restrictive Terms and Conditions on Tech Contracts in the State of Idaho Need to be Examined

Last week, I testified in front of the Idaho Legislature’s State Procurement Laws Committee on the need to modernize IT procurement.  Idaho, like many states around the nation, has modeled IT procurements according to legislative direction but that direction is intentionally broad and allows considerable policy-setting flexibility to the procurement oversight agency within the state.  The state agency and administrators set the standard terms and conditions that dictate which companies will bid on contracts and thus, influence the technologies implemented within the state.

Procurement is a balance of risk and the technology industry is willing to assume a larger amount of risk in contracting with governments.  Where problems occur is when the government expects or requires the industry to assume all risk.  Issues like expecting vendors to assume unlimited liability are often non-starters for companies and prevents them from being able to do business in states that set such requirements. 

Competition is at the foundation of all successful procurements and in order to achieve this competition, governments must facilitate terms and conditions that are appealing to the industry while protecting the citizens. Sourcing IT goods and services is different than other types of procurements; states that have been successful in their IT sourcing programs recognize this.  In fact, only about half of the state’s central procurement agencies have authority for contracts of IT goods and services; this function is often found with a State CIO or Comptroller.  

Idaho’s state CIO, Greg Zicau, is well respected among state CIOs for his ability to lay out strong strategic goals.  The Idaho Technology Authority (ITA) is also quite active in enterprise short and long-range IT and telecommunications plans.  However, it can’t be overlooked that procurement is the basis to accomplish many of these plans.

Ultimately, the citizens lose out when terms and conditions are restrictive because technologies implemented are not competitively sourced from all available solutions.  Open and inclusive competition drives the best solutions implemented in the most efficient manner.  Any terms or conditions that restrict this open competition should be examined for their necessity and actual function in hedging risk for the government.

The Idaho Legislature has taken notice of this concept and is working with CompTIA to examine possible legislative language that would dictate their intent in a more formal manner than currently exists.  When terms and conditions drive out competition, the citizen loses and the industry, at the end of the day, has the same goals as government:  to serve the citizens in the most efficient way possible with the latest and greatest technology available. 

A copy of my slide presentation can be viewed here and video of my testimony can be streamed here