Audit: Poor IT procurement led Oregon office to overspend up to $1.6B

Dive Brief:

The Oregon State Department of Administrative Services' (DAS) Office of the State Chief Information Officer overpaid for services by between $400 million and $1.6 billion during the 2015 to 2017 timeframe, according to an audit by the Oregon Secretary of State Audit Division that looked at $8 billion of spending.
This is the result of relying on legacy systems and process, which, in some cases, date back to the 1990s, the audit found.
The state has taken steps to lower the cost of procuring IT goods and services through a new program known as Basecamp, but good data is holding it back. Purchase-level data is only available for about 12.5% of procurement expenditures, the audit found.

Dive Insight:

The audit resulted in five recommendations, which include the purchase of an electronic procurement system to "provide purchase data of sufficient detail to allow for robust spending analysis." It also recommends setting a minimum knowledge requirement for managers who oversee projects and regularly reviewing and updating performance indicators.

The DAS has taken steps to begin addressing some of the concerns spotlighted by the auditors. In 2017, Oregon piloted OregonBuys as a digital procurement system, and 10 agencies within Oregon's state government are now using it.

In 2016, the state began the "basecamp program" in an effort to align the state's IT procurement with known best practices.

But the state currently lacks the data and systems necessary for quality spend analysis, the process of evaluating historical spending data. Such analysis needs to improve for the new basecamp program to be successful, the audit said.

One estimate suggests the state could have saved 5% to 20% as a result of improving this practice.

Katy Coba, the chief operating officer and director for DSA, and Terrence Woods, the state CIO, responded to the audit's investigation and agreed with the recommendations. They plan to make a funding request early in the 2019 session of the state legislature for a new procurement system that would improve the data for spend analysis.

"If approved, the package would provide resources and funding to transform the current OregonBuys system to an enterprise solution," their response read. "The implementation project would take 24 months to complete."