Analysis of theMaterials ManagementDivision s Review andApproval ofProfessional andTechnical Contracts
Department of Administration An Analysis of the Materials Management Division¡¯s Review and Approval of Professional and Technical Contracts December 2002 MANAGEMENT ANALYSIS DIVISION Management Analysis Division The Management Analysis Division is Minnesota government¡¯s in-house fee-for-service management consulting group. We are in our 18th year of helping public managers increase their organization¡¯s effectiveness and efficiency. ... CONTENTS Introduction 1 Methods 2 Findings 3 Conclusions 11 Recommendations 14 Summary 19 Appendices 21 1 INTRODUCTION The Minnesota Department of Administration oversees the review and approval process for state professional/technical contracts.1 The Management Analysis Division was asked to assist the department in identifying possible improvements to the contract review and approval process by examining the challenges inherent in Administration¡¯s oversight role. Management Analysis was also asked to identify opportunities for increasing the efficiency and effectiveness of the contract review and approval process. Management Analysis assisted the department by _ Interviewing staff and leadership from the Department of Administration, contract coordinators from a variety of state agencies, agency heads, legislators, and other stakeholders; _ Documenting and analyzing the interview results and related material; _ Identifying options for procedural or policy improvements to the contracting process; _ Presenting the improvement options to a sample of stakeholders, and assessing and analyzing stakeholder responses; and _ Preparing a final report with recommendations. ... It should be noted that the Office of the Legislative Auditor (OLA) was also conducting a simultaneous review of ¡°State Contracting for Professional/Technical Services.¡± The OLA¡¯s review was quite broad and examined several questions in detail. Namely, the OLA review examined overall state expenditures for professional/technical services, the extent to which certain state agencies have complied with select state laws, how well certain agencies managed professional/technical service contracts, and how well the Department of Administration has overseen the contract review and approval process. Management Analysis¡¯ review focused on opportunities to improve the department¡¯s contract review and approval process. The OLA¡¯s report was not completed prior to the publication of this report. ... 08 defines ¡°professional and technical services¡± to mean services that are intellectual in character, including consultation, analysis, evaluation, prediction, planning, programming, or recommendation, and result in the production of a report or the completion of a task. Professional or technical contracts do not include the provision of supplies or materials except by the provision of professional or technical services. 2 METHODS The department was interested in hearing a diverse array of perspectives on the Materials Management Division¡¯s (MMD¡¯s) approach to the professional and technical contract review and approval process. The Management Analysis Division interviewed 34 people between Sept. ... The interviewees included MMD staff, the Department of Administration commissioner and deputy commissioner, other agency commissioners or their designees, agency contract coordinators, a representative from the Attorney General¡¯s Office, legislators and legislative staff. ... In addition to the interviews, MAD reviewed a variety of related background materials including, but not limited to, _ State statutes and rules pertaining to state contracting; _ The ¡°State Contracting¡± manual, developed by MMD; _ Samples of agency memoranda and communications with agencies regarding professional and technical contracts on subjects such as, ¡°Organizational Conflicts of Interest,¡± ¡°Department of Administration Policy Related to when Professional/Technical Contracts are Necessary,¡± and ¡°Delegation of Contracting Authority;¡± _ An evaluation of state professional and technical contracting, published by the Office of the Legislative Auditor in 1992; _ Performance data pertaining to MMD¡¯s review and approval of pre-contract certifications and final contracts (data on total number reviewed and approved, statistics on ¡°turnaround¡± times, percentage of ¡°rush¡± reviews competed, etc.); _ The ¡°Project Charter¡± for the ¡°Contracting Process Review Project¡± (as originally proposed by MMD in July, 2002); _ MMD Website postings and other information pertaining to state contracting, including those related to the ¡°Contract Management Academy Project¡± and the process for Administration to grant waivers to the ¡°Moratorium on Consultant Contracts;¡± _ Local newspaper articles regarding state contracting; and _ Professional journals and publications regarding the strategic management of regulatory functions. Finally, select MMD staff, contract coordinators, and other stakeholders reviewed this report¡¯s findings and preliminary conclusions prior to the final preparation of this report and its recommendations. The purpose of the stakeholder review was to test the accuracy of the findings and obtain preliminary feedback on the conclusions and recommendations. 3 FINDINGS Management Analysis interviewed a wide range of staff and stakeholders in order to gather perspectives on the policy and procedural aspects of the professional and technical contract review and approval process, and to identify options for improving the efficiency and effectiveness of the process. The interviewees had varying degrees of direct knowledge of and experience with MMD¡¯s contract review and approval process. ... MMD¡¯s contract review serves a variety of agencies, large and small, and involves contracting for services ranging from multimillion-dollar, multiyear, information technology projects to single-event meeting facilitations. State contracts also span a vast array of topical areas, such as state prison food services, transportation system designers, architects, health professionals, and actuaries. ... Interviewees were asked to comment on the value of the review and approval process, aspects of the process that work well, and aspects that need improvement. ... Their responses are summarized below: The value of the review and approval process Interviewees were asked to describe, in their own words, what they believed to be the public value of a having a formal review of professional and technical contracts. The following provides a summary of their perspectives on that question: _ Legislators and their staff were most expansive on the public value of the MMD review. ... They acknowledged that a centralized review process may add time and cost to state contracting processes, but said that the review is important because the process incorporates many diverse interests and uncovers problems when those interests are not easily reconciled. ... _ Contract coordinators generally agreed with the legislators and MMD staff on the value or purposes of the review. They stressed the importance of MMD having an independent review process to assure agency practices meet the applicable legal standards. ... For example, they would like it to provide data on contracting dollars spent, value realized, and the implications of increasing or reducing the use of professional and technical contracts. ... _ Most agency heads and contract coordinators acknowledged the need for oversight, and some expressed appreciation for the department¡¯s renewed efforts to cultivate an effective working relationship between the agencies and MMD. However, some agency heads tended to see MMD¡¯s oversight as redundant and wished that MMD would place more emphasis on support. They said that their most pressing needs are to secure contracts for complex and expensive projects that both protect the state from legal and financial exposure risk and deliver the desired results. ... Aspects of the process that are currently working well The interviewees identified several areas of the contract review and approval process that are working well: _ In interviews for this project, MMD staff conveyed a thorough knowledge of state contracting practices. They reported a strong sense of personal responsibility and accountability for certifications and contracts that they approve by personal signature. ... Data from MMD¡¯s tracking of professional and technical contracts show that for fiscal year 2002, 3,142 contracts were approved by MMD. The average number of working days to approve those contracts was 2. ... MMD staff point out that the operation is very small and that the review requires very few handoffs. ... , master contracts and master rosters) add complexity, the tools provide agencies more options. Finally, most contract coordinators reported that MMD¡¯s process for contract review was much faster and sometimes more efficient than their own internal contract development and review process. ... ¡± Coordinators commonly said that MMD is willing to ¡°take the heat¡± when the agency coordinator questions his or her own agency¡¯s contracting practices but is facing internal pressure to approve the contracts. ... One agency head told a story of how the agency was seeking to save some money on a contract and that MMD objected on the grounds that the agency¡¯s plan would not comply with state contracting statutes. The initial reaction of the agency head was that MMD was being ¡°picky and obstinate¡± but later found that MMD provided helpful explanations for its position and offered reasonable alternatives to the agency¡¯s original plan. In the end, the agency head reported that MMD helped the agency better understand MMD¡¯s role and its importance, as well as helped the agency to save money in a way that met the interests of both the agency and the state. ... 6 Aspects of the process that could be improved The interviewees also identified aspects of the review and approval process that could be improved. ... Improvements within agencies Contract coordinators commented in detail on the need to improve their own agencies¡¯ internal processes for contract review and approval: _ Several agency contract coordinators reported that project managers, supervisors, and division directors needed to be continually reminded of the professional and technical contracting provisions, the purpose of the provisions, and the procedural implications for internal agency staff.