This Blog

Advertisement

Featured Articles

March 2011 - Posts

  • State and Local Governments Prepare for Climate Change

    by Frances L. Edwards


    The year 2010 was challenging for Planet Earth. While the East Coast sweltered in record-setting high heat and humidity, the U.S. Congress abandoned its attempt to pass global warming legislation. Meanwhile, Moscow experienced a heat wave that drove residents to vodka parties and swimming to cool off, with fatal results for some. California experienced a year with no summer, causing late harvests and damage to crops that the rest of the nation depends on for food. Finally, during the holidays, the U.S. East Coast experienced a blizzard from Maine to the Carolinas that haulted transportation systems, even the venerable New York City subway.


    Observed Impact

    A political debate rages over the science of climate change, but local governments have to cope with the realities of heat waves and blizzards, and changes in sea levels and fresh water supply. Observed impact of these events rather than scientific theory may offer a less controversial basis for climate change public policy development.


    Impact from changes in sea levels on islands has already been observed, especially along shorelines and barrier reef islands. The impact of climate change is expected to exacerbate the threat from many natural hazards, such as hurricane wind speeds, wildfire frequency, storm surge levels, and the occurrence of flooding. Changes in land use, such as a growing coastal population, have raised the stakes for environmental-related events, while climate change—or climate variability—has altered the frequency and severity of such hazardous events.


    When confronting climate change, decisions on public investments must be made using rational criteria. The Transportation Research Board’s “Decision Framework to Address Impacts of Climate Change” offers guidance to local governments on infrastructure investment decisions. Similarly, the California Institute for Local Government provides the “Best Practices Framework,” which lists 10 areas for potential climate change adaptation and mitigation actions (see Figure 1).


    The International City Managers Association (ICMA) has crafted the publication Balancing Ethics and Climate Change to guide decisions on local investments. The guidelines emphasize the importance of determining who benefits and who pays—discussing ways to lessen the burden on those least able to pay and avoid mortgaging the next generation’s future.


    The guiding principles are distributive justice, intergenerational considerations, precautionary principle, human rights, and “do no harm.” ICMA recommends taking prudent action today that will have no net harm if climate change does not progress, and will have a beneficial effect if climate change does progress.


    San Jose’s Green Vision

    San Jose, California, the 10th largest U.S. city and the capital of Silicon Valley, began its response to climate change with the 2008 adoption of Mayor Chuck Reed’s Green Vision. This multipronged approach to climate change includes both mitigation and adaptation. A former agricultural center, San Jose has seen its economy switch to the high tech industry, changing orchards to industrial and commercial centers. The result has been an increase in impervious surfaces and a loss of carbon-capture capacity.


    LED Street Lights

    One Green Vision program is the installation of LED (light-emitting diode) street lights. Conversion of traffic signals to LEDs occurred several years ago, demonstrating energy savings and lessening labor costs for replacements. The LED streetlight conversion now underway will not only cut electricity costs, but also decrease the light signature that affects the observatory at Mount Hamilton, provide white light that enhances the ability to identify colors of cars and perpetrators’ clothing at crime scenes, and save on greenhouse gas (GHG) emissions. With cities confronting shrinking resources, LED streetlight conversion is a community benefit on many levels.


    Tree Planting

    Another Green Vision program is tree planting on available lots. San Jose has a long-standing partnership with Our City Forest to maintain and improve existing trees. Budget cutbacks several years ago eliminated tree planting and maintenance by the city, however. Through Green Vision, San Jose’s goal is to plant 100,000 trees on median and parking strips, other publicly owned areas, and spots where the city has easements. Tree planting will restore carbon-sequestration capacity that the city lost when orchards were converted to a built environment, and the shade is expected to lessen the need for air conditioning during the warmer months.


    ICMA and the California Institute for Local Government note the importance of stakeholder involvement in climate change mitigation programs. AmeriCorps volunteers made a tree inventory to create the basis for the new tree-planting program. San Jose has extended tree-planting program implementation to private property locations and other community members. Individuals can participate in the tree-planting program by registering their privately planted trees online with My City Forest to help track achievement of the 100,000 tree goal.


    LEED Certification

    Another focus of San Jose’s efforts is Green Building certification for its facilities. Leadership in Energy & Environmental Design (LEED) is an internationally recognized green building certification and rating system. The new city hall was awarded the LEED-platinum rating. Building retrofits for fire stations and the construction of the new police substation included green building strategies, including energy efficiency and building materials selection.


    California’s Initiatives

    Electrical generating and transmission are among the sectors most vulnerable to natural hazard events associated with climate change. On the one hand, aging infrastructure elements, such as transformers, are damaged by high heat. Additionally, demand for electricity rises during high heat events, resulting in managed “brown outs,” or unmanaged blackouts, as air conditioning demands stress the aging electrical grid.


    In the western United States, hydropower has been a staple electrical generation system, but the early snow melt and lower levels of precipitation in some areas have lessened the number of megawatt hours (MWh) of electricity generation in dry years. One of California’s many climate change-related initiatives is investment in the development of solar power generation at the point of consumption.


    In 2008, California Governor Arnold Schwarzenegger issued Executive Order S-13-2008, which mandated state agency action on climate change to both mitigate climate change (limit the GHG emissions believed to be the cause) and adapt to the climate changes already observed, such as a seven-inch rise in sea level and rising average temperatures.


    California Solar Initiative (CSI)

    Electricity generation has been identified by the California Air Resources Board as the second largest source of GHG emissions in the state, following transportation. The California Solar Initiative (CSI) was intended to mitigate climate change by lessening the GHG emissions associated with energy production.


    One aspect of CSI was the Million Solar Roofs program, begun in 2006 and sponsored by the governor. CSI created an incentive program for individuals and businesses to adopt solar technology, especially installing solar panels on their roofs for point-of-consumption power generation. Creating power at the point of consumption not only eliminates GHG emissions from the power production cycle, but also prevents the needs for new transmission infrastructure investment. Following the ICMA ethics concepts, the solar program was extended through special incentives to low-income single family and multi-family homes.


    Solar Power Generation

    The goal of CSI is 1940 MWhs of solar power generation at the point of consumption. About two-thirds of this capacity has already been created by residential and commercial generation projects in areas of the state served by investor-owned utilities. Each MWh of electricity generation avoided saves about 0.32 metric tons (MT) of CO2 emissions. In 2008 that represented 1.8 million metric tons of CO2 emissions.


    Participants have included colleges that placed solar roofs on parking spaces and on the roofs of parking garages and state buildings that installed photovoltaic systems. The UPS building in San Francisco operates solely on its solar roof system during daylight hours, its highest period of consumption.


    Fuel Cell Technology

    Fuel cell technology is one green technology that the state is also encouraging for point-of-consumption energy generation. One firm in Sunnyvale, California, produces Bloom Boxes, which use a solid oxide fuel cell to create power. The fuel can be bio gas or even solar power. Google, eBay, and Yahoo have adopted Bloom box technologies to power their facilities around the clock.


    Alternative Transportation Strategies

    The California Department of Transportation has been tasked with managing transportation’s impact on climate change. Planners have long said that new roads create their own customers, opening up formerly rural areas to longer commutes that will require more fossil fuels to power vehicles or electric trains for commuters.


    Caltrans has been working with the transportation planning organizations in the state to develop strategic growth and congestion management plans to lessen GHG emissions. In partnership with the U.S. Department of Housing and Community Development and the Air Resource Board, housing needs assessments will be  developed that include strategies for infill development and transit-oriented development that will lessen the demand for single user car commutes. The state also is greening its own fleet by purchasing replacement vehicles that run on alternative fuel or hybrid technology.


    Water Conservation

    Water policy is also affected by climate change. Western states rely on snow pack and snow melt to create surface water flow in rivers and streams, as well as to recharge aquifers. Drawn down ground water causes the ground level to subside and may lead to sink holes. For example, the San Jose neighborhood of Alviso has sunk to six feet below sea level as a result of pumping underground water for agricultural irrigation in other parts of the Silicon Valley.


    Loss of surface water can impact the electrical power supply in areas with hydroelectric power. Early snow melt can lead to spring flooding and summer drought, which requires the construction of reservoirs to ensure water provision.


    In California water conservation has been practiced for many years. Now with the realization that water processing and use incurs GHG emissions, projects that reward water use reduction and water recycling are widespread. The state is focusing on agricultural water conservation and smart irrigation systems for public lands.


    Denver’s Climate Action Plan

    As has been noted, regions and sectors of the United States are developing plans for coping with climate change that may offer guidance for communities that are just beginning to develop mitigation, resilience, and adaptation plans. Denver, Colorado, developed its Climate Action Plan in 2007, which addresses 10 areas for participation by the city government and individual residents, with goals set for 2012. While focused on greenhouse gas reductions, other strategies include

    • reuse of fly ash in paving energy conservation and the use of renewable energy sources
    • support for multimodal transportation
    • waste reduction by commercial and residential generators, including recycling green waste.

    Energy efficiency standards are included for commercial buildings, new homes, and remodeled homes, including a preference for renewable energy sources. Existing homeowners are encouraged to plant trees and monitor their energy use. City development plans include enhanced densities, pedestrian and bicycle-friendly areas, and mass transit development. Alternative fueled vehicles and car-share programs also are incorporated, along with encouragement for telecommuting and car pools.


    Pew Center Urges Further Adaptation

    In 2009 the Pew Center for Global Climate Change issued a working paper that outlines actions that states and local governments are taking to adapt to climate change while they work on mitigation measures. Pew defined mitigation as reduction in greenhouse gas emissions, and adaptation as coping with the results of climate change.


    Although 32 states were identified as working to reduce greenhouse gas emissions, only 10 were developing adaptation plans. The Transportation Research Board report on transportation’s impact on climate change also encouraged adaptation to reduce vulnerability.


    New York City, Philadelphia, and Washington, D.C., have published plans and programs on climate change initiatives. San Diego and Dallas have plans focused on energy strategies. San Jose has a Green Vision website that addresses its comprehensive climate change plan, from emission reductions to planting trees and from green composting to LED street lights. Alaska, California, Florida, Maryland, Massachusetts, New Hampshire, New York, Oregon, Virginia, and Washington all have state-level comprehensive climate adaptation approaches.


    Pre-Disaster Mitigation

    China’s growing population of successful consumers is pushing levels of air pollution—and the generation of greenhouse gasses—above previous levels throughout the most populous areas. In Hot, Flat and Crowded, author Thomas Friedman notes that as new nations develop “American” economies, the rate of demand for fossil fuels will rise and greenhouse gas emissions will increase, but at a rate slower than the American experience because of more fuel-efficient systems.


    Australia’s 2010 drought was blamed on global warming. In an effort at adaptation, desalinization plants were constructed to enhance the supply of fresh water for irrigation for domestic use. Unfortunately, the power for the desalinization plants is coal-fired electricity, further contributing to green house gas emissions.


    Political support is needed at the state and local government levels for pre-disaster adaptation efforts to cope with the observed changes in natural resources and systems. Some of these mitigation efforts already are underway as part of the federally mandated community mitigation plans developed under Disaster Mitigation Act of 2000.


    Existing strategies may include alternative flood protection approaches, such as avoidance, elevation, and flood-proofing, as well as structural protection against flood events and flood protection of low lying areas. Protection of fresh water sources from salt water incursion and development of new materials for roadways that are less prone to heat damage may prevent some future climate change impacts.


    Construction methods that recognize the benefits of insulation, building orientation, and location for mitigating the demands for heating and cooling are also useful, including strategies used before air conditioning like attic fans and location-specific building orientation. For example, in the hot climate of California, the original settlers used a northeast-southwest building orientation for whole communities—notably Los Angeles—to mitigate interior heat build-up. In New York, which experiences colder temperatures, architects advocate locating the most-used living areas on the south side of a home to benefit from solar warming.


    Natural Cycle or Carbon: The Challenge Is the Same

    Communities must evaluate the threat posed by climate change and determine the level of adaptation that is possible and cost-effective. Community stakeholders developing a climate adaptation plan need to include residents, emergency responders, local infrastructure agencies, scientists, and other levels of government. Adaptation to climate change affects public health, local government, transportation, and many other aspects of the public infrastructure.


    While debating the cause of climate change can be divisive and politically volatile, a review of observed climate-related events within the community and a strategy for lessening future loss of life and infrastructure provide a firm basis for adaptation planning, funding, and implementation. The observed effects of climate change must be dealt with, regardless of their cause, whether part of a natural cycle or due to greenhouse gas emissions.


    Frances L. Edwards, PhD, is the deputy director for National Transportation Security Center of Excellence at the Mineta Transportation Institute, San Jose State University in California, and director of the master of public administration program. Contact her at kcthm@yahoo.com.

  • Private Sector Procurement Reform in Georgia: A Model for the Public Sector

    by Brad Douglas

     

    State government officials have not faced a budget crisis this severe since the end of World War II. According to the National Conference of State Legislatures (NCSL), the 50 U.S. states had to face a collective budget gap of $83.9 billion for FY 2011. For many, this marks the fourth year in a row that they have had to slash programs or raise taxes to balance their budgets.


    Unfortunately, the problem is not improving. New gaps have opened in at least 15 states for 2012, and 2013 is expected to bring more of the same, according to the NCSL.


    Georgia has not been spared. The 2012 state budget is projected to be 20 percent smaller than it was when the recession began, down from $20.5 billion to $16.5 billion. But the situation could have been much worse. Thanks to an effort to transform procurement, Georgia has brought $1.6 billion of an estimated $5 to $6 billion of total spending under central management, and the state expects to double the amount under management in 2011.


    Without this procurement transformation, Georgia would be in much worse shape.


    A Bold Experiment


    In 2005, one of Governor Sonny Perdue’s highest priorities was to apply best practices from the private sector to state operations to increase efficiency. Perdue and his staff sought experienced executive talent from the business sector to oversee this transformation.


    That year, Perdue hired me as assistant commissioner of purchasing for Georgia’s Department of Administrative Services (DOAS).It was my first position in the public sector. I had previously spent nearly two decades in the private sector, including eight years running the procurement operations at large companies in the staffing services and hospitality industries.


    I took the job because, after 18 years in the private sector, I wondered whether the business principles that I had used in the private sector could be successfully applied to government operations.


    Notably, Georgia changed the purchasing code, which provided DOAS with the authority to make the significant changes that Perdue’s vision required. Just five months into my post as assistant commissioner, I was promoted to commissioner and brought in Tim Gibney to fill my assistant commissioner post. Gibney had previously headed procurement at the University of Notre Dame, where he had implemented a procurement transformation initiative that included successfully rolling out eProcurement technology from software firm SciQuest. Additional hires from the private sector followed. These included the director of strategic sourcing, who was lured away from Microsoft; an experienced procurement hand recruited from Bell South and put in charge of technology purchasing; and another procurement veteran – and Georgia Tech grad – from Advanced Micro Devices (AMD).


    From Tactics to Strategy


    When I arrived, Georgia quite literally had no idea of the exact size of its spending or where that spending was going―a situation that the vast majority of states still find themselves in today. It was also cumbersome for state employees to find vendors who had contracts and then buy from them. Additionally, the contracts themselves differed greatly according to price and coverage of the right goods and services. Most important, these contracts did not work together toward achieving a larger strategic goal.


    Without a strategic sourcing process, the procurement operation ends up being a group of people sitting in an ivory tower saying, “Well what can we go source today?” It’s this mentality that produces a statewide contract for trash bags, instead of a contract for maintenance, repair, and operating supplies covering 20,000 line items. With a strategic sourcing process, government professionals ask , “What are all the items that go into running a building?” The procurement team then leveraged the marketplace to put together a broader set of goods that can be combined on a contract, with a rationalized supplier base.


    My team and I envisioned a procurement process that made it as simple to buy items on statewide contracts as it is for consumers to purchase books, clothing, and music from commercial websites. We believed that through the judicious use of technology, we  could capture spending in exquisite detail, which would empower us with the information needed to negotiate smarter deals. And by streamlining the process, we could eliminate waste and cut the cost of processing purchases. The opportunity, we felt, was enormous.


    Procurement Taskforce


    The first order of business was to set up an organizational structure that could execute on this new vision. We had a set of general guidelines because Gov. Purdue had already set up the Procurement Taskforce of the Commission for New Georgia to establish a vision for the transformation of state government, but creating and implementing a structure according to those guidelines―a collection of principles that if achieved would result in the nation’s first statewide reform of government procurement―would require some extra help. We hired consulting firm A.T. Kearney to be our “transformation assistant.” It provided  more than 20 people to assist us through the initiative.


    A.T. Kearney helped us define an optimal organizational structure under the committee’s guidelines, while we outlined new workflows and defined the capacity that the state’s procurement office could sustain to ensure it maintained adequate staffing levels. Kearney also helped us rewrite job descriptions, perform a fit-gap analysis of technologies to support the transformation, and revise and re-engineer the entire purchasing process and related policies to streamline administrative actions that didn’t add value to procurement.


    Strategic Roadmap


    The roadmap required procurement staff to move away from a transactional focus to a more strategic role. Technology would automate routine transactions and take the paper-pushing out of procurement. This would free up procurement staff to focus on higher-level, strategic tasks such as negotiation, project management, collaboration, and strategic sourcing. Early in the transformation initiative, employees in our procurement office were evaluated to determine whether their skill sets―and mindset―matched our more strategic direction. Of the 40 staffers who entered the process, more than 50 percent were rated as not being capable of taking on a new strategic role, which meant that substantial education and training efforts were needed.


    As a part of the transformation, Georgia created a new team structure with a different approach to doing business. Today, the state procurement office includes a strategic sourcing group built around four commodity groups: technology (headed by the Bell South veteran), goods (a recruit from AMD), services (led by a longtime staffer who stayed on with the procurement team) and infrastructure (headed by a retired U.S. Air Force officer who previously helped lead the introduction of strategic sourcing to that branch of the military). A group dubbed “the Knowledge Center” supports the sourcing teams by conducting spending analyses that identify gaps in spending under management and opportunities for a leveraged, statewide contract. The Knowledge Center staff also evaluates, selects, and implements technologies that support the state procurement function, process improvement, and Georgia’s new training and certification program for procurement.


    Emphasis on Training and Certification


    The renewed emphasis on training was a big change. Previously, Georgia had just two purchasing courses for staff―“Welcome to State Purchasing” and “Purchasing Fundamentals.”  Today, the state procurement office offers more than 30 courses that are both instructor-led and computer-based. To date, Georgia has had more than 5,000 “course sittings” by buyers and staff both within the state procurement office and also among hundreds of buyers across the different agencies and universities. The office also instituted its own three-tiered certification program, offering the Georgia Certified Purchasing Associate (GCPA), which covers fundamental workflows; Georgia Certified Purchasing Manager (GCPM), which includes higher-level negotiating and RFP skills; and Georgia Certified Purchasing Card Administrator (GCPCA), which is for staff who manage P-card programs. Plus, these courses are by no means limited to staff within the state purchasing office. Other state agencies and state universities have access to the courses and certification programs.


    Procurement as E-Commerce


    Once we had new staff in place and new processes outlined, we turned to the technology side of the equation. We intentionally waited until we had the people and new processes in place before we began working with the enabling technology, because we didn’t want to automate a bad process with people who would not be able to execute it. We did not want to harden procedures that would hurt our ability to provide good service and cost avoidance.


    With technology, the goal was to create an “Amazon.com-like” experience―to make it so simple for state employees to find the right product on the right contract, including specs or an image of the item, that it was easier for them to buy on contract than it was to buy items on their own without going through procurement.


    Team Georgia Marketplace


    After evaluating our options, we deployed an eProcurement system that was based on a solution from SciQuest and integrated with the state’s existing backend PeopleSoft financials system. We dubbed it Team Georgia Marketplace. The SciQuest solution helped us populate Team Georgia Marketplace with products from negotiated statewide contracts. The SciQuest solution provides a familiar and user-friendly shopping experience on the front end that drives both a more efficient procurement process on the back-end and ensures contract compliance and better spending practices by end users.


    The software automatically tracks and reports on spending, giving the strategic sourcing teams a wealth of information on spending according to supplier, product, or category. In addition, the marketplace allows buyers from Georgia’s local public entities to see the terms and discounts of the state’s supplier contract. As a result, local government employees within the state can now “window shop” to get the best pricing by leveraging the state’s buying power.


    Results


    Georgia is rolling out its procurement transformation in waves, with the first wave now completed. The results have been impressive. The organization ran $1.6 billion through the system in fiscal year 2010, but leadership believes that the real spending could be between $5 and $6 billion. Georgia is finally learning what the state’s true spend really is. Twelve months ago, procurement had no details on that $1.6 billion in spending,  but the day the fiscal year closed on July 1,2010, we had detailed information on every purchase right at our fingertips.


    Today, approximately 3,800 agency users from 17 agencies and 21,000 registered bidders and suppliers are live in the system. In December, the Department of Revenue, the Georgia Bureau of Investigation, the State Personnel Administration, Georgia Public Broadcasting, and the Department of Early Care and Learning/Bright from the Start all went live.


    Reduced Cycle Times, Automation, and Going Paperless


    Seven additional departments in the state―the Department of Community Affairs, the Department of Behavioral Health & Developmental Disabilities, the Department of Defense, the Department of Driver’s Services, the Office of the Secretary of State, the Department of Education and the Department of Public Safety―are expected to go live later this year.  The entire Technical College System of Georgia, which encompasses 26 technicalcolleges, will be the next entity to go live.


    The initiative currently encompasses 17 state agencies. Yet, even at this early stage, the project has yielded impressive results. Prior to undertaking the initiative, the state effectively had just 6 percent of its spending under management, while today that figure has increased to nearly 60 percent, with a goal of reaching 80 percent by the end of fiscal year 2012. For the agencies using the system, requisition-to-purchase order cycle times have dropped dramatically, from as much as 20 days to just two days.


    Strategic sourcing efforts have yielded additional discounts from 5 to 20 percent on the goods covered under new contracts, and easy access to these contracts through a simple online interface have ensured that the state actually realizes thesebenefits. In addition, improved workflows and efficiencies, along with purchasing automation, allow thousands of users to take advantage of next-day deliveries for a wide range of goods. Automation has helped the Georgia Department of Audits to completely eliminate paper from its procurement processes.


    Expansion to County and Municipal Organizations


    The prospects for savings and better service do not stop with state government. Our vision is for Team Georgia Marketplace to be accessible to all public entities in Georgia that use the required technologies. This will allow county and municipal organizations to access the state’s contracts, even while they increase the buying volume that strategic sourcing managers use in their negotiations with suppliers. In effect, Georgia will create the nation’s largest group purchasing organization in the public sector.


    Cost-Saving Model for Public Sector


    With this program, Georgia is giving the nation a concrete example of the future of public procurement, in which purchasing on contract is as easy as filling an electronic shopping cart, and where the procurement office can focus not on pushing paper, but on analyzing data on spending and negotiating contracts that public employees will use to save taxpayer dollars.


    I am the first to admit that Georgia’s procurement transformation is an ongoing process. While the state believes it has addressable spend in the range of more than $5 billion, the success of the procurement initiative to date has opened up the possibility that the state procurement office could eventually capture significantly greater amounts of spend―and drive much greater efficiencies―as the initiative progresses.


    Georgia offers a powerful example of the significant opportunity states have to drive bottom-line results with an entirely new approach to procurement.


    It is not always what you buy that makes the difference, but how you buy it. The steps that Georgia has taken and the completely new way that it uses taxpayer funds has enabled the state to achieve far more with each and every dollar. Citizens deserve that diligence, not just in Georgia, but throughout the nation. 


    Brad Douglas is the former commissioner of the Department of Administrative Services for the State of Georgia. Contact him at buzztech@yahoo.com.