A Plausible Candidate for Contract Automation: The National Association of State Procurement Officials (NASPO)

Change is facilitated by economies of scale: implementing a document-assembly system for contract drafting becomes more feasible if the aim is to serve many users, not one. That’s why I’ve long thought that it would make sense to have trade groups build document-assembly systems for use by their members.

To be more specific, a plausible candidate for automated contract creation might be the National Association of State Procurement Officials (NASPO).

Here’s how NASPO describes itself:

NASPO is a non-profit association dedicated to strengthening the procurement community through education, research, and communication. It is made up of the directors of the central purchasing offices in each of the 50 states, the District of Columbia and the territories of the United States. NASPO is an organization through which the member purchasing officials provide leadership in professional public procurement, improve the quality of procurement, exchange information and cooperate to attain greater efficiency, economy, and customer satisfaction.

Obviously, states buy all sorts of stuff. Computers. Park benches. Road salt. Equally obviously, contracts are a big part of that process. Based on conversations with state procurement people over the years, I gather that more often than not a state will use its own contract when buying stuff.

So contract creation is a big part of procurement by states. And templates are a big part of contract creation by state procurement offices. How do they go about creating templates? The process and the quality vary, but based on what I’ve seen, generally it’s not pretty. No surprise there—traditional contract drafting is never pretty. Instead, it’s usually an unhappy combination of process dysfunction and language dysfunction.

With dozens of procurement offices in a constant widget-buying frenzy, I’d have thought it beyond dispute that NASPO’s members would benefit greatly if NASPO were to implement a document-assembly system for creating key procurement contracts.

Here’s how that might play out: NASPO forms an editorial board, secures the services of a specialist in contract language, and selects suitable document-assembly software. The editorial board and the specialist compile a wish-list of automated templates and a database of sample templates used by state procurement offices. The specialist prepares drafts, with the editorial board suggesting what issues to address and what customization to offer. Once the language to be used in a given template has been finalized, the contract-language specialist automates it and creates the related questionnaire guidance. The editorial board and designated testers put each template through its paces, and any necessary adjustments are made.

If it’s handled properly, preparing an automated template should be quick—a matter of weeks—and cost-effective. How would NASPO pay for it? I’d have thought that the expenses involved would be modest enough that they could be paid out of member dues.

What would members get out of such a system? You could eliminate the waste involved in having each state procurement office be entirely responsible for creating and maintaining its own templates. Instead, a state procurement office that wants to create a new version of a given template could use the document-assembly system to create a customized first draft that addresses its needs. It could then make any further customization it thinks appropriate and treat that document as its new template. It could even clone the automated template and modify it to create its own automated template.

The upshot? Contracts get created more quickly. Because contracts are clearer, deals get done more quickly and need less attention, and there’s less risk of a dispute erupting down the road. State procurement offices accomplish more for the same money.

Furthermore, NASPO automated templates would offer unmatched training—users would see the different ways to address a given situation, would be offered basic guidance, and could click on links to consult more detailed guidance. Offering customized guidance and customized language right when the user needs it most—when they’re creating contract—beats talking-head presentations and static print guidance.

Will any of this happen? Not necessarily—given institutional inertia, for an idea to prevail it’s generally not enough that it simply make sense. And the economies of scale available to a trade group are offset by the tendency of trade groups to behave like bureaucracies.

As an outsider, I have no idea how NASPO actually operates. But the NASPO and other similarly situated trade groups should at least consider the costs and benefits of offering contract automation to their members.

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Contract-Automation Clearinghouse is where I put my posts on contract automation and related topics. My regular blog is at Adams on Contract Drafting.

  • http://www.onvia.com/ Travis Pearl

    Great article Ken. You’re right, agencies do struggle with contract creation. Cooperative purchasing entities such as NASPO, even if they don’t create templates or focus on automated contract creation, can help address the problem by preventing agencies from having to go out with their own procurement in the first place – instead using a contract written and facilitated by the coop and/or lead agency. Piggy backing has a similar effect, allowing smaller agencies to reuse an existing contract already authored and executed by a larger agency.

    We (at Onvia) just published a detailed report on the state of cooperative purchasing (coop associations and piggy backing) in the state and local government market. We’re only seeing about 2.2% of the awards we track in our system mentioning cooperative purchasing terms overall right now (up from 1.9% three years ago), but those numbers increase to 7-8% in some industries more focused on off-the-shelf products and commodities.

    You can access the full report here, it is free: http://www.onvia.com/business-resources/white-papers/leverage-cooperative-purchasing-to-grow-your-government-sales