Transforming Local Spend into Statewide Revenue
January 7, 2025A state with a long-standing eProcurement system faced challenges in maximizing the use of its statewide contracts, particularly with local governments. To fund improvements, they sought to shift from an
internal agency fee structure to one that was funded by suppliers who
benefited from statewide contracts.
Challenge
The state had an existing internal fee program, which applied only to departmental spending. They wanted to expand this program to include external fees from suppliers, particularly to capture revenue from local governments, who were a major user of statewide contracts. However, they encountered significant hurdles, including supplier resistance and the need for a strategic plan that would ensure compliance and acceptance across the board.
Solution
SOVRA worked closely with the state to pass the necessary regulations to implement the new fee structure. Our Supplier Success team played a crucial role in amending existing contracts to include the new fees. Throughout this process, we emphasized transparent collaboration and communication, ensuring that suppliers understood the benefits of the new structure and felt supported during the transition. Additionally, we focused on promoting the use of statewide contracts among local governments and ensuring consistent fee collection across all users.
Results
The program’s expansion, driven by SOVRA’s innovative strategies, led to a dramatic increase in reported local government participation, with local spend on statewide contracts growing from $6–8 million per quarter to over $100 million, a testament to the effectiveness of our newly implemented reporting regimen and fee structure. Local Government Managers (LGMs) have played a pivotal role in promoting these contracts and demonstrating their use to local entities, thereby increasing utilization.
A primary benefit of this program is the enhanced visibility it provides, enabling data-driven decisions on specific portfolios that support both state and local agencies.
This remarkable shift not only underscored the state’s commitment to transparency and accountability in its procurement practices but also highlighted SOVRA’s pivotal role in fostering supplier engagement and compliance. This surge in local government engagement, combined with the consistent application of the new fee structure, significantly boosted the state’s revenue and knowledge about contract demand and spend volume.
The synergy between our consistent fee structure application and strategic supplier engagement significantly boosted the state’s revenue and strategic knowledge, demonstrating the unique value that SOVRA brings to public procurement. The success of this initiative has set a precedent for future procurement strategies, showcasing the potential for statewide collaboration and revenue generation. To enhance local government engagement, we employed both in-person and virtual strategies, such as attending conferences and hosting webinars. By forging personal relationships at conferences, we showcased our solutions directly to local officials and networked with other industry professionals, demonstrating the value of purchasing off statewide contracts. Additionally, webinars facilitated broader outreach and provided detailed presentations, allowing us to gain valuable insights into local government priorities and procurement processes. The combined impact of these strategies enhanced our visibility, built trust within the local government community, and ultimately led to increased contract opportunities within the sector.
Furthermore, we recognized that building strong relationships with suppliers while advocating for the state requires a delicate balance. Establishing open and honest communication was essential, allowing us to understand the suppliers’ needs and challenges while ensuring they fulfilled their contractual obligations to the state. By actively listening to the suppliers’ perspective and proactively addressing their concerns, we fostered collaborative partnerships that benefited both the suppliers and the state. This effective balance of competing interests has been instrumental in creating a mutually beneficial relationship that strengthens the procurement process.
Learn More
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