Former state official: Buy in bulk, decrease the deficit

David Yarkin, former deputy secretary of the Pennsylvania Department of General Services, wrote an op-ed for today’s New York Times contending that states and cities can slash their deficits by buying services and goods in mass from a single vendor.

“Previously, the state purchasing office would set up a master contract with dozens of suppliers and then allow agencies to buy whatever they wanted from whichever supplier on the list they preferred.

The result was to break the state’s buying power into thousands of pieces. Rather than making a big monthly purchase at, say, Costco, Pennsylvania was effectively making tiny, hourly purchases from 7-Eleven.

Take ketchup. In a state with a former senator and a football stadium both named Heinz, it’s no surprise that we use a lot of it. But since every agency was allowed to choose the vendor it wanted, the state paid wildly divergent prices: a hospital in Allentown paid $23.20 for a case while a prison near Shamokin paid just $12.66.

Our approach turned this model on its head. Rather than allowing purchasing decisions to be made by each agency, state procurement aggregated purchases while consolidating suppliers, pushing prices down by buying in bulk.”

March 1st, 2011 | Posted in Front Page Stories | No Comments