System helps city track contract process

In 1990 and 1991, the city of Philadelphia’s fiscal crisis had reached a crescendo, leaving the city of the verge of bankruptcy with a$2Q0 million annual structural deficit that was projected to grow, if untended, to $1.4 billion by 1996. The city’s credit rating had dropped to “junk bond” status, and municipal services were eroding under an across-the-board hiring freeze.

In the midst of these most tenuous of circumstances, Philadelphia’s government continued to enter into contracts for a wide range of professional services such as residential treatment for emotionally disturbed children, architecture and engineering design, programs to lower infant mortality and computer systems development.

In all, the city was spending mo;,e than $700 million on professional services each year and was doing so through a process that was inefficient, lengthy and lacking programmatic and financial accountability. The city had no, cost principles that defined eligible contract expenditures, and the city’s vendors built premiums into their costs because of extraordinary payment delays. It was not unusual to see contracts of more than $1 million that provided little explanation of costs or services to be delivered to the city.

Worse yet, when Philadelphia’s city council asked for an inventory of all 1,500 professional services contracts entered into by more than 40 city departments and agencies, it took two months to compile the list. There was no comprehensive data, base that contained even the most basic and essential information on how and with whom the city was spending almost three-quarters of a billion dollars.

The first term of Mayor Ed Rendell’s administration, which began in 1992, brought fundamental change to the city’s contracting practices.

In a major reengineering effort that the city conducted with Andersen Consulting, Chicago, the city government reinvented how it develops and executes professional services contracts.

Today, standardized contract documents and procedures are in place, the review and approval process has been reduced from 44 steps to 13 steps, more contracts are being completed on time, and vendors are experiencing fewer payment delays.

The technology component that emerged from the reengineering effort–known as the automated Contract Information System (ACIS)–is a citywide network that links all city agencies at 21 different locations and allows employees to share information. The system also electronically-tracks each phase of a contract’s development, so both the city and vendors are held accountable during contract negotiations and upon agreement.

As Philadelphia’s first citywide client/server application, ACIS allows employees to use desktop PCs for point-and-click access to a central database, where all information about contracts and professional service vendors is housed in a UNIX server. The server provides secure, citywide access to electronic copies of the contracts. Contracts are routed from one city unit to another for efficient, accurate approvals and revisions.

Other ACIS features include office automation packages, such as word processing, contract annotation capabilities for on-line edits and an ad-hoc inquiry tool so that users can obtain all information relevant to particular contracts from their desktops. To help employees make the transition to the new environment, ACIS has a Windows-like interface for a userfriendly look and feel and an on-line help system to reduce manual training.

By focusing on contract substance–scope of work, service quality and cost–rather than on the logistical challenges of contract administration, the city is able to maximize its resources on behalf of its residents and visitors.