Why the everyday taxpaying citizen should care about the Missouri NIGP Code Bid Protest by Jon Hansen

Posted on April 4, 2015


“Can you imagine what a politician would do with a story like this?  How would State’s explain their coming under the thumb of a purported non-profit entity such as the NIGP who, through what appears to be a non-arms length relationship with a private entity, wields enough power to the point that they can dictate to individual States who and who cannot provide the needed service capability to maintain the Code’s ongoing veracity.  Taking such a stand might even get a candidate elected (or re-elected).” – Procurement Insights April 3rd, 2015 Post

I read somewhere recently that any type of controversy or scandal is automatically assigned the –gate designation i.e. Watergate.

While I have always resisted the convenience of using contrived designations that are designed more to inflame emotions as opposed to reporting useful facts upon which an informed opinion can be based, the growing controversy regarding the Missouri bid protest is an exception.

#CodeGate, has I will now call it, represents a potentially devastating turn of events that if left unchallenged and/or unchanged, could limit a State’s ability to determine the tools they use to buy goods and services.  The goods and services to which I am referring, are those procured to directly satisfy the individual or collective needs of the community (you and I), and create future benefits such as infrastructure investment.

From a money standpoint, and based on the following list of State Budgets, we are talking about tens of billions of dollars if not more.  And this just includes expenditures that are made at the State level.

From a practical standpoint, if government’s lose the ability to competitively select the best solution to procure said goods and services, the impact on the individual taxpayer could be enormous.  Specifically, the purchasing inefficiencies brought about by the use of what could be considered inferior technology, resulting in significantly higher acquisition costs and a decrease in the level of related services a government can offer its citizens.

Or to put it another way, if a State such as Missouri cannot use the tools it deems to be the best in acquiring goods and services at the optimum value (i.e. best cost and quality), then the everyday citizen ultimately bears the consequences.  This could potentially take the form of program cuts, or increased taxes or any combination of these, as well as a variety of other ripple effect factors.

“Similar to when baseball had to seek it’s first commissioner following the 1919 Black Sox scandal, I fear that when it comes to the guardianship of the NIGP Code the procurement world desperately needs its version of a Kenesaw Mountain Landis.” – Commentary exchange with NIGP Chief Executive Rick Grimm

At the heart of #CodeGate is the NIGP Commodity/Services Code.

The NIGP Code is a “coding taxonomy used primarily to classify products and services procured by state and local governments in North America.”

It is most commonly used to “classify vendors and to track spending data for use in strategic sourcing and spending analysis.”  In short, the NIGP Code is critical to ensure that government entities can manage the purchase of goods and services as effectively as possible.

So who owns this Code and oversees its access and ongoing maintenance?

The National Institute of Governmental Purchasing or NIGP through what now appears to be a non-arms length relationship with a private sector company by the name of Periscope.  This is where the likely conflict of interest, that leaves governments and its citizens vulnerable, comes into play.

Periscope, buoyed by its recent acquisition of BidSync, sells an eProcurement technology designed to service the public sector.

When Periscope lost a recent bid to a competing vendor in Missouri, they filed a formal letter of protest contesting the contract award.  Periscope (through the NIGP) then threatened to cancel the winning vendor’s license to use the NIGP Code.  In fact, the letter that was sent to the winning vendor by the NIGP threatening to pull its license to use the NIGP Code, was not only included in Periscope’s official protest letter, the NIGP letter was actually co-signed by a senior Periscope executive.

In a commentary exchange with the NIGP’s Chief Executive Rick Grimm, in which I made reference to Periscope’s letter of protest and the conflict of interest it represents, the NIGP Chief Executive lawyered up.

The NIGP-Periscope Way

The NIGP-Periscope Way

The net result is that a vendor competing for government business should not simultaneously have stewardship over the very code that is needed for other – perhaps better qualified vendors – to do their job.  It is the equivalent of the if I can’t be the pitcher (i.e. contract winner), I am going to take my baseball and go home.  In this case, the baseball is the NIGP Code.

So here is the question for you the everyday citizen . . . do you want what appears to be a self-serving monopoly dictating to your State how they ultimately buy goods and services?

Do you want to put your access to government services including infrastructure investment in the hands of the NIGP – Persiscope partnership?

I for one believe that Missouri and every other State and government entity that depends upon the NIGP Code to buy goods and services, should determine what is in their and their citizen’s best interest.

As for an alternative to the present situation, here is the link to my previous post titled With regards to the NIGP Code, are States forfeiting their future for the sake of a questionable past?


Just started following the NIGP #CodeGate story? Use the following link to access the Post Archive; https://procureinsights.wordpress.com/nigp-codegate/

Follow my coverage of this story on Twitter using the hashtags #missbid and #CodeGate

On The Go? You can also listen to the audio version of this post as well as others through @Umano https://umano.me/jhansen