The NIGP Code History: A Timeline To Trouble? by Jon Hansen

“A wildfire is an uncontrolled fire that can, given the right set of circumstances, spread quickly to consume and devastate a large area of land.  Unlike other fires, once started wildfires unexpectedly and without warning change direction as well as jump gaps in roads and rivers making its containment a nearly impossible challenge.”

The wildfire effect is an interesting concept in that it speaks to the unpredictable nature of a particular event or, in the case of the #CodeGate controversy, story.

As indicated in my previous post What are the origins of the NIGP story?, the inflow of information is not only increasing, it is rapidly expanding into unexpected areas.  Like shifting winds that can suddenly and without prior warning change the direction of a wildfire, the new snippets of information and rumblings of discontent with the NIGP, create an interesting picture that spans years and even decades.  In the process, a new set of questions are raised – some troubling.

For example, there are suggestions that Periscope and the State of Texas are having issues regarding the fact that the State does not feel that, has one of the key creators of the Code, they should be required to pay license fees.

There are also concerns regarding the unnecessary and perhaps contrived complexity of the NIGP Code crosswalks to the UNSPSC Code – which it should be noted is an “open, global, multi-sector standard for efficient, accurate classification of products and services” – that also happens to be technically free.  You can read about the UNSPSC Code in my April 3rd, 2015 post With regards to the NIGP Code, are States forfeiting their future for the sake of a questionable past?

These concerns – especially in relation to the comments made in a 2001 press release, and about which I will talk further in The Simonton Years section of this post – centers around the one to as many as five possible matches between the NIGP Code and its counterparts in the UNSPSC Code. As a result, States as well as other government entity’s feel that their ability to move away from the NIGP taxonomy, and the related significant license fees, have been deliberately hindered.

Complicating the matter further is that the vast majority of Vendors utilize the UNSPSC Code, which was originally adopted as part of the eCommerce evolution.  The potential impact that this has had on government’s ability to effectively engage the vendor community is anyone’s guess?

So like a jigsaw’s pieces, let me share with you the historic pieces of a timeline puzzle, and the questions that our progression through each phase prompts.

NIGP Code Origins

The Director of General Services in Texas, Homer Forrester, led the group that produced the initial NIGP Code Set in 1983.  The group included representation from “Texas, Oklahoma, Florida, Illinois and other states, cities and counties.”

That same year, Forrest Simonton of Simonton Enterprises became the “exclusive contract holder for the marketing, licensing, and maintenance of the NIGP Commodity/Service Code.”

Unanswered Questions:

Who is Forrest Simonton, and why did the founding NIGP Code members select Simonton Enterprises to be the exclusive contract holder for what was a nascent, but ultimately important tool, to classify products and services?

The Simonton Years (1983 – 2001)

Based on my research, and bearing in mind that I am still waiting for additional records, one piece of information that stood out in particular, actually makes reference to the UNSPSC Code.

In an April 26th, 2001 press release, which announced that Simonton had signed an agreement with Way2Bid Inc., allowing the latter to use the NIGP Commodity Codes, the following statement was made; “Simonton offers coding services to convert existing files, catalogs and inventories to the NIGP standard, and it offers cross referencing with the UNSPSC code as well.”

The 2001 press release would tend to suggest that at least during the Simonton years, the intention was to make the “crosswalks” to the UNSPSC Code as simple and as direct as possible.  This would of course make sense given the fact that the announcement also indicated that “The Way2Bid Exchange will continue to support the UNSPSC Code in addition to the NIGP Commodity/Services Code.”

The implied simplicity associated with the above statement is not, according to reports, the case under the present Persicope guardianship.

A mere five months after the April Way2Bid press release, the Austin Business Journal reported on September 27th, 2001 that “Periscope Holdings Inc. has purchased Simonton Enterprises LLC, Simonton Solutions LLC and Workflow Integrators Corp.”

Periscope, as described in the article, “is a technology holding company that acquires, operates and incubates new and established companies catering primarily to the public sector.”

What is interesting is that in referencing the original Simonton acquisition in 2001,  a November 6th, 2006 Austin Business Journal article reported that in forming Periscope Holdings Inc., the three companies that Persicope purchased were “Periscope LLC, Simonton Enterprises and Workflow Integrators.”  Who is Periscope LLC, and why were they not referenced in the original article?  Maybe nothing but . . .

On October 1st, 2001 then NIGP Executive Vice President Rick Grimm expressed his approval of the Periscope acquisition in a separate press release.

In the release Grimm stated that “We’re excited about Periscope’s acquisition of Simonton Enterprises, who oversaw and maintained the Code for the past 19 years.”

Grimm then went on to say “I believe our combined efforts will further solidify the Code as the measure for quality commodity and service coding.”

In the same press release, Periscope’s Managing Director and President Brian Utley, described the “new partnership” as being “a great opportunity to expand the Code’s value as the standard in public and private purchasing.”   He concluded by saying that “We see this as a great chance to serve the public procurement community by continuing to make the Code a superior standardized purchasing tool.”

Unanswered Questions:

Why did Forrest Simonton sell his company to Periscope?  Was there a pre-existing relationship between Simonton and Periscope?

What due diligence did the NIGP perform prior to the Periscope acquisition of Simonton Enterprises?

Who were the executives at the NIGP responsible for said due diligence in 2001?

Was there a prior relationship that existed between the NIGP and Periscope?  If yes, who was a party to that relationship, and what was its nature?

Were there conditions originating with the original 1983 agreement that granted Simonton exclusive contract rights to the Code, and if there were, were they maintained or honored in the Periscope acquisition?

What impact did the transfer of custodianship from Simonton to Periscope have on the Code’s development – including the apparent commitment to “cross reference” to the UNSPSC Code highlighted in the April 2001 Way2Bid press release?

The Periscope Years (2001 – Present)

So who is Periscope Holdings Inc.?

I must admit prior to the news that they had acquired BidSync this past December, I had never heard of them.  So my first impression is the most recent impression, which I have shared with you in this series of posts starting with Up Periscope? Examining Periscope’s acquisition of BidSync with a “Survivor’s” eye.

What I found interesting is that Periscope Holdings, Inc. filed a U.S. federal trademark registration for BUYSPEED on Friday, August 10th, 2001.  This was one month prior to the announcement that they had acquired Simonton Enterprises, and with it the rights to the NIGP Code.

According to an Austin Business Journal article from 2006, and prior to registering the BuySpeed trademark, and the subsequent acquisition of the three previously referenced companies, “Periscope was originally an incubator that provided funding, technology consulting and office space in exchange for equity.”

Why is this important?

Because BuySpeed is, according to a post on an NIGP WordPress website a “top-rated, source-to-pay eProcurement solution.”  Note my emphasis on the words NIGP WordPress website.

Basically, and unlike Simonton Enterprises – for whom I have not found any record or indication that they sold an eProcurement solution – it would appear that Periscope’s intent was clear from the beginning.  Specifically, to leverage the anticipated ubiquity of the NIGP Code, to provide them with an incredible (and unfair) advantage over other vendors when bidding on government contracts.

In short, we control the Code you desperately need . . . why deal with someone else?

Of course, the Missouri protest might serve as a possible warning, in terms of what could happen when you choose to go with something other than the Periscope solution.

In this regard, the BidSync acquisition makes even more sense, because they likely sized up their former competitor, and thought that by buying them they would bolster their offering so that they could make governments an offer they couldn’t refuse.  Or to put it another way, the formal protest letter challenging Missouri’s award of the recent eProcurement contract to Perfect Commerce, and the associated letter from the NIGP – Periscope team threatening to pull that vendor’s license, is the proverbial horse head in the government’s bed.

Unanswered Questions:

Surly as part of the due diligence process, the NIGP leadership must have discovered that Periscope had registered the BuySpeed trademark.  They must have at that time known or at least “suspected” that said registration meant that the company was going to make the transition from an incubator providing funding, technology consulting and office space, to becoming a vendor competing for government contracts?

Given the fact that under the custodianship of Simonton, whose sole focus was on the “marketing, licensing, and maintenance of the NIGP Commodity/Service Code,” such a revelation would have raised all kinds of red flags.  Or at least it should have, as the business models between the two entities were notably different.

So why didn’t it raise red flags?  And if it did, why did they ignore it?  Certainly what has happened in Missouri would not have happened if Simonton was still at the NIGP Code helm?

This is also what makes the following statement in Periscope’s March 11th, 2015 protest letter interesting; “There has only been one other occasion where we felt it necessary to contest an award made to another provider.”

I have always believed that when someone answers a question that isn’t asked that, in and of itself, is a red flag.  Why did Periscope feel it was necessary to include this in the letter?  It has no real material value to the protest.  Maybe they are just trying to show that the Missouri award is so out of whack with sound decision making, that they have no choice but to speak up?  Maybe.

There is however another possible line of thought – one involving Parthenon Capital Partners.

As the money behind Periscope’s acquisition of BidSync, they may want to see an immediate and definitive return on their investment in a company that appears to possess a tremendous competitive advantage by way of its stewardship of the NIGP Code.  When you read my December 14th post “Who are those guys? Are these the people who will have the most influence on public sector procurement in the coming years?“, you will see what I mean.

Can you imagine having to explain to these big time money players that you couldn’t deliver the first “W”.  Yes I know, they landed a contract with Detroit, but I think that Missouri would represent a statement as much as it would an immediate win.

Summary

In the end, and for whatever reason, the NIGP leadership in 2001 – which included then President William B. Irish and lo and behold one Rick Grimm (so much for Grimm inheriting a predecessor’s mess), made a decision to go with a company who was clearly positioning itself to compete for government contracts as opposed to serving the government.

One can only wonder if any of the most recent events would have occurred, had the not-for-profit organization put the NIGP Code in the hands of someone other than an eProcurement vendor.

More to come . . . stay tuned.

 

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

You can 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

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