Breaking The NIGP Code? by Jon Hansen

Posted on June 18, 2015


Back in the middle of April, I wrote a post titled What is the real cost of moving away from the NIGP Code?

At the time, there seemed to be a notable reluctance on the part of NIGP Code licensees such as States, to make the switch to another taxonomy.

According to feedback, this reluctance was based upon several factors including; 1) the complexity of building a crosswalk to another taxonomy, 2) the potential loss of historical data and, 3) the functional changes at the operational or user level.

That was the feeling then.

However, as the #CodeGate story has become more widely known, a different perspective is emerging. One that is more reflective of a willingness to consider an alternative to the NIGP standard – although Spend Matters’ Pierre Mitchell does not consider it be a standard “since it’s proprietary to a vendor.” Pierre may have a point.

For example, Hawaii recently made the switch from the NIGP Code to the NAICS taxonomy. Now I am fairly certain that Hawaii’s decision to make the change was in the works before anyone had ever heard of #CodeGate. This then raises the question . . . was there a pre-existing issue with the NIGP and/or the Code before the story of the scandal broke?  If there was, what impact does this have on the existing client base?  Would the States or other government entities that currently use the NIGP Code be more inclined to follow Hawaii’s lead, given their increased exposure as a result of the evolution of the NIGP-Periscope relationship?

According to the discussions that I have had with different people over the past couple of weeks, the answer appears to be yes.  Even though it may not have created the original desire to make a change to a new taxonomy, the #CodeGate scandal has provided a certain degree of justification for considering a move sooner as opposed to later.

What about the previously referenced obstacles such as the complexity of building a crosswalk to a new taxonomy or, a loss of historic data if the NIGP Code is simply dropped? Doesn’t this create a major problem for existing NIGP Code licensees?

Not necessarily.

In fact, I am surprised by the somewhat relaxed responses I am now receiving when I pose the question regarding the possibility of using a new taxonomy. While I am not suggesting that this is the only reason, I got the impression that the decision on the part of States and other government entities to stick with the code had more to do with supporting their association, as opposed to the actual merits of the taxonomy itself.

Now that the trust relationship between its members and the NIGP has been damaged by the #CodeGate revelations, it would appear that more than a few are wondering whether or not such loyalty is deserved or warranted. After all, if the NIGP-Periscope tandem could challenge Missouri’s award of a contract by threatening to take away the winning vendor’s license, why would they not do the same with another State down the road?

This brings us back to the Hawaii decision, as well as the mindset of the other NIGP Code clients, who may also be contemplating a change.

If I were Parthenon – who late last year recapitalized Periscope before merging the company with BidSync, I would want to know what NIGP- Periscope people knew in terms of client attitudes, and whether or not this was fully disclosed during the due diligence process.

Based on everything that is happening, Parthenon may have gotten more than they bargained for, and not in a good way.

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