2010 NASPO Eastern Region Meeting

1. Commonwealth Of Massachusetts Operational Services Division1% Administration Fee on Statewide Contracts 2010 NASPO Eastern Region Meeting

2. FINANCIAL SELF-SUFFICIENCY • Created a road-map to financial self-sufficiency by proposing and implementing a legislatively authorized statewide contract administration fee. • The 1% fee assessed upon statewide contractors has saved the Commonwealth approximately $ 1 million from a reduction in state appropriation and generated an additional $1.4 million back to the General Fund in FY 2010. • In FY 2011 the fee will generate over $2 million to the General Fund in addition to covering more of OSD’s administrative expenses, lessening our dependency on appropriated funds.

3. 1% Administration Fee on Statewide Contracts • How we got started? • Introduced the concept to ANF • Discussed it with the State Comptroller • Submitted with the Governor’s budget for FY10 • Introduce it to the Legislature.

4. 1% Administration Fee on Statewide Contracts • FY10 Budget: • Reduced our main appropriation from $1,887,661 in FY09 to $743,779 in FY10 • Difference $1,143,881 • New admin fee account • Retained Revenue: $900,000. • Total Appropriation for FY10: $1,643,779 • Difference from FY09: $243,882

5. 1% Administration Fee on Statewide Contracts The admin fee applies to new or existing contracts and those contracts up for renewal or extension. Reports and fees are due 45 days after the end of the quarter for the calendar year

6. 1% Administration Fee on Statewide Contracts Created a database to manage and support contractor reporting, collection and future estimation of the Administrative Fee A news blast is issued through COMM-PASS two weeks after close of quarter to remind contractors that their 1% payments are due.

7. 1% Administration Fee on Statewide Contracts • As of the end of May 2010, total payments received for the admin fee for 6 calendar year quarters: • $2,379,607.64 • $1,479,607.64 (back to the general fund)

8. 1% Administration Fee on Statewide Contracts • Keeping the concept in mind that we’re trying to generate a savings while bringing in additional revenue to the state, for FY11 the recommended budget from the Governor, HWM and SWM is as follows: • Governor’s Budget HWM Budget SWM Budget • Main account Main Account Main Account $502,970$502,970 $814,809 • Admin Fee Admin Fee Admin Fee $1,810,167 $1,810,167 $1,400,000

9. 1% Administration Fee on Statewide Contracts • Projected Revenue from Admin Fee for FY11 • $4M – statewide contracts (this includes other eligible entities as well as state departments) • $2M -- will be reverted to the general fund

10. 1% Administration Fee on Statewide Contracts • NASPO White Paper • Several states currently employ an administrative fee, including California, Connecticut, Florida, Georgia, Kansas, Minnesota, New York, North Carolina, Oklahoma, South Dakota, Utah, Virginia and Washington, DC., Maryland had administrative fees but eliminated them in August 2007. • The imposition of an administrative fee as a funding mechanism to support all or part of a state’s central procurement program is not a new phenomenon. However, the use of this approach is rapidly increasing as state legislative bodies recognize the substantial savings and efficiencies offered by central procurement programs…

11. 1% Administration Fee on Statewide Contracts • THANK YOU AND AFTER THE OTHER PRESENTATIONS, I WILL BE HAPPY TO TAKE QUESTIONS.