Building the “Back Office” for New Outcomes: Nudge Solutions at the Georgia Department of Administrative Services

An Insight from the 2017 Public Sector for the Future Summit

Part of a Series

This Insight is a part of the 2017 Public Sector for the Future Summit Report.

To see the complete report, click here.

In 2016, the Georgia Department of Administrative Services (DOAS) encountered what then-DOAS Commissioner Sid Johnson characterized as a “crisis situation.” , That August, news broke that a senior official from the Georgia Bureau of Investigations (GBI) had used an agency credit card to make over $87,000 in personal purchases; at least some of the purchases were made via Amazon. A subsequent investigation revealed a breakdown of internal controls, inadequate management oversight, and a broader sense that something had gone seriously awry. “The GBI routinely conducts investigations of misuse of purchasing cards. In this case, it was one of its own employees,” said GBI Director Vernon Keenan. “I [was] totally mortified that this occurred.”

As distressing as the situation was, it provided DOAS—which is responsible for managing the state’s purchasing card program and its approximately $330 million in annual transactions—an opportunity to review and improve its policies and internal controls for state purchasing cards. The analysis revealed new problems, trends, and opportunities. These included that a large amount of money (approximately $18 million over two years) was being spent on Amazon; that there were other compliance issues, including agencies not making purchases off of statewide contracts; and that there were broader procedural inefficiencies. At the same time, DOAS believed that the state could seize an opportunity by beginning to make more purchases from local small businesses, a move that would support the Governor’s Small Business Initiative. “All of that,” Johnson explained, “came together at one time in reaction to this fraud case.”

Thus, in late 2016 and early 2017, DOAS implemented a series of reforms to correct deficiencies in and leverage opportunities surrounding the purchasing card system. The most immediate change was a significant decrease in the number of people with procurement cards. In addition, DOAS changed the design of its system by establishing a partnership with Amazon that integrated the company’s catalog into the state’s procurement system. This created an extra security layer because one needed a credential to log into the system, which meant that the state could more easily track who was making purchases. What’s more, the system—which went live in January 2017—provided DOAS an opportunity to create a series of nudges and capture data as part of an effort to enhance security further and help the state realize other efficiencies and enterprise-wide objectives.

“Once we get this data and do the analysis, that gives us an opportunity to see what other nudges we can build into the system. So, it just kind of builds upon itself as we move forward.”
Sid Johnson
Former Commissioner, Georgia Department of Administrative Services

The new system employs a diverse set of nudges. One involves shifting default settings. Specifically, the system requires that all purchases receive two approvals; it also creates a default shipping address that cannot be changed, eliminating the possibility that an employee will inappropriately ship an order to his/her home. In addition, the system contains a series of warnings and reminders that alert an employee three times if an item he/she is purchasing is part of an existing statewide contract. (Statewide contracts often have the best prices and terms due to their scale and scope.) The state does not require the officials to purchase the item from the contract, but the reminders are designed to increase the likelihood that purchasers are fully compliant with state policies. Finally, the new setup simplifies and increases the ease and convenience of the process by making it unnecessary for subscribers to have an Amazon PRIME account, removing taxes, and eliminating the need for purchasers to move back and forth between state catalogs and Amazon’s website.

What is the Nudge Loop?

Learn more about the framework being adopted in the Public Sector >

Along with incorporating numerous nudges, the system is designed to help the state enhance its data and analytics capabilities so that it can continue to strengthen its purchasing card and procurement systems. For example, the state is analyzing data on spending patterns, which may reveal opportunities for new statewide contracts and the savings that accompany them. State officials are also evaluating whether existing purchases are compliant with statewide contracts and rules and regulations. Finally, they are working with vendors with hopes of acquiring “level three data” (which provides detailed spending information). This information—and the system’s data and analytics capabilities in general—is invaluable because it can help the state discern which nudges are working and at the same time develop new techniques. “Once we get this data and do the analysis,” Johnson said, “then that gives us an opportunity to see what other nudges we can build into the system. So, it just kind of builds upon itself as we move forward.”

Less than one year after the creation of the new integrated procurement system, DOAS and its partners are still working to address challenges with the system and evaluate its effectiveness. For example, the price of products sometimes changes between the time a staff member requests and receives approval for a purchase. Similarly, the state is determining how to address shipping costs that are separate from the price of the item. The state is also still working toward incorporating small businesses into the new integrated setup. Finally, having only introduced the joint catalog in January and then implemented new purchasing card restrictions in April, DOAS is still awaiting increased participation so that it can gather more data to analyze and increase impact. Specifically, as of June, 423 individuals in 32 agencies had joined the integrated procurement system, resulting in 721 orders and a total of $170,000 in spending. As a result, they have been able to acquire some data, including the volume of purchases and what was bought with a warning. However, they are still awaiting additional information, including what purchases the warning prevented.

Videos from This Session

Still, even as they try to hone the system, DOAS officials can take pride in the fact that, in less than a year after a highly public crisis, they have dramatically improved their security procedures and introduced a system that leverages design thinking, nudge principles, and data and analytics. The path forward may continue to involve challenges, but they are building a system that can help them navigate those difficulties intelligently and deftly.

Latest Insights

Over the last several years, the Washington DC Metropolitan Police Department has embarked on a capacity- growing journey integrating new approaches to both human capital and technology. During their presentation at The 2018 Public Safety Summit: Leadership in Turbulent Times, Chief Peter Newsham...

It’s not news that the role of the CFO has changed. Finance teams dominated by accountants, risk officers, and administrators are a thing of the past...

In fall 2014, Mark Stutrud was fishing for salmon in Michigan’s Pere Marquette River when a colleague introduced an intriguing but fraught...

In 2008, Walt Ekard, the Chief Administrative Officer for San Diego County, asked Nick Macchione, the newly-promoted director of the county’s Health...

Hosted by

Leadership for a Networked World’s applied research, student innovation challenge, and on-campus summit programs are an initiative of Dr. Antonio M. Oftelie, Innovation Fellow at the Technology and Entrepreneurship Center at Harvard (TECH), part of the Harvard John A. Paulson School of Engineering and Applied Sciences. TECH is a hub for students, faculty, alumni, and government and industry leaders to learn together, collaborate, and innovate. LNW accelerates these efforts by connecting leaders across sectors and developing cutting-edge thought leadership on innovation and organizational transformation.

© 2018 Leadership for a Networked World. All Rights Reserved.
login