Arkansas has entered into a five-year agreement with Austin, Texas-based Periscope Holdings for an electronic procurement system, called ARBuy, at no cost to the state, state and Periscope officials told lawmakers this week.
Amy Fecher, secretary of the Department of Transformation and Shared Services, said the Department of Finance and Administration issued a request for proposals for an electronic procurement system in 2018, but the bids were in the $35 million-$75 million range and officials decided "that was not economical for us at that time to award that bid."
"I had also found out through our studying e-procurement about a model of Texas' Periscope Holdings, which has a self-funded model," Fecher told the Legislative Council on Friday.
"They come in and implement the system, [and] integrate it with AASIS. They train and work with vendors at no cost to the state, so we entered into a cooperative buy contract through [a department of] Texas, she said. AASIS is the Arkansas Administrative Statewide Information System.
Under Periscope Holdings' self-pay model, Fecher said there is a 1% "convenience fee" on vendors, and 20% of that revenue will be paid to the state.
The convenience fee will be charged only on state contracts, and vendors will be able to opt out of the fee, but they will not be part of the online marketplace if they do so, transformation department spokeswoman Alex Johnston said in a written statement.
"The [electronic procurement] system just went live in the last couple of weeks and our vendors are registering," Fecher told a committee earlier in the week. "Right now, it's not live to use and buy on. ... Our aim is to go live in August for ... departments around the state to purchase products."
The electronic procurement system also will be available to cities, counties, universities and public schools, and it "expands the use of state contracts across the entire state," said Brian Utley, Periscope Holdings CEO.
The system has been implemented in eight states and more than 1,000 agencies and is used by more than 500,000 suppliers, he said.
Utley said the convenience fee will raise an estimated $4.1 million over five years for the state.
Fecher said the state will have staffing costs tied to the system's administration, and she doesn't know if the fee revenue will cover those costs.
"We did look at the some of the costs associated to the state through procurement as we do it now versus the new method and we found savings," she said.
Sen. Jimmy Hickey, R-Texarkana, asked: "Are those something that were reduced to writing that we can look at?"
Fecher replied, "No sir."
Hickey said, "That's bothersome to me. In the future, I would at least hope that whenever we enter into a contract of any size, but of this magnitude, that we could present that to this body."