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“It’s important to start with a challenge, right?” says Dallas Stone, Division Chief at the California Public Employees’ Retirement System, better known as CalPERS for short. “When you can clearly define that challenge and understand it…the wins should be easier to identify.”
Stone brings a level-headed and solution-oriented approach to his work. His professional journey is one that many career State employees can relate to: He’s held a number of different roles within the agency. He is continuously focused on finding ways to deliver effectiveness and efficiency. He is mission-driven and open to improvements and collaboration in the service of the people of his state. At CalPERS, he is leveraging technology, experience, automation, and weighing the costs of inaction.
At CalPERS, Stone is the chief of the Operations Support Services Division, which provides internal customer service for over 30 divisions, and employs 115 team members. Around 35 of these individuals focus on contracting and procurement services.
In a given year, the team handles around 15-20 solicitations (including RFPs, RFIs, RFBs), processes 175 contracts, executes 200 letters of engagement, and actively manages 14 Spring Fed Pools.
About 85% of their workload is focused on the:
1. Investment Office, which oversees a half trillion dollar pension fund through multiple asset classes;
2. Health Benefits Branch, which oversees administration of healthcare and pharmacy benefits for approximately 2.2 million members through multiple HMO, PPO, and pharmacy benefit manager contracts; and
3. Information Technology Branch, which oversees all IT services, applications, and the myCalPERS platform that administers retirement benefits for retirees and beneficiaries and contracting employers.
In order to provide internal customer service to these main three branches and others, the Operations Support Services Division relies on Contract Managers embedded throughout the broader organization.
A Contract Manager’s job never stops. They’re tasked with running appropriate reports, identifying necessary annual contracts and services, keeping a handle on when services expire, and determining what services will need to be renewed the following year. They need to communicate their contracting procurement needs in a timely manner to Dallas Stone’s team to ensure that critical services don’t lapse.
Once a contract is signed and services begin, they need to stay on top of risk, compliance, and IT security needs, and constantly perform due diligence.
The Operations Support Services Division believed that technology could dramatically improve the workload, but they needed to show their work first.
“Before we can go to our executive team and ask for permission to move forward with our IT
automation project and retain the funding, we needed to demonstrate that we knew our current process and make every effort to work with our internal Lean Six Sigma team and ‘lean’ our process as much as possible while ensuring we were in compliance with our contracting policies,” says Stone.
Over the course of 18 months, the Division documented their contracting process step-by-step. They met with business partners to better understand contracting from a requestor’s point of view and with control units inside CalPERS to understand internal approval documents that accompany request forms. They identified redundancy, streamlined procedures, and reduced their service level agreement (SLA) time from 90 days down to 72 days. There was an even bigger discovery along the way.
Through the discovery process, the Operations Support team revealed that it wasn’t the “people aspect” that were holding up the contracting process, “but the labor intensive work that needs to be done behind the scenes.”
For example, in addition to the main request forms, a requestor needed to complete six different forms in Microsoft Word or Adobe that didn’t auto-populate. Each form had to be completed line by line. For contract analysts, all templates were in Word and required hours of form formatting. For approvals, each request was individually routed via Outlook for different program areas to review, and for compliance, finished documents had to be run through an accessibility tool to meet accessibility requirements, which could potentially add five business days to the process. Tracking of solicitations, contracts, and amendments happened in an Excel spreadsheet and Outlook.
“Having a real time view into our contracting pipeline is pretty much impossible, and being able to shift priorities or delegate work to our analysts required multiple emails and follow up conversations. The only way we were going to see real improvement in the services we provide was through leveraging technology, which is really what led us to Authorium.”
The team worked through their internal governance process, gained organizational approval and support, and sought a partner to help with contract automation, vendor management, and more.
Regarding the partner selection process, Stone recalls “sitting down and documenting what we thought was a complete critical requirements list, talking with the vendor community that lived in the contracting space, demoing their products, and landing on a solution that not only met our needs, but could provide us with future opportunities we didn’t know existed.”
Having put in so much effort to make changes within a large organization, one wonders if the payoff will be worth it. “The real cost of not acting goes back to our mission statement, you know, and that is to serve those that serve California…If we cannot process a contract or engagement timely, we could potentially miss out on a unique private equity deal or bring in a third party consultant to assist our health care team when we’re actively negotiating health care premiums for the next calendar year,” says Stone.
At present, the CalPERS team is working with Authorium to leverage the platform to remove the challenges described above.
“We’re excited about a new environment that once our team has internally reviewed required documents and answered their requirement document building questions and simply clicks a build button. We’re provided [an] instant completed contract, engagement, or solicitation that has the appropriate contract language. It’s formatted appropriately, and it’s fully accessible,” Stone continues.
“We believe we could easily eliminate 15 business days from our current SLA at a minimum, just from a contract build perspective. If you add in simultaneous approvals on the front end, as well as the final execution phase, we could possibly see a 40 to 50 percent SLA reduction once the entire organization becomes comfortable working within the platform.”
To hear more from Dallas Stone about how CalPERS is leveraging technology to better meet their mission, check out the on-demand webinar, Track Every Dollar.
CalPERS serves those who serve California. As an agency, their four priorities are investment risk mitigation; employer affordability; sustainability; and exceptional health care. They are the largest purchaser of public employee health benefits in California and the second largest public purchaser in the nation after the federal government.
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