Deloitte projects savings for Iowa's three state universities at $193 million

Regent concerned about disadvantaging Iowa companies

(The Gazette file photo)
(The Gazette file photo)

Suggestions from a consultant on how to improve purchasing practices at Iowa’s three universities could result in a cumulative total savings of $192.9 million over the next 10 years.

When broken down by institution, projected cumulative savings over the decade could reach $128.7 million for the University of Iowa, $47.2 million for Iowa State University and $17 million for the University of Northern Iowa, according to new documents out of the Board of Regents Office.

New York-based Deloitte Consulting LLP — hired by the board earlier this year to conduct an efficiency review of the public universities — will present its findings and suggestions in the area of “sourcing and procurement” during the Board of Regents meeting Wednesday.

Documents made public in advance of that presentation suggest that by negotiating more favorable contracts, strengthening procurement functions and coordinating efforts across the campuses, each university quickly could start to see savings.

Over the next 18 to 24 months, across three “sourcing waves,” the universities could combine for $16 million to $40 million in savings, according to a business case put together by Deloitte.

The first wave would include sourcing and procurement of items such as office supplies, furniture, food, maintenance material, temporary labor and small package delivery — such as through FedEx or UPS.

Possible challenges associated with the new model include the need to manage implementation of new suppliers and ensure UNI has sufficient staffing, according to the documents.\

Payment increase

The Board of Regents on Wednesday will consider entering into an agreement with Deloitte to implement its suggestions related to sourcing and procurement, and possibly increase the $3.3 million total it already has agreed to pay the consultant.

Regent Bob Downer has said he’s been pleased with the Deloitte team’s work so far and with the projected savings. But he added he has concerns about inflating the total cost too far beyond what was originally proposed.

And related to the sourcing and procurement suggestions, Downer said he’s wary about the effect the changes might have on Iowa businesses and the local economy.

“I think it’s extremely important that they not try to package various types of goods and services on which they are going to be getting bids into packages too large, resulting in the possibility that many Iowa businesses will not be able to bid on these packages because they don’t offer all the deliverables,” Downer said.

Many of the larger companies that could offer a wider range of goods and services are national companies, not businesses that have an Iowa presence and Iowa payroll, Downer said.

“I want to be sure that we are not putting Iowa businesses at a disadvantage here,” he said.