Among the 40,000-odd counties in the United States are some really big ones. Like San Diego County, California. At the recent National Contract Management Association’s World Congress, I caught up with the buying chief of San Diego, who would like to see the GSA multiple award schedules open permanently to states and counties. Among the topics Federal Drive with Tom Temin discussed with procurement and acquisition director Jack Pellegrino.
Jack Pellegrino County of San Diego, a little known fact is the second largest county in California, of the 58 counties, and it’s also the fourth largest county by population in the nation. It’s really not only from a population point of view, we’re about 3.3 million residents.
Tom Temin So you would be like the fifth biggest city in the country, too.
Jack Pellegrino We would. We would be definitely in the top handful. But also geographically, what what makes us unique is geographically, we’re so large. We are about 4200 miles as far as a county. We have 75 miles of beautiful beach. If you’ve ever been out to Oceanside, Del Mar, Coronado. So we go all the way from the border, all the way up to Orange County, and then only inland to two Imperial County, Riverside and San Bernardino. So those are our border.
Tom Temin So it’s a big area. What kind of budgets are you dealing with? So procurement.
Jack Pellegrino So we just approved our our fiscal 23-24 budget. $8.1 billion as far as the county budget. 25% of that of that, Tom, is my procurement spend. So about just under 2 billion I spend on goods, supplies, services of all type.
Tom Temin What kind of a staff do you have for procurement and contracting?
Jack Pellegrino My total team is 77 people. About 60 of those are procurement officers.
Tom Temin And you make a distinction between in the title procurement and contracting.
Jack Pellegrino Well, procurement is more of a general, overall. They’re really synonymous. Procurement tends to be more transactional. It’s usually supplies and services that are more commodity based versus contracts are usually service based. They usually have more complicated scopes of work. And typically we we do contracting. We have what’s called an RFP request for a proposal. Where we may not award to the lowest, lowest price. We use best value, which is other factors, quality, technical capability and price as another factor.
Tom Temin So when you’re buying a great all that might be the best price.
Jack Pellegrino Correct.
Tom Temin But if you’re buying some kind of a technical service, it’s a different story.
Jack Pellegrino About of that $2 billion, about 600 million of it is Health and Human Services, which is every every gamut of Health and Human Services, social services, aging and adult services, behavioral health services. That’s where a lot of our contracts are right now in behavioral health.
Tom Temin Right. Yeah. So that’s where the quality outcomes and so forth might outweigh price.
Jack Pellegrino Absolutely. Because different providers, we do a lot of business with nonprofit providers and as such, they all have different cost structures. And really what we’re looking to do is have the best, as you said, outcomes and results for the dollars that we’re spending.
Tom Temin And what about digital services you’re buying? I mean, is the county in that mode that so many locations are to provide better citizen services? Through digital, online and all of this?
Jack Pellegrino Yes. That’s one of the things that we’re very proud of. If you went out to the County of San Diego website, you would be, I think, very impressed about the amount of access. One of the things that we really work hard at is full transparency in everything we do. For example, this new budget that was just approved, you can the full budget is out there and you can it’s we call it open budget and you can see it by line item of where the money is going, where it’s programed to go.
Tom Temin All right. We’re speaking with Jack Pellegrino. He’s director of purchasing and contracting for San Diego County, California. And at NCMA, you were talking about flow down of federal rules and regulations for procurement. What’s the connection between what the feds do and what a big county does?
Jack Pellegrino It’s all about the dollars. A lot of my dollars, a significant amount of our dollars come from the federal programs.
Tom Temin And every one of them has a string attached.
Jack Pellegrino Absolutely. We follow the full rules promulgated by Office of Management and Budget. So really sometimes that the money comes into the state. I have the great state of California above me, so comes to the state and then the state flows it down to me. And then the state puts their rules on top too. So I have the federal rules, the state rules, and then within within whatever the grant vehicle is or whatever the program is contract that comes to us. There’s always agency rules, maybe FAR provisions or the other other provisions that are unique to that that agency.
Tom Temin So it’s not just the FAR at the federal level, but it’s all of the CMS regulations, Health and Human Services, Labor Department. It goes on and on. Veterans Affairs.
Jack Pellegrino For example, Health and Human Services, they have very specific requirements, as far as who is eligible for reimbursement for those services. So we have to ensure that that is now a flow down in our contract to, as I said, are nonprofit providers.
Tom Temin So it’s a giant compliance exercise. It is how do you get it abstracted so that it doesn’t eat your work alive?
Jack Pellegrino Well, we really have I’m blessed with a great staff and what we do is we have some really wonderful templates that we’ve developed over time, so we always make sure those templates are up to date. So for example, there was some new legislation that something called the Byrd Act. I don’t know if you remember the Byrd Act, we went through and updated all our reps and certs to make sure we’re now in full compliance with that. I would say, Tom, we update those reps and certs and our whole contract template probably about once a year to keep up with those flow downs. And then we very consciously, when we got into the program, may out of compliance measures like you referred to and make sure we covered everything.
Tom Temin So there’s no artificial intelligence related on that.
Jack Pellegrino I’m looking for that. So I’m going to do some shopping here a little bit later. So I will say.
Tom Temin All right. The other thing I wanted to ask you about as use of federal contracting vehicles for commodities.
Jack Pellegrino Okay. Here’s what I would like to. Here’s what I’d like to do. This might be controversial, but I wish Congress would open up all the GSA schedules to state local governments. Right now, I can only purchase off the I.T. schedule and also the the public safety schedule, because.
Tom Temin There wasn’t consolidation of all the schedules a few years back.
Jack Pellegrino Right.
Tom Temin But those distinctions for nonfederal purposes are still in place.
Jack Pellegrino Yes. And and less. The only time I was able to do it and this is a horrible thing, it was during the pandemic, all schedules were open to us during the national emergency. But I don’t know why they’re not with us every day of the week. And really, the advantage would be, although I’m a very large county with tremendous resources and buying leverage, there’s 3000 counties in the nation. That don’t have the purchasing leverage that I do or the staff to do that. So opening up those federal schedules would help those organizations immensely.
Tom Temin Those would give you more flexibility. You would think that maybe the some of the NACO or the statewide or the national contracts that they oversee.
Jack Pellegrino Right. And I’m a member of the NACO Procurement Advisory Board right now. And one of the things we’re looking to do is put together some contracts that will benefit counties.
Tom Temin Interesting.
Jack Pellegrino And so I see that in the future now. Again, I would like to I like to see the federal government help us a little bit.