NIGP Code: a highly useful procurement tool

No question about it: The NIGP Commodity/Services Code (NIGP Code) has become THE national standard for product/service codes used in public purchasing in the United States. It is used at some level by 33 states and thousands of local jurisdictions and political subdivisions.

The NIGP Code features an extensive library of descriptive terms, assembled, indexed and organized into a comprehensive classification structure to identify and describe a wide variety of products and services. All in all, the NIGP Code offers an effective coding structure for standardizing purchasing.

Public-sector purchasing professionals use it to track purchasing activity; for budgeting and management reporting; for tracking and controlling inventory; and for classifying suppliers by the types of products they provide.

The Code, which is copyrighted and owned by NIGP, was developed by NIGP in partnership with Austin, Texas-based Periscope Holdings. Periscope holds the exclusive license to maintain, enhance and market the Code. The 18th edition of the NIGP Code is available for download for current NIGP Code licensed customers from http://www.nigp.com.

“Combining the capabilities of our robust [Oracle] financial system with the detailed information-gathering capability derived from the NIGP commodity codes has helped make us a much more efficient purchasing department,” said John Mahin, CPPO, CPPB, purchasing manager for Johnson County, Kan.

Mahin, the winner of the second annual NIGP Code essay contest, noted in his essay that using the NIGP Code along with Oracle supplier volume reports enables his team “to identify and combine requirements for like commodities and, through the formal competitive process, take full advantage of the total county volume and award term contracts based on volume and best price.”

“Our customers,” Mahin added, “appreciate the availability of the term contracts derived from our current process that now takes full advantage of the NIGP codes.”

Mahin wrote the essay in response to the following question: “How has the NIGP code enhanced your organization’s efforts for strategic sourcing?”

A uniform code

Other entities have similarly positive views about the NIGP Code.

“From its inception, the NIGP Code has been a tremendous tool for purchasing professionals so that we can all be on exactly the same page when we are looking for products and services,” said Jay McCleary, CPPB, deputy director of public works for the city of Red Wing, Minn., and a member of the Go Pro editorial advisory board. “Because prior to that, one community would call it one thing, and another community would identify it in a different manner. But having the uniform commodity code gives us that one specific way to track exactly the same thing from community to community.”

David Gragan, CPPO, has been a long-time user of the Code.

“I would say that there are two key values to the NIGP Code,” said Gragan, who is chief procurement officer for the District of Columbia. “One is that it allows us or any organization to source more strategically, meaning we can tell exactly what we are buying, and from whom we are buying it.

“The second value that is unique to the NIGP Code is that it’s the most commonly used state and local government procurement code, so it allows us to do more cooperative purchasing, and there are all kinds of cost-savings implications of that.”

In the Pacific Northwest, the Code helps to produce a clear picture of financial transactions.

“Washington state is dedicated to making a significant business change that will increase transparency of state spend to both the citizens of the state of Washington and the business community,” Servando Patlan, procurement reform project manager in the state of Washington, told Go Pro. “To do so, we obtained a statewide 11-digit license for the [NIGP] Commodity-Service Code System to help advance our procurement reform initiative. We want to get a handle on more than just the commodities we are purchasing — we also want to be able to describe our government services, grants and loan activity, and the NIGP Commodity-Service Code System is able to address that.”

On the horizon

This year, around 80 jurisdictions became new licensees or upgraded their current licenses (see partial list through October on P. 6). Among other developments:

In the future, look for the introduction of commodity codes for environmentally certified products and services.

“We continue to maintain cross references to the NAICS, UN/SPSC and MCC code sets,” explained John Walters, president of NIGP Code Services at Periscope Holdings. “We also are investigating putting together another workgroup to address real property classifications to assist entities with GASB 34 and 35 reporting.”

NIGP Code: new licensees

NIGP Code: upgrades

From 5- to 11-digit code

From 5- to 7-digit code