Show Me the Money

Summers’ new cost-cutting measures are a boon for Harvard, come decades late

University President Lawrence H. Summers has plans to overhaul the University’s method of supplies procurement, opening the process to independent bidders in an effort to reduce costs. Summers’ plan was partially based on recommendations by consulting firm McKinsey and Company, and it shows great promise; using the methods on which this plan is based, Harvard has already cut $26 million a year from travel, office-supply, and temporary-help costs, according to University officials. When fully implemented, the overhaul may save as much as $100 million annually.

This is a step in the right direction for the management of the University’s resources, and it is heartening to know that Summers is willing to rely upon outside consultants to bring fresh thinking and creativity to the process of budgetary review, which is easily influenced by internal politics. It is unfortunate, however, that this effort was not undertaken years ago. The impending budget crunch at several Harvard schools is a more recent development, but the University should always be in search of money-saving policies like this one, which could have been implemented throughout the 1980s and 1990s.

In hindsight, identifying $100 million a year to cut from Harvard’s costs makes the University’s concern about the $13 million necessary to extend a living wage to all its workers seem trivial. The administration’s insistence that labor be outsourced in the name of lower costs was at that time a very weak claim given their apparent lack of interest in fielding competitive bids on items from computers to construction materials.

Still, the decision to adopt open bidding for supply contracts is a good one. The University’s considerable aggregate buying power should be used to find the lowest possible prices by standardizing purchases across Harvard’s schools. While there are certainly good reasons that a particular Harvard lab might prefer a certain supplier, many departments and schools share similar needs, making pooled purchases beneficial. Competitive bidding will continue to satisfy all their needs while simultaneously reducing costs.

The Faculty of Arts and Sciences has important goals to reach, including Dean of the Faculty William C. Kirby’s plan to increase the size of the Faculty by 10 percent of the next 10 years, the renovation of Widener Library and the Science Center, and the removal of the recently implemented “soft-hiring-freeze.” Hopefully the savings that accrue to the Faculty from McKinsey’s suggestions will allow it to pursue these goals.