Managing procurement in the public sector results in procurement decisions being evaluated under a different sort of microscope as compared to the purchases made by private businesses. Rather than being beholden to the CFO of a company, procurement managers in the public sector typically answer to an appropriations department composed of elected officials, or in a broader sense, the constituents that voted those elected officials into office.
Due to the lack of a direct profit motive within government systems, many government entities have been marred by hiring practices that reward campaign and party loyalty rather than the skills that apply directly to a high-caliber job performance. However, recent decades have been marked by a push toward transparency and accountability at all levels of government, and the job performances of relevant government officials have been irrevocably linked to their stewardship of the public’s monetary resources. This means procurement contracts which have been inked under a veil of kickbacks, graft and cronyism are rapidly becoming part of a bygone era, as government procurement practices are being disclosed to the public at large.
With this in mind, here are several of the most noticeable ways in which government procurement practices have changed over the last ten years.
Evolution of Technology
Government procurement purchases are now far removed from the days where service contracts were primarily limited to waste management, construction, demolition, and other labor intensive industries. Technological advancements have changed the way government procurement is transacted, and also the nature and volume of the purchases being made. For instance, with different government departments requiring different cloud-based services, contracts for a wide variety of SaaS products are being written with an ever increasing number of vendors. This new delivery of white-collar services to government agencies requires different demands than blue-collar services in terms of vendor evaluation, but still needs diligent management when defining terms and crafting agreements.
The advent of technology in government and internet solicitations for RFPs has resulted in an increase in the sheer volume of proposals submitted for consideration on every government project. This has proven to be especially true in the case of tech-based projects, which draw interest from an ever-increasing number of technology startups. As a result, government agencies have undergone painstaking efforts to write thorough RFPs that align very clearly with those agencies’ true requirements. From there, those same agencies have to endure an equally onerous process of eliminating vendors that are the most likely to underperform relative to the requirements of the job.
Increase in Local Reinvestment
Government bodies of all sizes have been under increased pressure to perform an incubator role in the formation of public-private partnerships and next-century jobs. As a result of this and similar government mandates, several incubator programs have spun off local tech startups that offer service projects that can directly benefit the local government agencies that aided in their creation. While private businesses have the freedom to negotiate with vendors from all over the globe, government procurement teams are often pigeonholed into negotiating with (or at least favoring) homegrown startups when the time arrives to award contracts to vendors.
Different Management Systems
The implementation of private-sector management systems in government has altered the way procurement practices are orchestrated. For instance, adopting the methodology behind Agile Management has allowed some public procurement teams to become more solutions oriented, to develop closer relationships with a few trusted vendors, to forecast changes in requirements which might be looming on the horizon, and to preemptively consider those potential changes before soliciting bids from vendors. This has culminated in the creation of government procurement teams that are more forward thinking, less bogged down bureaucratically, less driven to the exclusive crafting of contract requirements, and more focused on developing solutions that will continue to benefit the government entity on an ongoing basis.