The biggest differences between government and private sector procurement

June 22, 2020

It is easy to assume that government and public sector organizations are similar to private sector companies in the way they procure  tools, such as technology solutions. However, while government entities need many of the same software solutions and services as enterprises, the way that they procure these solutions and their decision making processes are vastly different. Fundamentally, each of these types of organizations are held accountable by different interest groups. The public sector is often driven by more stringent regulatory standards, tighter budgets and limited internal resources while a public company is driven by profit, internal stakeholders, board members and customer needs.

Spending is not fully driven by the bottom line and profit

Unlike the private sector, public entities’ spending is not fully driven by the bottom line and profit. Instead, their decisions are made based off laws and regulations to maintain fair competition in the market. Additionally, the spending habits of government organizations are under far greater scrutiny by internal teams and the public because they are using taxpayer money.

A no trial and error approach

This sense of fiscal responsibility also impacts the way that government organizations test new solutions and modernize their infrastructure, because they cannot use a trial and error approach (trial and error would cost too much taxpayer money). This often leads to government organizations choosing and then being stuck with technologies that are inferior or simply don’t fit their organization’s needs.

Additionally, because governments don’t have the leeway to test and try out different technologies, the procurement process can be drawn out and require more detailed communication and documentation than most enterprises would require. This ultimately affects how quickly government procurement teams can complete  RFPs, thus slowing down the entire procurement process in general.  

Increasing pressure to respond and procure faster than ever before

To make matters worse, there is increasing pressure on procurement teams to respond and procure faster than ever before. With these expectations placed on procurement teams and with these regulations and structural rules slowing them down, it’s a miracle that government procurement teams are able to procure any technology, much less good technology.

Evaluating these differences, it is clear that government organizations need to be calculated and fiscally responsible in the way that they approach software procurement. Yet they also need a way to help them evaluate more and better technologies while maintaining objectivity, as well as more tools to aid them in their procurement processes.

Intelligent sourcing, like Fairmarkit, offers government procurement professionals price transparency and competitive data that helps save valuable time and taxpayer money by allowing them to quickly gauge the average price of a given software solution. This data can save them a lot of time and manual effort on the price research portion of the process and a lot of money on the actual purchase of the software by using the data as leverage in the price negotiation.

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