The 2017 Annual Report for the Canadian Office of the Procurement Ombudsman highlights the persistent problem of tight government procurement capacity.
“The issue of capacity is intriguing in that, unlike many procurement topics, it appears to generate some consensus among suppliers, procurement specialists and program managers. In the past year, it has become apparent to me through discussions with these groups that many (if not most) federal organizations do not have sufficient procurement staff or have staff that do not have the experience or knowledge needed to tackle the volume and complexity of federal procurement in a way that is fair, open and transparent. The impacts include delays during various stages of the procurement process, and concerns of an increasing reliance on non-specialists to undertake some procurements given the limited number of procurement specialists. In addition, suppliers invest time asking questions or obtaining clarifications as they are dealing with procurement staff who are not always fully knowledgeable about their given industry.
The lack of capacity results in experienced and knowledgeable procurement specialists being highly sought after, with federal organizations routinely cannibalizing staff from one-another. And the situation may get worse; data indicates that the procurement community has one of the highest percentages of staff eligible to retire in the next five years. Without a concerted effort on the part of all federal organizations, and more importantly a coordinated approach to recruitment and development of procurement specialists across organizations, capacity problems and associated impacts will continue to grow.”
It is not just the Government of Canada. Economic Modeling Specialists International, a CareerBuilder subsidiary, wrote a report, summarized in American City & County that talks about the reductions in procurement staff at the local government level in the United States:
“Governments, however, are reducing their purchasing manager staffs. Local governments, excluding education and hospitals, will employ 1,794 purchasing managers in 2022, a 2.4 percent drop (45 managers) from 2016 hiring levels. In 2016, local governments had 1,839 purchasing managers on their payrolls. “
The federal government in the US has had this problem for years, compounded by bureaucracy, culture, and management missteps.
The private sector with which government competes for talent is not immune, either.
“A recent report issued by DHL stated that the US Bureau of Statistics estimates a 26% growth spurt in logistics between 2010–2020, while a different study estimates the number of jobs exceeding available staff at a 6:1 ratio, Air Cargo News reported.”
And it leads to problems, not least of which include rising bid protests cited in NextGov.
“According to Deltek’s federal market analysis, bid protests have increased 60 percent since fiscal 2008, even as the likelihood of the Government Accountability Office sustaining such protests decreased over the same period from 21 percent to 13 percent. In 2008, bidders filed 1,652 protests; in fiscal 2015, they filed 2,639.”
Inexperience and shortness of staffing can lead to higher costs, longer timeframes, and sub-optimal outcomes.
All of this is happening as the role of procurement naturally becomes more strategic, involved in purchasing decisions at an earlier stage, focused on value for the money, sustainability, and broader policy goals.
Straddling these twin constraints, of increased volume per contracting officer and of increased import per procurement decision, requires using technology and new business models that help procurement staff, intelligently.
At the most basic level, one can envisage new tools that facilitate the more administrative aspects of any procurement, although it would be a mistake to try to push this burden onto vendors if one is trying to attract more suppliers to generate greater diversity in solutions and better value for the money. Nevertheless, this seems to be the direction of least resistance for some.
“Eaves tells GPN that cloud-based procurement technologies can boost efficiencies in cooperative buys and other public procurement processes. “E-Procurement solutions in the cloud can boost productivity throughout an agency’s procure-to-pay processes. These solutions allow for e-forms and other technology-driven processes to reduce paperwork and transfer the data entry from internal staffs to end-users.””
More productively, the solution will be to employ tools that exploit transparent data analytically, including forms of machine learning and automation, ideally delivered by a cloud-based solution outside of the framework of the government agency’s IT footprint, as suggested here by IBIS.
“Tighter budgets mean that procurement officers for these agencies will have to do more with less. Therefore, data management will be key. Tools such as supply chain management software, vendor management software and contract management software provide a comprehensive view of current and potential suppliers, contracts, payments and other information. The data analytics provided by these tools decreases manual workloads, which enables government agencies to manage their procurement operations with fewer employees at lower operating costs. IBISWorld estimates that the prices for these software products have either been declining or have remained relatively stable during the past three years. As a result, government buyers, already equipped with significant leverage due to their organizational breadth, are in a position to negotiate favorable prices and contract terms with a solid understanding of these markets.”
Generally, new business models can be described as breaking out of the silos in which so many government officials operate by connecting them with procurement staff in other agencies within a level of government, in other levels of government, and in other geographies to obtain intelligence about industry verticals, vendors, and value. Re-inventing the wheel is an increasingly expensive luxury.
More excitingly, this inter-governmental collaboration should and will include collaborative purchasing, not determined by the convenience of proximity defined by geography or the randomness of personal networks, but by functional overlap within dedicated networks of professionals.
This is the EdgeworthBox vision. Give us a shout. Let’s talk about how to make the RFP business process ready for the 21st century.