Government procurement to the rescue

“They’re back!”

Horror-film fans may remember that iconic line from the 1986 movie Poltergeist II - The Other Side, spoken by a little girl who discovers demons have returned. Recent actions in the US Congress show that the line could also apply to government budget debates, often scary themselves. Some politicians are trying to break the budget deal that avoided a government shutdown last August and cut another $20bn from the agreement. One result would be less money for the states, which could be forced to once again slash the services they and their cities and towns provide, including public safety and education. Big cities are particularly unstable. That nightmare is the perfect scenario for government procurement officials to show their worth and come to the rescue.

If you’re in the private sector, you might be scoffing at that possibility. Don’t. Yes, it’s true that in the private sector, procurement has grown in status in the last several years, largely because of CPOs’ ability to find the savings and efficiencies that help companies survive. And no, there has been no such status elevation for government procurement officers, at least in the US. “The public sector doesn’t value procurement as much as the private sector does,” says David Yarkin, president of Government Sourcing Solutions and former deputy director for procurement in the Pennsylvania Department of General Services. The result: staffs are slim, training budgets are practically nil, and investments in technology are stingy. Oh, and there is that extra element of occasional political interference in procurement decisions.

All of which makes the successes that government-procurement officers have achieved much more admirable. Take Yarkin’s experience, for example. Through strategic sourcing, establishing shared services, and centralizing contracts, among other things, he saved the state of Pennsylvania $140 million.

Likewise, within the Wisconsin Department of Administration, where procurement resides, there has been real progress. According to the non-profit Pew Center for the States, Wisconsin’s move to statewide contracting resulted in savings of $18.9 million over a three-year period.

And, in a classic example of cooperative purchasing, the Western States Contracting Alliance (WSCA) pooled its members’ buying power to get discounts of 10-75% in the 2008 purchase of $2.57 billion worth of computers and related equipment. WSCA and the National Association of State Purchasing Officials are using the SciQuest e-procurement system to develop a platform for the multi-state purchasing consortium and increase spend visibility. Member states include Alaska, Arizona, California, Colorado, Hawaii, Idaho, Minnesota, Montana, Nevada, New Mexico, Oregon, South Dakota, Utah, Washington and Wyoming.

There are other states that have achieved great savings through procurement efficiencies as well. Delaware is one and I will discuss the challenges and accomplishments there in a future piece.

Public-sector procurement has great potential, says Yarkin. “It can even create revenue,” he says, “considering that every dollar in savings can mean a dollar in revenue without new taxes.” If government-procurement officers can accomplish that, they can change the meaning of “They’re back” from a reference to demons to a return of needed public services that were previously cut for lack of funds. A heroic accomplishment indeed.

Paul Teague is US contributing editor of Procurement Leaders. To subscribe to the magazine, click here.