The Rapidly Changing Nature of Government Procurement

Georgia's efforts to transform how government manages its supply and demand chain reveal the need for new procurement processes, technologies and skills


By Brad Douglas

Current events have converged to create an era of unprecedented opportunity for public sector procurement professionals. In this singular time, innovative thinking and new ways of working have emerged that have the potential to change the very fabric of government and provide taxpayers with the transparency and accountability they demand and deserve.

How government agencies approach procurement and spend money, of course, is of prime concern to the public – a tradition that stems from our first citizens’ success drawing a direct correlation between fiscal responsibility and effective government. What makes our current situation different is that for the first time technology is available that promises to fundamentally change how agencies purchase goods and services. These new tools necessitate the development of skills never before utilized in public sector procurement.

To fully appreciate this shift, one has to look at the status quo. In the United States, federal agencies, states, counties and municipalities typically do not have real-time visibility into spending. Few have a keen grasp on who is making purchases, what those purchases are for or the price paid – let alone the enterprise-wide view required to aggregate buying power or implement strategic sourcing initiatives like those found in the private sector.

Until recently no technology existed to allow agencies with numerous offices and departments in scattered locations to make their purchases electronically on one system. And with so many agencies, offices and people involved the complete integration of traditionally deployed e-procurement software simply wasn’t viable.

As a result, most agencies can’t manage their supply and demand chains effectively and lack the ability to truly enforce contract compliance. This is evidenced by inappropriate purchases, which, while rare, tarnish entire agencies with the misdeeds of a few individuals.

A March 2008 report from the Government Accountability Office (GAO) on government purchase cards underscores the reality of this situation. Among its findings, the GAO noted that agencies could not demonstrate that 48 percent of transactions over $2,500 met the standards of “proper authorization, independent receipt and acceptance, or both.” Clearly, the public sector’s lack of visibility into spending is a problem, particularly when one considers that such a limited view is only accomplished through a time-consuming, after-the-fact process.

With the Internet this can and will change. On-demand e-procurement solutions that empower agencies to bring all spending under management on one system for the first time represent a paradigm shift in how governments utilize procurement automation technologies. Users, no matter where they are located, simply log in and shop in an online marketplace similar to popular e-commerce sites. The software automates related workflow – including the distribution of electronic requisitions for approval – in a process that is transparent for all involved. Its unique architecture, available without costly custom software, is also far less expensive to implement and maintain.

Contract compliance can now be enforced. Orders that appear questionable are flagged electronically for review. Perhaps most importantly, such systems enable agencies to truly aggregate their buying power and empower government financial leaders to know how public funds are being used right now.

The State of Georgia – Procurement Transformation and a Demand for New Skills

As part of Governor Sonny Perdue’s mandate to operate the state of Georgia more like a business, the Department of Administrative Services is deploying such an e-procurement solution partially powered by SciQuest. The system will empower Georgia employees to quickly and easily access, review and purchase the goods and services they need online through state contracts in Team Georgia Marketplace, the state’s virtual shopping mall on the SciQuest network. Additionally, 159 counties and hundreds of municipalities will be able to utilize the system to piggyback off the state’s contracts, thus creating additional purchasing leverage at the local level. The system will be fully integrated with the state’s enterprise resource planning (ERP) and financial management systems.

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