e-Pluribus Unum

Anyone who believes the federal government's acquisition and supply chain systems are too bogged down in bureaucracy to act quickly and efficiently should consider this: Within hours of the September 11 terrorist attacks on the World Trade Center and the Pentagon, the General Services Administration (GSA) reportedly acquired and shipped, among other things, 65,000 protective suits, 5,000 facemasks, 3,000 respirators, 1,000 entrenching tools, 400 vehicles, 500 phone sets and 250 cell phones to help in rescue and recovery efforts.

Yet when it comes to implementing technologies to make the federal acquisition and supply chain systems more efficient, Earl Warrington, deputy program manager for the Integrated Acquisition Initiative at the GSA, acknowledges that the government's efforts are still in the formative stage. We are looking at how the government can leverage the work that industry has done in developing supply chain solutions and in adopting standards, he says, but for now, we haven't even hit walker-toddler stage.

Warrington may be a bit modest, but it is true that the federal government, once a technology leader thanks to projects like Internet progenitor ARPANet in the late 1960s, more recently has found itself lagging behind private industry in its use of supply chain solutions.

Now, as the government strives to adopt a more businesslike, enterprisewide approach to its operations and reap the benefits of the latest technologies, Washington faces some of the same obstacles as the private sector in implementing those solutions, as well as some added challenges. A few early adopters, particularly in the military, are already in the midst of supply chain and procurement projects. However, at this early stage, it is worth considering how far the federal government can and should go with its procurement and supply chain initiatives. The current consensus on this question may surprise private sector champions of procurement and supply chain enablement, and it could serve as a cautionary lesson for those who would implement corporatewide purchasing and supply chains systems within their own enterprises.

A Billion Here, A Billion There

The first thing you notice when you start delving into the federal government's spending is, not surprisingly, the large numbers of zeros and commas. At just over $2.0 trillion, the 2002 federal budget accounts for nearly 20 percent of U.S. gross domestic product. However, all those zeros can be deceptive. $1.1 trillion of the budget goes for mandatory spending, such as Social Security, Medicare and Medicaid payments, and another couple hundred billion covers interest on the $5.7 trillion in federal debt. When we take all the salaries, benefits and other administrative costs out of the remainder, we find the government actually spends only about $200 billion 10 percent of its total budget on procurement every year, with $87 billion going to acquire services and the rest to procure goods.

Not small change, mind you. Two hundred billion is almost as much as Exxon Mobil Corp. earns in revenues every year, so the government's procurement budget still makes it the biggest spender on the planet.

The second thing you notice about federal procurement is how dispersed it is among the government's many agencies, departments, offices and services, each of which has its own goals, culture and requirements in the same way that large corporations traditionally have had their own organizational stovepipes. Except, of course, in the government, the stovepipe structure is both intentional and necessary, since each agency's goals and mode of operation stem from its mandated mission. The impact of this mission on how an agency goes about its procurement is difficult to underestimate.