Inefficiency Costing Government Billions

New Aberdeen report highlights recommendations for improving public sector procurement

New Aberdeen report highlights recommendations for improving public sector procurement

Boston  May 21, 2004  Complex regulations and fragmented procurement operations are inhibiting the ability of government agencies to reduce costs and streamline purchasing cycles. Such challenges are costing the government billions of tax dollars, says a new report by Aberdeen Group, a research and consulting firm, and Government Computer News (GCN), a publication for government information technology executives.

The study, which examined supply management procedures, experiences and intentions of more than 250 federal, state, county, local and defense agencies, found that despite 10 years of procurement and contracting reform, government procurement operations require further streamlining of procurement policies and procedures and more aggressive adoption of supply management automation.

Respondents to the survey cited satisfying procurement regulations  not reducing costs  as the primary driver of supply management strategies in the public sector. Chief procurement challenges cited by government managers included creating, managing and controlling compliance to the terms and conditions of supplier contracts.

"In the public sector bureaucracy is getting in the way of sound and efficient procurement and supply management practices," said Tim Minahan, Aberdeen's senior vice president of supply chain research and author of the report. "Now, faced with declining tax revenues, most agencies face mandates to more efficiently manage their spending and, as a result, must develop strategies and adopt technologies to improve procurement procedures."

The "Supply Management in the Public Sector Benchmark Report" provides evidence of how efficient procurement can drive improvements without negatively impacting the breadth or quality of government services. The report's specific recommendations for improving public sector procurement include:

* Further update procurement policies, procedures, and incentives to remove unnecessary tasks and foster cost savings

* Institute total cost management strategies that have been proven in the private sector

* Assess competency of procurement operating model against peers and best-in-class performers

* Continually measure and improve compliance and performance