ART - NIGP Position on Outsourcing in the Public Sector

The document discusses the role of the Chief Procurement Officer (CPO) in the outsourcing decision and process in the public sector. It explains that outsourcing is the contracting out of functions traditionally performed by public employees to the private sector. The document emphasizes the importance of a fair and open process in the public's best interest when moving functions to the private sector. The National Institute for Public Procurement recognizes outsourcing as a fiscally sound tool of responsible public administration, but acknowledges the challenge of identifying and assessing the elements of public performance most appropriate for outsourcing. The document highlights the CPO as a strategic partner in the outsourcing assessment and as the administrator of the selection and contract formation process. While the ultimate decision rests with the elected body or senior executive, the CPO provides informed insight on market structure, cost, risk, competitive methods, and contract form. The CPO is uniquely positioned to design and manage a process for achieving a successful public outsourcing effort. The document also discusses the criteria for determining whether to outsource and how to do it. It defines "inherently governmental activity" as activities that require the exercise of substantial discretion in applying government authority or making decisions for the government. It provides key considerations in the outsourcing determination, including an organization's sensitivity to risk, clear performance measures, criticality of the function, potential providers, economic costs and benefits, and political and social costs/benefits. The document emphasizes the importance of considering not only front-end savings but also the long-term effects and risks associated with outsourcing. It mentions the potential loss of institutional knowledge and expertise held by public employees and the risk of failure, which would require the public entity to bear the cost of restoring the service. Furthermore, the document highlights that procurement professionals play a crucial role in the outsourcing decision-making process. They utilize market intelligence and compelling data to support their sourcing decisions. Their expertise allows them to provide valuable insights and contribute to the overall success of the outsourcing effort.