Understanding the Strategic Power of Procurement

Public Procurement Guide for Elected Government Officials

 

This guide is designed to  help elected and senior government officials understand how public procurement can help achieve their goals. Written from the perspective of a seasoned public official mentoring executives new to the public sector, the guide is a pragmatic reference that includes the following helpful features:

 

 Pull-out, single-page “Quick Reference: Top 10 Things to Know About Procurement"

 

 Key takeaways for each chapter via “The Highly Abridged Version” at the beginning of each section

 

Short, 1–3 page chapters that quickly convey what you need to know about specific topics to leverage the greatest value from your procurement team

The Top 10 Things to Know About Procurement

This quick reference provides a high level overview of important procurement-related topics. Download the guide for more in-depth exploration of each issue, along with helpful advice and conversation starters.

1. What is your role in the procurement process?

Understand your role as it relates to procurement. Help determine the business need, define the context and background for others, define the desired performance outcomes, and secure the necessary budget. Then, decide how much personal oversight and engagement you need to have while the procurement professionals design and implement procurement methods. Rely on their professional advice, and know that you may be tasked with making a final procurement approval decision.

2. Ethics - Staying on the right side

Ask your procurement professionals to inform you of the conduct, situations, relationships, or conflicts of interest that could negatively affect the procurement process or be perceived as unethical. Declare any conflict of interest at the beginning of any procurement-related activity, and recuse yourself when appropriate. Lead and foster a culture of high ethical standards for public procurement in your entity.

3. Procurement authority–Why is it important to me?

Best practice puts all procurement processes under the authority of a Chief Procurement Officer (CPO). Large entities may benefit by employing separate CPOs for specialty areas as construction or information technology. Most entities should establish centralized units for procurement expertise to develop policy and strategy, coordinate purchasing expenditures, and handle complex purchases directly. In turn, procurement professionals should strategically train, monitor, and delegate the ability to handle most ordinary transactions to others in the entity.

4. What is the strategic value of procurement to a public entity?

Procurement is a broad and sophisticated discipline that can help your entity thrive when it's tasked to do so. When procurement professionals are empowered to play a strategic role, they can help erase siloed organizational behavior and revise processes to make more fully informed business decisions, achieve coordinated savings, and reduce unnecessary purchases across the entity.

5. Procurement values and principles

Effective public procurement is grounded in the key values of transparency, accountability, ethics, impartiality, service, and professionalism. These values and the principles that flow from them determine how your suppliers and contractors treat your entity and they affect the ways in which the press, public, and other government partners treat your entity.

6. How is public procurement different from private sector procurement?

First, public procurement is founded on the principle of fully advertised, open and fair competition, with limited exceptions. The private sector is generally free to follow whatever methods it chooses. Second, public procurement usually has to balance multiple conflicting goals: speed, low price, quality outcomes, level playing field, social and environmental goals, public transparency, and accountability. This is a much more complex work environment than the private sector, in which purchasing is generally based on the organization's profit.

7. Procurement methods

The procurement process is not simple or "one-size-fits-all." Most procurement methods rely on public competition and are tied to dollar thresholds. The higher the value, the more formal and fully open the procurement, and the more likely that multiple factors will contribute to the award decision, not just lowest cost. Within all the procurement methods, seemingly minor details and decisions can have a profound impact on outcomes.

8. Emergency management and continuity of operations

Procurement offices play an important role in disaster preparedness and in supporting the logistics of disaster recovery efforts for emergencies such as severe storms, floods, fires, epidemics, and criminal events.

9. The issue of privatization

Public-Private Partnerships, Outsourcing, and Privatization are controversial, but they can all be smart choices under the right circumstances. Before deciding to follow one of these avenues, assess all trade-offs and demonstrate net value to the public. Then, assess all drawbacks and challenges to determine whether or not privatization makes sense.

10. The issue of social policy and contracting preferences

Procurement officials should make doing business with the government easily accessible to all interest groups. A live issue is whether public procurement should go further to advance several possible categories of social policies. Local preferences can be politically and technically hard to implement and administer, and retaliatory "reciprocal preferences" from other jurisdictions may hurt your business more than they help.

Feedback and Comments

NIGP welcomes your feedback about this guide, including recommended revisions and questions about the principles and practices discussed here. 

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