Streamlining agency purchasing systems can unearth surprising savings.
Government procurement accounts for $7 trillion in spending, annually. In light of this, it’s no wonder taxpayers are demanding better services and more insight into where all their money is going. But what does this look like, and what can procurement officials do about it?
When it comes to spending in 2015, obtaining a consolidated view of spending, gaining visibility into your procurement activities, and streamlining the process to reduce costs and best match your organization’s needs should all be at the top of your priority list.
The public sector needs to innovate to meet the need for transparency and deliver value beyond awarding contracts. Transformation is in order.
There’s a new model for public procurement excellence that can address all of these issues and bring transparency, efficiency and cost savings. Both technology and the people who adopt it, are driving the success.
And with a new year here, it’s time to act.
The federal procurement process historically suffers from a lack of transparency and efficiency. There’s a huge need to understand the basics: who agencies are doing business with, what they are spending their money on, and how much. Dirty, inconsistent data is plaguing the ability to get a clear view of spending.
In May, President Barack Obama signed the Digital Accountability and Transparency Act. The DATA Act is the nation's first legislative mandate for data transparency. It requires the Treasury Department and the White House Office of Management and Budget to transform U.S. federal spending from disconnected documents into open, standardized data, and to publish that data online.
Subsequently, GAO reported in June that USASpending.gov is missing at least $619 billion from 302 federal programs, and the data that does exist is “wildly” inaccurate. In fact, only 2 percent to 7 percent of spending data on USASpending.gov is fully consistent with agencies’ records.
“That's a problem,” Sen. Tom Carper, D-Del., the chairman of the Senate Homeland Security and Government Affairs Committee said in USA Today. "We live in a world in which information drives decisions. And given the budget constraints that our government faces, we need reliable information on how and where our money is being spent."
It’s impossible to make confident and informed purchasing decisions when access to reliable information is limited. Luckily, there are procurement technologies available to help improve visibility into spending by establishing a consolidated view of purchases and streamlining processes.
By automating procurement processes, you can move the entire award and bidding process online. Doing so helps procurement teams create a transparent bidding process and establish visibility into contract awards and procurement activities for buyers, suppliers and taxpayers. Much of the visibility also comes from the audit trails that these systems can create. Having this 360-degree view provides a central location for purchasing history, improving collaboration, control and compliance among everyone involved. Understanding this flow of information translates to informed negotiations and business decisions.
When multiple government agencies can use a common system, additional benefits unfold. Agencies can work together with increased negotiation power for volume-based discounts and improve operations efficiency. Using a simpler, automated system also boosts vendor participation in bids—often unearthing surprising cost savings.
These systems also reduce errors and cumbersome manual tasks, allowing the purchasing team to focus on more strategic work such as relationship management, restructuring the value chain and building internal capability—ultimately delivering more value to stakeholders.
The first step needed for transformation is to get leadership and user support for change. When both buyers and suppliers can see that their lives are made simpler with these new processes and tools, adoption happens much faster.
To start the process, stakeholders must understand why this change is necessary, how the process will work, and how these new systems and tools will make their lives better. Creating a tiered rollout process is key. It allows employees to move at a comfortable pace and master the new sourcing technology process. Employees are more open to change when they know they have a support system in place.
Fiscal 2015 is here. Are you ready for public sector procurement transformation?
Dan Warn is vice president at supply management provider BravoSolution.