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GSS Public Procurement Report
August 2018 Vol. 1, Issue 2

Recent Trend Analysis
Top Issues Identified by CPOs
GSS Public Procurement Survey, March 8 – August 8, 2018
For a second consecutive reporting period, chief procurement officers across the country reported that eProcurement was the top issue on their radar.  Fully one third of procurement officials reported that it was a primary area of focus. "As government and commerce get more and more digital, governments will move to eProcurement in order to maintain service levels for citizens, vendors, and government customers," said Mike Smith, GSS Vice President, Midwest. "eProcurement is a critical tool for a procurement leader to use to drive efficiencies, savings and value from every purchase," he added. In addition to eProcurement, Decentralization, Staffing Levels and Cooperative Purchasing returned as top-5 issues reported by procurement executives.

The major difference between the issue ranking from the first reporting period and the second is the rise of Impact of Politics on Procurement from the eleventh most reported issue (cited by 10.77% of governments) in the first reporting period to the fourth most reported issue (21.74% of governments) in the second. Interestingly, a full two-thirds of those governments that cited Buy Local as a major issue also cited the Impact of Politics on Procurement.

Comparative Analysis
In this second edition of The Public Procurement Report, we examine the issues cited by procurement officials from a variety of angles. The analysis below looks at the aggregate data collected since September 2017 to determine what topics are front of mind for procurement leaders regionally and across different types of organizations.

Comparative Analysis by Type of Government/Educational Institution

At its heart, public sector purchasing has tremendous similarities whether you run a state or local procurement operation or a K-12 or higher education organization. The central tenets are identical – fairness, competition, transparency, service to customers and an orientation towards driving savings and value. But spend a day – or a decade – in the shoes of America's public procurement leaders and the differences from one type of institution to another become more pronounced.

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GSS Public Procurement Survey Data, September 2017 – August 2018

As the top issue on average across all verticals, procurement leaders of governments and schools nationwide continue to cite eProcurement as one of the most important issues they are facing today. In fact, it was cited as a top-3 issue in three separate verticals: state government (#1), city government (#3) and higher education (#3).

Staffing Levels was the second most frequently cited issue facing CPOs.  While this is a top-5 issue for most levels of governments, it barely cracks the top-10 of issues reported by higher education CPOs.  Those CPOs instead cited Staff Ability and Training as the #2 issue facing higher education procurement teams.  "Higher education has seen the value in eProcurement and strategic sourcing for many years and now they need to go beyond the low hanging fruit to achieve additional savings.  To do this, they are re-tooling their staff, transforming buyers into sourcing professionals," said Judy Smith, GSS Vice President, Higher Education.

Notably, Decentralization was the top issue cited by county, higher education, and K-12 CPOs. This is unsurprising given the longstanding traditions within these organizations that give greater authority and autonomy to individual schools, departments and end users. "In higher education especially, decentralization continues to plague the CPO," said Judy Smith.  "CPOs that have implemented eProcurement find it easier to more effectively manage spend in these decentralized environments."

Conversely, Decentralization does not even register as a top-10 issue for states, where, to different degrees, procurement operations are already consolidated under a central structure.

Socioeconomic Goals and Savings – Conflicting Priorities?

The effects of the 2008 Great Recession can still be felt in many government and education agencies, and this survey reflects its impact on public procurement officials. During the late 2000s, elected officials looked to government spending, including on goods and services, to kickstart regional economies and encouraged buyers to drive spend to local businesses, with an emphasis on minority- and women-owned firms. At the same time, with tax revenues down, they pushed their staffs to find savings to reduce deficits. These two pressures – socioeconomic preferences and a push for savings – are often seen as conflicting priorities.

Survey data to date bears out this perception. The organizations that cite savings as a top-5 priority (states, universities and K-12) typically rank Buy Local or MWBE/HUBs lower. For example, procurement leaders of school districts rate savings as their third highest priority but Buy Local and MWBE/HUBs were only their eleventh and ninth ranked priorities, respectively. Conversely, cities and counties both rated Buy Local as a top-2 issue and predictably, Savings fell to tenth place or worse for both.

The two socioeconomic trends were cited more often at the local level (city and county) than by their counterparts in states or educational institutions. Local governments also cited Savings as a key issue far less frequently.  Less than five percent of city and county procurement officials reported both Savings and Buy Local or MWBE as major issues affecting them.  "Local governments are under a lot of pressure from elected officials and constituents to increase local spend by being inclusive of and extending contracting opportunities to more small and local disadvantaged businesses," said Jason MacDonald, GSS Regional Director, West.

Comparative Analysis by Region

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GSS Public Procurement Survey Data, September 2017 – August 2018

In many ways, the regional data mirrors the national data. Across the country, eProcurement and Decentralization are the topics being most often discussed. In addition, staff-related issues and Savings are also reported often nationwide.

Socioeconomic goals again play prominently in most regions of the country. Procurement officials in the Southern United States reported both Buy Local and MWBE/HUBs as top issues impacting procurement. Their counterparts in the Midwest and West cited MWBE/HUBs and Buy Local as top-5 issues, respectively. Counterintuitively, Buy Local and MWBEs/HUBs were among the highest reported issues in every region but the Northeast. According to GSS Vice President, Northeast, Nicole Kenney, "The Northeast reported these socioeconomic issues less frequently because the region already leads the country in MWBE certification and disadvantaged business procurement programs."

Staffing Levels was reported as a top issue nationwide, except in the South which instead identified Staff Ability/Training most frequently. "Across the country, procurement offices are understaffed. Where they can fill positions, staff is often new and inexperienced and there are few to no resources for training. This was especially cited in my meetings across the South, where pay grades and job descriptions result in talent that stays only until they are lured away by another department offering more money and less responsibility," said Jane Benton, GSS Vice President, South.

Appendix A: Most Reported Nationwide Public Procurement Issues (March 8 – August 8, 2018)

Percent of CPOs Identifying Top Issues
GSS Public Procurement Survey Data, March 8 - August 8, 2018

Appendix B: GSS Regional Territory Breakdown

Map

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