GSS Public Procurement Report
April 2019 Vol. 3, Issue 3

Every year, consulting firm Government Sourcing Solutions (GSS) meets with hundreds of senior government procurement officials across the country. In those meetings, GSS' team of former senior government procurement leaders/chief procurement officers (hereafter "CPOs") hears firsthand about the issues and hot topics that are facing government and educational purchasing.

Beginning in September 2017, GSS began collecting and analyzing the issues most often cited as impacting public procurement by those public procurement leaders. Previous editions of The Public Procurement Report have examined how those issues have been reported across regions and government levels. In this third edition of the Report, we compare the trends reported between two six-month periods (February 1 – July 31, 2018 and August 1, 2018 – January 31, 2019) and note the pronounced impact of the 2018 gubernatorial elections on state procurement.

Comparing the Public Purchasing Trends Over Time
(February 1, 2018 – July 31, 2018) vs. (August 1, 2018 - January 31, 2019)
Top Issues Identified by CPOs While the top 5 trends reported nationwide by CPOs were roughly the same over the course of both reporting periods, there was some change in the ranking of each. The exception to this was eProcurement, which remained the #1 issue reported by CPOs across the country and across government levels. Staffing Levels and Cooperative Purchasing were the #2 and #3 reported trends in the latest (August 1, 2018 – January 31, 2019) reporting period, respectively.

Decentralization (#4) and Buy Local (#5) were ranked lower during the more recent reporting period, although the rate of reporting of these issues by CPOs remained relatively the same.

Following, we analyze the three most often-reported issues from the most recent reporting period, including why two issues that ex-perienced growth in reporting over the previous period (Staffing Levels and Cooperative Purchasing) have be-come more influential to the nation's public procurement leaders.

Top Issues Identified by CPOs

Issues Reported by CPOs eProcurement has ranked as the #1 overall reported trend across all governments since GSS began collecting data for The Public Procurement Report. In the latest six-month reporting period, 45% of all governments cited it as an issue, an increase of nearly 15% over the previous six-month period. Perhaps most compelling was the rate at which state government procurement leaders brought up eProcurement as a trend – a full 71% of those state CPOs with whom we met mentioned it in our meetings. It is also the #1 issue reported at all levels of government (states, cities, counties, higher education) except for K-12 where it was #3, although still a full third of those CPOs reported that eProcurement is a significant issue (31%).

Staffing Levels
Issues Reported by CPOs Staffing Levels ranked as the #2 trend reported across governments in the August 1, 2018 to January 31, 2019 reporting period. In the 6 months preceding that, it ranked #3 overall. There are likely several reasons that Staffing Levels has been and continues to be reported as a top trend across the United States.

First, the "silver tsunami" of Baby Boomer retirements has begun in earnest – more than 44% of the governments surveyed by the Center for State and Local Government Excellence's State and Local Government Workforce: 2018 Data and 10 Year Trends reported that retirements increased from 2017 to 2018 while only 10% reported that they decreased. Second, the national unemployment rate consistently hovered around 4.0% in 2018, and employers across all sectors of the government and economy had trouble filling open positions. Finally, many governments have reduced their procurement staffs since the 2008 Great Recession (either through ordered cuts or attrition without replacement), leaving procurement offices understaffed. Combined with the low pay and pension uncertainties tied to government employment, it is easy to understand why CPOs feel Staffing Levels are an important issue.

Cooperative Purchasing
Issues Reported by CPOs The frequency with which Cooperative Purchasing was cited by government procurement officials resulted in its rank rising to #3 from #5 overall, with an almost 50% increase in the percentage of governments referencing Cooperative Purchasing over the previous six-month reporting period. All government levels reported it as a top-5 trend during latest reporting period, except K-12 CPOs who reported it as #6.

One reason that Cooperative Purchasing continues to be a top-rated trend among all governments is the increasing number of cooperative purchasing vehicles and offerings available in the marketplace today. Tammy Rimes, MPA, served as the former Purchasing Agent for the City of San Diego and is the current Executive Director for National Cooperative Procurement Partners (NCPP), an association of cooperative procurement organizations. According to Rimes, "The cooperative industry continues to grow and evolve as the needs of government expand and change. In the past, commodities were the primary contracts available. However, services, added-value amenities, consulting, construction and even temporary staffing solutions are now available."

The Impact of the 2018 Gubernatorial Elections
Much attention has been paid nationally to the federal midterm elections, but 2018 was also a watershed year in gubernatorial politics with 20 new governors taking office this past January. The impact on public procurement could be profound. While the connection between a new gubernatorial administration and public procurement may not be immediately apparent, part of the CPO's job is to mold and inform the purchasing policies and legislation designed to implement the priorities of the new Governor's agenda. 2019's new Governors campaigned on a variety of promises that will impact state purchasing, including increasing local vendor purchasing, improving reporting and technology, and finding additional savings and efficiencies – and the states' procurement directors (and their staffs) will be tasked with carrying out these goals. Even those Governors who were reelected may have campaigned on new priorities that impact procurement.

By The Numbers

In addition to potential changes to policy and focus, new administrations often lead to new bosses for CPOs when Governors appoint new state Chief Administrators (CAs). According to the National Association of State Chief Administrators (NASCA), 22 new state CAs have been appointed since the November 2018 election. State CAs oversee many operational functions of state government, including purchasing. Many times, new CAs (especially those in states with a party change at Governor) have different plans for purchasing operations that must be implemented by purchasing leadership.

NASCA Executive Director Sarah Razor sums it up: "State Chief Administrators are all appointees of their respective Governors, and so we are at a natural time of major transition for this position in many states. In 49 out of 50 states, centralized procurement is an area of oversight for State Chief Administrators, and they are very focused on implementing their Governors' priorities. That can often mean working closely with the state CPO and central procurement."

In some cases, new Chief Administrators may bring in their own senior staff resulting in turnover at the CPO level as well. "In early 2011, following the 2010 gubernatorial elections where 37 states held elections that resulted in 18 new Governors, a large turnover at the CPO level had begun," says Mike Smith, VP of the Midwest Region for Government Sourcing Solutions and former CPO for the State of Illinois. "Within a year or so of the inaugurations of the new administrations, more than a quarter of U.S. states had new CPOs, whose job it was to help implement the new Governors' agendas."

It was unsurprising, then, to see that 47% of the state procurement leaders we met with during, and just after the runup to the November elections, cited "Impact of Politics on Procurement" as an issue. This was up from the 19% who noted it during the first half of 2018 – when 20 states (more than half of all states having an election in 2018) had not yet had their primaries and the campaigns had not entered their final stages.

An analysis of city CPOs' reporting of Impact of Politics on Procurement gives some insight into the future of the trend at the state level. In 2017, 59 of the country's largest 100 cities had mayoral elections. In the reporting period soon after the new mayors took office, 35% of city CPOs we met with cited the Impact of Politics on Procurement as an issue. By the next reporting period (beginning August 1, 2018), the percentage of city procurement directors who noted the issue had fallen by almost half to 19%. It is possible, then, that the issue's reporting rate may continue to be high amongst state CPOs for the next reporting period but then decline later in the year as new administrations' priorities have begun to be implemented in the second half of 2019.

Appendix A: Most Reported Nationwide Public Procurement Issues (August 1, 2018 to January 31, 2019)


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