I stumbled upon a press release the other day, regarding pending litigation in which the US Government is being investigated for unfair procurement practices that have potentially cost small businesses up to $640 billion in lost opportunities in the past ten years.

The article itself is filled with more abbreviations and acronyms than even a programmer could understand, but here is a quick summary: The press release alleges that public servants, in an effort to get what they wanted (or perhaps out of laziness) have disregarded typical higher costs for goods or services and have been influenced in their decisions in selecting a “preferred supplier”. The article summarizes that the procurement habits of these procurement servants was unethical because they drafted the bids to include ‘unique’ or ‘patented’ features that were directly related to the preferred brand or supplier they wanted to engage with.

Although it appears that nothing much is being done on a government level, a relatively new organization (founded in 2005), “Fairness in Procurement Alliance” has sprung up to help the issues come to light. This advocacy group is attempting to partner up with the University of Florida Center for International Policy with the goal of getting the government and entrepreneurs in the private sector to address this procurement crisis.

Anthony Robinson, President of the Minority Business Enterprise Legal Defense and Education Fund said, "the government lacks viable vehicles to prevent procurement abuses, enforce the penalties on the book and reward small and disadvantaged businesses when they win their protests. We need to involve entrepreneurs in the solution to the procurement crisis." The goal of this new partnership is to help foster this view and hold the government more accountable for abusive procurement practices.
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Most of us are not surprised when we see news articles like this, especially if you have spent any time at all working in the government sector as a consultant. In my short time in that sector I saw many government RFPs that went out that specifically included criteria that would eliminate all other potential bidders except for the incumbent vendor.

However, this problem is by no means unique to the public sector, although usually procurement individuals at private businesses are not doing it out of laziness or lack of ethics. As consultants looking in we still see plenty of proposals that float out the door that only have one possible result, and that is to hire back the incumbent or the company that originally pitched a product or solution to the company. A perfect example of this is anytime you let an existing or potentially new supplier write your RFP for you. See “Don’t Let your Suppliers Write Your RFP” for more on that.

But most often it really is not the “fault” of the procurement department. In many situations, the procurement individual is just ordering what they were told to order, for example, the engineer in the shop tells them that they need a particular gasket for a particular machine and it can only be ordered from this one particular company. How is a procurement person supposed to challenge that, when it would require not just a political battle, but also an engineering degree? Or, the most common thing we see is that “We have always ordered that part, I am not sure why.” In other words, you really need to dig in to the products and services you are buying, and completely understand why you are buying them and how buying them came about. Often we find that a product is over-specified because of an old design that the product originally evolved from, or because an old engineer that worked there at one time wanted to order the part from his dad’s shop.

The moral is, procurement should not function in a vacuum as its own entity and businesses must do a better job of supporting the procurement function to a point that goes beyond different departments just telling procurement to buy something for them. The most successful procurement teams are not seen as a department, but rather a resource extension to every department within a business. Or, if the internal politics are just to much for your procurement team to take on, consider forming your own "advocacy group" by reaching out to a procurement service provider to help you uncover potential opportunities.
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William Dorn

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  1. I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.


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