Cooperative Public Procurement Produced Public Value: Evidence From the COVID-19 Pandemic
The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.
By Stephen Gordon and Nathan Myers
July 29, 2022
Health care providers continue to navigate multiple health threats as community transmission of the SARS-COV-2 virus continues, while public health continues to monitor avian influenza outbreaks and monkeypox infections. Therefore, providing sufficient supplies of personal protective equipment (PPE) remains an on-going priority. On-going supply chain issues in addition to increases in infections could create a new emergency.
Organizations like the Continuity of Supply Initiative (CoSI) believe that governments and other consumers can leverage their spending and use competitive, outcome-based procurement with award incentives to assure the availability of critical goods and services in the future. CoSI believes that true, joint, intergovernmental cooperative procurement (IGCP), as opposed to piggybacking on other entities’ contracts, can play a major role in effecting the needed result, especially for smaller public entities with lower demand levels. One argument for such an approach is that it will produce a higher level of public value. The theory of public value, as articulated by Mark Moore, is based on three precepts.
The first of Moore’s precepts is that organizations need to foster trust and legitimacy among elected officials and other key stakeholders. Traditional perspectives on public procurement have focused on economic efficiency. Typically, this has translated into lower-price goods being purchased to keep state and local budgets under control. However, groups like CoSI argue that both procurement officials and those to whom they answer need to look beyond affordability and consider that some additional cost may be merited if it means avoiding critical supply shortages.
Avoiding such shortages will also help participating organizations to meet the second component, individually or collectively carrying out their mission and objectives. COVID-19 has shone a spotlight on how critical procurement is for the mission of health care institutions. Without the ability to have key supplies on-hand when needed, both patient and provider safety are put at risk and the operation of health care facilities is jeopardized.
The third component, involving the ability of organization to acquire additional resources, is clearly linked to the procurement function in general and rich, deep and broad collaboration within and among the buyer and supplier communities in particular. A key part of the innovative model advanced by CoSI is having supplier and purchaser agree during the contract award process on different prices based on different demand/risk scenarios. This feature should greatly mitigate, if not eliminate altogether, the likelihood of price gouging, other unethical practices and waste of public resources seen during the pandemic. Comprehensive and collaborative procurement planning and effective, collaborative contract administration, not always found in government contracting actions, are also key features of the model advanced by CoSI.
In preparation for a presentation at the annual Preparedness Summit sponsored by NACCHO, we interviewed representatives from two current cooperative procurement programs: the Southeast Florida Chapter of NIGP Purchasing Cooperative (SEFPC) and the Kansas City Regional Purchasing Cooperative (KCRPC). The member governments of SEFPC contract jointly for items like fuel, lime and the transportation of lime, whereas KCRPC members jointly contract for a more diverse range of goods and services, including shared micro-mobility operations (e-scooters, bikes), on-call legal services, testing services for fire hose, ladders and pumps. While many entities’ procurement contracts failed during the COVID-19 pandemic, those involving joint cooperative procurement through the SEPFC and the KCRPC remained largely resilient. Each true IGCP program had one contract that failed, and both of those contracts were for personnel staffing. KCRPC reported that other than for an agreement involving registered nurses and licensed practical nurses, there were no issues with its other regional contracts.
In regard to the components of the public value theory, the SEFCPC representative noted that participating in this true joint IGCP program enabled individual organizations to better accomplish their mission during the pandemic by being able to draw upon the collective knowledge of the other participating organizations. That same representative of SEFCPC reported that the third component was met with shared information saving time on sourcing and the group continuing to enjoy the same economies of scale and efficiencies as seen prior to the pandemic. A collection of organizations being able to maintain this level of cooperation and stability in the midst of a global emergency should bolster a sense of trust and legitimacy among policy makers in regard to any group.
Moving forward, the Continuity of Supply Initiative advocates for more organizations, particularly health care providers at the local level, to explore the development of procurement frameworks that anticipate and provide for future emergencies. CoSI believes that doing this will realize the benefits of Moore’s Public Value Theory. The inability of many organizations to receive necessary supplies and accomplish their complete mission contributed to a loss of confidence in the general public toward various actors and institutions. Both Public Value Theory and the experience of Southeast Florida Chapter of NIGP Purchasing Cooperative and Kansas City Regional Purchasing Cooperative suggest that resilient cooperative procurement can mitigate these challenges. However, it was also made clear in our interviews that such programs are created with leadership, vision and hard work. Organizations must have the will and desire to build back stronger.
Author: Stephen B. Gordon, PhD, FNIGP, CPPO, is a veteran of 45 years in the public procurement arena. A past president of NIGP – the Institute for Public Procurement and a recipient of NIGP’s highest award for individuals, Gordon directed the procurement programs of two well-known and well-run local governments. He stood up and managed for five years Old Dominion University’s globally accredited Graduate Certificate in Public Procurement and Contract Management. Dr. Gordon is the lead coordinator for the Continuity of Supply Initiative.
Author: Nathan Myers, Ph.D. is a Professor in the Department of Political Science and Director of the Master of Public Administration at Indiana State University. His areas of research include public policy, public health emergency preparedness, and the governance of biotechnology. He is the author of “Pandemics and Polarization: Implications of Partisan Budgeting for Responding to Public Health Emergencies.” Myers serves as an academic advisor to the Continuity of Supply Initiative and assistant director of Indiana State’s Center for Genomic Advocacy. Email: [email protected] Twitter: @nagremye1980
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Cooperative Public Procurement Produced Public Value: Evidence From the COVID-19 Pandemic
The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.
By Stephen Gordon and Nathan Myers
July 29, 2022
Health care providers continue to navigate multiple health threats as community transmission of the SARS-COV-2 virus continues, while public health continues to monitor avian influenza outbreaks and monkeypox infections. Therefore, providing sufficient supplies of personal protective equipment (PPE) remains an on-going priority. On-going supply chain issues in addition to increases in infections could create a new emergency.
Organizations like the Continuity of Supply Initiative (CoSI) believe that governments and other consumers can leverage their spending and use competitive, outcome-based procurement with award incentives to assure the availability of critical goods and services in the future. CoSI believes that true, joint, intergovernmental cooperative procurement (IGCP), as opposed to piggybacking on other entities’ contracts, can play a major role in effecting the needed result, especially for smaller public entities with lower demand levels. One argument for such an approach is that it will produce a higher level of public value. The theory of public value, as articulated by Mark Moore, is based on three precepts.
The first of Moore’s precepts is that organizations need to foster trust and legitimacy among elected officials and other key stakeholders. Traditional perspectives on public procurement have focused on economic efficiency. Typically, this has translated into lower-price goods being purchased to keep state and local budgets under control. However, groups like CoSI argue that both procurement officials and those to whom they answer need to look beyond affordability and consider that some additional cost may be merited if it means avoiding critical supply shortages.
Avoiding such shortages will also help participating organizations to meet the second component, individually or collectively carrying out their mission and objectives. COVID-19 has shone a spotlight on how critical procurement is for the mission of health care institutions. Without the ability to have key supplies on-hand when needed, both patient and provider safety are put at risk and the operation of health care facilities is jeopardized.
The third component, involving the ability of organization to acquire additional resources, is clearly linked to the procurement function in general and rich, deep and broad collaboration within and among the buyer and supplier communities in particular. A key part of the innovative model advanced by CoSI is having supplier and purchaser agree during the contract award process on different prices based on different demand/risk scenarios. This feature should greatly mitigate, if not eliminate altogether, the likelihood of price gouging, other unethical practices and waste of public resources seen during the pandemic. Comprehensive and collaborative procurement planning and effective, collaborative contract administration, not always found in government contracting actions, are also key features of the model advanced by CoSI.
In preparation for a presentation at the annual Preparedness Summit sponsored by NACCHO, we interviewed representatives from two current cooperative procurement programs: the Southeast Florida Chapter of NIGP Purchasing Cooperative (SEFPC) and the Kansas City Regional Purchasing Cooperative (KCRPC). The member governments of SEFPC contract jointly for items like fuel, lime and the transportation of lime, whereas KCRPC members jointly contract for a more diverse range of goods and services, including shared micro-mobility operations (e-scooters, bikes), on-call legal services, testing services for fire hose, ladders and pumps. While many entities’ procurement contracts failed during the COVID-19 pandemic, those involving joint cooperative procurement through the SEPFC and the KCRPC remained largely resilient. Each true IGCP program had one contract that failed, and both of those contracts were for personnel staffing. KCRPC reported that other than for an agreement involving registered nurses and licensed practical nurses, there were no issues with its other regional contracts.
In regard to the components of the public value theory, the SEFCPC representative noted that participating in this true joint IGCP program enabled individual organizations to better accomplish their mission during the pandemic by being able to draw upon the collective knowledge of the other participating organizations. That same representative of SEFCPC reported that the third component was met with shared information saving time on sourcing and the group continuing to enjoy the same economies of scale and efficiencies as seen prior to the pandemic. A collection of organizations being able to maintain this level of cooperation and stability in the midst of a global emergency should bolster a sense of trust and legitimacy among policy makers in regard to any group.
Moving forward, the Continuity of Supply Initiative advocates for more organizations, particularly health care providers at the local level, to explore the development of procurement frameworks that anticipate and provide for future emergencies. CoSI believes that doing this will realize the benefits of Moore’s Public Value Theory. The inability of many organizations to receive necessary supplies and accomplish their complete mission contributed to a loss of confidence in the general public toward various actors and institutions. Both Public Value Theory and the experience of Southeast Florida Chapter of NIGP Purchasing Cooperative and Kansas City Regional Purchasing Cooperative suggest that resilient cooperative procurement can mitigate these challenges. However, it was also made clear in our interviews that such programs are created with leadership, vision and hard work. Organizations must have the will and desire to build back stronger.
Author: Stephen B. Gordon, PhD, FNIGP, CPPO, is a veteran of 45 years in the public procurement arena. A past president of NIGP – the Institute for Public Procurement and a recipient of NIGP’s highest award for individuals, Gordon directed the procurement programs of two well-known and well-run local governments. He stood up and managed for five years Old Dominion University’s globally accredited Graduate Certificate in Public Procurement and Contract Management. Dr. Gordon is the lead coordinator for the Continuity of Supply Initiative.
Author: Nathan Myers, Ph.D. is a Professor in the Department of Political Science and Director of the Master of Public Administration at Indiana State University. His areas of research include public policy, public health emergency preparedness, and the governance of biotechnology. He is the author of “Pandemics and Polarization: Implications of Partisan Budgeting for Responding to Public Health Emergencies.” Myers serves as an academic advisor to the Continuity of Supply Initiative and assistant director of Indiana State’s Center for Genomic Advocacy. Email: [email protected] Twitter: @nagremye1980
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