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Governmental and Institutional Procurement Officials Must Aim to Mitigate Future Supply Failures

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Stephen B. Gordon
April 3, 2020

Procurement officials in governmental entities and healthcare institutions have encountered many difficulties as they have sought to acquire sorely needed medical equipment and supplies during the ongoing national emergency created by the COVID-19 virus. The goal of this article is to encourage anyone and everyone, including procurement and other staff in public and healthcare organizations, as well as students of public administration and public policy, to suggest measures that we can implement quickly to assure that critically needed goods, supplies and services are as widely available and as reasonably priced as possible during the next regional, global or national emergency. It is not a matter of whether there will be such emergencies in the future; it is, instead, a matter of the specific natures and the particular challenges the individual events will present. Given the number of people who have been adversely affected by the current supply shortages, governmental and nonprofit officials are morally obligated to assure a higher level of preparedness in future events.     

Among the greatest causes of the difficulties experienced to date by governmental and healthcare procurement officials during the COVID 19 pandemic is their late start in pursuing ventilators, respirators and other needed medical equipment and supplies. These procurement officials, when they entered the marketplace, found themselves in a Hobbesian state of nature. State, local and healthcare organizations were bidding against other state, local and healthcare organizations and the federal government, too. Not infrequently, a governmental or healthcare organization has believed it had a contract with a supplier, only to be out-bid by another organization at the last minute. Many of the suppliers from whom organizations have sought to secure needed equipment and supplies have been previously unknown profiteers—dishonest brokers who would not be considered in normal times. In some instances, entities and institutions have payed enormous sums of money to fraudulent suppliers, only to receive shoddy items or nothing in return.

Had governmental and healthcare organizations gone into the marketplace earlier, the likelihood of their being able to obtain needed items at reasonable prices would have been higher. Finger-pointers can blame the United States federal government for not publicly sharing the early intelligence it received, or they can blame governmental and institutional procurement officials for not being prepared; but, playing the blame game does no good once the horse has escaped the barn. Governmental entities and healthcare institutions, in collaboration with one another and in consultation with established, reputable suppliers, must develop and implement new strategies that will enable them to be as prepared as possible when future widespread crises occur.     

Several United States governors are providing much-needed leadership by working together to assure, in the present supply crisis, that the needs of their states and other states are met. These governors are tossing around, and in some cases already implementing, strategies like aggregating purchasing power through procurement coalitions to increase market leverage and, thereby, better pricing and supplier performance. They also are loaning medical equipment and supplies their states no longer need to other states whose immediate demands for such items exceed their current inventory. Governor Newsom of California has formed a multistate procurement coalition to leverage large, combined purchasing power. Governor Cuomo of New York has spoken of his intent to put together a nationwide contracting coalition once he becomes the chair of the National Governors Association next year.

The difficulties that the procurement officials of state and local entities and healthcare institutions have experienced during the COVID-19 pandemic have been driven not only by their late entry into the healthcare marketplace; they also have been driven by antiquated legal requirements and procurement agencies not possessing all the resources and tools they need. As governmental and healthcare procurement officials struggle to procure what is needed in the present situation, they must join with their peers, clients, stakeholders, suppliers and others to formulate strategies for reliably and cost-effectively fulfilling the needs of internal clients and end-users, with as little disruption as possible, in future emergencies. Preparedness is a proven way to minimize chaos in any situation.

There are many promising strategies, including but not limited to assuring that:

  • Procurement agencies possess the personnel, technology and other necessary resources, including the ability to identify events and trends that could signal potential supply failures in sufficient time to at least mitigate their effects.
  • Procurement staff possess the general and technical competencies, values and personal traits required to perform optimally under all conditions.
  • Respondents to solicitations are required to explain and commit to how they will assure continuity of supply, including in emergencies, with their explanations being considered in the evaluation of their offers.
  • Respondents to solicitations are required to propose and commit to their pricing under all conditions, with this, too, being considered in the evaluation of their offers.
  • Contracts are properly administered.
  • Payments are timely.
  • Supplier performance is evaluated, documented and shared.

Market leverage will be essential for implementing these and other strategies. Existing cooperative procurement groups and true cooperative procurement coalitions will play a key role in creating that leverage. The move toward preparedness must begin now.

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.

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