Staying on budget

The public procurement profession has historically focused on how money is spent. That’s very logical. Since these folks purchase goods and services that represent 15 to 20 percent of the gross domestic product (GDP) in a given year, it only makes sense. We are talking about billions of dollars here.

But it is not enough for today’s procurement professional to know where the money is going; they also need to be aware of where it comes from. Being knowledgeable about the agency budget is an important part of public procurement. In past years, we have tended to wait for program managers to secure the necessary funding and then for the finance office to “bless” the purchase. Only then would we become concerned. Not only did procurement think it was somebody else’s role, so did others in the organization.

This situation really sank in for me a few years ago when a contractor called and inquired about an exterior painting project. I was not aware of any such bid and told him so. He said he had found out about the project on the agency web site, which had published a list of planned capital improvement projects. I checked my own web site and there it was: Administration Building Exterior Repaint, $20,000. If an interested contractor knows more about my agency budget than I do …. well, then perhaps I need to rethink my role.

Procurement professionals can be instrumental in providing accurate estimates for budgeted projects. They know the industry and have past experience buying similar commodities, so it only makes sense that procurement be engaged. Being at the budgeting table will also help with procurement planning, with developing a bid schedule, and greatly aid in strategic sourcing (analyzing spend, aggregating requirements, standardizing products, etc.). Countless organizations around the world are recognizing the importance of procurement’s upfront involvement in the planning stages of an acquisition. There really is no downside to procurement having an active role in the budgeting process.

For years I have heard my procurement colleagues say they “get no respect” from the finance officials (who, by the way, are often our bosses). What better way to demonstrate our value and earn this respect than by being involved in budget planning? A few years ago, a purchasing officer in one of my classes said she was continually left out of the budget planning. When asked how she handled it, she said, “I invited myself to the next meeting!”

Professional procurement is not just about spending money. It is also about being a knowledgeable and experienced manager of systems, people and resources. Those I have observed advance into executive positions for their agency have been the ones who “upped their game” in the budgeting area. When top leaders are looking for directors, CFOs and business managers, one of their first stops should be the procurement office.

So while we are busy honing our skills in the areas of negotiation and contract writing, let’s not forget about line-item and performance budgeting. It will pay off.

Darin Matthews, FNIGP, CPPO, C.P.M., teaches public procurement at Portland State University. He has extensive management experience, speaks throughout the world on procurement, and has published several books and articles on supply management. Contact Matthews at darin.matthews@pdx.edu.