Finding an Ally: These are the Relationships that Procurement Professionals Should Prioritize
As public procurement professionals, you may think that it is important to increase your visibility and credibility with C-level leaders – the CIO, CTO, city manager, or mayor/governor. They are driving very high-profile and innovative government modernization initiatives that demand specific procurement capabilities. Without their cooperation and support, it can be challenging to define the requirements needed to successfully issue solicitations and make contract awards that will deliver their desired outcome.
At the same time, you may put effort into strengthening your bond with your finance and budget peers. These are the people that will ultimately approve and release the funds for your purchases, which means they can either be very helpful in meeting customers’ procurement deadlines or they can become a roadblock. However, there are really two other groups of people that influence your procurement performance capabilities much more than a C-level leader or finance/budget gatekeeper: Your suppliers and your end-user customers.
Four Reasons Why You Must Strengthen the Procurement-Supplier-End User Relationship
The NIGP Business Council recently convened for an honest conversation about the state of “The Procurement-Supplier-End User Relationship” and made it our mission to bolster the bond between these three parties. Not because we want everyone to get along, but because we need everyone to get along. Collaboration and cohesiveness are mandatory if we want to meet rising government procurement demands, especially now that the ever-changing (i.e. increasingly lean) acquisition workforce is putting a strain on resource capacity while the growing use of technology is pushing the envelope on procurement capabilities.
Without trust, communication and a shared toolset with both suppliers and customers, it will be all but impossible for procurement to sustain the purchasing tempo of “everyday” buys much less advance anyone’s modernization agenda. A strong supplier-procurement-customer relationship is necessary to navigate the inherent and new-age complexities of traditional, advanced, and services procurement processes. We must learn to rely on both customers and suppliers to educate us on the availability of new marketplace products and ultimately gain access to those products. We must also work in concert to develop and implement new strategies in the delivery of services. In doing so, you will gain four key benefits:
- A broader knowledge and experience base from which to inform your actions
- Extra help to accomplish work
- Access to experts who are well-informed on current marketplace and supplier capabilities
- Independent, unbiased perspectives on procurement strategies and industry standards
These are not the only reasons why you should embrace a private sector-public sector teaming mindset, though.
In the Name of Service: How Relationships Impact Services Procurement
State and local services procurement equates to $70 billion annually, making it the second largest spend category. It is arguably one of the categories whose spend value is most impacted by the quality of the supplier-procurement-end-user relationship. That is because the evaluation of service capabilities is often tricky, and the delivery of quality state and local government services is reliant on a well-coordinated execution model. Plus, the performance of services suppliers can be very subjective, with evaluations heavily reliant on feedback from both the customer and the supplier about what is working and what is not – and why. Just consider the involvement and responsibility of each party in the four stages of a typical services procurement lifecycle:
Scope Development: Procurement typically identifies and enlists the support of stakeholders across multiple public sector agencies (or across multiple departments for a single-agency solicitation) to define intended outcomes. Once everyone is in agreement about what they want the service to accomplish, then the procurement will (or should) start to solicit input from both suppliers and customers to define specifications and requirements based on need and actual marketplace capabilities. If the scope is developed in a silo, without both supplier and customer input, then you risk making incorrect assumptions about the performance criteria, price schedule or other evaluation factors that should be included in the solicitation – or you risk omitting details that will help suppliers submit accurate proposals.
Procurement Strategy Development: Procurement teams should frequently solicit input from both internal stakeholders and industry experts when determining which procurement strategy is best suited for the requested service. Once you understand how a service should be performed, how many potential sources exist, the industry’s fair and reasonable pricing thresholds, and other factors that influence selection and award criteria, it will be easier to match the contract type to the service’s characteristics.
Evaluation: Procurement should also consider supplier and customer feedback when determining the importance, or weight, of each evaluation defined factor. For example, should “best value” criteria always be used for professional services or solution-oriented services – as is typically the case? And should the “lowest cost” proposal receive a higher ranking for ancillary or easily-defined services. Third-party input can also help you determine if and when cooperative purchasing vehicles should be used for a service and how to properly select from that supplier pool.
Ongoing Contract Management: Without a clear understanding of minimum service capabilities, industry quality standards, and customer expectations, it will be very difficult to set the key performance indicators (KPIs) that will be used to measure the selected contractor’s performance delivery. It is not enough to rely on customer requirements, as they may not be fair in terms of actual service capacity. That is why you must tap into those relationships you’ve built on both sides of the supplier-customer spectrum to gain an unbiased perspective of realistic performance expectations. In the course of your conversations with subject matter experts, you should also be able to derive the information needed to properly link KPIs to the requirements and payment schedule. It may be recommended that you conduct regular meetings to discuss KPIs and contractor performance. You may also learn from either suppliers or customers how to employ certain technology tools to better manage performance.
In other words, teamwork is essential to strategic procurement. And open, honest communications regarding expectations and outcomes are non-negotiable in the services procurement lifecycle. So, while procurement is technically leading the charge for services procurements, it is important to recognize procurement’s less-credited, but highly meaningful role as a communications facilitator and – in the case of service performance issues – a mediator. Inviting others to contribute to the strategic procurement and performance review process fosters the transparency and collaboration required to build strong, trusting supplier-procurement-customer relationships. And, it is those relationships that will enable you to extract the greatest value from every solicitation – whether it is a traditional, advanced or service procurement.
Jean Clark, FNIGP, CPPO, C.P.M, CPM is President of NIGP Code and Consulting Services at Periscope Holdings. She is an NIGP Past President and former State of Arizona Procurement Administrator.