Public Sector Backwardness in Sourcing and Cost Management (Part 2)

Earlier this week, we began to explore the absurd nature of public sector sourcing requirements that require guidelines and handbooks spanning thousands of pages but force arcane (and often archaic) sourcing approaches and tools on users. OJEU requirements in the UK are a perfect example of this. If you want simple proof about the backwards nature of European public sector sourcing, ask how many purchasing-focused civil servants are trained and/or required to use the advanced sourcing / optimization capabilities resident in two popular tools, Emptoris and BravoSolution, which are commonly used by top performing procurement organizations in the private sector as well.

The US is not much better – trust us. Yet perhaps the best prescription of all for success in Federal Sourcing comes from an expert quoted in a previously referenced FCW article: “If a particular purchasing approach has the potential to bring good value to the agency and it’s not forbidden in the Federal Acquisition Regulation, then you are empowered to do it.” What might such tactics include? Good old-fashioned reverse auctions are among them. FCW suggests that “the approach [reverse auctions] is effective for commodities, but it’s another tool agencies have had available for some time and not used as much as they could.” Another suggestion in the article cracks us up: “agencies will make greater use of requests for information, perhaps to the point of asking for what amounts to free help in planning acquisitions.” RFIs as an advanced sourcing program element? Give us a break. Tapping suppliers for innovation as well as for structuring a procurement program is old hat in successful private sector procurement organizations. A number of leading procurement organizations we know view themselves as sitting at the barrier between the world outside and the world within – tapping ideas and innovation from both sides of the organizational fence. This should be the ante for federal sourcing.

But why not take it a step further and solicit alternative responses and specifications as part of the negotiation process itself and compare bids in a competitive but not apples-to-apples manner, something solutions from the likes of CombineNet, BravoSolution, Trade Extensions, Emptoris, Iasta and even Ariba and Zycus (more recently) can enable in varying degrees. Moreover, these approaches could enable the Federal government to better quantity different types of award trade-offs (e.g., domestic content/sourcing, diversity content/percentage, general split of business requirements, etc.) as part of a decision process based on total value, not just unit cost.

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