Do Decentralized Procurement Systems Really Work?

Public agencies differ widely when it comes to how centralized or decentralized the procurement and contracting function is.  

For some smaller agencies, procurement is totally decentralized and often not systematic.  Larger agencies generally tend to centralize some or all of the procurement functions.  And then there are many agencies in the middle, with a combination of centralization and decentralization.

Key Features of a Procurement System:  Regardless of the size or model used by the public agency, it is important for the agency to be deliberate in its procurement and contracting practices to ensure the following:

• Transparency:  Public contracting should be conducted in an open environment where businesses understand clearly the process the agency will use in making contract selections and awards.  This means that procedures should be published in bidding documents and online.

• Ethical Behavior:  Without clear policies and procedures, government contracting can be ripe for ethical and fraudulent abuse.

• Protests:  The procedures for protests should be clear to all businesses.  And, of course, the bidding and solicitation documents should be clear to mitigate against potential protests.

• Consistency:  Especially under a decentralized or partially decentralized environment, it is important for the public agency to have consistent procedures and expectations between different departments.

Phoenix Criticized:  The City of Phoenix, Arizona has recently come under criticism for the inconsistent and unpublished regulations under its decentralized procurement system.  The Arizona Republic ran an interesting article on July 6, 2011 on the City's practices and attempts by the City Council and others to make improvements.

Challenges of Decentralization:  One of the challenges that comes with a decentralized system is that it means more people must be experts in procurement and contracting issues in order to protect the public's interests and provide a fair forum for contractors, vendors, service providers, and consultants.   Phoenix attorney, Kevin O'Malley, who often represents businesses on City contracting issues noted that:

"If you rely on each department to come up with their own (process) each time, it just seems kind of inherent that you're going to have a hard time maintaining a quality process."

Review Your Policies and Procedures:  

1. Have you reviewed your agency's procurement and contracting practices recently?  
2. Are your policies and procedures up-to-date and consistent with current laws, regulations, and best practices?  
3. Are you actually complying with your published policies and procedures?  
4. Are your bidding documents consistent with your policies and procedures?  
5. If you have a decentralized model, are the departments and individuals who are managing solicitations and contracts knowledgeable and trained?  
6. Are your policies and procedures consistent with the requirements of any grants you may receive?
7. If you don't have written policies and procedures, consider developing them, or obtaining expertise to help you develop them.

Mike Purdy's Public Contracting Blog 

© 2011 by Michael E. Purdy Associates, LLC 

http://PublicContracting.blogspot.com