Note: As I so often warn, I slice and dice and paraphrase and omit articles to my end an didactic idiosyncrasies. Therefore, don't take my word for the renditions of articles here. If you need to know the actual intent and full context of the authors of articles presented in this blawg, read the source at the links.
Procurement changes welcome
The devil is always in the detail. There will never be a one-size-fits-all-perfectly procurement system for all time. It's a balancing process. Every procurement change involves a rebalance of crucial principles, for better or worse. You can never finally have it the way you'll always be happy with it. In other words, it's a politician's dream come true: a never-ending dream of posture and headline. As Prof. Steven Schooner of the George Washington University Law School tells us in his procurement Desiderata, the choices we make in procurement reform involve trade-offs of critical governance principles.Gov. Bruce Rauner signed bipartisan legislation last week that should make it easier for the state to make required purchases at lower costs for taxpayers. S.B. 8 has particularly positive ramifications for public universities throughout Illinois.Governor Signs Procurement Reform Bill
The legislation is intended to make the procurement process more efficient and transparent by undoing restrictive rules that were put into place after the scandals of the administrations of former Govs. Rod Blagojevich and George Ryan. They created bureaucratic nightmares, the undoing of which Rauner said will "make it easier for small and midsize businesses to bid on contracts." It also will make it easier for public entities to accept the lowest bid. That may seem like common sense, but in Illinois, it's revolutionary political reform.
Killeen cited several problems UI officials endured under the old rules that he expects to be addressed by the new law. He said that "our libraries will be able to purchase academic journals that are staples throughout higher education without going through unnecessary and time-consuming procurement reviews" and "will avert delays that have slowed research and frustrated top faculty, threatening to chase them and their nearly $1 billion in annual research funding to states with "less-cumbersome" procurement guidelines. "For instance, our chemistry and biology researchers will be able to order a specialized microscope that is available from just a single source without jumping through hoops to attract other vendors that don't exist," Killeen said.
The goal of limiting public corruption under the old approach was well intended. Given the criminal instincts that pervade government in this state, they can hardly be ignored. But there are limits to what bureaucratic rules can achieve in pursuit of the noble but challenging goal of legislating honesty. They can become counter-productive when they have the effect of paralyzing the process — in this case, the procurement process.Rauner said the bill isn’t perfect, but it will make the procurement process easier for both vendors and state agencies like universities. “And, based upon the estimates I’ve heard, this can save the university tens of millions of dollars every year.” And Rauner says the savings will be even greater for other state agencies, from Central Management Services to the state prison system. Rauner said that his administration estimated that procurement reform would, in time, save the state $250 million to $300 million a year.
“This bill will allow us to save hundreds of millions of dollars every year”, the governor said. “This is big stuff, and it’s wonderful. This is major progress for the people of Illinois.”
Prof. Jeffrey Moore, said he welcomed the measure. Moore said Illinois’ complicated procurement rules have made it difficult for researchers to obtain vital but obscure equipment and parts at good prices, because many suppliers find them too complicated to bother with. He gave the example of a researcher who was seeking a part that was made by only one small company. “And this particular company, which is a small company and doesn’t have a lot of business, but is the only maker of this research part, was not willing to learn the process of our complicated system and chose not to participate in the bidding process”, said Moore, “which meant that the researcher was not able to do the research that they needed to do, because they couldn’t get this part.”
Gov. Rauner said it’s difficult to regulate ethics, and the result is often a surplus of paperwork. He said his own administration supported a different approach.
“We’ve made an effort to try to encourage ethical behavior”, said Rauner, “and encourage good government, but try to also balance that with making government efficient and effective and transparent.”
It is difficult to articulate objectives for a procurement system. There are many options, and most are contradictory.
Critics of the U.S. system suggest that, historically, efficiency was not a fundamental goal of the procurement process and, arguably, our system is designed to thwart efficiency. A procurement system is efficient when it spends the least amount of resources in the process of purchasing what is needed. If your buyers are overworked, however, such a system becomes more expensive, because your buyers fail to obtain the best prices. Unfortunately, the pursuit of best value typically requires greater buyer resources, from market research to negotiation.
Ultimately, each government must decide how much discretion or flexibility it wishes to delegate to its buyers. For each individual transaction, greater buyer flexibility should result in higher customer satisfaction and better value for money. For all of your transactions, taking a systemic view, broad delegations of discretion or flexibility may reduce transparency and competition. Accordingly, this discretion may entail a lack of control that may threaten public confidence in your procurement system.
No system can achieve all of these goals. Nor can a state expect that its objectives for its system will remain constant over time. Determining which goals are most important is a daunting, ever-evolving challenge.
Because no system can achieve all of the goals here (or the many not discussed), your desiderata entails important tradeoffs. There are significant transactional, economic, and social costs associated with maximizing transparency, integrity, and competition. Nonetheless, the author believes these costs are an excellent long-term investment.
Three “pillars”, in my opinion, underlie the United States procurement system: system transparency; procurement integrity; and competition. In the United States, we believe that, as a general rule, our government enjoys access to the best contractors, lowest prices, most advanced technology, favourable contract terms and conditions, and the highest quality goods and services. We think this is so because our system, for the most part, encourages participation by the widest possible pools of potential competitors; it consistently demonstrates that competitors will be impartially considered for award of our contracts; and it treats all contractors in a manner that balances appropriate risks with meaningful profit incentives and rewards.
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