The one thing procurement departments can’t buy: Time

Written by David Yarkin and Bernadette Launi

As we think about the largest challenges facing public procurement, topics such as supply chain disruption, inclusive purchasing and spending ARPA funds immediately come to mind. These are challenges that remind us of the ever-changing landscape of public procurement. They remind us of the urgency and complexity that we all must be prepared to navigate, often with limited resources or guidance. But after months of connecting with and learning from procurement practitioners around the nation doing this work every day, a much simpler challenge seems to be testing governments everywhere.

Time. It is our most precious commodity and in early 2022, we have less of it than any time in my 20 years in public procurement. How we use this declining resource wisely is of paramount concern to procurement leaders from palm-treed beaches of San Diego to the wintry mountains near Augusta, Maine.

While time has always been scarce for procurement officials, the strain of the ongoing COVID-19 pandemic has stacked challenge after challenge on an already full workload: unprecedented supply chain disruptions, staffing shortages, rapid adoption of technology and automation for a workforce used to in-person processes. You know the drill.

In a recent interview with Rick Grimm, CEO of NIGP, we discussed the effect this time crunch is having on supplier performance in the public sector. While the impact of this issue is serious, Grimm shared an optimistic message. By working together, we can leverage new solutions that will enable governments to spend less time and get better outcomes from the procurement process.

Supplier performance is procurement performance

In the busy world of public procurement, it is easy to direct buyers to just stay focused on the task at hand: develop the specifications. Publish the solicitation. Evaluate suppliers. Award the contract. At this point, many procurement offices, reeling from staff shortages, have considered their work done, leaving the user agency responsible for managing supplier performance.

But when you look at the responsibilities of a public procurement organization, the lines are notso clearly marked. “Your role does not end after that contractor PO was issued,” Grimm says. “Supplier performance is built into the specifications you develop, the measurements of success you identify, and how that success will occur during the contract period. For better or worse, supplier performance is really a reflection on procurement performance.”

The difference is a subtle yet important one. A narrow mindset sees the job of procurement as simply establishing contracts. The more expansive mindset holds procurement responsible for the successful delivery of goods or services to users. When you adopt the latter approach, the process of selecting a supplier becomes much more real. How can we build the clearest specifications? Attract the right bids? Understand the supplier’s past performance record and how it relates to the project we are considering them for?

“Public procurement is a steward of the public trust, and that stewardship doesn’t stop when that PO goes out the door,” Grimm states. “If you want to ensure that the supplier can perform well if awarded the contract, public procurement needs to base their decision on past performance metrics.”

But it all comes back to where we started: that pesky issue of time. Many well-intentioned procurement practitioners understand the importance of supplier performance. But with so many competing priorities and fewer staff to accomplish them, investing time to really research vendor performance often takes a back seat.

Investing time at the wrong points

As governments have become more time- and resource-strapped, procurement professionals have been forced into a reactive approach to supplier performance.

“The issue is that we never have time to do this right on the front side of things,” Grimm reflects. “But when we have poor contract execution, we find a lot of time to address it through performance improvement plans, legal action, due process.”

When time is short, we focus on “mission-critical” tasks that must be completed for the organization to function. Those tasks seldom extend to ensuring excellent supplier performance post-award. The reality, however, is that issues resulting from poor performing suppliers come back to procurement and end up taking up a considerable amount of time.

This reactive approach creates a vicious cycle: purchasers can’t find time to ensure they are selecting the right supplier. The more unsure they are of supplier past performance, the stronger chance that there will be poor contract execution. When there is poor supplier performance, we must find the time to address the problem. Which limits the amount of time we can spend finding the right supplier for other projects. Repeat. This anti-pattern results in procurement teams getting buried in work as they try to mediate supplier issues and manage everything else. And oftentimes, the poor performing contracts were entirely predictable. Says Grimm, “Usually, if there was bad past performance, it probably is going to be an indicator of future poor performance.”

The impact, Grimm says, of picking a supplier with a poor performance track record is as serious as can be. “If a bridge that falls and collapses kills citizens, there’s some responsibility there. There are consequences in really not knowing how a supplier is going to perform. And poor performance from the supplier actually reflects poorly on us in public procurement. That’s why it matters.”

To Grimm, a more proactive approach to soliciting supplier feedback would help break this cycle. “Shifting that energy to get things right on the front end of the award would allow us to find better ways to determine a supplier’s capacity for success,” he says.

If buyers can confidently select high-performing suppliers, it will set a new cycle in motion: suppliers with a proven track record enter contracts built for the supplier and agency to be successful. This leads to happy agency customers and end users and less procurement paperwork. Less procurement paperwork means more time spent getting procurements right and working towards long-term strategic goals.

The supplier reference check process is broken

It may seem like purchasers already have a viable tool to make buying decisions informed by past performance. The supplier reference check—where the supplier provides three past customers who can verify that they can do the work they have promised to do—exists so procurement professionals can see a supplier’s track record and make the most informed decision possible.

But as stewards of the public trust, it’s on us in procurement to raise the flag when something isn’t working. Let’s face it: supplier-provided references skew overwhelmingly positive, are difficult to get in contact with, and are often dated or irrelevant to the contract requirements. As Grimm asks rhetorically with more than a tinge of sarcasm, “how many times have you actually checked those references and they said this is a horrible supplier?”

A survey conducted by Procurated in a recent NIGP webinar supports this claim. In the survey, procurement practitioners were asked when the last time was that they had had a negative supplier experience. Sixty-eight percent said in the last year, and 26 percent said in the last two to five years. But when that same group was asked how often they hear negative feedback in supplier-provided reference calls, 96 percent said “rarely” or “never.”

These statistics don’t add up. Procurement professionals are having sub-par experiences with suppliers but aren’t encountering any of this information in reference calls. These reference calls have become little more than a “check the box” exercise and the reality is, they are wasting our time. We need to find a better way to organically connect feedback-seekers with feedback-givers.

Hundreds of thousands, even millions of public sector supplier interactions are occurring all around the nation. Insight about those interactions could undoubtedly benefit the public procurement community at large. Imagine if there was a centralized record of these supplier experiences. And as a procurement professional, if you could understand supplier performance as easily as you can decide whether to go to a restaurant based on peers’ experiences.

Grimm agrees that the procurement community holds the answer to this challenge. “That is the beauty of the public sector.” In this regard, he believes that public procurement has a great advantage over its commercial brethren. “We’re head over heels on what happens in the private sector because when I’m sitting in a meeting in private sector procurement folks, the person next to me is a competitor. However, in the public sector, we aren’t competitors. We are colleagues. I think that a solution to these challenges in the landscape that we’re facing now is to leverage automation and to leverage the relationships that we continue to build in our own communities … Because that actually saves us time,” Grimm says.

The solution: A time-saving home and a standard for peer reviews of government suppliers

The change we are discussing is two-fold. Grimm described the first—a necessary shift in behavior to spend our time evaluating supplier performance while establishing, rather than dealing with the consequences of poor performance during the rocky term of a contract. And given universal time shortages, when purchasers do invest that time up front to research past performance, they need a fast and reliable way to connect with a supplier’s past customers to get transparent, actionable insight into their track records.

At first glance that may seem like a utopian fantasy. How could you possibly know which of the thousands of purchasers in the United States to ask about their experiences with a particular supplier? Are we stuck with broken tools like supplier-provided references because we just don’t know who else to ask?

Grimm suggests the solution lies in bringing the procurement community together, to share their feedback about suppliers in a systematic way. “We have to have a very intentional way to measure supplier performance,” he says. He envisioned, “a standard process that really measures the right metrics.”

Fortunately, that universal standard is not some gauzy vision, far away on the horizon. It is here, being built by the public procurement community. Three years ago, several hundred local governments, school districts and universities began reviewing the past performance of their suppliers in a beta test of Procurated, a software company I started. Their early and unheralded work has now paid off for purchasers across the country. For free, government buyers can access nearly 40,000 verified reviews of more than 10,000 suppliers. Reading reviews on this platform will help them learn more about a vendor’s past performance than the broken reference system. And best of all, it only takes a few minutes. I know from my experience just how precious that time is. And isn’t it ironic that time is the one thing you can’t buy?

David Yarkin is the former chief procurement officer of Pennsylvania and the founder and CEO of Procurated, a supplier ratings platform built for the public sector. Please send Yarkin any comments or ideas for future columns to [email protected].

This article originally appeared in the Q1 2022 issue of Government Procurement.