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Legislating honesty creates procurement bureaucracy overload

 

In my previous two posts on how we can improve the public procurement process, I’ve talked about how procurement differs in the public and private sectors and why it’s unfair to compare the two, and pinpointed the protest process, which is unique to government procurement, as one area that’s ripe for overhaul.

 

The other major area for improvement is human capital – namely, taking better care of the people who oversee and implement the public procurement process. They need to get paid more and work in an environment where the best ideas can be brought to bear on the problems of the day.

 

I spent most of my career in procurement in the private sector before I transitioned to the public sector to work as Secretary of the Department of Management Services for Florida under Governor Rick Scott. I have observed a shortage of top talent in procurement in both the private and public sectors, but it is more acute in the public sector.

 

Make no mistake--there are a lot of very committed and smart people that choose to work in government, and what was striking to me was the quality and skill set of the people we were able to attract for the amount of money we were willing to pay. Considering the level of responsibility, accountability and amount of spend they were managing, they probably make on average 40 to 50 percent as much as their counterparts in the private sector.

 

Welcome to government

There’s a Catch-22 at play here in that a lot of the bureaucracy around public procurement exists to prevent fraud. Obviously we need to have some rules, but we also just need to pay better. The base pay is below market rate, and within government, you don’t often see a compensation system that rewards people based on outcomes. A few states have it, but the amount of money isn’t that material.

 

One of the things that I was always concerned about as a CPO in the corporate world was paying a good living wage based on peoples’ skill sets and competencies. If you're procuring millions of dollars worth of contracts and not making enough money to live on, or to support your family, then you can get very easily tempted by fraud and graft and all kinds of other things.

 

Most of the bureaucracy around government procurement has been created because a relatively small percentage of bad apples abused their power. Despite all the rules that are in place, they still do. You can’t legislate honesty, or competence, and in trying to do so we’ve made it much, much more complicated, time consuming and expensive to do the work that needs to get done.

 

And, we’ve created a bureaucracy that stifles creativity. When I first moved into government from the private sector, I would sit down with my team in Tallahassee and say, "This makes no sense. We ought to work to change this."

 

My team would look at me and say, "Welcome to government."

 

A culture that stifles initiative

I have a fundamental philosophy that everything can be done better and improved, and that is what I spent a good part of my career doing. That piece of my DNA didn't depart when I went to work in state government, and I worked with the legislature on changing some things that were costing the state a lot of money. It’s a lot harder to bring about process change in government than it is in the private sector, and not everyone has an appetite for that.

 

In the private sector, corporate procedural guidelines can be reinterpreted or worked around within appropriate limits and approvals. When you're dealing with state or federal laws, you don't have that latitude. Deviate from the law and you'll wind up in jail. You’re required to transact in a certain way whether you like or dislike, agree or disagree, with the requirements. That tends to stifle initiative and creativity, and breeds a culture where the more valuable skill set is being able to tolerate absurdity and operate successfully within the labyrinth.

 

There is certainly a lot of this in the corporate world as well, but you also have more rebels out there that are willing to challenge the status quo, and they have a much better chance of bringing about change.

 

What we should do in the wake of healthcare.gov

I started this series out talking about healthcare.gov, and why our public procurement system is set up to deliver the kind of outcomes we saw there.

 

A lot of very smart people were working on that website. I know the CEO of CGI, the lead contractor; we worked with them when I was at CIGNA. They are a very competent organization, but they were trying to herd cats within a government environment, wrangling with agencies that didn't communicate with each other, and dealing with turf battles over responsibility and accountability. Complexity and rigidity, not surprisingly, begat complexity and rigidity.

 

The worst possible thing that could happen in the wake of healthcare.gov would be more legislation. Instead, we need to throttle back some of the current bureaucracy. We need to reform the protest process. We need to pay market rate to public procurement professionals, and we need to realize that it’s not possible or desirable to legislate every eventuality or corner case.

 

Yes, we need some structure and rules, but on the other hand we also need to be able to empower competent and well-compensated professionals with the flexibility to use their judgment and apply their expertise on an ad hoc basis to get the best possible outcomes for the American public.

 

Jack Miles is the former Secretary for the Department of Management Services for the state of Florida and served as the Chief Procurement Officer of several Fortune 100 firms. He serves on Coupa Software’s Visionary Council. This article previously appeared on GovTech.com.

 

Jack Miles

Jack Miles  

Jack is an advisor known for his experience developing and executing business strategies and his ability to deliver operational excellence in functions which typically under perform in most companies. He has lead procurement teams in both the public and private sector and is a member of Coupa's Visionary Council.