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NIGP Commodity/Service Code is Still the “go-to” Answer

The NIGP Commodity/Services Code continues to be the “go-to” answer for public procurement in the classification of suppliers, and procurement spend tracking.  During the past few weeks, a broad spectrum of entities has licensed the 5-digit and 7-digit Code.  A few of the licensee entities include:

·          City of Augusta, GA for use with supplier management;

·          Washington Suburban Sanitary Commission, MD for strategic sourcing analytics;

·          Hennepin County, MN for supplier registration and to capture purchasing history;

·          Bibb County School District, GA for supplier registration and purchase history; and

·          Ascension Parish Government, LA.

e-Procurement is the e-Commerce Function of Government Contracting

For today’s public procurement professional to be successful, a strong focus on the delivery of quality procurement services is essential.  Technology has transformed the world for business and communications in general which has impacted public procurement.  In the past, public procurement officials could be “gatekeepers” of the procurement process, but in today’s information age with the ability to purchase and shop on-line the “gate” is too broad to act in the same manner.

Increasingly, customers have had their own experiences in shopping on Amazon or other e-commerce sites, which creates a new performance level for the delivery of public procurement services.  As a public procurement official, with a goal of increased spend under management, while providing quality products and services, the “shopping” experience of the customer needs to be as “easy, transparent, and quick” as one’s personal experience in shopping online.

Additionally, public procurement officials need to review policies and procedures to address these types of online purchases to ensure a level of reasonableness for obtaining quotations, Pcard transaction limits, or in having technology available to meet the inevitable demand for online purchases for today’s fast pace of government procurement.

How Do You Measure Cost Effectiveness?

As referenced in Purchasing and Supply Management by Monczka, Trent, and Handfield, a key performance metric for procurement organizations is cost-effectiveness.  Cost effectiveness may be defined as a measure of cost reduction, cost avoidance, or return-on-investment.  A cost reduction measure compares the actual cost of an item over a period of time, while cost avoidance represents the difference between a price paid and a potentially higher price (without procurement’s involvement).  As cost avoidance is not based on “actual” costs paid, a procurement organization that strives to document tangible cost improvements should focus on the use of cost reduction metrics to provide a representation of tangible savings and cost-effectiveness for the organization.

When Procurement Cuts May Cost You Money

Procurement officials always remain focused on obtainment of the best pricing for any needed product or service being procured. Although, procurement officials need to remember that saving a $1 today may not necessarily save a dollar tomorrow.  Many of us can recall an example of when the lower cost item was not necessarily the best solution.  One example I recall was for the purchase of an ambulance.  The low bid was approximately 25% than the next lowest bidder. When conducting due diligence for responsibility it was discovered that the supplier had several unhappy customers based on poor product, specifically leaking/open-air floors.  Can you imagine being a patient in an ambulance and having water flood the bottom while on the way to the hospital or feel the “natural” fresh air across your face and toes? Customer experience aside, it will cost more money in the long run to replace low-quality or poor-performing equipment. Consistently, we have to remember that we need to maximize each  dollar we spend and ensure we achieve full value for each dollar. For more information on accountability in procurement, read the NIGP’s Values and Guiding Principles of Public Procurement.

Ohio’s New Financial Transparency Site

Government Technology wrote an article last week, Ohio Offers Financial Transparency Statewide, which reported on Ohiocheckbook.com, Ohio’s first interactive financial transparency dashboard that helps citizens and officials track government spending. Ohiocheckbook.com will contain financial data from 3,900 Ohio cities, counties and government entities online in accessible, searchable form. Citizens will have access to this information when the site is launched late June 2015.

Ohio’s new financial website is a part of a larger initiative announced by Ohio Treasurer Josh Mandel to provide greater transparency by the state. Over the past 4 months since the debut of Ohiocheckbook.com the state’s financial transparency rating from the U.S. Public Interest Research Group (PIRG) has jumped from 46th to first in the nation.

As quoted in the article, Mandel said, “I think there’s going to be a lot of public pressure from citizens for every local government to get their finances online.”

Over the past couple years there has been increased pressure for government to increase financial transparency to the public. President Obama signed the Digital Accountability Act in 2014 and issued an executive order in 2013 for federal agencies to publish all financial data.

Many states have adopted similar transparency policies. The consumer advocacy group, U.S. PIRG, issued a report Following the Money 2015 that graded each of the 50 US states. Grades were based on transparency efforts such as information made available to the public and the functionality the websites provided. States such as Florida, Massachusetts, Connecticut, Oregon and Ohio scored very favorably. Ohio’s A+ score was due to its Ohiocheckbook.com functionality of offering citizens a single portal for all information, advanced single-click search functionality, and comprehensive data that includes spending by quasi-government agencies and public-private partnerships.

Mandel is quoted in the article How Does Your State Rank for Financial Data Transparency, “I believe taxpayers have a right to know how their tax money is being spent, and I think the best way to make government more efficient is to empower citizens to hold politicians accountable.” Mandel continues, “My vision is to create an army of citizen watchdogs and in just three months, we’ve had over 130,000 searches. So I think the politicians and other government workers have been put on notice that people are watching.”

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