For most purchasing professionals in the public sector, solicitations and open bid processes are “just the way things have always been done.” Open solicitations are a way for governments to protect themselves, ensure transparency, show good stewardship of public funds and give the best value for monies spent.
There is also a trickle-up benefit to the open bidding process – if more businesses are able to benefit and grow from winning government contracts, in turn, tax bases grow, unemployment declines and the overall fiscal health of the agency increases. This is why so many public sector agencies are putting an emphasis on awarding contracts to small, women-owned, minority and disabled veteran-owned businesses.
The protection that an open bid can give an agency can’t be underestimated. In the news right now is a scandal involving the Utah Transit Authority, who has been the subject of an audit report that the Salt Lake Tribune called “scathing.” The report calls out 10 million dollars that went to a company that never built the parking garage they were paid for and the award of contracts to vendors who submitted incomplete and non-competitive bids. This has caused public outcry, with some people calling for the resignation of the management and the board of the agency.
The federal government created the Competition in Contracting Act (CICA) in 1984 in response to scandals involving defense spending. Critics pointed to the Pentagon paying $18 for light bulbs that were sold for 67 cents on the open market and an ashtray that cost $600, among other examples. This stigma of overspending and underutilizing is still being felt by purchasing departments who work very hard to ensure that the funds they are entrusted with are spent in an open, transparent and responsible manner.
Open bidding processes aren’t as old as some people think. The first government-wide mandate for competitive bidding was enacted in 1949. This act stated that purchases should be based on “competition in the marketplace whenever practicable.” Congress amended the Armed Services Procurement Act in 1962, seeking “to assure that the competitive mechanism will not be used in part but in the fullest.” It went on to say that the public and taxpayers would benefit from this method.
Not using the competitive mechanism “in the fullest” is what led the federal government to the scandals that have rocked its agencies for decades. At this point, the public presumes that public sector purchasing will be done with an open bid process. To go against that process in any way that countermands current regulations is inviting scandal and public criticism.
Public sector sourcing practices may seem filled with regulations and requirements. In reality, most of those processes and regulations are in place to protect not only the agency, but the public at large.
This post and others can be found on the BidSync blog: http://www.bidsync.com/category/blog/