Meet the Expert:
Brent Maas is Executive Director for Business Strategy and Relationships at NIGP: The Institute for Public Procurement. He oversees the Institute’s marketing, accreditation, consulting, partnership, and other non-dues enterprise programs. Prior to joining NIGP, Brent served in marketing & sales operations for start-ups, global technology firms and the Walt Disney Company.
Onvia’s Market Research team interviewed Brent as a part of the 2018 State & Local Government Contracting Forecast.
What have been some of the biggest trends, issues or developments you’ve been seeing this year so far (in 2017)?
In many respects 2017 has been a year with similar patterns in terms of what is purchased. One of the noteworthy trends we’ve been watching doesn’t have to do with changes in the buying process as much as with the people involved and whether procurement teams are adequately staffed and qualified. The other major ongoing trend I’ll cover has to do with growth in cooperative and other efficient purchasing methods.
The need for certified hires: Suffice to say, there is unmet demand for certified procurement professionals to fill available procurement openings for buyers and managers. The good news-bad news is that agencies clearly recognize value in certification for new hires to strengthen procurement effectiveness, but the number of certified professionals remains insufficient to meet the demand.
The rise of millenial buyers: Shifting attention to the demographics of the procurement workforce, we can see what is also being observed within the greater American population: There are more Millennials than Boomers in the workplace today. The tipping point occurred only in the past couple of years, and in the coming 10 years we’ll watch Boomers exit their current procurement roles for retirement or semi-retirement. Meanwhile, Millennials will continue to assume management and leadership roles along with the smaller Generation X age cohort.
If the generalization about Millennials being comfortable with technology and rapid change holds true, we’ll likely see a substantial shift in the rate of technology-based solution adoption come in the early 2020s in government procurement. Technology has long been on procurement’s radar, whether it is technology related to the purchasing process itself or tech solutions that support functions across government. In 2017, conversations about the CIO-CPO relationship, the Internet of Things and Big Data seemed to intensify in volume and urgency. While this is a subjective observation, these topics seemed to be raised more frequently in online discussion communities or trade publications than in prior years.
Cooperative purchasing: The use of cooperative programs and the contracts they promote continues to grow in 2017. Based on surveys conducted between 2011 and 2017, on average, agency spend through cooperative contracts has grown from around 12% to 18-20% (including statewide contracts from agencies). The operating demands of agencies and related pressure on procurement to meet those demands continues to drive growth in the use of cooperative contracting options, and contracts with online retailers able to support agency spend controls.
…agency spend through cooperative contracts has grown from around 12% to 18-20%...Brent Maas, Executive Director for Business Strategy and Relationships at NIGP: The Institute for Public Procurement
Other approaches and methods: Establishing appropriate spend authority and thresholds, as well as purchasing card programs and broad procurement policy reviews, supports more effective and efficient acquisition activities for both procurement and operations staff.
Agencies that have not undertaken some degree of operational and policy review in the past five years to improve their overall efficiencies are encouraged to do so. That said, managing to limited budgets and personnel capacities is in no way a new phenomenon. While these limits can and do drive agency management to undertake operational reviews and reforms, I’m skeptical that the rate of these reviews will change much in 2018.
What are some of the trends or developments you see coming in 2018?
Momentum will continue to grow in IT project planning and implementations to position public entities to better capitalize on the value of transactional data across the agency. This includes day-to-day business efficiencies as well as predictive use in community planning, infrastructure development and service delivery. As a result, expect to see and hear more about “agile development” and “agile procurement.” For now, those terms are primarily used in context of technology-based projects. Whether those practices have broader application – and adoption - in other industry segments will be something to watch in the coming few years.
Among the emerging topics are: Outcomes-based procurements and “Smart Cities” infrastructure and support services. Related projects and needs include driverless vehicles, increasing the percentage of non-fossil fuel vehicles, on-demand vs. continuous energy supply, and increasing use of alternative energy sources – to name a few “near horizon” topics.
Expect revenue and expenditure growth at a rate similar to or slightly above inflation (around 2%).
How would you describe your overall outlook for procurement in 2018?
Expect revenue and expenditure growth at a rate similar to or slightly above inflation (around 2%). In other words, minimal if any “real dollar” revenue and spending growth. We can also expect status quo growth rates for use of cooperative practices and shifting workforce demographics.
A near-perpetual challenge is balancing mandatory payments (such as pensions) and operating expenses with anticipated revenues. Most local entities experience varying degrees of gap between total liabilities and their capacity to meet those demand payments through self-funded revenues. Further, for most localities, the gap is growing, not shrinking. For 2018, the expectation is that overall spending ratios between mandated and discretionary spending will remain fairly constant. That’s the broad generalization. However, it’s important to understand the diversity of actual conditions that exists across public entities. For example, two states and the District of Columbia have fully funded retirement programs while five states have between 30%-50% of their programs funded.
Obviously, those entities best able to support their mandatory payments are better positioned for expansion of operating budgets, while those at the opposite end will be more likely to look at program spending reductions and/or tax increases.
Looking at capital expenditures, the familiar priorities remain:
- Infrastructure replacement and construction
- Education facilities
- IT systems
Projects having a revenue-generation or private investment (public-private partnership, or P3) component will continue to draw greater interest as an alternative model for growing community infrastructure and social program capacity.
What kind of an impact do you think the major hurricanes this year might have on procurement trends or buying patterns?
In the affected states, there will be some carryover of recovery-related purchasing, adding to standard operating activities. Elimination of damaged structures posing a risk to public safety and debris removal should be substantially completed coming into 2018. However, ongoing remediation projects – road, infrastructure, facility repair or replacement - may add to “normal” procurement activities next year.
How important is it to local agencies to engage with the business community?
Engaging the supplier community early and often grows in importance the more complex the system, service or solution needed. Without understanding the current and near-future capacities of an industry, procurement diminishes its capacity to fully contribute to supporting achievement of agency goals. There are many ways to remain informed of industry developments, but communicating with the supplier community in an industry is a direct way to get diverse perspectives, commentary, and learn about industry leaders and innovations. For procurement practitioners, well-communicated and well-conducted RFIs provide a transparent approach to soliciting guidance from industry providers to better inform subsequent solicitation and contracting efforts.
How are local agencies helping to “level the playing field” for small and disadvantaged businesses?
Encouraging participation from small, disadvantaged, minority and veteran owned businesses continues to be a priority for many agencies, as they are attractive from both political and local economy perspectives. While these programs sometimes include “Doing Business with Government” sessions, the solicitation, response and award processes remain cumbersome and obscure for many small businesses and business owners. Simplification of the process and language is the barrier that agencies need the will and capacity to address to substantially support growth of their small business communities.
Engaging the supplier community early and often grows in importance the more complex the system, service or solution needed.
This article appeared originally in Onvia's 2018 State & Local Government Contracting Forecast. You can download a complimentary copy of the report below: