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Purchasing As A Service Organization In The Public Sector

Author(s):

John L. Balentine, C.P.M.
John L. Balentine, C.P.M., Purchasing And Contracts Administrator, Washoe County Purchasing, Reno, NV 89520, 702/328-2280

84th Annual International Conference Proceedings - 1999 

Abstract. During the last quarter century, the purchasing function has been undergoing a profound change. It started in the private sector, but the momentum of the change has overtaken the public sector. This all-encompassing change is the transformation of the purchasing function from a "Police Department" to a Service Organization.

Background. The laws, rules and regulations proscribing the purchasing function in the public sector are many and varied. These laws, rules and regulations, cover everything from the dollar threshold at which commodities or services must be formally bid to specific dollar "set asides" for small, minority owned or disadvantages businesses. The laws, rules and regulations can include buy-American and/or buy local preferences; specific exemptions from bidding requirements and exactly how a "responsive and/or responsible" supplier is determined. Additionally, public sector purchasing departments are charged with "guarding the public trust" as their primary function.

This charge of "guarding the public trust" has been traditionally interpreted to mean enforcing the laws, rules and regulations. Consequently the "police department" mind set in the purchasing department.

Into the early 1970's this "police department" mind set in purchasing was also true in the private sector. However, with the ending of the war in Viet Nam vast changes swept the American economy with the shift from a significant war time economy to an almost total peace time economy. Also, increased competition from a uniting Europe and the Pacific Rim Nations lead by Japan, put pressure on American businesses to re-think their processes. A comprehensive re-thinking of the business process, with a tremendous emphasis on "quality" was the result.

The Opportunity. With the re-thinking of the business process came the inevitable questions: What is purchasings role? Where does it fit? Does it fit? What needs to be added/changed/modified/deleted to better support the "cleaner, meaner, quality oriented" business process? From those (and other) tough questions came the hard answers. The purchasing function had to make some fundamental changes. Most notably a change in mind-set. The thinking process change was from "clerk" to "analyst" at the buyer level. The manager/department director level's mind set moved from tactical to strategic. With that basic thinking change, a whole new vista opened, the vista of "service".

Purchasing has, and continues to be, a support function. As such it provides a vital service to its organization, whether that organization is in the private or public sector. However, as is true with most changes, the public sector is the last to change.

Today And Beyond. With the model of private sector business, the public sector realized that changes must be made. It became popular (and still is) to hear "government should be run like business". While there is much the public sector can learn from the private sector, and there will always be "carry-over" from one sector to the other, business is business and government is government. They are, and will remain, fundamentally different in purpose, scope and function. However, a common denominator of both business and government is service. Service to the customer; service to the citizen.

With the realization that "service" was a major function of government, the purchasing and materials management departments and divisions began to make the transition from "police departments" to service organizations. However, it should be noted that throughout the transition, the purchasing function has been, is, and continues to be charged with "guarding the public trust". So the service aspect must be balanced against keeping the public entity legal in all of its acquisition and disposal transactions.

The purchasing function has had to embark on an extensive educational and training campaign within its entity to familiarize the other departments, divisions and agencies with what is required, legally and ethically when purchasing within the public sector. Some decentralization of the purchasing function resulted with the issuance of "limited purchase orders"; "local purchase orders"; "special purchase orders" and even the issuance of procurement cards.

New and innovative procurement techniques have been tried and instituted in the public sector: partnerships; stockless warehouses; guaranteed buy-backs; blanket purchase orders; cooperative purchasing; JIT; and some extent M.R.P. with "service" being the watchword along with the responsibility of "guarding the public trust".

The purchasing function's transformation from a "police department" to a service organization is not an overnight process. Depending on a great variety of circumstances such as the size of the entity involved, the willingness and readiness for change, the support of top management, the depth of involvement of the employees, the support of any employee associations and/or unions and the mood of the citizenry, the transformation may be painfully slow or relatively rapid. But happen it will.

Epilogue. Some organizations in the public sector seem to be able to adapt to change with great alacrity, even grace. Other must be pushed, prodded, even drug to the point of the change. Time, though, marches on. All will eventually make the change and once the change from a "police department" to a service organization has been fully accomplished and accepted, from the new vantage point, all will wonder "how did we ever do it the old way, and why did we do it that way for so long??"

For those public sector purchasing operations that have made the change - congratulations!

For those in the process of making the transition - keep at it! It's worth all of the pain and difficulty. And for those just starting into the transition process - it really isn't as daunting as it seems. One step at a time, in an orderly process, and you'll soon be there. The sooner the process is begun, the quicker it will be completed and you'll begin to reap the full benefits of purchasing as a service organization in the public sector.


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