Maximizing Results through Effective Competitive Procurement
July 12, 2021
by John M. Pellegrino, Director, Contracting and Procurement, San Diego County
When your organization needs to buy goods and services there is one word that should immediately come to mind: “competition”.
So-called “full and open competition” is a powerful approach to procurement which not only helps ensure that you can obtain the best value on the initial contract award but motivates effective performance throughout the contract lifecycle. The latter is a benefit that’s gained when contractors know that if their performance falters, the organization can potentially choose to not exercise options, terminate for convenience, and re-procure early.
Competition keeps everyone on their “A” game … first in order to win an award; and then to continuously perform. If you think about the way you buy goods and services for your personal needs, with your own money, you undoubtably use some type of competitive analysis. Though it’s not a formal or documented process, that generally takes place, whether it’s by comparing products and services on the internet or as you comparison shop products and prices in stores before you make a purchase.
This blog post will discuss the three critical steps to maximize your results and create an equitable and diverse competitive environment, which leads to effectively spending taxpayer dollars for the goods and services needed by the government. Governments in the United States spend about $2 trillion for public use, therefore doing it well is of utmost importance.
Effective competition begins with defining exactly what you want to buy, with reasonable specifics about performance expectations and results. Without this critical first step, you may find that your purchase was not what you needed or expected to effectively support your mission.
Most important, without first clearly defining your requirements and expectations for a contract, your ability to obtain the best value for goods and services available in the marketplace (including the best features and performance, timely delivery, and pricing) is diminished.
The second critical step is ensuring that you are soliciting proposals from the full marketplace. This is equally important as knowing precisely what you want to purchase, since products, services, and contractors are frequently changing, especially during this uncertain economic business environment caused by the pandemic.
This process requires conscious effort by government buyers to maximize their outreach to potential providers and contractors and make best efforts to make the largest possible marketplace aware of solicitations. It simply doesn’t work to assume that providers and contractors will come to you to submit proposals/offers without real effort to make sure they know you’re attempting to make a purchase.
With that in mind, one proven practice to maximize results is to not only post your solicitations, but also to actively advertise within the communities and marketplaces that may have resources to meet your needs. Robust community and marketplace outreach of potential opportunities serves to ensure equity of access and diversity to public contracting awards, which can strengthen local business economies.
Over the past few years, in San Diego County, we have established and frequently review a “depth of competition” metric, which is a measure of this outreach effectiveness. Our goal is to obtain at least three or more proposals/offers for all solicitations. These outreach efforts include ensuring that our solicitation requirements and process allow for full and diverse contractor participation – small, veteran, minority-owned, and non-profit firms, in all cases reaching contractors from the communities that they serve.
That leads us the third critical step – continuing to use a competitive process for subsequent awards which provides motivation throughout contract performance. To be effective, your contract awards should be structured to allow for renewal options and termination for convenience. The ability to termination for convenience allows the government to end the contract without a specific cause or reason. These two options allow the government to re-compete early in situations when it may be in the best interest to do so.
This allows for continuous performance motivation since contractors know that the government has options in the event that results are not achieved, service or performance becomes diminished, or more effective methods become available which are not being implemented by the current contractor. Knowing that the government may re-compete a contract early helps ensure that contractors keep focus on their performance. This is bolstered by their knowledge that inadequate past performance may lessen their ability to receive future awards.
In summary, using full and open Competition as a primary procurement tool is simply good business. Establishing clear requirements, consideration and robust outreach of the current marketplace, and structuring contracts with terms that support continued focus on performance are three critical elements in the quest to help governments acquire needed goods and services at the best value.
Effective procurement is simply common sense. Many of us do it unconsciously every day as consumers. However, when using public funds, it must be done consciously with reasonable forethought and structure in order to document that taxpayer dollars are spent wisely.