Five trends in government procurement for 2021 and beyond

There’s no question that the year 2020 brought significant change to the way we do business, particularly for those working in government. COVID-19 took its toll as U.S. state and local governments shed 1.3 million jobs and it’s predicted that state budget shortfalls will reach an estimated $555 billion. In addition to personnel and budget shortages, government procurement teams faced supply chains shortages as well as the need to uproot processes and digitize quickly (virtually overnight!). They’ve also needed to ensure that their efforts to support ‘Disadvantaged Business Enterprise’ (DBEs) are balanced and transparent as social movements like Black Lives Matter have made vendor awards and contracts all the more paramount to the cause. Change typically doesn’t happen as fast as it did in the last year—especially in government—but organizations adapted with lightning speed and government procurement is no exception.

So now is the exciting part, the silver lining hidden in the hurdles of a tumultuous year of change. As we march on, what are the adaptations that will stay? How will government procurement sustain business as usual as we limbo in a transition between in-office, paper-based processes and work-from-anywhere digitized workflows? From speaking with public procurement professionals every day and supporting their process changes throughout a year of COVID-19, our experiences have brought five trends to light—and based on what we’ve learned thus far, they’re here to stay.

1)Cost cutting decisions

Public procurement teams have, with no doubt, needed to do more with less. They demonstrated their strategic potential in the early days of COVID-19, proving they can be major decision-makers when it comes to cost cutting and budget reprioritization.

How? Finding cost savings through existing and re-negotiated contracts will be key. They’ll also need to consider the financial impacts of stopping, delaying or continuing projects. Planning reprioritization is another focus area as procurement will be responsible for reviewing current projects to ensure that they are aligned with the agency’s new priorities (with limited resources, agencies will surely be working on innovative ways to move forward). Lastly, budget reprioritization will be necessary to help their organization forecast spend and give managers visibility.

2) Telecommuting is here to stay

And why would we go back? We’ll start to see a transient workforce compiled of people and processes that are flexible and digital. A leading procurement software company ran a survey in April 2020 and found that 98 percent of procurement professionals had worked from home at some point during the pandemic, and 70 percent of respondents had already adjusted their processes to run bid openings and meetings virtually. As this transition continues and processes are made permanent, procurement teams will need to work closely with IT departments to support evolving work requirements.

How? Governments need to address legacy systems, giving procurement the opportunity to implement digital services and enable hybrid working models through the procurement of proper equipment, network access, software licenses, and even new benefit plans that better reflect this new way of working.

3) Efficiency and adaptability at light speed

During COVID-19, procurement teams had to adjust their processes to source goods and services as fast as possible amidst constantly changing conditions and supply chain disruptions—it’s quite clear that government procurement teams can embrace agility in a crisis. The trick now will be to sustain this because citizens and procurement stakeholders have come to expect the same kind of agility in all government processes and services (as explained by Deloitte).

How? The next normal of procurement will involve re-examining procurement processes, making them faster and more agile for the long-haul—not just in emergencies—to meet these new expectations from stakeholders and constituents. Procurement teams will need to run more bids more efficiently to ensure their agency remains faster, stronger and more productive even amidst budget reprioritization and resource cuts. Most will require procurement software tools that enable the entire procurement process from intake to contract award and management in order to do this effectively.

4) Procurement for social good

COVID-19 wasn’t the only historical event in 2020 shaping the future of government; during social justice movements like Black Lives Matter, citizens turned to their government for change. Procurement departments have the opportunity to promote social good by creating a level playing field for diverse suppliers.

How? Public procurement teams have the power to shape inclusive spending policies that actively enable greater and more diverse participation in public contracts. The Economist explains that joined-up thinking will be essential—such as linking procurement strategies to the small business loans in stimulus packages—to ensure that the economic impact of emergency investments extends beyond the crisis.

5) Data and AI

In a year of riveting change, it’s only natural that we start to see data and artificial intelligence (AI) emerge in public procurement, despite how contradicting that might sound to some. Procurement has always been a “jack of all trades, master of none” department, so they’re often expected to have expertise in everything. As a result, procurement agents may find that a lot of their time is spent on Google searching for templates, or on the phone with a peer from another agency to see how they’re approaching new categories. The future of procurement will involve more data-driven decision-making and even experimenting with AI and machine learning (a subset of AI that uses statistical techniques to give computers the ability to learn) in the procurement process.

How? Leveraging software solutions that empower procurement teams to access benchmarks and data insights from their peers can help procurement guide their internal clients to consider the right requirements, and apply other procurement best practices, like appropriate criteria weighting, to achieve a successful outcome.

Marching forward: innovate and adapt

COVID-19 may have forced businesses to lockdown and caused many people to work from home, but it’s also the driving force behind the accelerated digital transformation that has, in many ways, pushed government procurement on its inevitable path forward, albeit faster than anyone could have predicted.

This quote from MarketWatch puts things into perspective: “If history can teach us anything, it’s that pandemics have a long-lasting and severe effect on the economy. But there’s another lesson: Human ingenuity and adaptation march on.” And so, government procurement shall march on, embracing these trends and continuing to innovate into the future as we adapt and evolve workflow efficiencies and workspaces.

Omar Salaymeh is chief client and product officer at Bonfire, overseeing customer experience and the product roadmap. Salaymeh has worked with hundreds of procurement professionals to support their transition from paper-based processes to streamlined, digital operations. He believes procurement teams can be, and should be, strategic drivers within their organization and he is passionate about enabling those professionals for success with effective tools.