Reinventing Federal Procurement

Reinventing Federal Procurement Issue Summary

Every year, Washington spends about $200 billion buying goods and
services. That's $800 per American. With a price tag like that,
taxpayers have a right to expect prudent spending.

Our system presently relies on rigid rules and procedures, extensive
paperwork, detailed design specifications, and multiple inspections and
audits. It is an extraordinary example of bureaucratic red tape.

Like the budget and personnel systems, the procurement system was
designed with the best of intentions. To prevent profiteering and fraud,
it includes rigid safeguards. To take advantage of bulk purchasing, it
is highly centralized. But the government wrote its procurement rules
when retailing was highly stratified, with many markups by
intermediaries. Today the game has changed considerably. Retail giants
like Wal-Mart, Office Depot and Price Club are vertically integrated,
eliminating the markups of intermediaries. Federal managers can buy 90
percent of what they need over the phone, from mail-order discounters.
Bulk purchasing still has its advantages, but it is not always necessary
to get the best price.

There is little disagreement that federal procurement must be
reconfigured. We must radically decentralize authority to line managers,
letting them buy much of what they need. We must radically simplify
procurement regulations and processes.  We must empower the system's
customers by ending most government service monopolies, including those
of the General Services Administration.

As we take these actions, we must embrace these fundamental principles:
integrity, accountability, professionalism, openness, competition--and
value.