1 Public Procurement as an Instrument for Public Policy Implementation Session D10 Stephen B. Gordon, PhD, FNIGP, CPPO Tuesday, July 31, :15 AM – 12:30 PM

To paraphrase very roughly one of Jeff Foxworthy’s great phrases: “I don’t practice public procurement and contract management anymore, but I ‘use-ta-did’. I became a professor.” 2

3 History at the Federal, State, and Local Levels Why Procurement? Examples of Public Policies in the U.S. Implementation Methods Intended Results and Unintended Consequences Examples of Public Policies in Europe Wrap-Up Public Procurement as an Instrument for Public Policy Implementation

History in the U.S. Government System 4 Five key categories of policy that policy-makers at all levels of government have sought to implement through procurements of goods, services, and infrastructure: Protection of businesses within political jurisdictions Protection of certain industries Business development within demographic categories Non-discrimination against classes of people Promotion of sustainability and other social values

Any Important Categories Missing? 5 If so, which ones should we add to the list?

Why Procurement? 6 We’re talking big money and significant leverage. What else do procurement and contract management officials have to do, anyway?

Estimated Governmental Purchases of Goods and Services in Federal Government = $1.22 trillion State and Local Governments = $1.77 trillion Combined Federal, State, and Local = $2.99 trillion Percentage of GDP = 18.69% Source of first three statistics: Last statistic calculated using a guestimate of $16 trillion, based on the projections through October 2012 found in

8 Public Procurement Responsibilities Can and do conflict from time to time (duh!) In addition to implementing public policy as required: o Enabling clients to achieve their strategic results o Fulfilling minimum needs when that is sufficient o Optimizing LCC/value when that is the goal o Managing associated risks o Complying with applicable legal requirements o Reflecting the highest ethical standards o Treating all involved and affected parties equitably o Being as efficient as possible and practical o Keeping the politicians off-your-back o Not inviting IGs and auditors to zap you for non-compliance

Methods for Implementing Public Policy through Procurement 9 Include: Formal Methods  Mandates  Absolute Preferences  Percentage Preferences  All-Else-Being-Equal Preferences  Set Asides  Market-based (aggregated procurement) contract award incentives  Post-award contract award incentives  “Strings” Attached to Grants-in-Aid Informal Methods  Sometimes Legal; Sometimes Not  More Often than Not, Risky – Especially in Today’s World

Federal Grants to State & Local Governments Estimates in (In Millions) Budget Authority Outlays Mandatory7,3337,437 General Government7,7187,858 Grants688,961612,419 Discretionary126,241164,888 Mandatory562,720447,531 Source:

Results and Consequences 11 As members of the public procurement community of practice and research, do we know empirically: Whether, and to what degree, policy goals intended to be achieved through public procurement are being achieved through procurement? The externalities of the policies, both internally and externally? The overall cost/benefit of the policies? Do we (or policy makers) care enough to want to know the answers to such questions as these? If so, what are we doing to get these questions answered, or to help get them answered?

Policies being Driven through Public Sector Procurement in Europe 12 Examples include: Development of SMEs and NGOs Corporate Social Responsibility Sustainability, including Sustainable Development & Growth Equal Treatment, Non-Discrimination, and Social Inclusion Ridding Governments of Corrupt Practices Implementation Methods Results and Consequences

The European Commission’s Proposed Policy to Require “Substantial Reciprocity*” Across International Borders 13 Targeted at policies like “Buy American” and similar policies of other nations. Needless to say, the proposed policy is considered controversial. The European Commission (EC) “would be able to investigate whether other countries discriminate against the EU in public procurement tenders, or it would act if when Member State (MS) contracting authorities propose to reject international tenders.” “In both cases, the EC would seek to negotiate an opening of the target countries’ public procurement (PP) market, if the results of its investigation show no ‘substantial reciprocity’, i.e., lack of comparable treatment of EU suppliers. Only if this is unsuccessful would PP contracts in specific industry sectors be blocked to the third country or a financial penalty levied. Sanctions would be proportionate. (Source: Library Briefing, Library of the European Parliament, 08/05/2012, “EU International Public Procurement Policy”, located at

Wrap-Up 14

Contact Information for the Facilitator 15 Stephen B. Gordon, PhD, FNIGP, CPPO Program Director, Graduate Certificate Program in Public Procurement and Contract Management Old Dominion University College of Business and Public Administration Department of Urban Studies and Public Administration 2094 Constant Hall Norfolk, Virginia Office Telephone: (757) Mobile: (615) Office On LinkedIn