Organizing the Public Purchasing Function: A Survey of Cities and Counties.

As a number of state and local governments explore new ways to reduce costs, provide flexibility to service delivery managers, and integrate their decision-making processes, many are examining their purchasing function as a potential area for increased efficiency.

It is commonly believed that changing the purchasing process in government can generate substantial cost savings and contribute to overall efficiency by reducing red tape, providing service delivery managers with flexibility, and eliminating the number of reporting channels necessary to procure goods and services. As a number of state and local governments examine their purchasing departments, a common question that arises is: Should the purchasing function be centralized, decentralized, or should a modified purchasing structure be applied?

A central purchasing authority has long been believed to ensure purchasing integrity, fix accountability, and provide for the efficient transition of goods and services between the supplier and the consumer. Further, a central purchasing authority was desirable to limit the power of the agency, to assure professionalism, consistency and accountability in the conduct of public business, to provide for maximum procurement planning, to standardize the purchase of commonly used goods and services, and to link diverse agency needs in order to take advantage of economies of scale.

Recently, the centralized purchasing paradigm has been challenged by the decentralization paradigm. Under the auspices of the "Reinventing Government" movement, many contend that purchasing, especially in government, must be decentralized in order to provide more responsive support to end users, eliminate unnecessary and procedural obstacles to program flexibility, improve inter-departmental coordination, and empower service delivery managers to procure what they need without impediment by a centralized organization.

The federal government's re-engineering process initiated substantial changes in Federal Acquisition Regulations that provide more authority to program managers to procure needed goods and services. On the state and local level, the National Institute of Governmental Purchasing (NIGP) reported in 1996 that only 40 percent of the respondents to its annual survey considered their government purchasing authority to be centralized (A Report of Procurement Practices, 1996, NIGP). In 1999, the Center for Advanced Purchasing Studies revealed that 39 percent of survey respondents reported centralized purchasing responsibility (Purchasing Performance Benchmark Survey of American Municipalities). Thus, it appears that the traditional model of centralized purchasing may not represent what is found in practice.

The purpose of this study is to identify the patterns of change occurring within local government purchasing. While definitive answers are difficult at this stage of the research regarding which organizational form is best, the findings give rise to questions regarding factors that influence organizational change. Specific areas examined include the structural arrangements of local government purchasing, who is in charge and under what title, and what are the responsibilities of purchasing professionals when executing the purchasing process in governments. In addition, local government chief purchasing officers were asked to identify trends in the next decade that will impact the purchasing function in government.

Study Design