Inefficient procurement costs government billions

Frontline Solutions, August, 2004

Whereas the private sector has focused much of its supply chain strategy on reducing the cost of goods, government agencies have made satisfying procurement regulations their top priority--at a cost of billions in wasted tax dollars.

A study of 250 federal, state, county, local, and defense agencies by Aberdeen Group found that despite 10 years of procurement and contracting reform, government procurement operations require further streamlining and more aggressive adoption of supply management automation.

Less than half of public sector managers cited reducing prices paid for goods and services as a goal of their procurement operations. Even fewer were concerned with reducing employment cost of procurement operations.

The problem isn't being ignored, though. About 60% of respondents reported that their agencies have increased the emphasis on procurement and supply management operations during the last five years. Simultaneously, 40% of agencies reported that their cost reduction targets have increased in the past year.

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www.aberdeen.com