Five Ways Local Governments Can Use eProcurement

Increasingly, local governments are being asked to operate more like businesses in the private sector—nurturing innovation while adhering to strict budget mandates and embracing operational efficiency while at the same time keeping operations open and transparent.

eProcurement solutions are helpful tools for government agencies to reach these goals. Here we outline five ways local governments can use eProcurement for strategic gain.

1. Facilitate competitive bidding

eProcurement not only boosts efficiency in general but can facilitate the competitive bidding process.

Most local governments do the vast majority of their business with the private sector. Private sector contractors already have to deal with greater regulatory complexity and more lengthy proposals when bidding on public contracts, so having a smoother, easier procurement system can help, especially when market conditions make it even harder to attract enough bidders.

eProcurement may also help promote vendor diversity to ensure that contracted dollars are also supporting the agencies’ equity goals by streamlining procurement processes to reduce the transaction cost for vendors seeking to conduct business with the agency.

2. Strategic management of vendor contracts

Effective, proactive management of the multitude of high-value contracts can help municipalities achieve the best overall outcomes. eProcurement solutions provide the mechanisms to build, use, and monitor vendor contracts.

By providing a central contract repository, the software makes it easier to identify overlapping or conflicting terms, ensure continuing compliance, and identify the potential for volume discounts.

Additionally, local governments can strategically develop a list of the most important contracts that are coming up for renewal over the next couple of years and use that list to prioritize which of those should receive the most attention to try to improve the value they deliver.

3. Optimize basic procurement processes

Every organization seeks to grow efficiencies and lower overhead costs, and local governments are no exception. eProcurement solutions can be strategic tools to help municipalities optimize their procurement processes.

By streamlining the requisition and approval processes, helping bring more spend under direct control, making it easier for potential vendors to submit bids, facilitating the monitoring of vendor contracts, and building overall best practices, eProcurement is a powerful government asset.

4. Budget adherence

Budgeting in local governments is about more than finance. The annual operating budgets of cities and counties serve as their most significant policy documents and their annual operating plans.

Local budgets determine who gets what services, how much they get, and who pays. The hard work that goes into establishing annual budgets can be thwarted by unmanaged purchasing activities.

eProcurement solutions help enforce operational controls by incorporating workflows and rules to warn or even prevent requisitions from advancing if the amounts exceed the assigned budget category.

5. Managing construction and maintenance contracts

Construction and maintenance projects are notorious for running over budget and behind schedule, frustrating the best efforts of municipalities. eProcurement solutions provide a valuable control structure to accurately track project-related procurement costs as they move through the system from requisitions to purchase orders to invoices.

The software can provide real-time project budget management to identify the budget impact on the project or job before approval, so purchasers know whether there’s sufficient budget before committing spend.

If the eProcurement solution integrates with the government’s ERP or project costing application, the combination provides the insight, oversight, and control needed for effective project management.

There is room to improve

A recent survey of government agencies found that just 20% of agencies are making “significant use” of eProcurement systems. Given that research finds that such digital transformation enables typical procurement organizations to reduce process costs by 30%, there is ample room for agencies in the government sector to improve.

For example, a recent audit by the Oregon Secretary of State’s office shows that adoption of a statewide eProcurement system could have potentially saved the state more than a billion dollars if it had been in use during the last biennium.

Ready to learn more? Read how two municipalities, Reedy Creek Improvement District and the City of St. Johns are leveraging eProcurement to automate, streamline and improve their procurement processes.