Last week, our Spend Matters colleagues in the US held the first Procurement Technology Summit in conjunction with ISM (the Institute of Supply Management). The first keynote speaker in Baltimore was Anne Rung, who is President Obama’s appointed Head of the Office of Federal Procurement Policy – the closest there is to a US government “Chief Purchasing Officer” in effect.
Her formal title is actually “Administrator”, which is used for very senior roles in the US government, whereas in the UK that word tends to be used for less senior roles. (“You say Tomato” and all that!) She was introduced in Baltimore by Raj Sharma of Censeo Consulting, a firm that has worked with Rung and has generally done some great work in procurement and more widely in US governmental circles – more on Sharma to come here shortly, we suspect.
Rung has previously held various roles in the US public sector, with increasing seniority, including in the General Services Administration (which does operational centralised procurement in the US) and in the state of Pennsylvania – it was her success in these roles that brought her this White House appointment. I had a brief chat with her after the session, and she is very approachable and down to earth as well as being predictably smart. Clearly, her interpersonal skills and personality have been just as important in this role and in her successful career as her technical procurement skills.
Those behavioural skills are perhaps even more important here than in most CPO type roles. Rung is overseeing (in some sense) no less than $445 BILLION annual spend – no other procurement role in the world comes close to that. But she only has 13 direct staff in her department, and whilst she has some direct power (through issuing policy statements for instance), most of what she achieves has to be done through persuasion and collaboration.
That sphere of influence includes some 37,000 contracting officers, but the landscape is very fragmented and devolved both in terms of many different organisations and then in terms of how procurement is run within those organisations, which tend to be decentralised by nature.
The Office of Public Procurement was formed in 1974 with a goal to promote economy and efficiency. Just as in most major countries, public procurement in the US has had a fairly chequered history, with some major and well-publicised failures in areas such as IT and defence equipment. Rung also faces the problems driven by multiple systems, not just procurement but even email; one government Department had 21 different and incompatible email systems!
Rung focused much of her presentation on IT procurement – it was a technology conference after all. That super-category accounts for no less than $51 Billion annual spend. Again, the challenges will be familiar to many in the public sector in any country, starting with a lack of strong procurement capability. “Contractors tell me they are often surprised by what we ask for in tenders – and what we don’t” she says. There is endemic over-specification in the system. That’s not just in IT and she quoted the example of a 40-page specification for chocolate brownies (I hope they were amazing after all that)!
Buyers don’t talk to the supply side enough throughout the procurement process, and “we constantly fight against the tyranny of complexity in the Federal space” – that’s both market and internal complexity. There were other horror stories too; the Air Force “found” thousands of PCs in stock that had been forgotten whilst new machines were being bought.
Lack of good data and information was another problem; buyers had no real visibility of what was available in terms of contracts that they might be able to use, for instance. The lack of data, as we might all expect, also leads to considerable price variability across organisations, and the sort of press stories most governments have had to face – the “$100 flash storage” device that is $10 in the shops.
So, that was quite a list of challenges, although Rung also seems to have kept her sense of humour through her years in this role. And in part two of our report we will look at the actions she has taken, and is taking, to address those challenges and move US government procurement in the right direction.