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Sabastina Ellingsworth
Narkon and Lancaster
Principles of Public Procurement
4 June 2018
Critical Issues Facing Public Procurement Organization
Procurement is at the heart of every business organization, and it plays a major role in
providing quality services to the public. The procurement job has evolved from a primarily
administrative function to a strategic role within the organization. Public procurement includes,
“the process of acquiring goods, works and services involving the use of public money to
accomplish specified public purposes, beginning with the identification of a need and ending
with completion of the contract” (Thuo and Njeru). Procurement departments are faced with
numerous challenges. However, the three critical issues public procurement organizations face
are the aging workforce of the baby boomers who are eligible for retirement, which impacts
knowledge retention, the budgetary limitations placed on public procurement employers, and the
lack of involvement of Chief Procurement Officers (CPOs) in strategic level decisions. This
research paper will elaborate on the impacts of those limitations on public procurement
organizations and will provide some recommendations that could help solve these issues.
Knowledge and skills retention should be a pressing concern for many public
procurement organizations. Within the government sectors, the baby boomer effect is very real.
That is due to the aging workforce in these procurement fields and others. The potential for
losing critical knowledge and skills is high. Baby boomers, as described by National Association
of State Procurement Officials (NASPO), “are all those born in the United States between 1946
and 1964” (2). The significant numbers of boomers eligible for retirement exceed the number of
younger replacements which are available within public sectors. “The percentage of older
workers (defined as those age 45 and older) in the government workforce increased by 7.3%
between 1994 and 2001 to 46.3%” (NASPO 2). With respect to NASPO’s point, Arlene Dohm is
an economist in the Office of Employment Projections, Bureau of Labor Statistics, pointed that,
“of the 25 million people projected by the Bureau of Labor Statistics (BLS) to leave the labor
force between 1998 and 2008, 22 million will be aged 45 years or older and thus will be leaving
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mostly to retire” (17). As these numbers of baby boomers are reaching retirement, the impact of
knowledge and skill loss will be felt by the public procurement organizations.
Many of the baby boomers working in the public sectors today have leadership positions,
specialized skills, experiences, or a long occupation in the organization. Upon exiting the
workforce, these baby boomers often take valuable knowledge and experience with them
resulting in an organization losing its key employees, knowledge, and skills. Additionally,
retaining of these pieces of knowledge, skills, and experiences, and passing them on to the
younger generations or millennials becomes difficult sometimes. This is because the younger
workforce has changing work patterns and is more mobile than baby boomers’ generations. This,
however, creates a further need to have knowledge retention and transfer processes in place.
As the baby boomers begin to retire or exit from the procurement professions, the public
procurement organizations will need to retain those desired qualities such as general office skills,
communication, writing skills, and the ability to comprehend procedures and implement policies.
The vacancies created by the boomers’ retirement would require the public procurement sectors
to recruit qualified millennials or candidates to fill those vacancies; however, finding and
recruiting qualified millennials or candidates with the right skill sets for the job is a challenge for
public procurement organizations. NASPO mentions that “finding qualified employees with the
right skill sets—including knowledge and capabilities relevant to the current procurement
environment—is part of the challenge” (6). The procurement field in the public sector requires
skills such as excellent communications skills; thus, the person must be a good writer, presenter,
negotiator, and customer service representative. Other skills also include good analytical skills
and the ability to interpret changing laws regarding public contracts.
Recruiting candidates with no skills or fewer skills could impact organization’s
performance resulting in poor delivery of services, dissatisfaction from the public, a high cost of
expenses, and poor quality of products and services. For instance, some fresh young graduates
entering the workforce may lack work ethic, professionalism, and experience pertaining to the
job requirements. Professional practices such as good writing and communication skills and
professional work appearance are some of the things procurement employers and other
employers look for in candidates.
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Furthermore, not only does unprofessional practices badly disrupt operations, it can also
damage organization’s reputation. Marian Tukuta and Fanny Saruchera argue that
“unprofessional practices can badly disrupt operations in the receiving firms as well as damage
relations with its customers downstream.” Employees represent their organizations; any
unprofessional attitudes can damage the firm’s reputation. For instance, fragments and
abbreviations are not acceptable in professional business writing and emails. Some millennials
are struggling with the reality of professional writing. Another example is an email sent to an
organization’s clients or a superior requires being written in full sentences for easy
understanding. Sadly, some millennials are accustomed to the shorthand of texting and informal
writing on social media, and they take this with them to work. Similarly, there are millennials
who may lack professional work appearances. For example, some millennials may have
difficulty showing up to work on time and may dress inappropriately for work. Professionalism
helps to eliminate most potential problems arising within the procurement industry such as
unprofessional attitudes, unnecessary expenses, and delays.
Another daunting challenge for public procurement organizations are the budgetary
limitations. Many of the organizations work within federal budgets. These budgets, however,
affect many procurement employers in federal, state, and local agencies in hiring newly qualified
millennials or other candidates. “Because of budgetary limitations, many states have enacted
hiring freezes or other restrictions in an effort to contain costs, creating a potential roadblock for
recruiting new employees” (NASPO 5). There are high costs involved in recruiting and training
qualified employees to fill the vacancies created by retiring baby boomers. Some of the costs
involved in the hiring process are the costs related to advertising, recruitment, orientation,
signing bonuses, relocation, and training.
It costs an employee’s or a retired baby boomer’s salary to replace that candidate. For
instance, when public procurement organization’s baby boomers are constantly leaving for
retirement, the procurement employers will be forced to spend the equivalent of over two
months’ worth of salary just to find someone qualified to replace them. “Replacing a key person
on organization’s staff will cost two times that person’s annual compensation and highly skilled
professionals could easily cost four to five times their annual salaries” (Kaye and Jordan-Evans
3). Public procurement employers’ hands are tied to the budgetary limitations resulting in losing
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qualified candidates or millennials to the private sectors due to their inability to hire those
candidates and harder to retain these pieces of knowledge and skills.
There are millennials with the qualifying skills to work for the federal government, state,
or local agencies, but budgetary limitations have led to the enactment of hiring restrictions
resulting in creation vacancies and the inability of baby boomers to pass on their knowledge and
skills. When the government or states enact hiring freezes due to the budgetary limitations, it
makes it hard for procurement employers to hire the qualified younger generation that is looking
for jobs. NASPO pointed out that “the number of younger workers (under age 35) is smaller
within the government workforce as compared to the private sector” (2). These have resulted in a
limited number of qualified younger workers or millennials working in the government sector.
This, in effect, has created an opportunity for the private sectors to hire the millennials
possessing the required skills.
Finally, Chief Procurement Officers (CPOs) in the public sector are not included in
decision-making processes involving procurements. This has resulted in late contract deliveries
and poor customer services. A survey taken by Richard Nixon, a partner, KPMG in the UK,
mentioned that “many procurement functions still do not operate at a strategic level within the
context of their wider organizations and – as a result – are neither recognized nor delivering as a
true partner to the business” (5). Most of the strategic decisions involving procurement are taken
by the top officials like governors or mayors without the involvement of the CPOs. For example,
mayors’ or governors’ decisions to contract a bridge or repair a road eventually lead to the
contracting process. All decisions involving the contracting process are contracted by the mayors
and governors. Often, those responsible for the procurement or contracting function become
aware only late in the planning stage.
According to Thomas H. Davenport and Lawrence Prusak, knowledge is “a fluid mix of
framed experience, values, contextual information, and expert insight that provides a framework
for evaluating and incorporating new experiences and information.” Most CPOs in the public
procurement sectors possess specialized skills and the technical know-how of a contract project.
Exempting them from the strategic decisions can result in poor performance or delayed
deliveries. Demel, et al. confirms by saying, “When skilled, professional procurement is buried
within an organization and disconnected from the decision-making process, key business
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opportunities, efficiencies, and full value for money may be lost” (5). The CPOs have become
order takers and not decision makers. This is because decisions are taken from the top officials or
strategic level, and many CPOs find themselves tied up managing issues related to too many
suppliers, off-contract purchases or varying price points, and missing the opportunity to deliver
quality end results.
Experienced employees know a lot of things. “As the age of the labor force increases, a
greater number of people will leave the labor force due to death, disability, or retirement” (Dohm
17). This will affect the public procurement organization because when an organization faces
extensive loss in their workforce due to aging and retirement, they have a lesser control over
potential knowledge and skill loss. To retain these pieces of knowledge and ensure efficiency in
the workflow of the organizations, the following recommendations could help solve or limit the
above mentioned critical issues.
First, an opportunity for the procurement professionals or CPOs to participate in
discussions of major initiative decisions would permit them to think of all the supporting contract
activities that should begin to support the rest of the government’s efforts. Demel, et al. added,
“procurement’s inclusion on a public entity’s leadership team ensures procurement strategies are
aligned with organizational goals and enables procurement to proactively identify and capitalize
on opportunities that improve operational and financial outcomes” (5). Increasing the span of
control of the CPOs would generate efficient and effective results. “States organizations have
become smaller and more flat, eliminating multiple authority levels and increasing spans of
control for supervisors” (NASPO 7). Therefore, eliminating the bureaucracies in the public
procurement organization and allowing flexibility in the span of control can bring out the best in
the CPOs to deliver quality and save costs at the same time. It can also pave the way for the
involvement of the CPOs in strategic decision making.
Second, to fill the future gaps that would be left by the baby boomers’ retirement, or stop
the outflow of the expertise from retiring, the public procurement manager should have a
knowledge-transfer, or talent-management plan, or strategies in place. These strategies may
include bringing back recent retirees on a short-term contract to train new staff, or the
organization could be rehiring the retirees and offering them a part-time position to help train the
newly hired employees. Society for Human Resource Management (SHRM) says, “differing
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work situations with greater flexibility are needed to retain older workers, who may prefer part-
time hours, the ability to work from home, and phased retirements, where retirement occurs
gradually over time.” In the retention knowledge transfer efforts between boomers and
millennials, there will always be the challenge that some of the best expert knowledge is implied,
which will have to be expressed and verbalized to be of value to millennials. Therefore, offering
baby boomer retirees the flexibility to work as part-time workers can help retain the knowledge
and skills for a period.
Finally, some of these millennials want to work but lack the skills for the job. “Nearly
half (46 percent) of young adults responding to the survey said they lacked the education or
training necessary to get ahead in their jobs or careers, a number that could reflect Millennials’
awareness of the fast-paced change inherent in a knowledge economy” (Brack and Kelly 9). To
help these millennials attain those skills and develop in a career and interest in the public
procurement field, the employers should work directly with nearby colleges and universities to
develop a public procurement curriculum at those institutions. Those managers together with the
school authorities can offer summer internships in their offices for students enrolled in those
programs and could hire them when they graduate. By offering the internship programs, it will
introduce the millennials into a real-life work experience. It will also provide them with
professional work experience they needed. Public procurement employers can also offer
professionalism ethics or soft-skills training like how to assimilate into a new workplace culture,
how to work with team members diplomatically, how to process feedback, how to approach a
supervisor for coaching and mentoring, and how to set long-term career goals are other ways to
get the interest of millennials in this work.
I would, therefore, like to conclude by saying that even though the public procurement
institutions face critical issues as mentioned above, their presence is necessary for every business
entity since they help in ensuring better utilization of funds, improve customer satisfaction,
negotiate as well as administer the best deals in businesses and many more. There is however not
enough qualified younger workforce in public institutions hence leaving the work of
procurement activities to be handled by baby boomers. Therefore, there is the need to ensure that
every public procurement employer creates an avenue to enable them to hire younger workforce
as more baby boomers are reaching retirement.
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Executive summary
The role of public procurement in government organizations is to obtain quality
commodities, constructions, and services to support an effective and efficient government, and
ensuring the prudent use of public funds. Public procurement professionals add value to every
government program by providing efficient delivery of products and services, obtaining best
value through competition, and offering fair and equitable competitive contracting opportunities
for suppliers. The retirement of the baby boomers in the organizations is having a huge impact
on employers.
Public procurement managers are facing major recruitment and retention challenges
because public procurement is in a state of transition. These significant challenges are created by
older workers (baby boomers) eligible for retirement, retention of loss knowledge and skills, and
the lack of involvement of the procurement professionals in strategic level decision makings.
NASPO pointed out that “as of 2002, 46.3% of government workers were 45 years of age or
older as compared to just 31.2 percent of this demographic within the private sector, especially in
occupations that require specialized skills, education, and training” (2). As vast numbers of baby
boomers prepare for and enter retirement, public procurement organizations are at huge risk of a
brain drain and a massive loss of intellectual capital.
Seeing this risk, employers in the public procurement organizations are beginning to
explore various creative means to capture and transfer older workers’ knowledge to the younger
generation. Retaining the younger generation (millennials) in the workforce is a good way to
pass on the knowledge and skills lost. Procurement employers will need to retain the currently
desired traits such as general office skills, communication and writing skills and the ability to
comprehend procedures and implement policies. Procurement employers should provide summer
internships for college students interested in the procurement field to help gain experience. Since
some baby boomer retirees seek part-time positions within the private sector, offering a part-time
position for the retiree boomers to train the newly hired workers would be another way of
restoring the knowledge lost.
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Works Cited
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Davenport, Thomas H and Lawrence Prusak. “Working Knowledge: How Organizations Manage
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