Public procurement isn't for the general public

Following the SOVRA Summit I attended last week, public procurement has been top of my mind. The differences between public and private procurement are so significant that they could be nearly described as entirely different industries. 

Public procurement operates under strict regulations and heavy scrutiny (no surprise there) because taxpayers fund the process and thus require increased eyeballs on where the spend is going. With public dollars at stake, governments tend to be more risk-averse in procurement spending decisions. In the 2023 fiscal year, the US federal government spent approximately $759 billion on contracts, while global governments allocated around $13 trillion in 2022.

For vendors, breaking into government contracting is no small feat. Winning bidders must comply with strict regulations, which may include workforce residency requirements, diversity quotas or specific liability provisions. The verification process alone can be extensive, often requiring significant documentation. These barriers to entry can be particularly challenging for smaller businesses that may lack the resources to demonstrate full compliance, potentially limiting their ability to compete for contracts. 

Historically, government initiatives have aimed to allocate a portion of contracts to diverse suppliers (e.g., minority-, veteran- and women-owned businesses). However, with recent shifts in political priorities and scrutiny of DEI initiatives, the extent to which these policies influence bid awards remains uncertain.

If you’re navigating the complexities of public procurement, book some time to chat with us here. Our analyst team is always happy to help. 

— Mia Klein, Associate Research Analyst