Public-Sector Procurement Reform: A Smarter Path Forward

Across the country, state and local governments are embracing procurement reform, ways to contract for goods and services faster, smarter, cheaper and more equitably. These efforts are often triggered by executive mandates, high-profile failures or well-intentioned modernization campaigns. But regardless of the entry point, success depends on getting one thing right at the outset: clarity of purpose.

Having served as director of the California Department of General Services (DGS), I’ve seen firsthand how complicated, but essential, procurement reform can be. I commend any administration or agency willing to take it on. But before we race to rewire our systems or rewrite the rules, we must ask a fundamental question: What's the problem?

Too often, “procurement reform” is treated as a catchall solution, but the term lacks precision. Is the problem that procurement takes too long? That it costs too much? Are the products or services the state buys failing to meet agency needs? Can we do a better job fulfilling our small business and Disabled Veteran Business Enterprise (DVBE) targets? Should we make the process more fair, competitive or transparent?

The honest answer may be all of the above. But if everything is the top priority, nothing really is. That’s why a successful reform agenda must start with clarity — not just about what we want to fix, but which goals we prioritize in different contexts.

COMPETING PRIORITIES IN PROCUREMENT

Procurement inevitably involves trade-offs. And the order of precedence among the following values will differ depending on the project:

• Speed: How urgently do we need this good or service?
• Cost: How important is minimizing upfront or life cycle expense?
• Quality/Functionality: Will this solution meet end-user needs, integrate with existing systems or require future customization?
• Policy Alignment: Does this purchase support the broader goals of the state (e.g., climate, equity, accessibility)?
• Competition/Transparency: Are we ensuring a fair process that brings in the best ideas and vendors?
• Small Business/DVBE Participation: Are we using our purchasing power to support economic inclusion?

All of these are good and valid goals. But each procurement requires an intentional decision about which goals come first.

EXAMPLES FROM PRACTICE: MATCHING THE PROCUREMENT APPROACH TO THE PRIORITY

We’ve seen different approaches to procurement depending on the type of good or service being purchased and the policy goals in play. Here are several examples from California that demonstrate how the order of priority can and should shift.

• Cost: Pharmaceutical Collaborative — When DGS led Gov. Newsom’s Pharmaceutical Collaborative, the central focus was lowering the cost of high-cost drugs for state purchasers. Our top priority was achieving cost savings — whether through strategic sourcing, volume-based pricing, or identifying generic or therapeutic substitutes in place of expensive brand-name drugs. In this case, cost was the driving factor, and we designed our procurement strategy to pursue that goal without compromising therapeutic value.
• Functionality: WIC IT System — When the California Department of Public Health was developing the RFP for a new IT system for the Women, Infants, and Children (WIC) Program, we pushed hard to reduce the scoring weight for cost and increase the weight for functionality. This system was entirely federally funded and would serve millions of low-income women and children who rely on it for nutritional benefits. So, our primary objective was to ensure that the system was reliable and easy to use for families and providers. We understood that a slightly higher price tag was justified by the essential nature of the service.
• Policy Alignment: Fleet Procurement — In line with California's clean energy goals, we made the decision to restrict our sedan procurement contracts to only electric and hybrid models. We knew this would cost more, but the goal was to lead by example and also make it easier for local governments to purchase cleaner vehicles through our contracts. We opted for a multiple award schedule so that agencies had more EV and hybrid options to choose from.
• Speed: Pandemic PPE Purchasing — During COVID-19, speed was the top priority. We needed to move fast to secure critical supplies for frontline workers. That meant sometimes purchasing through non-competitive processes. But we didn’t compromise on quality. We only purchased N95 masks that met National Institute for Occupational Safety and Health standards, even if that meant paying more or restricting what we purchased.
• Small Business Participation: State Office Buildings — During Gov. Jerry Brown’s administration, DGS issued multiple RFPs for the construction of new state office buildings. At that time, one of our high priorities was to support small-business participation in public works projects. So, we incorporated clear requirements for meeting small-business participation goals in our RFPs, knowing that doing so might increase costs or extend construction timelines. But we scoped these impacts carefully and confirmed that the state could afford to support these goals within available budgets and schedules. Here, economic inclusion became a priority, and procurement was shaped accordingly.

Each of these cases had set parameters and prioritized goals, and procurement was structured accordingly. But in each case, we had to be transparent about the trade-offs: higher cost for better functionality, longer lead times for greater impact or limited competition for urgent delivery.

WHY THIS MATTERS EVEN MORE FOR IT PROJECTS

These considerations become even more important in large-scale IT procurements. These projects are inherently high-risk, high-cost and high-visibility. They affect millions of people, and they often involve multiyear development and integration timelines.

California's FI$CaL project is a telling example. The initial cost projections were higher than the budget that was ultimately approved. To secure funding, functionality was trimmed and the budget reduced. Over time, as agencies realized they needed more features, change orders brought the scope (and cost) back up to the original estimates. On the surface, this may have looked like a project overrun; in reality, it reflected how early-stage trade-offs were later reversed to meet real-world needs.

There’s a logic to that. Budget constraints, shifting priorities and operational feedback loops are part of any complex system implementation. The key lesson isn’t to avoid trade-offs — it’s to make them transparently, deliberately and with full understanding of their downstream impacts.

GETTING THE RIGHT PEOPLE TO THE TABLE

To navigate these trade-offs successfully, we need to involve the right stakeholders early in the process:

• End users who understand how the product or service must perform
• Funders who control budget and understand fiscal constraints
• Policy leaders who define how procurement supports broader state goals

Without these perspectives, we risk developing procurement approaches that are misaligned, misunderstood or unsustainable.

A CONSTRUCTIVE PATH FORWARD

Whether driven by a federal directive, gubernatorial initiative or internal strategic planning, procurement reform is gaining momentum across all levels of government. But to deliver on its promise, we need to bring clarity to complexity. We need to understand that procurement isn’t about chasing a single ideal — it's about managing trade-offs to achieve the best outcome for the public.

Let’s get clear about what problem we’re solving. Let’s be intentional about which goals come first. And let’s recognize that procurement, done well, is not just about buying things. Rather, it’s about aligning to policy goals, delivering outcomes and building systems that can deliver better outcomes at scale.

Daniel C. Kim is director of procurement for the Weideman Group. His 25-plus years of experience in state and local government includes serving as director of California’s Department of General Services under two governors, in executive positions at three counties, and as president of the National Association of State Chief Administrators.

A version of this story originally appeared on Industry Insider — California, which is part of e.Republic, Government Technology's parent company.