February 2019 SLED Analysis: Emerging Trends in State and Local Purchasing

Posted by Paul Irby on March 4, 2019

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GovWin’s research staff of more than 100 state, local, and education (SLED) and federal market analysts provide in-depth research reports, timely articles, webinars, presentations, and consultations to help clients build business development plans and navigate the government market effectively.

In this month’s focus on SLED research we present highlights from a special feature article on emerging trends in state, local, and education government purchasing. The full version of that article, written by Mary Scott Nabers, president and CEO of Strategic Partnerships, Inc., was included in GovWin’s recent research report, the State and Local Procurement Snapshot for Q4 2018.

 

 

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The New Year promises to be extremely interesting - one that is likely to be filled with transformational changes. Government contracting will morph or evolve in multiple ways in 2019 and contracting firms should monitor the changes carefully.

The total volume of opportunities and dollars spent with private-sector companies will continue to grow in 2019. But procurement processes appear to be changing rather significantly as a result of population growth, crumbling infrastructure, the decreased availability of public funding, a digital technology explosion, and an alarming decline in public confidence in government.

Governments are Looking for New Ways to Make Purchases

One change occurring at the federal level bears watching because it may impact state and local government contracting. Five federal agencies have been approved by Congress to experiment with a type of simplified acquisition process known as Other Transactional Authority (OTA). This is a procurement pilot initiative with the objective of encouraging nontraditional defense contractors to propose innovative technologies that are not bound by traditional contracting rules. The OTA acquisition process encourages more traditional defense contractors to participate as well. It is important not to confuse OTAs with standard procurement contracts, grants, or cooperative agreements – this is something entirely different. The initiative is designed to incorporate innovation, speed, and flexibility into the procurement process. Early positive reports indicate that procurement changes could be in the making. If true, those changes could surface at other jurisdictional levels of government.

Because public officials in cities, counties, and school districts are facing critical issues related to outdated infrastructure, limited budgets, and inadequate procurement staff, the potential of OTA contracting is attractive and there is talk about the possibility of using OTAs at the local levels of government. Whether or not approval for OTA use becomes allowable at other levels of government, solicitations that tend to mimic OTAs are anticipated in 2019. These solicitations will be released as RFIs, or Requests for Information, but the objective is the same – public officials are seeking private-sector input, innovation, and assistance. Procurement officials want quicker, less rigorous, and less complicated procurement processes.

The “Digital Explosion” Will Affect All Areas of Government

It’s hard to imagine a procurement in 2019 that will not include technology as a component. The question “what government functions make the most sense to adopt newer tech solutions?” has shifted to “what functions are left that still haven’t become digital?” In recent years we have seen the introduction of custom software and digital systems into formerly “blue collar” or non-digital areas of government services, from parking garages to building permits to social services. Artificial Intelligence (AI) has become more common, the Internet of Things (IoT) is now the basis for thousands of municipal procurements each year, and blockchain technology offers all kinds of desired transparency benefits and digital data solutions. All of these will be in high demand in 2019.

Greater Transparency Will be Increasingly Required

There will be a major focus on transparency in the coming year. That’s based on a decline in public trust of government in general. A recent National League of Cities report indicates that public trust dipped considerably over the past year. While discontent was highest at the national level of government, few jurisdictions were untouched. There were reports of indiscretions involving Federal Emergency Management Agency (FEMA) contracts in Puerto Rico, Health and Human Services Commission (HHSC) contracting issues in Texas, bid-rigging in New York, and contract oversight failures in school districts.

Although staffing, funding, and inexperience all were factors contributing to these problems, the decline in public trust has caught the attention of elected officials and that will impact what happens to government contracting in 2019.

State Revenue Gains Are Encouraging

Thanks to the stronger economy, a majority of states collected more tax revenue last year than in years past. At least 40 states beat revenue projections in 2018 – a record not achieved since 2006. The hope would be that these increased revenues could be used for procurement, but many state legislators are more interested in shoring up rainy day funds. Still, the presence of additional funding can be seen as a positive factor.

Expectations for State and Local Purchasing

Despite the uncertainties, there is a lot of potential for growing sales and deepening relationships with public sector clients by offering to help meet some of these needs, understand these pressing issues, or fit into the new emerging requirements. The SLED marketplace is expected to remain healthy in 2019, and provide enormous opportunity for the broader universe of contractors.

Interested in reading the full special feature from Mary Scott Nabers, plus a comprehensive look at the key takeaways, trends, and market developments from Q4 2018? Download your free copy of the State and Local Procurement Snapshot for Q4 2018. Or to read more of the analysis produced by both our SLED and Federal Market Analysis teams, simply click on this link.

It’s easy to learn more about current procurement opportunities and research in the GovWin IQ SLED database – often before the contracts even go out to bid. Not yet a subscriber? Learn more about Deltek's GovWin IQ service by clicking on the link below.

 

 

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