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Public Purchasing

Public Purchasing. Marketing 3860 – Purchasing August 4, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations Management Middle Tennessee State University. Gov’t Purchases 1933-2000 ($B). Trends in Public Purchasing. Centralization Privatization or outsourcing

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Public Purchasing

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  1. Public Purchasing Marketing 3860 – Purchasing August 4, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations Management Middle Tennessee State University

  2. Gov’t Purchases 1933-2000 ($B)

  3. Trends in Public Purchasing • Centralization • Privatization or outsourcing • Commercial practices • Government purchasing cards • Contract types • Electronic procurement • Environmental and investment recovery

  4. Characteristics of Public Purchasing • There is a premium on long-term planning, because extra-budget increases are not likely. • A large portion of purchases are handled by non-purchasing professionals. • Savings from purchasing estimated at $108 B over a five year period. • Budget dominated by services (62%)

  5. Characteristics of Public Purchasing • Gov’t purchasing law requires contracts to be awarded to lowest “responsible” and “responsive” bidder. • Budgetary constraints make spot buys difficult. • Supply base growing • Greater support of public service programs (i.e., MWBE)

  6. Characteristics of Public Purchasing • Lack of traffic expertise • Change processes are lengthy • Salary competitive at the lower levels, not competitive at upper levels • Lack of confidentiality • Specifications of supreme importance • Acquisition procedures rigid • Emphasis on bid process

  7. Federal Gov’t Buying Prejudices • Small business • Labor surplus areas • Buy American Act • Environmentally Preferable Purchasing • M/WBE

  8. Types of Contracts Most hospitals and clinics use some sort of Group Purchasing Organization. One such organization, Novation, reports that GPO’s save their clients 10-15% on purchasing a total of $153 billion / year.

  9. Health-Care Purchasing • Firm-Fixed-Price • Cost-Plus-Fixed-Fee • Cost-No-Fee • Cost-Plus-Incentive-Fee

  10. Public Purchasing Marketing 3860 – Purchasing August 4, 2004 Kimball Bullington, Ph.D. Associate Professor of Operations Management Middle Tennessee State University

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