Documenting the Response of State Procurement Officers to the COVID Crisis
The COVID-19 emergency will be remembered as one of the most devastating disasters in modern history with impacts that rippled across all sectors of the global economy and societies. One grave failure is the challenge governments faced in securing personal protection equipment (PPE) for its citizens. In Western countries, it became clear that the shortage could not be averted quickly as critical products such as N95 masks and nitrile gloves have become rare commodities globally. Most PPE is produced in Asia, with an ironically large proportion produced in the Wuhan region.[1] In the U.S., PPE shortages created a bidding war among nations, states within nations, and between state and federal government agencies.
During the COVID crisis, the federal government made a proclamation when it came to supplying PPE and medical supplies to the states in the union: You’re on your own. The result of this policy led to the equivalent of a “Hunger Games” type of free-for-all, as states scrambled to find PPE, often competing with other states for the same suppliers with limited supplies. In many cases, suppliers required 50% or even 100% of the payment upfront, something that states had never been willing to do in the past. A number of the larger states were hit hardest early in the pandemic, including California, New York, Massachusetts, Texas, and Washington; many of the Midwest states didn’t feel the full wrath of the virus until later.
Early in the pandemic, I was asked to join a team of academics to document and understand how state procurement officers were able to mobilize and react to this incredible situation. In the report published this week by the National Association of State Procurement Officers, who supported the study, our team focused on the PPE shortages that occurred throughout the United States in 2020, and examined the structural influence of state procurement offices on the ability to respond in an agile and effective manner. Specifically, we explored how the levels of centralization of state procurement, led by state Chief Procurement Officers (CPOs), were associated with the responsiveness of state agencies to obtain PPE supplies during the height of the COVID-19 pandemic.
Our analysis is based on over 100 hours of interviews with state CPOs, state procurement managers, members of government organizations and private sector organizations involved in the state PPE procurement process. Our results suggest that increased centralized governance of state procurement led to a more effective response in tackling large-scale supply chain disruptions. Centralized procurement enabled increased coordination, improved leveraging of the volume of the state’s purchasing power[2] and application of contracting expertise to a difficult market situation. A centralized approach also led to better coordination among disaster relief entities, PPE suppliers and hospitals, counties, and agencies requiring PPE to operate. Our analysis also offered a nuanced understanding of the different modes of interaction that took place between state procurement and other actors in the disaster relief operations, and how these communications impacted operational outcomes. In integrating these insights, we conclude this report with a maturity model that we hope may assist CPOs to benchmark their procurement practices and seek resources for improving procurement operations within their own state leadership team. The report is available at no cost to anyone who seeks to learn more about how public procurement responded in a crisis, and saved the day for many of our healthcare professionals and critical workers on the front lines.
[1] Simon J. Evenett, Commentary: Chinese whispers: COVID-19, global supply chains in essential goods, and public policy, Journal of International Business Policy (2020) 408-429 (discussion of Chinese and other nations’ share of PPE exports), https://link.springer.com/article/10.1057/s42214-020-00075-5.
[2] Smaller states were able to leverage the purchasing power of the NASPO ValuePoint network, and coordinating with other states on coordinated contracts.
