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How COVID-19 has impacted vendor competition (and how procurement teams are responding)

August 28, 2020 | Emily Lambert

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Procurement teams were already expected to do more with less—and as public agencies navigate working within scaled-back budgets, procurement teams will be responsible for reducing costs even more. In this new environment, achieving the absolute best value for your bids and RFPs is more important than ever, and vendor competition is a key player in that effort. 

So how has COVID-19 impacted vendor competition on public bids, and how are government agencies responding? 

How has COVID-19 affected public sector vendor competition?

In our State of Public Sourcing: COVID 19 Edition report, we took a look at the average proposal submissions per project, comparing January/February and March/April 2020 data to 2019 data. Here’s what we found.

Graph showing the average number of vendor proposals per project

When comparing January/February 2020 to March/April 2020, we see that the average volume of proposals per project has increased slightly from 3.9 to 4.1 In other words, there has been a 5% increase in vendor competition on public bids. 

A case for continually engaging new vendors

In March and April 2020, as public organizations significantly reduced their open bids due to the uncertainty that came with COVID-19 and mandated lockdowns, suppliers may have had fewer options on solicitations to bid on. At the same time, the climate of economic uncertainty may have motivated suppliers to seek additional business, accounting for the increased vendor competition.

In times of economic instability, state and local governments play a critical role not only by providing businesses and individuals with the services and programs they need to weather the blow, but also by stimulating the economy by purchasing goods and services. In fact, government spending accounts for 17% of total GDP

Although vendor competition is on the rise right now, public procurement teams need to understand that engaging vendors and diversifying their supplier base in new and creative ways is critical to overcoming supply shortages, awarding contracts within project deadlines, and stimulating local and national economies. 

See it in action: How Louisville Metro Government is innovating their vendor outreach

To meet these needs and overcome these challenges, procurement teams are intentionally engaging new and existing vendors in creative and innovative ways.

In our State of Public Sourcing report, we covered this story from Joel Neaveill, Director of Procurement for the Louisville Metro Government:

“Our vendors were affected—the ones that we usually go to for supply were completely out. So you have to turn to others and be a little more creative. In terms of diversifying the supplier base, we found that through this emergency, we’ve been able to bring on new vendors that we haven’t dealt with before.

“Our local economy, like everyone’s local economy, is just hurting so much. The restaurant and hospitality businesses are hurting. Through this emergency, we’re turning to them to help supply part of the response to the emergency. We’re feeding local seniors who can’t get out of their homes by turning to local caterers to help with that. We’ve launched a program to help first responders who are healthy but can’t return back to their homes in fear of infecting them, so we’re tapping into the hospitality sector, the hotels, to implement those programs. We’re also providing face covers for all 5500 Louisville Metro employees, and we had those custom-made from a sewing shop in central Kentucky. We’re helping to stimulate the local economy through this emergency.”

“We also have a list of minority- and women-owned businesses that, as part of the incident management team, we look through an equity lens—how are we equitably responding to this so we don’t have disparate outcomes?” 

The good news is, as COVID-19 continues to impact the public sector, vendor competition is on the rise. That doesn’t mean it’s time to hit pause on intentionally engaging and diversifying your vendor pool; in fact, using competition to drive better value for your bids and RFPs will only become more and more important as public agencies prioritize cost savings and re-evaluating budgets. Agencies that can develop innovative solutions now will be the ones to weather the forecasted economic blows in the next months and years.

For more insights on how public procurement teams responded to COVID-19, and how these lessons learned can help prepare your organization for the future, download your copy of the State of Public Sourcing: COVID-19 Edition.

About the author

Bonfire Blog Author Emily Lambert

Emily Lambert | Bonfire Interactive

As the Content Marketing Strategist at Bonfire, Emily writes thought leadership for procurement teams in the public sector. Best practices content for procurement professionals doesn’t have to be a chore to get through—which is why Emily strives to strike the balance of writing educational yet engaging content that inspires sourcing experts and equips them to make the best purchasing decisions.