Public Procurement Trends 2022 Outlook and Forecast

Jun 7, 2022

Public Procurement Trends 2022: Outlook and Forecast

Since the emergence of the Covid-19 pandemic, economic and social disruption have transformed how many industries do business, and public procurement is no exception.

Despite being essential to the continuity and functioning of government at all levels, the public procurement sector still faced many challenges over the past two years. In particular, increased global demand for goods and services and concurrent supply shortages have made the procurement process increasingly difficult.

Now, as restrictions are gradually being lifted and economic activity begins to rise, the public procurement sector still must grapple with several challenges during this period of recovery. In this article, we’ll explore some of the trends currently taking place in the procurement industry, and how buying agencies can position themselves for success in these challenging times.

Technological change

A primary driver of change in the public procurement sector is the widespread adoption of digital tools to streamline and simplify the procurement process.

The number of companies expected to implement digital tools and procedures as part of their operations will likely increase dramatically over the next five years. This trend of digital transformation will undoubtedly impact the public sector ecosystem, as e-procurement tools are proven to deliver strong ROI for both suppliers and buying agencies.

In 2022, much of the existing public procurement workforce is expected to retire or move to a new industry as younger, less-experienced professionals join the public purchasing sector. These newcomers will bring fresh expectations of efficiency and digital capability, putting pressure on buying agencies to modernize their tools and operations.

As well, as local, state and federal governments pursue a net-zero economy, green procurement will continue to gain traction with buying agencies in 2022 and beyond. As a result, more government agencies will work with private companies in an effort to lower their carbon footprints.

Data-driven decision making

Real-time data and deep analytic capability are essential to improving the decision-making process in public procurement. Because many government agencies are accustomed to working autonomously, having a single, reliable source of data from digital procurement platforms can help them reduce costs, address procedural gaps, and improve overall efficiency. This also holds true for suppliers: by having access to all contract requirements and bids in the larger procurement ecosystem, which can be updated in real-time, suppliers also benefit from improved processes and efficiency.

Local sourcing and supplier diversity

Small businesses in local communities are essential contributors to economic stability and growth across North America. Governments procure billions of dollars in goods and services annually from businesses in their regions. Many government agencies have goals and objectives in place to ensure a portion of those purchases are made from small, local businesses.

However, agencies that lack tools to track diversity and inclusion goals and results are often at a disadvantage when it comes to gathering data about local and non-local vendor percentages, solicitation chances and response rates. E-procurement solutions with vendor management tools, with their built-in functionality to track communications and generate detailed reports, can help rectify this situation.

Without a doubt, 2022 will continue to see a significant number of local opportunities available for a diverse group of small and medium-sized suppliers, allowing these businesses to develop strong relations with government buying agencies. Regional supply chain needs will accelerate government agencies’ initiatives to source goods and services locally, creating new opportunities for businesses to partner with these agencies.

Supplier pools

Alongside diversity and inclusion, access to a wider supplier ecosystem will continue to be a priority for buying agencies this in 2022. Having experienced the impact of manufacturing shutdowns and other supply chain disruptions, leaders in the procurement industry are seeking to quickly partner with large groups of suppliers in order to maintain continuity.

Finding new suppliers and growing partnership networks can be challenging and time consuming for government agencies, as they vet RFP submissions and compare vendor rates and services. Procurement solutions that give these agencies access to a high number of suppliers, allowing them to compare their offering and rates in real-time, will prove beneficial in this regard.

Government funding trends

Governments around the world introduced substantial funding packages throughout 2021, in an effort to mitigate the consequences of global supply shortages and economic slowdowns.

In the United States, billions of dollars were allocated to states and municipalities via the 2021 American Rescue Plan Act. Large sums were earmarked for the construction, energy, transportation and broadband industries, and the opportunities available as a result of this bill are only starting to materialize.

In particular, the 2021 Infrastructure Bill, which aims to upgrade American seaports, waterways, electrical grids, transmission lines, public transit systems and airports, will continue to have a long-lasting economic impact on the procurement market well into the new year. Regional economies will be strengthened thanks to this bill, which will also allow local economies to resume projects that were put on hold and to start new ones.

To take advantage of the opportunities presented by this bill, companies need to familiarize themselves with every aspect of the legislation. E-procurement solutions that allow both suppliers and buyers to effectively manage resources, access and share intelligence on relevant contracts and projects, and gather important data are key to getting the most out of future procurement projects. To learn about the eprocurement solutions offered by mdf commerce, visit our website.