The Case for Interdepartmental and Inter Agency Competition in Public Sector Procurement

Why Competition is Essential in Public Procurement

Competition is widely regarded as a driver of efficiency, cost savings, and innovation in procurement. While external competition between suppliers is well understood, the concept of competition between departments and agencies within the public sector is less explored but equally important. Encouraging interdepartmental and inter agency competition can lead to more effective procurement strategies, cost reductions, and better value for money.

The Benefits of Internal Competition in Procurement

1. Encouraging Efficiency and Cost Savings

When departments or agencies are encouraged to compete for procurement strategies, they are incentivised to adopt best practices that optimise costs and efficiency. Those who secure the best deals and negotiate effectively set a benchmark for others, driving continuous improvement across the sector.

2. Driving Innovation and Better Procurement Strategies

Healthy competition fosters innovation in procurement approaches. Departments that must compete to justify their procurement methods are more likely to explore alternative sourcing strategies, new supplier markets, and emerging technologies to gain an edge.

3. Enhancing Transparency and Accountability

Competition among public sector entities creates a natural form of oversight, where different teams scrutinise each other’s procurement decisions. This reduces the risk of complacency, ensuring that procurement strategies are well-justified, data-driven, and in the public interest.

4. Benchmarking for Continuous Improvement

By allowing departments and agencies to compare procurement outcomes, competition facilitates meaningful bench marking. Identifying which department secures the best contracts, achieves the most cost-effective deals, or implements the most effective procurement models provides invaluable insights that can be replicated elsewhere.

5. Encouraging Strategic Supplier Engagement

Suppliers benefit from competition between departments, as it pushes them to offer more competitive pricing and value-added services. This can lead to better contractual terms, more innovative solutions, and a more dynamic supplier ecosystem within the public sector.

Overcoming Challenges of Internal Competition

While internal competition has many benefits, it must be managed to avoid inefficiencies or counterproductive rivalry. Here are some strategies to ensure healthy competition:

• Set Clear Evaluation Metrics: Define key performance indicators (KPIs) such as cost savings, supplier diversity, sustainability impact, and contract performance.
• Encourage Collaboration Alongside Competition: Competition should not hinder knowledge sharing. A balance must be struck where departments compete but also collaborate on best practices.
• Leverage Data-Driven Insights: Using platforms like Be Connected allows departments to access procurement intelligence, track performance, and make informed procurement decisions.
• Avoid Duplication of Effort: While competition is beneficial, there should be centralised coordination to prevent inefficiencies or redundant procurement activities.

Conclusion

Competition between public sector departments and agencies in procurement can drive efficiency, innovation, and cost savings when implemented correctly. By fostering a culture of bench marking, transparency, and strategic decision-making, public sector organisations can improve procurement outcomes and deliver better value to taxpayers.

Would you like to explore how Be Connected can help your department optimise procurement strategies and stay ahead in the competitive landscape? Get in touch with us today.

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