If anyone has ever seen the movie War Dogs...…………………...
Today’s post is by Ashley Riviello, Account Manager at SafeSourcing Inc.
If anyone has ever seen the movie War Dogs, it is a prime example of exactly how government procurement works, well at least how it worked back in the 90’s. In the movie, the government used procurement to buy weapons and ammunition on a large scale.
For anyone who doesn’t know what government procurement is, it is the procurement of goods, services and construction on behalf of a public authority, such as a government agency. With 10-20% of GDP (Gross Domestic Product), government procurement accounts for a substantial part of the global economy. Per Wikipedia, to prevent fraud, waste, corruption, or local protectionism, the laws of most countries regulate government procurement to some extent. Laws usually require the procuring authority to issue public tenders if the value of the procurement exceeds a certain threshold. Government procurement is also the subject of the Agreement on Government Procurement (GPA), a pluryilateral international treaty under the auspices of the WTO (World Trade Organization).
It has been amazing working at SafeSourcing and learning about all the different markets there are to take out to bid. However, it would be incredible to learn exactly what the government takes out to bid. The opportunity in Government Procurement is substantial. Government Procurement brings in about 7 trillion dollars annually.
The government buys many of the products and services it needs from suppliers who meet certain qualifications. The US federal, state and local governments apply standardized procedures by which to purchase goods and services.
For example, according to RFQ.com the federal government does not purchase items or services in the way an individual household might. Instead, government contracting officials use procedures that conform to the Federal Acquisition Regulation (FAR). The FAR is a standardized set of regulations used by all federal agencies in making purchases. It provides procedures for every step in the procurement process, from the time someone in the government discovers a need for a product or service to the time the purchase is complete. When the government wants to purchase a certain product or service, it can use a variety of contracting methods. Key contract methodologies used to purchase products and services include:
- Simplified acquisition procedures
- Sealed bidding
- Contracting by negotiation
- Consolidated purchasing vehicles
There are problems, however, with procurement within the government, such as the possibility of corruption. Like in movie War Dogs, you had 2 Americans that ended up corrupting the procurement process and stealing millions of dollars from the government and overseas officials by using the procurement process to hold fake bids and then collect the money on weapons and ammo and then buying them from the black market. The movie is based on a true story that happened in 2007. David Packouz and Efraim Diveroli ended up proving how corrupt Government Procurement could become. Worth the read? Maybe an upcoming blog.
For more information on SafeSourcing, or on our Risk Free trial program, please contact a SafeSourcing Customer Service Representative. We have an entire team ready to assist you.