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How Can Procurement Create (Sustainable) Public Value under the Bipartisan Infrastructure Deal?

October 2022
Public Administration Review 83(4)

DOI:10.1111/puar.13575

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CC BY-NC-ND 4.0

Authors:

Andrea Stefano Patrucco

Florida International University

Ana-Maria Dimand

Boise State University

Milena I. Neshkova

Florida International University

The economic response of the U.S. government to the COVID‐19 pandemic envisions massive investment in infrastructure construction. Yet, governments contract out public works and might lack the capacity to meet the increased demand for new construction. Drawing on a mix of survey and interview data, we identify critical deficiencies in contract capacity that might lead to a loss of public resources and further erode trust in the government. We propose a plan for restructuring public procurement systems and offer solutions around four foci: collaboration, training, flexibility, and sustainability. This transformation path would enhance government contract capacity and use markets to signal a demand for sustainable infrastructure and create public value in line with the strategic objectives of the Bipartisan Infrastructure Deal. This article is protected by copyright. All rights reserved.

Challenges in public construction procurement (Note: Respondents were asked to what extent each construction procurement activity is difficult and/or time-consuming, where 1=strongly disagree and 5=strongly agree. These were recoded as High (4 and 5), Medium (3), and Low (1and 2).

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How Can Procurement Create (Sustainable) Public Value under the

Bipartisan Infrastructure Deal?

Andrea S. Patrucco, Ph.D.

Assistant Professor of Supply Chain Management

Florida International University

College of Business

Department of Marketing and Logistics

Email: apatrucc@fiu.edu

Ana-Maria Dimand, Ph.D.

Assistant Professor of Public Policy and Administration

Boise State University

School of Public Service

Email: anamariadimand@boisestate.edu (corresponding author)

Milena I. Neshkova, Ph.D.

Associate Professor of Public Policy and Administration

Florida International University

Department of Public Policy and Administration,

Email: mneshnkov@fiu.edu

Madison M. Cevallos, JD

Government Affairs Specialist

Gordian

Email: M.Cevallos@gordian.com

Authors’ biographies

Andrea S. Patrucco, Ph.D. is an Assistant Professor of Supply Chain Management at FIU

Business. His research addresses the strategic management of procurement and buyer-supplier

relationships in the public and private sectors. He has published over 35 academic articles in

peer-reviewed journals in the supply chain and public management fields, and he actively

collaborates with private companies and public organizations in Europe and North America.

Ana-Maria Dimand, Ph.D. is an Assistant Professor of Public Policy and Administration in

the School of Public Service, at Boise State University. She holds a Ph.D. in Public Affairs and a

Graduate Certificate in Public Finance, Procurement, and Contract Management, from Florida

International University, Miami. Her research focuses on public management, government

contracting, environmental policy, sustainability, innovation, and collaborative governance.

Milena I. Neshkova, Ph.D. is an Associate Professor of Public Policy and Administration in the

Green School of International and Public Affairs at Florida International University. Her

This article has been accepted for publication and undergone full peer review but has not been

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research interests include public management, comparative and international public

administration, collaborative governance, and managing public money.

Madison M. Cevallos, J.D. is a Government Affairs Specialist with experience in legislative,

legal, and rule of law analysis. She has a B.A. in International Affairs from The George

Washington University, concentrating in Security Policy, and J.D. from the University of South

Carolina School of Law. Madison Cevallos is member of the South Carolina Bar.

How Can Procurement Create (Sustainable) Public Value under the

Bipartisan Infrastructure Deal?

Abstract

The economic response of the U.S. government to the COVID-19 pandemic envisions massive

investment in infrastructure construction. Yet, governments contract out public works and might

lack the capacity to meet the increased demand for new construction. Drawing on a mix of

survey and interview data, we identify critical deficiencies in contract capacity that might lead to

a loss of public resources and further erode trust in the government. We propose a plan for

restructuring public procurement systems and offer solutions around four foci: collaboration,

training, flexibility, and sustainability. This transformation path would enhance government

contract capacity and use markets to signal a demand for sustainable infrastructure and create

public value in line with the strategic objectives of the Bipartisan Infrastructure Deal.

Keywords: Contract capacity; infrastructure construction; public procurement; contract

management

Acknowledgments: The authors would like to thank Lauren Fields (Director, Brand and

Marketing Communications), Randy Horn (Director, Business Development, Western Region),

Tom Brewer (Content Manager), Blaire Collins (Creative Manager), Pete Jutras (Visual

Production Specialist), Liz Rubel (Corporate Marketing Specialist) at Gordian, and Todd Slater

(Chief Content Officer) at NIGP, for their invaluable support and suggestions throughout the

research project.

Funding: This research was sponsored by Gordian and NIGP: The Institute for Public

Procurement, who partnered in 2021-2022 to fund market research on construction project

delivery method challenges and opportunities.

Evidence for Practice

• The Bipartisan Infrastructure Deal (BID) of 2021 appropriates billions of dollars to

rebuild the nation’s aging infrastructure and is a potential game-changer for the U.S.

economy.

• Governments rely on contractors for public works, and the increased demand might strain

existing local, state, and federal procurement systems. The lack of contract capacity can

result in poor project execution, a waste of public money, corruption, and erosion of trust.

• The weaknesses of current contract management are rooted in the shortage of qualified

procurement staff, thin quasi-markets for government goods and services, and scarce

market research on construction pricing.

• Reimagining public procurement entails strengthening contract capacity by collaboration

with suppliers and using markets to create demand for environment-friendly and socially

responsible production of goods and services.

Introduction

In November 2021, the nation celebrated the passage of the Bipartisan Infrastructure Deal (BID),

a sweeping reform aiming to fix the nation’s aging infrastructure and jump-start the economy.

The bill appropriated $550 billion in new infrastructure spending for a total of $1.2 trillion in the

next five years to rebuild roads, bridges, and rails and improve telecommunication infrastructure.

Now that the celebration of bill passage is over, it is time for sobering questions.

Public organizations do not design and build infrastructure or other public works alone.

They foot the bill but contract the work to the private sector. This phenomenon has been referred

to as “hybrid government” because it takes the efforts of multiple parties across the sector lines

(Christiansen & Laegreid, 2011). Although the government has outsourced public works for

centuries, procurement and contract management have become increasingly complex. This is

especially true for infrastructure contracting, a laborious task requiring a professional capacity

that procurement systems might currently lack (Koppenjan & Enserink, 2009).

Scholars have long warned about inadequate government contract management and

project governance (e.g., Stanton, 2008; Joaquin & Greitens, 2012; Johnston, 2010; Kort &

Klijn, 2011). In a sense, the BID represents a double-edged sword. On the one hand, it is a

potential game-changer for the U.S. economy after the COVID-19 pandemic slowdown. The bill

can unprecedentedly improve the infrastructure after years of inadequate investments in roads,

rail, airports, ports, bridges, broadband connectivity lines, and water pipelines and create 800,000

new jobs by 2025 (Moody’s Analytics, 2021). On the other hand, public agencies currently face

procurement and contract management deficiencies coupled with labor supply shortages that

might preclude them from delivering on the BID’s objectives. The lack of organizational

capacity impacts the whole process—from bidding to project execution and monitoring—and

can result in a waste of money, corruption, and a decline in public trust (Dimand, 2022). By

raising awareness about these imminent challenges, we seek to open a dialogue on how

governments could reform their procurement systems to maximize the BID benefits and create

sustainable public value.

The Construction Sector and the Economic Recovery from COVID-19

Before the COVID-19 pandemic, the U.S. economy was producing at unprecedented rates, with

quarterly Gross Domestic Product (GDP) growth of 2-3% and a marked increase in employment

and minimum wage (Center on Budget and Policy Priorities, 2022). More than any prior

economic recession, the pandemic affected specific industries (e.g., labor-intensive ones) while

leaving others relatively unscathed (e.g., those using information and virtual technologies). The

construction sector was severely hit (Maani & Galea, 2020), which generated significant adverse

effects for the economy (U.S. Bureau of Labor Statistics, 2021). Over the last 20 years,

construction in the U.S. contributed between 3.4% and 5% of GDP (U.S. Department of

Commerce, 2022), and the investment made by this industry has been closely linked to economic

growth (Nasir et al., 2014). While designating construction workers as essential has helped the

industry stay afloat, new post-pandemic challenges created a perfect storm throughout 2020 and

2021. On the supply side, social distancing restrictions, the impossibility of operating

construction sites at full capacity, short staffing due to shrinking labor markets, and raw

materials price increases, among others, limited the output of the sector and affected the

completion of large-scale projects (Alsharef et al., 2021; Love et al., 2021). On the demand side,

governments worldwide had to postpone infrastructure investments due to pandemic-related

budget shortfalls (Buckley, 2020). Because the public sector is the primary buyer for many

constriction companies, this further stalled the industry. In the U.S., public spending on

commercial construction projects plunged from $4.09 to $3.54 billion (-13.5%). Similar figures

are projected for 2022 (U.S. Census Bureau, 2022).

In the second part of 2021, the federal government rolled out several initiatives to refuel

the nation’s economy. As a result, agencies at all levels have commenced programs to support

new construction and bolster economic activity and employment. Some major initiatives include:

• The U.S. Department of Transportation plans to invest $906 million in infrastructure

through the Infrastructure for Rebuilding America discretionary grant program. A total of

20 projects in 20 states will receive funding to improve highways, bridges, ports, and

railroads (U.S. Department of Transportation, 2022).

• The Federal Aviation Administration is financing infrastructure improvements in 405

airports through more than $1.2 billion in airport safety and infrastructure grants

(Forconstructionpros.com, 2020).

• Illinois has announced $39.5 million in new grants for 27 capital projects in underserved

communities across the state (Illinois Department of Commerce & Economic

Opportunity, 2020).

• Arizona’s Pima County has approved $55 million to repair about 127 miles of local

roads, 45 miles of collector and arterials, and $165 million for local capital projects

(Demers, 2020).

• The Port of Seattle Commission plans to proceed with about 20 projects worth

approximately $1.5 billion (Port Technology International Team, 2020).

The BID, passed in November 2021, represents the most significant recent infrastructure

reform. “Because of today’s vote, state and local officials will be able to invest in a more

efficient supply chain network. Ultimately, these new infrastructure investments will provide a

needed boost for the construction industry while making our economy more efficient” (AGC The

Construction Association, 2021). This statement by a construction official reflects the

enthusiasm about the new opportunities opened by the bill. The projected construction costs were

further increased after the bill’s passage, reaching over $2 trillion in 2025 (FMI, 2022).

The BID’s Potential for Value Creation

The BID covers a multitude of local, state, and nationwide projects, including roads and bridges,

public transit, freight, passenger rail, drinking, and wastewater infrastructure, ports, and airports

(The White House, 2021). It also allocates money for “the new economy,” such as broadband

deployment and adoption, grid security and resiliency, and clean energy. If appropriately

managed, the funding allocated through the bill can bring about a wave of construction projects

commissioned by governments at all levels and increase the quality and value of the delivered

projects. Below, we identify four potential BID benefits for the U.S. economy, informed by

current construction management and public administration research.

National development and new job creation. The construction industry delivers the

physical infrastructure that enables the functioning of other sectors. Infrastructure projects are

also highly labor-intensive and bring new jobs to the area (Heintz et al., 2009). The BID

envisions 700,000+ new jobs yearly in construction, manufacturing, and transportation (The

White House, 2021).

Increased competition and project delivery quality. Governments have long struggled to

attract best-in-class suppliers, who find it more profitable to work with industrial buyers. Small

and medium companies are also severely underrepresented in government contracts. Such firms

often do not even compete for large public works considering their chances of being selected too

slim given the government’s focus on cost and price (Patrucco et al., 2021). Widely recognized

as a problem, the lack of competition in construction procurement can cause corruption in the

procurement process, mismanagement of funds, and poor project performance, including delays,

cost overrun, and low quality (Locatelli et al., 2017). Given its principles, structure, and size, the

BID could significantly stimulate government-supplier collaboration under the auspices of

public-private partnerships (Kort & Klijn, 2011) and attract a broader pool of companies to bid

for government contracts and even relocate for infrastructure projects. This, in turn, could result

in more competitive offers and a better quality of project delivery.

Growth in rural communities. Infrastructure projects spur local socioeconomic growth

(Pavel et al., 2018). Small and medium construction companies are more willing to tackle

projects in rural communities that satisfy basic infrastructure needs (e.g., healthcare and

educational facilities or transportation works). Such projects could induce the growth of local

small-medium businesses and boost regional economic development. The main objective of the

BID is to bring more projects to these traditionally neglected areas. Besides improving the

infrastructure, safety, and local economy, it will also stimulate more participation from small and

medium businesses.

Boost technological advancement. The construction sector holds a high technical

potential (Agarwal et al., 2016). Some companies have already adopted solutions for

productivity roadblocks and optimization gaps, but a large-scale adoption is yet to happen. As

the primary buyer of the industry, governments can encourage technology usage by introducing

ad-hoc contract incentives (McKinsey & Company, 2019). The BID represents the perfect

scenario to boost technological advancement and the diffusion of hardware technologies, such as

construction drones and trackers, that enhance productivity and security on project sites.

To produce these benefits, the BID requires that public organizations adopt new rules in

contracting out construction projects. First, per the Build America, Buy America Act, projects

funded with federal infrastructure assistance should use locally sourced iron, steel, construction

materials, and manufactured products. If contractors cannot source a project domestically,

procurement officials must carefully evaluate the possibility of awarding waivers. To qualify for

a waiver, contractors must demonstrate that local rules are “inconsistent with the public interest,

not available in sufficient and reasonably available quantities of satisfactory quality, and/or if

domestic products will increase the cost of the overall project by more than 25%.” Second, the

Make it in America Act adds new requirements to enhance transparency and accountability. One

example is a centralized website to publicize the requests and conceded waivers and facilitate

interaction between manufacturers and contractors (MadeinAmerica.com, n.d.; Alliance for

American Manufacturing, n.d.).

With its potential benefits and new rules for doing business, the reform will open a new

era for construction companies, but it will likely have a profound effect on the demand side as

well. The availability of infrastructure funding and new rules means that public organizations

must pull off significant “hybrid government” capabilities to procure, contract, and execute the

public works envisioned in the bill. In the end, materializing this “potential” value depends on

the government’s ability to make good decisions when contracting out infrastructure projects.

Deficiencies in Procurement and Contracting Capacity: Evidence from the

Field

The increased demand for construction projects, combined with the new requirements to buy

domestically and deliver on the BID strategic objectives, poses a fundamental question: Do

government procurement systems possess the capacity to face the new challenges?

We rely on quantitative and qualitative data collected from the field to answer this

question. Specifically, we surveyed U.S. officials tasked with procurement, construction, and

facility management in various types of public organizations. The collected data reveals the

magnitude of construction contracts and projects, delivery methods, transaction costs associated

with contract solicitation, and the challenges before contract and relationship governance.

Appendix A outlines the survey design, our data collection, and the results from 362 responses.

Semi-structured interviews with 30 public officers responsible for construction procurement in

their organizations complement the survey data. Appendix B depicts the interview process and

provides illustrative quotes. These data allow us to elaborate on the critical deficiencies public

procurement systems face in construction contracting. We distinguish between two types of

deficiencies—organization-wide and construction-specific. Figure 1 shows the groups split into

subthemes: managerial and knowledge deficiencies for the organization-wide one; and project

delivery methods and supplier evaluation deficiencies for the construction-specific one.

[FIGURE 1 ABOUT HERE]

As a methodological note to Figure 1, the flow structure follows Goia et al.’s (2013) data

analysis approach. Specifically, we differentiate among challenges (first-order concepts), issues

(second-order themes), and deficiencies (aggregate dimensions).

Organizational Deficiencies

Many procurement officials consider procurement and contract management of their agencies

ineffective and indicate knowledge and capacity gaps preventing them from handling

construction projects efficiently and effectively. Respondents point to a lack of human capital to

design and monitor contracts and cope with administrative work. Having sufficient staff is

essential for managing complex projects. The issue of severe labor shortages is further amplified

by limited strategic planning for construction procurement:

“Our biggest headache [is] the lack of planning and the demand for

a quick turnaround on [project] jobs.” (Construction Manager,

State Government)

While planning is typically reserved for high-value projects (those above $0.5 million),

our data show that such projects represent a small portion of annual contracts (around 30%). This

implies that the remaining projects are, by and large, managed in an unstructured way.

“There is no standardization, to look up stuff [previous

construction procurement procedures] in there...” (Superintendent

of Public Works, Local Government)

Interviewees agree that the desired timeline to procure construction projects is around

two months, though it can vary from project to project. Table 1 presents a different reality.

Procuring construction projects stretches beyond the intended timelines in over 75% of the cases,

sometimes leading to service delivery that no longer fits the needs. Regulatory controls (like the

Federal Acquisition Regulation) that seek to ensure compliance often introduce significant

delays. Extensive administrative work involved in contract design and management, coupled

with labor shortages, has caused further interruptions. As a result, pre-bidding and bidding

periods can last over a half year, slowing down projects potentially requiring urgent attention.

[TABLE 1 ABOUT HERE]

Our interviewees report missed opportunities for federal funding due to the inability to

compress the duration of the construction procurement process:

“Given the constraints of funding through the Cares Act, the timing

was extremely tight. We started [the process] in October of last

year. By October 31st, we had gotten permits for three projects. The

funds were to terminate on December 31st. That left us two months

with various holidays to get these projects contracted. It was

extremely difficult managing that tight schedule, managing multiple

trades working simultaneously, [and] dealing with the shortage of

various materials. [All] that put us out until early February.”

(Deputy Director of Public Works, County Government)

Problems also stem from the fragmentation of authority over contracting decisions for

construction projects. Procurement offices govern those decisions only in a few organizations1.

At the state level, for example, the Department of Transportation, Department of Management

Services, Division of Real Estate, and Division of Facility Management can grant infrastructure

contracts, with the procurement office having only administrative or no involvement.

“[Procurement] is not brought into the process early enough.

Department heads do not want to change [that].” (Purchasing

Manager, Local Government)

Such fragmented decision-making complicates contract management and oversight and

impedes process standardization.

“It is frustrating the time it takes to get things done—bureaucratic

problems [and] going through far too many approval groups.

Routing the papers makes you want to pull your hair out.”

(Purchasing Manager, Local Government)

While departments might be more familiar with the context, and their input is invaluable

in designing contract solicitations, infrastructure procurement is an uphill task that requires

professional expertise and skills. Our data indicate that these qualities are not always present in

the procurement unit or other departments. To improve the value created through construction

procurement, interviewees emphasized the need for 1) a better understanding of the financial and

cost aspects of construction projects and contracts, 2) gathering supply market intelligence, and

3) developing expertise in bid evaluation.

“We are never sure they [procurement] are getting the best price.

We use our own historical knowledge to determine if the price

sounds reasonable. When getting three quotes, we simply compare

them to determine the market price.” (Director of Facility

Management, School District)

Construction Procurement Process Deficiencies

Our informants also identified deficiencies specific to the construction procurement process.

Figure 2 presents the most challenging and time-consuming issues, as seen by the survey

respondents. Evaluating suppliers’ bids, reaching an agreement about project specifications, and

gathering information on project progress are among the most pressing.

[FIGURE 2 ABOUT HERE]

The deficiencies combined with the massive procurement pace for construction projects,

the lack of strategic planning, and qualified staff have two significant implications. First, public

agencies will likely resort to more traditional and lengthy project delivery methods. One such

method is Design-Bid-Build (DBB), where each phase needs to end before the next begins.

Traditional delivery methods have been criticized for inefficiency and corruption (Messick,

2020). Only a third of our respondents indicate familiarity/use of alternative project delivery

methods, such as Indefinite Delivery Indefinite Quantity (IDIQ) or Job Order Contracting (JOC),

that allow for the completion of multiple projects through a single competitively awarded

contract. The reluctance of managers to leave their “comfort zone” seems to limit the application

of new approaches that could alleviate the issues associated with traditional delivery.

“I have tried to push a JOC state bid project, but my higher-ups

would not allow it. I wanted to work with a company we worked

with in the past. Selfishly, it would have made it easier on my side. I

have not been able to push through a state contract for anything

bigger than $100k; I have always had to go through a bid process.”

(Director of Parks and Recreation, Local Government)

Second, public organizations will likely struggle to secure the best price or award the best

supplier. Although federal regulations require that agencies ensure “fair and reasonable” prices

with contractors, our data show that competitive pricing is rarely achieved in thin markets. The

main reasons are the inability to 1) design competitive bids (based on reliable cost estimates) and

2) attract reliable suppliers for construction projects. That is why contracts are often awarded

noncompetitively:

“The last project we bid on was a 9-acre pocket park. We had the

prebid meeting, and close to 10 people signed in from 10 different

places. In the long run, we only received two bids. We thought we

would get at least five to have a good idea of what we would deal

with. With only two, it turned out [the selected contractor] to be a

company that we had worked with in the past.” (Director, Parks and

Recreation, Local Government)

Solving the Procurement Capacity Challenge: Suggestions for System

Reimagine

Given the current procurement deficiencies, the BID offers an opportunity for reflection on how

to address them moving forward. Historically, outsourcing sought to solve the issues of

bureaucratic inefficiency and inject market mechanisms into the government’s provision of

goods and services. The goal has been to make the government more efficient. While important,

efficiency is not the only goal. The theory and years of experience have taught us that markets

produce efficient outcomes. However, research in public administration (e.g., Mackintosh, 1997;

Brunjes, 2022) once and again indicates that markets for government goods and services remain

incomplete, plagued with issues of limited competition, imperfect information, and preference

substitution between the priorities of government providers and consumer choices2. Important

questions now arise: How should we think about efficiency in the current era? What values

should be emphasized to enhance public service delivery? How can we leverage the efficiency of

markets to create and deliver public value? Below, we identify four critical foci (illustrated in

Figure 3) that could guide governments in system reimagining.

[FIGURE 3 ABOUT HERE]

Collaboration

Given what we know about markets for public goods, governments might achieve higher

efficiency by seeking collaboration rather than market competition. While competitive bidding

remains an integral part of the selection process, contract awards should be decided holistically.

Governments often contract with the same vendors for years and, as a result, know how to

achieve the best product from them.

Collaborative governance research offers ample evidence that cross-sectoral partnership

helps solve complex public problems (e.g., Kalesnikaite & Neshkova, 2021; Sørensen & Torfing,

2021). In the context of construction procurement, public organizations could explore the

potential of collaboration to increase the value of public service delivery. As our interviewees

note, collaborative approaches can strategically nurture their relationships with private and

nonprofit contractors and involve them early in the process—in contract solicitation and

design—to speed up the process. Governments could also join resources with other public

entities through, for example, cooperative purchasing. Only a few agencies in our sample (below

10%) use collaborative procurement for construction projects. Yet, those who do, prize it for

increasing coordination, allowing organizations to tap resources they do not possess, expanding

social capital, improving conflict and risk management, and boosting compliance with local and

national regulations (Douglas & Ansell, 2021).

“When we piggyback on contracts done through other agencies,

there is less effort…somebody else did the procurement work; we

just need to customize what already exists. It is very efficient, and

once it is underway, it is easier to control and monitor projects.”

(Purchasing Manager, School District)

Increasing the use of alternative project delivery methods can also enhance collaboration.

While, traditionally, public organizations have collaborated with suppliers using variations of

DBB (e.g., through public-private partnership schemes3), the BID presents an opportunity to

explore collaborating through other methods. One example is JOC which builds on performance-

based contracting to incentivize local suppliers and delivery quality (Patrucco & Dimand, 2021).

While underutilized (87 survey respondents and six interviewees use it for procuring

construction projects), JOC promises public entities more effective governance of contractor

relationships, better communication, less opportunistic behavior, and superior project outcomes

than traditional DBB (Sanderson et al., 2018).

Training

Training positively correlates with performance management reform implementation (Kroll &

Moynihan, 2015). Administrations who undergo such training pay more attention to performance

data and strategic planning in their decision-making process. In the face of the new pressures

following the BID, governments could boost their contracting capacity by providing professional

training for procurement and contract officials. Our data suggest that these training efforts should

focus on supply chain management (e.g., alternative delivery methods), project management

(e.g., impact on the environment), and transaction costs management.

“Small municipalities need real-world training. There is no one

doing that or teaching anyone. You can follow this manual to a tee,

but it will not help you. There are tips and tricks everyone could

benefit from.” (Chief Procurement Officer, Local Government)

Flexibility

As construction and infrastructure projects often span years, they tend to operate in changing

environments (e.g., Demirel et al., 2016). Based on the COVID-19 experience, our informants

call for procurement systems to increase transparency and flexibility over the contract lifecycle.

“With COVID, things are not as consistent. I think as a person who

holds a contract, as a lead agency, it is helpful to see what projects

are going on. A dashboard would be helpful in that sense.” (Deputy

Commissioner, Local Government)

Managers should also seek a balance between satisfying the multitude of new BID rules

and leaving room for contract managers to use professional judgment. This reinforces our

previous point about the need to boost procurement and contract expertise, especially at the state

and local levels. Our informants suggest that contracts should include flexible control

mechanisms allowing parties to respond to changing conditions. Utilizing an IDIQ contract, for

example, let agencies establish competitively bid prices upfront and procure multiple projects

over a specific period. This eliminates the need to repeat the bidding procedure for every project

and shortens the procurement process. Thus, managers should closely evaluate the type of

contract for each project and resort to demanding types, such as DBB, only when necessary.

Sustainability

The BID strengthens governments’ purchasing power. Being the most prominent buyer on the

market, the government can use its purchasing power to create demand for sustainable

production of goods and services. Although not perfect, government quasi-markets—like all

markets—respond to demand and do so efficiently. In this sense, agencies could use the nature of

markets to generate demand for products that minimize the negative imprint on the environment

and improve social equity (Hafsa et al., 2021). Using purchasing and contracting to achieve

social and environmental policy goals is known as sustainable public procurement (Alkadry et

al., 2019). Examples include quotas for small businesses and companies owned by women and

minorities and requirements to buy local and ensure socially responsible supply chains.

Given the BID’s massive financial boost and local sourcing requirements, there is a

critical opportunity to repurpose government procurement to create market demand for

sustainability (Fiorino, 2010). Less complex project delivery methods can also aid in achieving

such objectives. They can stimulate participation from local small businesses and let government

organizations meet, track, and exceed their inclusion targets.

Concluding Remarks

Infrastructure works worldwide are notorious for their staggering inefficiencies. The McKinsey

Global Institute (2017) has estimated over $270 billion in losses globally due to construction

inefficiencies during the last five years. With the recently passed BID, millions of dollars are at

stake for U.S. public agencies (Statista, n.d.), putting their procurement systems under great

scrutiny. Based on quantitative and qualitative data from the field, this viewpoint identified two

types of deficiencies faced by current procurement systems—organization-wide and

construction-specific. We offer recommendations to aid policymakers and public managers in

mitigating these deficiencies and recalibrating the procurement process for the construction

industry. Specifically, our potential solutions center around four pillars—collaboration, training,

flexibility, and sustainability. If correctly managed, the influx of funds through the BID can be a

game-changer for the U.S. economy after the COVID slowdown and can lead to job creation,

better project delivery quality, growth in rural communities, and diffusion of new technologies.

Notes:

1 State procurement offices in Iowa, Maryland, Minnesota, New Mexico, South Carolina,

Vermont, Washington, and West Virginia govern contracting decisions for building construction

only; in DC for highway construction only; and in Hawaii, Illinois, New Hampshire, and Rhode

Island for both building and highway construction (NASPO Survey of State Procurement

Practices, 2018).

2Smith and Meier (1995) and Lowery (1989) draw on education vouchers to show how the

government’s preference for quality education gets replaced by consumers’ preference for

religious services and racial segregation.

3 A public-private partnership (PPP) can be considered an innovative project delivery model that

builds upon the strengths of the design-build delivery (DBB) method. In this sense, PPP is a

particular case of DBB.

References

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FIGURES

Figure 1. Deficiencies of construction procurement systems.

Figure 2. Challenges in public construction procurement (Note: Respondents were asked to what

extent each construction procurement activity is difficult and/or time-consuming, where

1=strongly disagree and 5=strongly agree. These were recoded as High (4 and 5), Medium (3),

and Low (1and 2).

Figure 3. Proposed solutions to procurement system deficiencies.

TABLES

Table 1. Construction Procurement Characteristics in Surveyed Public Organizations

Annual spending Number of contracted

projects Number of employees Time to procure a project

<1M 23 6.4% < 25 175 48.3% < 2 61 20.7% < 2 weeks 5 1.4%

1-5M 47 13.0% 25-50 84 23.2% 2-4 96 32.7% 2-4 weeks 21 5.8%

5-10M 51 14.1% 51-75 31 8.6% 5-7 73 24.8% 1-2 months 59 16.3%

10-50M 102 28.1% 76-100 25 6.9% 8-10 32 10.9% 2-4 months 83 22.9%

>50M 139 38.4% >100 47 13.0% > 10 32 10.9% > 4 months 194 53.6%

APPENDIX A

Survey Data Collection and Sample Characteristics

We designed and administered the survey from May to September 2021 to assess the current

challenges public procurement systems face in contracting construction projects. The questions

are informed by the extant literature at the intersection of supply chain management, construction

management, and public administration. The questionnaire was pre-tested with 12 senior

procurement officers before being distributed. Based on the feedback, we refined the survey

items. Our target population was public officers tasked with procuring construction projects.

Thus, study participants were not necessarily familiar with the potential implications of the BID

or its technical aspects. While still not passed at the time of the survey, the BID was already in

the works and actively debated in the news media. To reach more organizations, we distributed

the survey through the professional networks of two organizations—NIGP: The Institute for

Public Procurement and Gordian. The study was sent to about 5,000 respondents, 612 initiated

responses, and 362 completed the survey (a response rate of about 7%). Table A reports the

respondent characteristics.

Table A. Characteristics of Surveyed Construction Procurement Officials

Years in the Position Public Organization Type

Total Procurement

Employees

1-5 years 80 22.1% Local government 158 43.7% < 3 63 17.40%

6-10 years 126 34.8% State government 49 13.5% 3-5 85 23.5%

11-15 years 49 13.5% Education institution 46 12.7% 6-10 71 19.6%

>15 years 107 29.6% Healthcare provider 75 20.7% 11-20 51 14.1%

Other public entity 34 9.4% >20 92 25.4%

APPENDIX B

Semi-Structured Interviews

We conducted semi-structured interviews with 30 senior public officers tasked with construction

procurement in their organizations. The sample included directors (e.g., Planning and

Development, Parks and Recreation, Public Works, Maintenance and Construction, and Public

Services), facility managers, and purchasing managers. The interview questions inquired about

1) the characteristics of the construction procurement process, 2) the main issues and challenges

that procurement officers face, 3) the project delivery methods used, and 4) suggestions for

improving construction procurement. The interview data were analyzed using an inductive

approach—specific challenges discussed by the interviewees were grouped under broader issues

and categorized as either organization-wide or construction-specific procurement system

deficiencies. Table B contains the coding scheme and exemplary quotes.

Table B. Exemplary quotes for the themes emerged during the interviews with public officers.

Deficiencies

Issues

Challenges (exemplary quotes)

Organizational

deficiencies Managerial issues

Late involvement of procurement in the project definition:

“Procurement is brought in very late in the game, [when]

decisions are already made and are underway. Sometimes we

identify an alternative, but it is too late.”

Lack of planning:

“Our biggest headache [is] the lack of planning

and the demand for a quick turnaround on

[project] jobs”

Lack of procedure standardization:

“We need to streamline the procurement workflow in

government—too many layers of bureaucracy and too many

hands touch the same document; enhancements to a software

dashboard would be great.”

“There's no standardization, to look up stuff in there”

Staff shortages:

“Estimating is the heart. The accuracy estimation rate is 7%! We

also have a big labor crisis, we don’t have enough people to do

the job.”

“Our procurement office is 1.5 FTE, and it is overseen by the

CFO. We have a $300 million operating budget all run by a

single person—this is a severe understaffing.”

Knowledge issues

Lack of knowledge on financial and cost aspects:

“They [procurement] struggle with price accuracy. They don't

know what something should cost so rely on the contractors.”

“I have some spreadsheets for estimating unit costs, but it is a

struggle. There have been changes in the last 12 months with

COVID. I try to do my best with small projects, but for larger

projects, I really need more people able to do a scope review (…)

it really falls under me, but I do not have the capability to

oversee it in a reliable way.”

Lack of supply market knowledge:

“I don't think there's any training availability. The (name of a

program), all they tell you is the rote legal laws. (Name of

another program), that's a private group you can join, they fail at

dispersing knowledge. Other than that, there is nothing. Small

municipalities need real-world training. There's no one doing

that or teaching anyone. You can follow this manual to a tee, and

it won't help you [to find the best supplier]. There are tips and

tricks everyone could benefit from, in any state.”

Lack of expertise in bid evaluation:

“We would love more expertise. None of us are experts. When I

hit the light switch, I don't care how it works, I just want it to

turn on.”

Construction

procurement

process

deficiencies

Project delivery

method issues

Complexities of the construction procurement process:

“We don't have a county government, so the state has a

contracting portal where all the cities/towns can all post their

bids and arrange it that way…it makes everything more

complicated. We never know who's going to show up and takes a

lot to validate contractors…the lowest bidder is not always the

most responsible bidder…I have seen projects done where the

product is not what we really wanted because of the lowest

bidder [we picked].”

“The process itself is complicated when you get to larger

projects, having to bid out for a month and a half. The other part

is the process within the town, there are a number of approvals

we need to get. It makes it pretty cumbersome. Sometimes it

makes it tougher when you have to get all the documents scanned

and signed.”

Lack of time to execute activities appropriately:

“We are always in rush. It takes a long time to get a quote. We

need prices and proposals sooner, so we can have more time to

analyze them.”

“We cross check bids across each other. We try to make sure we

spell out exactly what we are looking for. We make sure the

warranties cover what we need. We have created estimates on

our own based on previous projects. We sometimes go to cost

databases to get pricing.”

Resistance to adopt alternative delivery methods:

“If they [procurement] can use other tools outside of DBB this

would be a game-changer. It would improve their process to get

the same benefits as a developer.”

“Just lack of experience with it [other project delivery methods].

We've done things a certain way for a long time, and it's worked.

We probably would need a lot better understanding of how it

works and the benefits in order to get on board.”

Supplier evaluation

issues

Unreliable tenders:

“We've done a lot of bids, so we understand how it works. My

concern with complex projects is more about getting competitive

prices, not that I don't trust my contractors’ ability to develop a

scope. We do an in-house estimate based on bids from the past

three years. So, we usually get bids around what we estimate, but

is it fair? We don’t know.”

Difficulties in finding the right suppliers/receiving competitive

offers:

“We are not able to design competitive processes. Sometimes we

only get one bid. Not having enough participation from

contractors. Once you have one contractor doing most of your

stuff, contractors are less interested [to give you the best

performance]. Restrictions from grant and loan requirements

don’t help.”

“We do not find enough contractors to bid on a project”

“There is a lack of people submitting their bids. Especially since

COVID, it has been harder to get them. Contractors have crew

shortages.”

Award contracts “uncompetitively”:

“We do all of our procurement ourselves; we don't have separate

agencies…It is hard to get competitive prices and multiple

bidders at a competitive rate.”

“Sometimes you get a good price, sometimes it works out in your

favor (like an auction) but other times it's the flipside. They [the

suppliers] know how it works and who is not going to go after the

biz so they gouge you on price. The laws are designed to protect

against fraud.”

“Not getting competitive process […] . Sometimes we only get

one bid. We do not have enough participation from contractors.

Once you have one contractor doing most of your stuff

contractors are less interested.” [in bidding]

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Nov 2020
Res Transport Econ

Before the 2019 Coronavirus Disease (COVID-19) outbreak, the Australian Commonwealth and State Governments invested significantly in the upgrade and construction of large-scale transport infrastructure projects (>AU$500 million). However, two trends prevail in Australia. Concessionaires/contractors face a requirement for fixed-price contracts, high levels of risk, and low margins. Concomitantly, an increasing number of projects have experienced significant cost blowouts, with adverse impacts on both the public and private sectors. Calls for the public sector to engage with collaborative procurement approaches to deliver large-scale transport projects, however, have gone unheeded. In this paper, we critically review existing procurement policies and practices used to procure large-scale transport projects and examine their procurement challenges, particularly in a post-COVID-19 world. We suggest that the public and private sectors will need to work in unison to overcome the significant economic hurdles that COVID-19 presents to the nation's infrastructure demands. We then proffer that governments need to re-calibrate their procurement policies to future-proof their large-scale transport infrastructure projects. To facilitate the process of re-calibration, we develop a theoretical procurement framework for consideration based on the concepts of shared leadership, value creation, and risks. It is envisaged that our procurement framework will provide a platform for engendering economic value and accounting for all-important societal costs and benefits in a world post pandemic.

Radical and disruptive answers to downstream problems in collaborative governance?

Article

Feb 2021

The research on collaborative governance has focused on the upstream problems concerning the recruitment of actors, facilitation of collaboration and the fostering of agreement. However, the main problems are possibly located downstream after a decision is made and thus relate to the implementation of joint solutions the evaluation of the results and the attempt to hold the actors to account. Base on new theoretical developments, this article explores some radical and disruptive responses to these downstream problems. Or findings is that while these responses are making good progress in solving downstream problems, we are not quite there yet.

Problem Severity, Collaborative Stage, and Partner Selection in US Cities

Article

Oct 2020

Prior research identifies problem severity as an important antecedent of collaboration. Yet, little is known about how problem severity shapes collaborative behavior of public organizations beyond the initial decision to engage in such action. This study adds to the theory of collaboration by linking problem severity to the stage of collaborative activity and partner selection. We empirically test the validity of these linkages in the context of US local governments and examine how they respond to a wicked public problem—sea-level rise. The analysis draws on 2017 survey data from 140 vulnerable municipalities across 20 states. We find that cities respond to higher risk by increasing their collaborative effort and seeking partners across sectors, with preference for those less similar to them. Our results remain robust to three objective measures of problem severity, as well as to a perception-based measure. A closer examination of the interplay between the effect of real and perceived threat underscores the need to account for the views of local decision makers.

China’s Belt and Road Initiative and the COVID-19 crisis

Article

Jul 2020

Peter J Buckley

How Can Procurement Create (Sustainable) Public Value under the Bipartisan Infrastructure Deal?

Abstract and Figures

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