Procurement Rules Aren’t the Sustainability Answer: Larry Allen

The administration has less power than it once did to shift corporate behavior on issues like sustainability and cybersecurity. Larry Allen looks at the procurement market shares around some of the White House’s recent pushes.

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The federal government was once the dominant buyer of computer hardware. Many of the early technology developments and applications were made for and purchased by government agencies.

Not surprisingly, the government could and did use its collective buying power to mandate rules and behavior for information technology companies.

As commercial adoption of technology broadened, the government lost its ability to be a market leader. This was a painful reality for some, including former Rep. Jack Brooks (D-Texas), who famously tried to make the General Services Administration the only federal buyer of IT.

Government officials eventually came to the conclusion that it was in their best interest to act more like a commercial technology buyer.

The same thing is now happening on the sustainability front. New rules are being imposed on government contractors in an attempt to move whole industries in the government’s preferred sustainability direction. Hardly a week goes by without an administration official stating that the size of government buying can drive everything from building practices to automotive changes and, back on the technology front, software acquisition.

Does the government have sufficient buying power in non-exclusive markets to achieve its goals? A quick look at a couple of key indicators suggests that it does not. As such, the additional rules may do little more than increase costs for both contractors and government buyers.

According to Grand View Research, the total world market for business software in 2022 was approximately $474.6 billion. Federal Procurement Data System information, viewed through Bloomberg Government’s historical spending analysis tool, shows that the government purchased about $12.2 billion. This figure is 2.6% of total global sales, assuming that all commercial software was used for business. The real number is likely quite lower.

The federal vehicle fleet is at around 656,000 according to 2021 data (the most recent) from the General Services Administration. That’s slightly less than 1% of all global vehicle sales in 2022. Forbes estimates that there were over 278 million vehicles in the US alone during 2021, making the size of the federal fleet less than a quarter of 1% of that total.

Even in areas where the government is aggressive, such as cybersecurity, the financial industry is still considered by many to be at the forefront of new technology security developments, with civilian agencies sometimes copying their already applied approaches. Though the government market may be closer to on par for cyber solutions, the speed at which commercial companies move makes the government something other than the market leader.

Simply put, although the federal government is a large buyer of many common items, it isn’t sufficiently large enough to be the market driver it wants to be. Adding new rules to the acquisition process will do little, if anything, to move the sustainability needle on a global scale. It will, however, add costs that taxpayers will eventually be responsible for in the form of higher government prices, even for commonly used commercial solutions.

Sustainability may be a worthy goal, but achieving that goal will require the use of more effective tools than acquisition can provide.

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Author Information

Larry Allen, president of Allen Federal Business Partners , has 33 years’ experience in government acquisition. He has provided critical information and advice to most of the top 10 federal contractors doing business with the government today.

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