B2B Payments

Bringing Government Procurement Into The Digital Age — And Onto Online Marketplaces

State and local governments buy from suppliers across contracts and catalogs. Like all manner of commerce, online marketplaces can speed the connection between buyers and sellers. Periscope Holdings’ SVP David Landsman explains how digitizing public sector procurement can maximize the use of taxpayer dollars.

Think of government spending, and the first word to come to mind might decidedly not be this one: efficient. The mind casts back to press reports of hammers that cost hundreds of dollars, for example, or grumblings that tax dollars, in general, are not being used efficiently on the most vital of services.

For state and local governments (which strive to buy from smaller, local businesses), the challenge is to manage data about what agencies are buying, and whether procurement processes are being managed well in terms of cost and quality. For vendors, there are challenges, too, as they navigate government agency solicitations for products and services, and seek to bid competitively.

Governments, then, can take a page from eCommerce, where two-sided marketplaces bring buyers and sellers together with speed and transparency. Though commerce is governed by rules in the private sector, procurement is governed by laws in the public sector.

There’s a difference, of course — because, when it comes to government procurement, the money used to buy goods and services comes out of the taxpayer’s pocket.

In an interview with Karen Webster, David Landsman, senior vice president for Periscope Marketplace at Periscope Holdings, said the evolution of public sector management for procurement through electronic means is still in its infancy. He added that the government procurement landscape is ripe for digitization and consumerization. There is limited visibility to source and complete contracts with the cooperatives that offer IT, security and law enforcement through approved industry partners.

“These agencies are not able to easily compare what is on offer from the various cooperatives they shop from,” said Landsman, “and the whole cooperative industry, in and of itself, can be confusing.”

With such confusion in place, he noted, there’s no way for the state of Nevada to benefit from some of the same efficiencies that the Commonwealth of Massachusetts generates.

One-Stop Shop

Periscope, for example, through its marketplace, seeks to offer what is billed as a “one-stop shop” for government buyers to compare publicly sourced contracts and “open market” items that are not formally approved, or specifically listed in contracts. Landsman noted that the marketplace model also lets suppliers bring their catalogs to the attention of government agencies with which they do not already do business.

He added that the marketplace also takes into account the various payment methods preferred by buyers, such as ACH and P-Cards. The majority of onboarding and authentication efforts, he told Webster, are handled by Periscope’s agency customers — and the agencies, in turn, have been doing business with its supply bases for years.

“The fact that the agencies have contracts with the suppliers is validation in and of itself,” he said.

As Landsman noted, the embrace of the marketplace model has been uneven across various agencies — some have been more forward-thinking in their movement toward the digital age, and some have had to be pulled toward the future. Yet, as he told Webster, “we’ll get there together eventually.”

To get there requires breaking down the silos of communication that exist between buyers and suppliers, Webster noted — no easy task, to put it mildly.

“It is going to be hard,” Landsman concurred. “But the most value comes when you are able to solve the hard challenges — for both businesses and governments, … digitization has little to do with tools, and everything to do with mindset.”

He explained that private sector specialists fall short when they try to get into the public sector space. “It’s a very different world, and they are not designed for it in the way that Periscope is,” Landsman said.

When asked by Webster whether Amazon is a threat or complement to Periscope’s business, Landsman noted that the company views Amazon as a complement.

“Amazon is one of many options [in procurement]. Amazon is a great potential partner, or great potential supplier. The pricing that you see through Amazon is based on a ‘quantity of one,’ and [the] government does not procure based on a quantity of one,” he explained.

With Periscope enabling its customers to upload their catalogs to the marketplace, bringing those catalogs to government agencies at large — and sharing the pricing with multiple agencies — helps transparency, and, in effect, localizes commerce. Bringing government procurement fully into the age of eCommerce, he acknowledged, is a massive undertaking.

“How do you eat an elephant?” he mused. “One bite at a time.”


New PYMNTS Report: The CFO’s Guide To Digitizing B2B Payments – August 2020 

The CFO’s Guide To Digitizing B2B Payments, a PYMNTS and Comdata collaboration, examines how companies are updating their AP approaches to protect their cash flows, support their vendors and enable their financial departments to operate remotely.