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Government Should Learn From Private Sector
Government officials should follow the lead of the private sector by adopting cost reduction practices for the procurement of custom goods and services.
Even though the Great Recession was supposed to have ended in June 2009, the United States has seen the largest two-year drop in “labor compensation”
“These are just some of the indicators cited by national media to illustrate that these remain tough times for the economy – one that is supposed to be the international pillar of strength,” said William Gindlesperger, chairman and chief executive officer of e-LYNXX Corporation. “Repeatedly elected and appointed government officials have been admonished and told that the engine for job creation must be the private sector. The purpose of government in a democracy is not to create jobs but to support an environment in which the private sector can thrive and create employment opportunities.”
With that in mind, Gindlesperger went on to say decision makers in Washington should embrace measures that would both reduce government spending and boost private sector jobs. Here are two ways to help accomplish both:
• Enforce compliance with Title 44 of the United States Code which directs federal agencies to channel all printing through the United States Government Printing Office (GPO). For decades, GPO has had the best of all government procurement programs. Printers nationwide depend on the millions of dollars that GPO awards annually to the private sector for the production of envelopes, tags, color copying, kit folders, cut sheets, four-color process materials and promotional specialties to mention a few categories of print jobs. Most printers vying for this work are small businesses with 20 or fewer employees, and their livelihoods depend on the $2,000 to $5,000 average per GPO job. GPO has said it annually awards contracts to more than 2,500 vendors nationwide. This represents some 50,000 jobs. The total number registered to do business with GPO is around 16,600 vendors, representing potentially 332,000 jobs. The key word is potentially. If the estimated $800 million in print work now being done in agency print shops were stopped that huge volume of printing would be channeled through the GPO where costs would be reduced by as much as 50% compared with agency plants. If that were done, the potential annual savings for taxpayers would be at least $400 million, and this is an historical fact. However, the $800 million is based on government accounting which is strange and excludes many of the costs the private sector includes in its accounting. In real numbers, the government controls many billions of dollars in printing (as everyone recognizes, government runs on paper). More private sector jobs would be needed to handle the increase in work that would flow through the GPO procurement program, and this would be a welcomed boost for job seekers and the economy.
• Embrace new procurement technology that is enabling private sector organizations to reduce their cost for goods and services by 25% to 50%. Antiqued procurement programs that have not been updated in 20 or more years are as effective as typewriters in today’s computer age. One example of a private sector initiative that is lowering costs by an average of 42% on jobs awarded is the automated vendor selection (AVS) process. Driven by AVS TechnologyTM, vendors carefully screened and objectively qualified are automatically selected to compete for work and in doing so lower their prices to fill gaps in their production schedules. The buying organization benefits from lowered pricing from qualified vendors, and the winning vendor is awarded work that it otherwise would not have. The competitive bidding environment provides a level playing field for all qualified vendors. For the buyer, there are additional benefits. When the technology is used with a robust web-based workflow and communications system and best practices, the process delivers total transparency, full accountability for all participants (buyer and vendor), strengthened quality controls and significant efficiency gains. Also, an indelible and auditable task-by-task record of each
project is established for future reference. This approach, already licensed by a host of private sector industries, can be used for a wide range of applications including specialty products, commercial printing, temporary staffing, direct mail, construction services, publications, packaging and transportation. Using the 42% average savings of current AVS Technology private sector licensees as the benchmark, a government program (local, state or federal) with $1 billion in procurement costs could achieve $420 million in cost reductions for procuring the same goods and services. In government parlance, that is $4.2 billion in cost savings over 10 years for each $1 billion in present costs. It is even more when considering that the savings of taking people off unemployment and putting them back to work in non-government jobs.
Before either of these cost reduction measures can be implemented to the benefit of private sector businesses, job seekers and taxpayers, Gindlesperger emphasized that government leaders have to change their ways: “They must rein in government agencies that are duplicating services already provided in the private sector. It makes no more sense, for instance, for government agencies to operate printing plants than it does for them to manufacture their own vehicles. Leaders must demand that government agencies outsource work to private sector businesses that already are set up to perform a particular job. The role of government is not to compete with the private sector. Government’
About e-LYNXX Corporation
e-LYNXX Corporation patented the technology integral to e-commerce. Endorsed by Educational & Institutional Cooperative Purchasing (E&I) and Printing Industries of America (PIA), e-LYNXX drives results through its three divisions. ● AVS TechnologyTM licenses the patented* automated vendor selection procedure used in e-commerce and procurement systems. ● American Print Management provides web-based system, services and patented AVS TechnologyTM to reduce substantially the procured costs of direct mail, marketing, publications, packaging, labels and other procured print. ● Government Print Management offers effective U.S. GPO bid services and strategies. www.e-
*U. S. Patent No. 6,397,197, Patent No. 7,451,106, post-Bilski Patent No. 7,788,143, and Continuing Application 12/855,423 (collectively, the AVS TechnologyTM)