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Government Agencies Frequently Take Twice as Long to Complete Contracts Compared to the Private Sector – Are They Overlooking an Obvious Fix?

By Kim Miller

Government agencies work hard to deliver value to constituents, yet many taxpayers remain dissatisfied with the speed and quality of public sector work.

Where’s the disconnect? Recent research suggests contracts may be part of the problem. 

A new report out from World Commerce & Contracting finds that “low complexity” and “medium complexity” contracts take the public sector twice as long to go from bid initiation to signature than in the private sector.

The numbers are better for “higher complexity” contracts, but those still take 25% longer in the public sector.

As the authors of “CCM Benchmark, Public Sector Insights” note, longer cycle times for public sector contracts are, to some degree, inevitable. With taxpayer funds at play, public agencies rightly abide by strict procurement and security regulations to ensure the proper use of funds and auditability.

But that’s not to say that these long turnaround times don’t have an impact.

Long contract cycle times are a hidden cost

“These delays matter,” the authors write. “They represent a source of cost; they represent a delay in product or service availability; they are a source of frustration to many stakeholders; and they make procurements more vulnerable to change.”

In other words, while government agencies may never be as fast as the private sector in contract turnaround, the public sector should also not be complacent with the status quo. Rather, it should be on the lookout for ways to streamline procurement contracting to the greatest extent possible to reduce cost and risk.

Digital transformation is a key opportunity for government contracting

Digital contracting software is one example that has become a mainstream technology in the private sector, with a proven track record of greatly reducing contract cycle times.

At Microsoft, for instance, simple SOWs are approved 83% faster since the deployment of an enterprise contract management system. With the system in place, procurement managers can easily access pre-approved contract templates, then route them to legal for review.

However, the Benchmark Report suggests that the public sector is not prioritizing digital solutions like these.

“The data shows that the hunger for technology is far lower than that in the private sector,” the authors write, “perhaps because of a lack of understanding of the potential benefits….”

Whatever the reason, the new data on contract turnaround time should be a call to action for public sector contracting leaders to rethink their approach to contract technology.

Granted, technology alone can’t transform contracting processes – the report provides important insights into the upskilling and process improvements also necessary to empower contract transformation.

Yet, with AI and other advanced technologies transforming how we work, there is no excuse for leaving contracts behind in the filing cabinet.

Want to read the full Benchmark Report? Access it here. 

Benchmark Report

Transforming public sector contracting: new trends and strategies for 2024

83% of public sector leaders now prioritize improving internal processes, reflecting a significant focus on efficiency and transparency in 2024.

Read the Report