It’s August and the air conditioning just stopped working. You’re
sweating profusely, your kids are screaming and you have no idea how to
fix it. It costs $500 to repair, $1,000 for a basic new one and $5,000
for the deluxe version. What do you do?
You haven’t gotten a raise in three years, you just added $1,000 in
monthly day-care costs and your car is making noises. Sound familiar?
Many Americans face this situation daily, and local governments face the
equivalent with their budgets — existing infrastructure needs repair;
new projects and requirements keep growing; and revenue is flat to
decreasing.
So what do you do? One answer is to use the strategies of personal finance.
Think of your personal buying habits. In life, sometimes your budget
shrinks — you lose your job, change to a lower-paying industry or add a
new expense. But you make changes — you take fewer vacations, buy
generic products, delay purchases and shop at Target instead of
Nordstrom. You may seek out independent job opportunities and focus on
optimizing what you already own, such as refashioning old clothes and
rediscovering hidden gems in your closet, instead of buying new clothes.
In addition, you become smarter about new purchases; you get more
quotes and really understand what’s needed when getting something
repaired.
So why don’t we do the same in government? As agencies are met with flat
and shrinking budgets, they should take an individual budgetary
approach and optimize how they are buying and using resources:
1. Maximize what you already own
Just like going
through your closet and finding some great clothes you bought and
forgot, do the same by going through your inventory. With most software
licenses, you already have access to amazing things that you probably
aren’t using. Many of these licenses could be combined to create new
solutions.
2. Get more quotes
When money is tight, you wouldn’t
buy a new air conditioner for your home based on one quote, right?
Governments also should get multiple quotes and promote their RFPs
instead of merely posting them. Work with vendors like Onvia and Deltek
to ensure your local procurement is distributed nationally. Make sure
the best candidates know about your RFP and encourage them to apply. And
just like you would negotiate when buying an air conditioner, negotiate
with applicants.
3. Reduce the barriers
If you asked five air
conditioner repairmen to fill out 20 different forms to win your
business, guess what — no one would do it. Part of the reason it is hard
to get into government procurement is that it’s expensive. Each state
and local government has different rules and regulations, and meeting
them costs lots of money. Each requirement also adds more cost —
companies spend thousands of dollars just for potential to win the
business. If we reduce the barriers to requirements, it allows
contractors to offer lower prices and more competition.
4. Prioritize
When the budget is tight at home,
priorities are necessary. That vacation to Disney World gets pushed to
next year as the air conditioner becomes the priority. The same is true
with local government — agencies must prioritize the nice-to-haves
versus the essentials. Also, look for replacements — downscale the
Disney World trip to a local amusement park. The large enterprise system
may be met with a nimbler, simpler service.
As funds shrink, government should embrace the same budgeting techniques
we use at home — when the budget is low, you make changes. You stretch
each dollar, maximize what you already own and look for sales. And
sometimes you still buy a new air conditioner because it’s worth the
long-term investment.
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