An exploration of knowledge-based factors affecting procurement compliance
| DOI | https://doi.org/10.1108/JOPP-14-01-2014-B001 |
| Pages | 1-32 |
| Published date | 01 March 2014 |
| Date | 01 March 2014 |
| Author | Timothy G. Hawkins,William A. Muir |
| Subject Matter | Public policy & environmental management,Politics,Public adminstration & management,Government,Economics,Public Finance/economics,Texation/public revenue |
JOURNAL OF PUBLIC PROCUREMENT, VOLUME 14, ISSUE 1, 1-32 SPRING 2014
AN EXPLORATION OF KNOWLEDGE-BASED FACTORS AFFECTING
PROCUREMENT COMPLIANCE
Timothy G. Hawkins and William A. Muir*
ABSTRACT. Public procurement officials are bound by extensive policies,
procedures, and laws. However, procurement professionals perpetually
struggle to comply with these vast requirements – particularly in the
acquisition of services. The purpose of this research is to explore
knowledge-based factors affecting compliance of service contracts. A
regression model using data acquired via survey from 219 U.S. Government
procurement professionals reveals that the extent of compliance is affected
by buyer experience, personnel turnover, the sufficiency with which service
requirements are defined, post-award buyer-supplier communication, and
the sufficiency of procurement lead time. From these results, implications
for practice and theory are drawn. The study concludes with a discussion of
limitations and directions for future research.
INTRODUCTION
Public procurement officials are bound by a litany of policies,
procedures, laws, and rules in the execution of their duties to procure
goods and services that satisfy agency needs, promote public policy
objectives, and maintain the public’s trust ensuring efficiency,
fairness, and transparency. The amount of government regulation in
public procurement is overwhelming – arguably necessary to manage
the increasing complexity of acquisition (Acquisition Advisory Panel,
--------------------------------
* Timothy G. Hawkins, Lt Col, USAF, Ph.D., CPCM, C.P.M., is an Assistant
Professor, Department of Marketing, Western Kentucky University. His
current research interests include electronic reverse auctions, procurement
ethics, buyer-supplier relationships, strategic sourcing, services
procurement, and supplier performance management. William A. Muir,
Captain, USAF, CPSM, M.B.A., is a Contracting Officer at the Air Force
Installation Contracting Agency, Wright-Patterson Air Force Base, Ohio.
Copyright © 2014 by PrAcademics Press
2 HAWKINS & MUIR
2007). But procurement laws and regulations are also self-
perpetuating as officials and lawmakers react to the latest problem,
implement additional rules, and invite more opportunities for non-
compliance (Coopers & Lybrand, 1994).
Suppliers’ compliance with these rules adds tremendous costs to
acquisitions. Stemming from an awareness that some key
companies refused to do business with the U.S. government, the U.S.
Department of Defense (DoD) commissioned a study to explore the
effects of regulation. The study found that laws and rules such as
the Truth in Negotiations Act, Cost Accounting Standards, and military
specifications added an 18 percent premium to value-added costs
(Coopers and Lybrand, 1994). These rules affect not only suppliers;
they increase transaction costs to the public agencies that must
promulgate, implement, and enforce them.
The U.S. Federal contracting workforce is overworked
(Government Accountability Office [GAO], 2009a) and understaffed
(GAO, 2001). Competency levels in the federal contracting workforce
decreased from 2008 to 2012 (Federal Acquisition Institute [FAI],
2012). Cracks in the seams of work products are showing –
particularly in the realm of service contracting. In 2001, the U.S.
Government Accountability Office (GAO) labeled the DoD’s acquisition
of services as ‘high risk’ (GAO, 2001), stating the department’s poor
management of service contracts undermined the government’s
ability to obtain value for the taxpayer’s dollar. The DoD struggles
with defining contract requirements, providing sufficient contractor
oversight, and adequately staffing contracting professionals. The
DoD lacks the key elements at the strategic and tactical levels to
make service contracts a managed outcome (GAO, 2007a). The GAO
(2007b) again questioned whether the DoD applies sound business
practices to the acquisition and management of contracted services
in: defining requirements, obtaining adequate competition, managing
contractors in a contingency environment, assessing contractor
performance, and executing interagency contracts and task orders.
Recent reports highlighted compliance issues including a lack of
required documentation (GAO, 2007c), failures to compete contracts
(Department of Defense Inspector General [DoDIG], 2004, 2010;
GAO, 2004), contracting for inherently governmental functions (GAO,
2012a), failures to record contractor performance assessment
AN EXPLORATION OF KNOWLEDGE-BASED FACTORS AFFECTING PROCUREMENT COMPLIANCE 3
reports (GAO, 2013), and increased rates of bid protests (GAO,
2012c).
But why is the DoD experiencing so much trouble with the
acquisition and management of contracted services? Public
contracting processes are promulgated through many people in many
agencies. Effectiveness depends on mastery of vast knowledge. This
knowledge is explicit and tacit – accumulating from education,
training, and experiences. However, the knowledge-related factors
affecting the extent of regulatory and statutory compliance have not
been explored. While some research is dedicated to exploring
compliance by the targets of regulations and laws, such as
individuals’ compliance with tax laws and contractors’ compliance
with acquisition laws and regulations (Mwakibinga & Buvik, 2013),
very little research addresses the government’s challenge of
administering them.
With this backdrop, the purpose of this research is to explore
factors affecting statutory and regulatory compliance of service
contracts. Such research is important because the U.S. federal
government spends approximately 15 percent of its budget, or $537
billion (GAO, 2012b), on purchased goods and services. If agency
noncompliance is as pervasive as reported, substantial funds could
be at risk of waste. Further, many public policy objectives could be
compromised.
To address these research questions, we first scanned extant
literature addressing services and knowledge management. We
combined the relevant antecedents into a model that explains
compliance. The remainder of this work is organized as follows. First,
the study discusses the conceptual framework and proposed
hypotheses. Next, the study presents the research design and
methodology. Then, the study provides an analysis of the proposed
model and reports the findings. Lastly, the study offers a summary
discussion, including conclusions and implications.
LITERATURE REVIEW & HYPOTHESES
The regulation of public agencies entails “processes by which
standards are set, monitored and/or enforced in some way, by
bureaucratic actors who are somewhat separate from units or bodies
that have direct operational or service delivery responsibilities” (Hood
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