5 Reasons Transparency in Construction Procurement is Important

We’ve recently explored the idea of transparency in construction procurement, both in our own publications and in an industry research brief produced in partnership with GovExec. It’s important, though, to first establish a foundation for the value of procurement transparency, especially in the public sector. With that in mind, here are five key reasons that government agencies and other public entities should prioritize transparency in their construction procurement.

1. The Times

Government spending has been a topic of interest over the last two years. The pandemic ushered in a new era of increased federal aid funding to states and municipalities. Questions about how those funds would be spent naturally followed, creating an increased need for government agencies and public entities to document their spending in a transparent manner.

Even before the pandemic, though, agencies were being challenged to demonstrate transparency in construction procurement. A wide array of technology and software tools are available now to house and track spending, purchase orders and estimates, and government groups have been expected to adopt these tools and make information more easily accessible. Those that haven’t leveraged these tools have fallen behind today’s best practices and left themselves in a compromised position.

The best way to avoid the disappearance or improper use of funds is to track every dollar and regularly check spending records to make certain that the right amount went to the right purpose at the right time.

2. Audits

Audits are designed to serve as part of the routine system of checks and balances, but they can cast a foreboding shadow over agencies that aren’t certain they can prove when and how public funds were spent. If a public official were asked to list reasons for keeping records of their spending, they’d likely mention audits first. They are top-of-mind for those responsible for cataloging public project spending, even though not every project will be audited.

When one does occur, though, having a transparent record of purchase orders will make the process easier and decrease the likelihood of spending coming under scrutiny. If the proper dollar amount can be traced from the source to the vendor, and proof can be provided that those amounts were spent on the appropriate items or services, then a public entity will have nothing to fear during an audit.

3. Protecting Funds

As the saying goes, money talks. Without proper funding, public entities can’t fulfill their missions, grow their program offerings and continue to better their communities. Transparency in construction procurement protects agency funding in two ways: It ensures that funds aren’t lost in illicit activities during the current budget year and provides a buffer from reduced funding for coming budget years.

The best way to avoid the disappearance or improper use of funds is to track every dollar and regularly check spending records to make certain that the right amount went to the right purpose at the right time. With such a system in place, even if someone within the agency attempts to improperly use funds, the event can be caught and addressed internally, preventing the organization from failing future audits.

That transparent record can also provide a platform for the agency to lobby for greater funding moving forward. If it can be proved that each dollar in the current year went to the fulfillment of the mission, tying funds to positive performance, then the case can be made that an increased budget in the upcoming year will fuel even better performance.

4. Public Trust

The public’s sensitivity to government spending seems to be at an all-time high, perhaps spurred by recent national and geopolitical events like the change in administration, the global pandemic, the devastation caused by natural disasters and a landmark infrastructure spending bill. And while much of the national discussion and, at times, scrutiny of government spending has focused on federal-level decisions, the spending of state and local governments have also been a growing topic of conversation and reporting – particularly among the recent release of stimulus funding.

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As states and municipalities make use of federal funds over the course of the upcoming year, the communities they serve will be watching to be sure those funds are spent well. Whether you plan to improve roads, build public housing, update schools or find other ways to invest in your community, building transparency into your procurement process will help gain public support and preserve their trust. Elected officials and government workers are ultimately accountable to the public, and a loss of their trust can lead to recalls, petitions for audits and losses of government positions.

5. Legal Issues

Self-preservation is, at all times, a strong motivator. It’s safe to assume that every public sector worker wants to keep as much distance between themselves and the possibility of legal recourse. If public agencies fail audits or can’t prove the appropriate use of funds, an investigation will commence to assign responsibility to one or more people within the agency. Depending on the gravity of the charges, the consequences could range from termination to heavy fines to prison sentences. No one wants to come under the hammer.

Help Along the Way

Gordian’s procurement solutions increase the transparency for construction projects. Our secure, cloud-based software tools allow agencies to track every document and purchase order, saving them on file in case an audit occurs. Gordian experts are also on hand to review documents and project progress, providing a neutral third-party presence to minimize the chance of mistakes or misuse of funds. Learn more about our transparent procurement solutions here.