The collapse of global trade, murky protectionism, and the crisis:

17. Public procurement: focus on people,
value for money and systemic integrity,
not protectionism
Steven L. Schooner and Christopher R. Yukins
George Washington University
As nations come to grips with the global crisis, proper management of government
procurement systems is critical. Massive fiscal stimulus packages mean that government
spending is set to expand significantly. States must manage these expenditures
wisely to obtain value for their money – a result that is essential to sustaining public
and private confidence that public funds are being well spent.
Demonstrate responsible fiscal stewardship
Confidence in government, particularly the government's ability to be a good fiscal
steward, is critical as the global economy struggles to recover from the present economic
crisis. The stakes are enormous, and they will only become more so.
Throughout this decade, the increased volume of public procurement spending has
been remarkable. From 1995 to 2006, public procurement in the EU more than doubled
as a percentage of GDP, and US federal procurement grew five times faster than
the rate of inflation. Given the massive stimulus spending, public procurement's
share of total economic activity should rise dramatically.
To meet their goal of stimulating sagging economies, stimulus packages require
rapid expenditure of government funds. But history is replete with examples – during
times of war and/or natural disasters – that demonstrate that expedited spending, particularly
of dramatically increased sums of money, leads to suboptimal outcomes.
States tend to pay too much for what they buy and, all too often, experience greater
levels of wasteful spending, inefficient outcomes (often in the form of paying abovemarket
prices for, in the worst-case-scenario, substandard goods and services), and,
alas, fraud and corruption. As a result, public confidence in government suffers (at a
time when confidence in government is particularly vital).
Derailing the "Buy American" express train: a cautionary tale
Economic stress and stimulus spending can bring out protectionism. Here the US's
stimulus package offers a cautionary tale.
As legislators rushed to inject a nearly $800 billion into a stagnating economy, special
interests demanded that stimulus-funded public works projects use only domestic
iron, steel, and manufactured goods. These "Buy American" stimulus provisions
would have violated, at worst, the letter and, at best, the spirit of many trade agreements,
which commit the US (and the majority of its constituent states) to non-dis-
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