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6.1.B. - Page 7 While every city in the County operates its own purchasing system, all cities share common practices and operations. 12 These commonalities stem from shared state and federal regulatory requirements, adherence to generally accepted best practices, and similar economic pressures. 13 By identifying systemic purchasing challenges and common solutions, cities have the potential to achieve consequential cost savings. In addition to benefiting from cost savings, the effective and efficient purchasing of goods and services is essential to the proper function of municipal government. When purchasing fails to achieve the highest standard of excellence, the quality and variety of services fall and the potential for wasting taxpayer money increases. Advantages of Decentralized Procurement Practices In decentralized purchasing systems, individual departments are responsible for: (a) identifying the need for a good or service, (b) conducting the appropriate vendor selection process, and (c) placing a purchase order for the good or negotiating a contract for services.14 In contrast, under a centralized purchasing system, individual departments still identify the need for a good or service, but a central purchasing department is responsible for conducting the appropriate selection process, negotiating with the vendor, and purchasing the good or service. II Although these processes might appear identicala city entity identifies goods and services for purchase, competitively bids the product, and purchases it from a vendor—fundamental operational differences and outcomes exist between these two systems. Historically, limited supply chains and less competitive markets for goods and services required municipalities to rely on specialized purchasing agents for competitive purchasing. 16 These purchasing agents, working in central purchasing departments, could negotiate directly with producers to secure lower prices for goods and services." Specialized purchasing roles also gave agents substantial expertise and experience in their field that today's employees cannot accumulate.) s However, as the market for goods and services has grown more competitive (a result of globalization, the internet, lower transportation costs, and gains to economic productivity) prices have fallen, leading many to believe that the need for specialized purchasing agents has " Interviews with City Finance Officials, Grand Jury Review of City Procurement Documents. 13 Interviews with City Finance Officials. " Clifford McCue, Jack Pitzer "Centralized vs. Decentralized Purchasing: Current Trends in Governmental Procurement Practices" (2000): 4. 15 ibid. " "Centralized vs. Decentralized Purchasing: Current Trends in Governmental Procurement Practices" Journal of Public Budgeting, Accounting, and Financial Management (2000). 17Money Matters "Centralized & Decentralized Purchase: Suitability, Merits and Detriments" Accountlearning.com Accessed on March 28, 2018. httr)s:Haccountleamina.com/centralized-decentralized-purchase-suitability-merits- demerits-differences. 18 Ibid. 2017-2018 San Mateo County Civil Grand Jury 4