Medical Supply Acquisition in Italy and the United States in the Era of COVID-19: The Case for Strategic Procurement and Public–Private Partnerships

• DOI: 10.1177/0275074020942061
• Author: Eric J. Boyer,Niccolò Cusumano,Veronica Vecchi
• Published date: 01 August 2020
• Date: 01 August 2020
• Subject Matter: The Case For & Against BureaucracyChallenges Acquiring Personal Protective Equipment & the Impact on Supply Chains

https://doi.org/10.1177/0275074020942061

American Review of Public Administration

2020, Vol. 50(6-7) 642 –649

© The Author(s) 2020

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DOI: 10.1177/0275074020942061

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Challenges Acquiring Personal Protective Equipment & the Impact on Supply Chains

Introduction

The crisis surrounding the 2019 novel coronavirus

(COVID-19) highlights the case for strategic procurement of

medical supplies, such as ventilators and personal protective

equipment (PPE), whose global supply chains were initially

disrupted by the lockdown in China and, subsequently, by a

surge in global demand. Responding to a global emergency

such as COVID-19 requires the development of systems that

can improve disaster resilience (Holling, 1973; Manyena,

2006), and efforts to expand and sustain the procurement of

medical supplies. The challenge is that public procurement

transfers higher levels of contract risk onto public agencies

in times of disaster (Buor, 2019; Gabler et al., 2017;

McKnight & Linnenluecke, 2016; Walker et al., 2013).

Procuring authorities require goods and services at the same

time, setting off bidding wars that escalate the costs of sup-

plies. Because of the lack of suppliers, procurement officials

often rely on vendors from gray markets (Antia et al., 2006;

Huang et al., 2004), including those who may have little or

no experience working for the government or even in supply-

ing the products they have been contracted to provide.

Procurement officials also rely on thin markets (Beck &

Maher, 1986; Theobald & Price, 1984), whereby the number

of available vendors is limited and the urgent need for medi-

cal supplies requires sole-sourced, no-bid contracts.

This article sheds light on the main challenges faced by

two of the countries most affected by COVID-19, Italy and

the United States, which are characterized by opposite

health care systems. Private providers and private insur-

ance companies characterize the U.S. system; in Italy,

there is a national health care service with universal cover-

age, financed by general taxation. In both countries, there

are procuring agencies that serve a network of hospitals.

The procurement of medical supplies in Italy and the

United States have traditionally prioritized contractor

competition, to avoid service cuts in the former and to

increase profitability in the latter (Meehan et al., 2016).

For example, U.S. hospitals and their purchasing agents

have come to rely less on their own stockpiles of supplies

of PPEs (Volland et al., 2017) and have, instead, turned to

just-in-time inventories to bring down costs (Swanson,

2020). In both the United States and Italy, hospital pur-

chasing depends on foreign manufacturing and interna-

tional supply chains that provide critical input products for

942061ARPXXX10.1177/0275074020942061The American Review of Public AdministrationVecchi et al.

research-article2020

1Bocconi University, Milano, Italy

2The University of Texas at El Paso, USA

Corresponding Author:

Veronica Vecchi, SDA Bocconi School of Management & Cergas, Bocconi

University, Via Roberto Sarfatti, 25, 20100 Milano, Italy.

Email: veronica.vecchi@unibocconi.it

Medical Supply Acquisition in Italy and

the United States in the Era of COVID-19:

The Case for Strategic Procurement and

Public–Private Partnerships

Veronica Vecchi1, Niccolò Cusumano1, and Eric J. Boyer2

Abstract

The article analyzes contracting challenges faced by Italian health care authorities and U.S. procurement officials in the

immediate aftermath of the COVID-19 crisis, and it provides practitioner-derived lessons for improving procurement in

times of disaster. The lessons we have learned so far emphasize (a) the need to recognize the strategic role of procurement,

(b) empowering procurement officials, (c) formalized coordinative mechanisms cannot ensure effectiveness without trust

among different governance levels, (d) the ability to identify reliable and proactive suppliers of personal protective equipment,

(e) the importance of stimulating the economic market to diversify the production of needed materials and to ensure a more

risk-resilient supply chain, and (f) the critical role of public–private collaborations to ensure responsiveness and resilience of

health care systems.

Keywords

COVID-19, public procurement, public-private partnership, strategic procurement, disaster resilience