The rising cost of goods and services remains the top external challenge for public sector procurement leaders for the third consecutive year, as cited by 74% of respondents in Euna Solutions’ 2026 State of Public Procurement report.
Budget reductions or stagnation was the second biggest challenge, cited by 55%, followed by 48% who said economic uncertainty is a top challenge.
Mayors are also feeling the financial crunch this year, according to a National League of Cities report. Economic development was the topic they collectively focused on the most in state-of-the-city speeches, NLC found.
For public procurement professionals, ensuring compliance is the top internal concern, cited by 46%. This reflects “the mental weight compliance management places on already stretched teams,” the Euna Solutions report states. Urgent or unplanned requests and budget management followed, both with 42%.
“In public procurement, a small oversight can have significant impacts on taxpayers, vendors, and City operations,” one survey respondent said.
Euna Solutions surveyed 100 public sector procurement professionals across North America in June for the report. Forty-five percent were from municipal governments and the rest from education, federal and state agencies and other public entities.
Streamlining and automating processes — the top priority in public procurement for three consecutive years — was a prime concern for 50% of respondents over the next 12 to 18 months, the survey found. Implementing cost reduction strategies was cited by 40%, and retaining and recruiting staff cited by 33%.
The survey found 39% of respondents want or are open to AI, while 41% were neutral and 21% uninterested. But 41% said they’re not confident their departments are ready for AI, while 42% are somewhat confident and 17% very confident.
As more public sector employees use AI, the technology is also influencing procurement and could reduce procurement lead times, according to experts. But questions surrounding oversight and ethics remain.
“It’s the wild west right now,” Danielle Mouw, a procurement analyst with the General Services Administration, said of AI during a CivicLabs panel earlier this year.
