Craig Brewin continues his three-part report from the Global Public Procurement Conference. Part 1 is here and Part 2 here.
This is the final part of my coverage of the Global Public Procurement Conference held in Washington DC in September. As the conference progresed we heard less from the more developed nations and more from those in the developing regions. The full conference is available on YouTube – the group discussions on the work of individual organisations and Governments.
An alternative view of transformation was articulated. One contributor from the floor, from Afghanistan, said that digitalisation is threatening. If procurement becomes a much smaller function it will mean a loss of jobs, and this in some countries is a real problem as these jobs are needed and new jobs will not appear quickly. Yokasta Guzmán from the Dominican Republic outlined their own procurement strategy in relation to women-led organisations and micro SMEs. Supporting this sector is a huge priority for the government and the importance attached to it reflects its importance to the economy as well as being an expression of the type of society that the Republic wants to be. Procedures are open, transparent and designed with micro-enterprises in mind, and they go as far as specifying products that are easier for them to manufacture. We were shown some wonderfully hand-crafted Christmas decorations to demonstrate this.
Harjinder Jutle from Montserrat raised the issue of changes in procurement strategy being technology-led. Montserrat was the first island in the East Caribbean to introduce an electronic tendering system but the documented procedures, connection to other strategies, and the wider procurement culture are still being addressed. Consequently, the option to submit manual bids remains and, for the recent ferry tender, the highest profile tendered service on the Island, all bidders chose to hand deliver manual bids.
It is clear is that there is a need to integrate procurement strategy with broader social objectives. One of the future roles for procurement professionals set out by Professor Larry Giunipero in the opening session of the conference was to link strategic sourcing to the overall values and objectives of an organisation, supplemented by, not replaced by, technology. This is clearly also the case where organisational goals are developmental.
Daniel Sanchez from the Inter-American Development Bank set out how Digital Innovation in Public Procurement should link to the National Development Agenda. The drivers of a national development strategy relate to fiscal issues, the development of infrastructure, service provision, private sector development, and social responsibility. The procurement strategy relates to control of resources, efficiency, and the delivery of public policy. Clearly each of the development drivers can be mapped to the procurement ones. According to Sanchez, Digital Innovation is crucial to these areas of interface, and the overall digital strategy needs to connect to both of these in a coherent way. This means that rather than a technology-led approach the starting point should be goal-focused.
There needs to be a broad awareness of development goals in order to gain a mandate for change, and the procurement strategy should be based on an assessment of how public procurement can support these goals. There is also a need for a good understanding within the development strategy of how digital innovation can enable better control of resources, efficiency improvement, and effective delivery of public policy in government procurement. Silvana Vallejo from Ecuador emphasised the need to create trust for new procedures to be embraced. This can be facilitated through setting simple standards and processes, effective maintenance and constant review of infrastructure, transparency and clearly communicated high-quality standards.
Social goals also need to be highlighted. Maurice Juma, General Director of Public Procurement in Kenya explained that full e-procurement was only introduced when legislated for in 2015 after many years of trying to do so. It was seen as a means of improving procurement’s key function of compressing time in purchasing. But there are other benefits in terms of improving transparency, with automation covering most aspects of the procurement cycle. The new Executive Orders for Procurement require high levels of public reporting in order to minimise risk and to build confidence in the system. But social policy objectives remain, 30% of procurement budgets in Kenya must be set aside for contracts relating to women, disabled people and young people.
The issue of e-procurement building trust was also addressed by Vasyl Zadvornyy the Director of Prozorro, the state-owned e-procurement enterprise in Ukraine. Before the creation of Prozorro there was a 10% loss to Government expenditure caused by corruption: “the corruption tax” is how he described it, with a further 10% lost through limited competition. Together these amounted to $2.4b per year. The new system is a subscription system for both the public sector and bidders, with open contracting. It was developed and implemented as an enterprise start-up and has now created a system where all information is public. The system has mandatory auctions and an online retail portal-style public face.
I could go on. But when you see the initiatives taken in each country you can see that there is a strong policy agenda behind them that has shaped the preferred solution. Each country is facing its own challenges, whether it is a developmental agenda, an efficiency agenda, or the need to restore public trust in the public procurement function. So the future of procurement looks reasonably secure after all.
Helen Fonseca of the Organisation of American States also reminded delegates not to forget the human element of procurement: Reinvent solutions, close gaps, regain trust, develop new ways of working together. Take effective and concrete actions to support and develop approaches, and build networks. Procurement will never be about technology alone. At the start of the conference we were told by Kathrin Frauscher of the Open Contracting Partnership, one of the sponsors, that in the future, procurement will be open, goal-driven and user-centric. But we were also told that it would be like Star Trek. The true aficionados of that series will know that in fact the technology was always in the background. The stories themselves were about values, human relationships, negotiating, dealing with threats, and boldy going where no one has gone before.