Curing public procurement of what ails it - a practitioner's view
I am sure that most of us would know that public procurement plays a fundamental role in economic and social development programs of a country. Poor public procurement practices can lead to misappropriation or sub-optimal use of public funds. Many infrastructure programs and essential public services are delivered via consultants, contractors and suppliers. When contracts are awarded to less qualified suppliers, the quality and timeliness of delivery suffers. More importantly, this places an additional cost burden on taxpayers and the poor who have the most need of public services such as health, education, transport, justice and social security. Problems galore! So is there a single solution to such many problems? Yes. I do believe so. Use of appropriate electronic procurement tools can improve the efficiency and transparency of public procurement and also increase economic development.
The e-Procurement process is unique to government. While corporate purchasing has become supplier management and driven by business partnerships, government procurement remains dedicated to levelling the playing field between competitors by use of the sealed competitive bidding and awarding bids to the lowest bidder meeting specification. Government records are open and the prices revealed in the public arena. Fortune 500 companies boast of maintaining a key supplier base of 10-15 first and secondary suppliers which is miniscule to what a Government has as registered vendors and many more that bid, but never make it to the vendor list. Given this divergence, a Government has to adopt e-procurement solutions that take into account the above factors.
One of the main challenges for an e-Procurement project is the establishment of an appropriate and context tailored strategy. Every project or initiative needs to be rooted in a very careful, analytical and dynamic strategy requiring focus on many aspects and processes, a holistic vision, long-term focus and objectives. Many public institutions limit their activities to a simple transfer of their information and services online without taking into consideration the re-engineering process needed to grasp the full benefits. The government must have a clear strategy to overcome the barriers to change. Part of the strategy is to engage in a rigorous assessment of the current situation, the reality on the ground and the inventory of projects, articulate costs, impacts and benefits of programme as well as continuously monitor and evaluate the project upgrading.
In a typical Government, procurement runs into hundreds of crores and complexity is inherent in the procurement process. What is required to be procured is wholly dependent on the nature of its business, and therefore varies from enterprise to enterprise. In today's scenario, adopting an effective cost saving mechanism is integral to any company's continued existence. Companies across different sectors of industry have been trying to simplify this extremely crucial aspect of their business, in extracting optimal quality, and timely, speedy transactions at the minimum possible cost.
Another important aspect that the Government needs to look into is driving organizational compliance with negotiated contracts. This would enable Governments to keep and sustain their savings. Traditional methods of procurement offered little transparency and lesser satisfaction of negotiation with suppliers. E-procurement offers the benefits of greater transparency, wider geographical reach and lesser time of transaction and better pricing. Also sustained savings can be achieved through automated, easy-to-use purchasing, invoice management, and supplier enablement capabilities. E Procurement Solution would help Government capture and settle all spend and readily obtain global user and supplier adoption. This improves process efficiency, increases compliance, and garners sustainable savings across the enterprise.
Benefits that I think which can justify investment in e- Procurement by government are:
- Improve transparency in the procurement procedures and practices.
- Bring in efficiency throughout the procurement process and minimize the procurement cycle time.
- Foster and encourage participation and promote competition among suppliers.
- Harness economies of scale through demand aggregation and maximize value for money in government procurement.
- Enhance decision-making capabilities of procurement officials by providing procurement information through MIS
- Improve service levels to all stakeholders involved in government procurement.
- Ensure confidentiality, integrity and authenticity of all transactions and data between the procurement entities and the suppliers.
- Optimize inventory levels through the adoption of efficient procurement practices.
- Enhance citizens' confidence in the government procurement process and the utilization of public funds.
- Usher in state-of-the-art procurement practices together with the necessary technology intervention.
So in a nut shell, E - government procurement can play an important part in generating savings and increasing the effectiveness of public sector services, whilst increasing transparency and accountability. It can also create a fairer, more competitive and trusted national business environment, attractive to international suppliers, lenders and donors and contribute in economy growth.