Procurement Reform Laboratories (Part 2): Features of procurement labs

by Dirk B

Part One of this three-part series on Procurement Reform Laboratories looked at The Use of Country Systems and why is there a need for Procurement Reform Laboratories. So the scope of procurement’s role has expanded. In This Part Two, we look at the Features of procurement labs to increase our organizational effectiveness — and influence.

Procurement labs are no advisory services

Labs may require start-up Technical Assistance, but they primarily require a critical level of country-ownership as the work of the Lab is progressively done by (an increasing number of) country partners, gradually and eventually phasing out technical assistance over time. Procurement Labs are intended to acquire full sustainability evolving into national or regional forums, networks, think-tanks, etc.

1- Use in countries with weak capacities

Procurement Labs can be used in countries with weak or assumed weak capacities. These conditions are frequently seen in fragile and post-conflict countries. One of the first activities of Procurement Labs is to map the stakeholders across the sectors. In low-capacity environments, it may be hard to identify key players and roles in the procurement industry. But the very establishment of a Procurement Lab and its related communication and visibility raises interest, expectations and engagement, triggering the first activities and results.

2- Sensitivity to politics

Procurement Labs are built with and around a critical mass of stakeholders for a number of reasons. First, the critical mass broadens country-ownership and accountability aimed at having at least a few early performers on board, realizing early and tangible results, displaying success and inspiring peers. The critical mass also has the purpose to increase procurement industry visibility, to increase transparency and, through increased public exposure, reduce the risk of elite capture and political interference. Consequently, the risk of fraud and corruption is reduced and governance outcomes are improved. Public procurement is always sensitive to politics, but Procurement Labs propose to reduce back-room politics and bring political sensitivity to the public discourse.

3- Value for Money (VfM)

VfM is a concept beyond the least evaluated cost bid but with a dedicated focus on quality. Therefore VfM can comprise – but is not limited to: the quality of the goods, works or services; risks for the various stakeholders; the place of delivery or contract execution; the time it takes to execute the procurement process and to complete the contract; the satisfaction of the beneficiaries; total cost of ownership (TCO- including service, maintenance, utility cost and disposal); the cost of the whole life cycle (including social, economic and environmental externalities) or sustainability in terms of social and environmental values.

4- Integrated reform approach

Procurement Labs requires an integrated approach. Integrated procurement reform can be defined in many ways, but it should combine at least these three dimensions: participants, scales and sectors.

In procurement, participants refer to the actors in the supply chain: e.g. client requisitioners, procurement officials, procurement authorities, technical experts, suppliers and contractors, logistics providers, controllers, direct beneficiaries (e.g. school authorities) and indirect beneficiaries (e.g. students, Parents and Teachers Associations, etc.). Often this supply chain is extended to the value chain, including budget planners, programmers and accountants.

Scales refer to the size of procurement packages and the various levels of decentralisation and/or delegation of authority. It also includes considerations of international, national and sub-national procurement. It can include considerations for Small and Medium Enterprises (SME) and Traditionally Disadvantaged Businesses (TDB) participation in public procurement.

Sectors refer to the different public sectors but also include private sector, civil society, academia, media, etc. Public sectors (ministries, authorities and SOEs) often operate independently, but integration of sectors can include joint programming (e.g. market access infrastructure linked to agriculture production, schools, health facilities, etc.), joint procurement of common goods and sharing of framework agreements, apart from many ways of peer-to-peer learning about best practices. External sectors, including the private sector, civil society, academia, media, etc. constitute the backbone of the country-ownership referred to above.

5- Ambition vs. Realism

Procurement Labs promote a combination and integration of proven and innovative interventions in order to strike a sound balance between realism through experimented routines with results and ambition by fostering inspiration and leveraging synergies, particularly at country level.

6- Value-adding principle

Public procurement too often is regarded as a value-retaining process, i.e. safeguarding the monetary value in its entirety to use for intended purposes. Procurement Labs introduce a value-adding principle that shifts the focus from transactions to forging close strategic and sustainable partnerships among the key stakeholders in public procurement: the public sector, private sector, civil society, academia and media.

7- Random entry

While policies, strategies and activities are aligned and integrated, they do not assume or include priorities and can be developed in random order. Procurement Labs do not require any logical or linear sequencing, and there are no conditions attached to any of the proposed activities. On the contrary, many activities are expected to generate synergies and energies within and across the scope of interventions. 

As we apply approaches of features, we can easily understand Setting Up Procurement Labs which will be the subject of the latest article in this series.

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