WHITE PAPER: Procurement Reform Laboratories (Part 1)

by Dirk B
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Procurement Reform Laboratories are country-based facilities which are set up in countries and by countries to reform and consolidate country procurement systems by upgrading procurement from a mere transaction tool to a strategic development vehicle. This paper provides a base and processes to guide, set up, and manage a Procurement Reform Laboratory. In this paper we call the Procurement Reform Laboratories, Procurement Labs or simply Labs.

The core concept is fully integrated country-ownership of a diverse and critical mass of stakeholders and champions from central authorities, public sector ministries, justice, parliament and State Own Enterprises (SOEs) as well as external sectors including the private sector, civil society, academia, media, etc. This means ‘connecting the unconnected’ into solid and sustainable partnerships. This is a far cry from the conventional wisdom of sole Government-ownership but instead a cry for inclusive, sustainable and fully resilient country-ownership.

Procurement reform laboratories are complex but far from complicated and follow simple cycles (never ending sequences) of stakeholder mapping, issues and needs assessment, strategy development and the design of joint action plan cycles and feedback loops.

A- The Use of Country Systems (UCS)

          A-1- Opportunity

Governments around the world spend approximately USD 9.5 trillion in public contracts every year. This means that public procurement constitutes on average 12%-20% of a country’s GDP. The strengthening of public procurement systems is thus central for achieving concrete and sustainable results and to build effective institutions.

At the same time, many countries still face major challenges in establishing good operational public procurement markets. The World Bank’s assessment of 180 public procurement regulatory systems revealed the magnitude of this challenge. Weaknesses across all surveyed areas include a needs assessment, a call for tender, a bid preparation, a bid submission phase, a bid opening, an evaluation, a contract award, content and management of the procurement contract, a performance guarantee, payment of suppliers and complaints.

          A-2- Quick & strategic wins

The opportunities of full use of country systems emerge from the enormous value (USD 9.5 trillion) against the wide array of weaknesses leading to at least three quick wins:

  1. Economic savings through better and swifter performing procurement systems by reducing the contract values, reducing the transaction time and cost and reducing leakages from fraud and corruption (F&C).
  2. Higher capital investment absorption by reducing underspending from donor and national investment budgets and irretrievable loss of resources.
  3. Improved governance outcomes by increasing the amount of money spent on the intended purposes and better achieving development objectives.

B- Why is there a need for Procurement Reform Laboratories?

Procurement reform laboratories propose strategic interventions aiming at short-term, mid-term and long-term wins by combining a number of key principles that sustain reform in width, depth and over time.

           B-1- Width – connecting the unconnected

The core concept of Procurement Labs is wide country-ownership. Almost every public procurement contract is signed between (i) a public-sector stakeholder and (ii) a private-sector operator and always to the benefit of (iii) the community. This means that the government, the market and civil society are equal partners and equal owners in the public procurement industry.

This cross-sectoral partnership also requires a radical change from procurement as a ‘transaction’ to procurement as a ‘strategic development vehicle’. The transaction mode identifies parties as adversaries, while the strategic mode identifies parties as partners to deliver sustainable development results and governance. This means that public procurement becomes a socio-cultural environment with many stakeholders with a wide array of interests e.g. profits, business continuity, service delivery, after sale services and maintenance, etc.

A fourth key partner in Procurement Labs is academia. Procurement training and professionalization are best designed and delivered by local training institutions based in the country itself. This means that technical assistance embraces training of trainers and supporting training institutes in the development of curricula, modules and teaching methodologies.

Another key partner in the professionalization concept (see below) is the public service authority, responsible for public service career development. This partner is important to acknowledge and certify academic achievements and results to provide access to dedicated public service positions e.g. technical, professional and managerial.

The Procurement Labs will focus on country needs in the first place, while embracing transfrontier and regional integration opportunities. The entry level for this type of integration could be the creation of professionalization networks across borders as there are quite a few training institutes already delivering procurement content in some countries, while there are many countries without any form of procurement training.  In addition, Africa field experience shows that there is a keen interest from training institutes to engage at regional level.

          B-2- Depth – planting seeds and trees

Procurement Labs upgrade traditional capacity building to professionalization. The latter combines (i) academic training, (ii) on-the-job mentorship and coaching with an emphasis on the transfer of learning to business application and (iii) career development of the procurement functions. This approach deviates boldly from ‘gap filling’, which is a metric and quantity-based approach without sustainability considerations. The proposed professionalization is a qualitative concept of ‘optimising existing but underused capacities’. Professionalization plants and nourishes capacities to come to fruition in the countries themselves.

The approach combines (i) retaining and sustaining country-owned capacities and (ii) sustaining country-owned capacity building systems e.g. universities, vocational training institutions, training units and/or professional associations, connecting the unconnected.

In addition, tailor-made training is designed and delivered by local training institutes to private sector participants (bid preparation and follow-up) and civil society partners (social accountability practices), covering the width of the procurement industry at the same time. Professionalization requires a much wider ownership including many stakeholders and partners.

Procurement Labs also embrace the Fit-for-Purpose principle, meaning that every single laboratory will be tailored to the country needs and idiosyncrasies. Every single country is different, combines a wide array of differences within and has varying relationships with nearby and far away countries and institutions. Procurement Labs embrace and celebrate this diversity, leveraging a critical mass of diverse partners to take procurement reform forward and to keep it going.

          B-3- Time – today, tomorrow and the days after

Procurement Labs comprise milestones but are not limited in time because objectives, technologies, scope and ambitions evolve over time. For instance, time translates in continued learning, not only through an ever-changing procurement population, but also through evolving technologies & innovation, higher targets, geographical spread, decentralization, etc.

Time also translates in a sequence of activities and processes including e.g stakeholder mapping, needs assessment, policy alignment, strategy development, action plan design, action plan implementation, monitoring and evaluation. This linear sequence in time evolves into a continuous cycle of learning.

Procurement Labs embrace the Fit-for-Change principle, meaning that every single laboratory will be tailored to the changing needs as society and economies evolve, mission and goals gain ambition, learning and innovation widen and deepen, etc.

While Procurement Labs aspire Fit-for-Change, they assume a transformational role as well, not only accommodating change, but also driving change where necessary. When a critical mass of resourceful stakeholders drive the Lab, many ideas will develop and synergies will emerge, leading to innovation and transformation.

Any reform requires change and all change goes through a sequence of steps, widely covered in literature with many variations of changing perception, understanding, language, action, appropriation & new cycles.

That is exactly what we’ll start to look at in post two of this series. We’ll dig deeper into the increasingly Features of procurement labs plays in making procurement more efficient and more influential.

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