Getting procurement right

Cabinet has given approval for the Finance Ministry to roll out the much-discussed Electronic Government Procurement (e-GP) in the Public Procurement System, which is expected to make a crucial part of governance more transparent and efficient.

Approval was given by the Cabinet to implement 10 recommendations outlined by the Working Group appointed by the Finance Ministry. To monitor the establishment of an e-GP System under a special project monitoring committee, an e-GP Secretariat will be set up comprising members drawn from the same stakeholder agencies represented in the Working Group.

Further, the Working Group also recommended carrying out a comprehensive Business Process Re-engineering of Government procurement steps and to document the software specification of national eProcurement of data interchanging and interfacing with other present government systems and upcoming systems such as the Integrated Treasury Management System (ITMIS) and Revenue Administration Management Information System (RAMIS).

Public procurement is a hidden conveyor belt that keeps an economy running.  Without effective procurement, hospitals wait for drugs, teachers for textbooks and cities for roads. Whenever a news item surfaces about drugs shortages in hospitals, schools without textbooks or failing road networks, the reader may be looking at a procurement problem. Without efficient procurement, money gets wasted on a very large scale.

Even delays of projects such as power plants have been put down to procurement issues. The problem has grown to the point that the head of the Public-Private Partnership Unit under the Finance Ministry recently called for procurement guidelines for its projects to be suspended selectively.  

Many developing countries including Sri Lanka channel significant proportions of their budgets through the procurement system, which means even marginal changes can add up to big savings. Public procurement is a part of the Government that citizens see every day. A lack of transparency and corruption in procurement directly affects citizens and the losses to corruption are estimated in the billions of rupees. Tracking the convoluted public procurement system can be exhausting but essential to combating corruption.  

But upgrading procurement systems is difficult for a number of reasons. Data on procurement outputs, outcomes or systemic performance is hard to come by and limits policymaker knowledge for reform that makes a real difference. Procurement reform also has a collective action problem. Any improvement to the procurement system will benefit a very large population of beneficiaries a little bit.

However, most citizens, like the next person in the street, will never know or care about procurement. On the other hand, civil servants or those who operate and directly interact with the system, care a great deal about it and are often very heavily invested in the status quo, at the risk of affecting their jobs or careers. Procurement reform isn’t just about procurement.

Different stakeholders have different, complex interests and incentives related to procurement reform: Influential stakeholders outside the procurement system could well care enough about specific changes that deliver better outputs for them. Procurement is also intrinsically linked to cash management. Simply put, procurement, especially through major Government tenders, has long been at the core of corruption and tackling it is crucial for the Government not just to gain credibility on the good governance front but also run the country efficiently and progressively.