The United Nations Office for Project Services (UNOPS)
Efficient public procurement is necessary for reducing poverty
The world’s poorest and most vulnerable populations are the most dependent on public goods and services. They feel the brunt of waste and corruption in public procurement more than anyone else. Here’s how we can contribute to making it better.
Public procurement has evolved from being merely a back office supply function to the public sector to now being considered a key tool in economic policy – and arguably the most visible beacon of the quality of governance. Efficient public procurement also has a direct impact on poverty reduction. As such, efficient public procurement is vital for achieving Sustainable Development Goal 1 of ending poverty. Sound public investment and spending is unquestionably an important factor in attaining the other 16 Goals. Over the last 15 years, countries have recognized the need to modernize the way they buy goods, infrastructure and services.
Over the last 15 years, countries have recognized the need to modernize the way they buy goods, infrastructure and services.
The first wave of procurement reforms, which started 15-20 years ago, focused on improving the regulatory framework and building skills. Later reforms combated corruption and waste by improving accountability, transparency, and better integrating public procurement across government. But these reforms are slow to make a tangible difference. Why?
Previous procurement reforms often disrupted entire procurement systems – and daily work. Frequently, such reforms met so much resistance that they were given up or watered down. So how do you change not only systems, but workflows, individual conduct, tools and, most importantly, minimize costs – all while managing the resistance to change inherent in nearly all public bureaucracies?
The answer is to initiate major changes through targeted reforms – surgically removing outdated, inefficient practices and recognizing proper existing practices to prevent disruption to the whole procurement system. The smart way of doing this is by building blocks of competence (which includes people, resources and workflows), targeting those areas where the biggest improvements are possible, with the largest combined impact. That requires a smart methodology to diagnose where you stand before any changes are considered.
CHANGES THAT HAVE THE BIGGEST IMPACT
UNOPS considers procurement reform to be a dynamic, iterative process – testing and improving on what already exists to help the quality and efficiency of procurement systems to leap forward.
At UNOPS, we’ve examined how we can help governments improve their procurement systems as well as show the concrete advantages to doing so. The UNOPS ‘Procurement Efficiency Assessment Tool’ helps minimize disruptions to day-to-day work and validates existing effective practices, through a forward-looking (instead of an audit-like) process that is carried out jointly with an organization´s top and middle management.
This unique tool uses a set of questions, data and process reviews to help governments set the foundation for a targeted reform by analyzing the strengths and weaknesses of their procurement systems. This tailored approach enables them to identify what needs to be changed without throwing out what works, minimizing the overall cost of the reform. This helps governments focus their efforts on those actions that will have the biggest potential impact, improving procurement efficiency and reducing costs.
This helps governments focus their efforts on those actions that will have the biggest potential impact, improving procurement efficiency and reducing costs.
SEEING LONG-TERM GAINS, TODAY
Often, the benefits of more efficient public procurement aren’t immediate. And if the benefits will be reaped after the current decision maker's administration is over, these reforms are less likely to be a priority. Hence, we see a lot of patchwork attempts at improving the performance of public procurement systems, which – after failure or limited results – delays a serious and comprehensive reform programme. With our tool, we also benchmark costs and compare them to prices elsewhere. This allows us to show a member of government concretely how much money they could save in the short, medium and long term by making a few changes. These savings could then be re-invested into key areas identified by the tool to achieve sustainable improved performance. A more efficient procurement system can also help governments save money and make sure they’re buying the right things at the best prices, as well as attracting the best suppliers. Ultimately, this helps them buy more of the things that the world’s poorest depend on.
José Moscoso is the Lead for Procurement Advisory Services at UNOPS. He was a Senior Procurement Specialist with the World Bank (from 1991 to 2000) and a consultant before joining UNOPS in 2008.