Ranking (and reforming) Public Procurement: a complex task
Author: Tim Cummins
The Blavatnik School of Government at Oxford University recently released a report containing its 2019 assessment of International Civil Service Effectiveness. Within this, it included a series of specific assessments, one relating to public procurement.
It is interesting to compare the conclusions reached by the Blavatnik team with those reported by IACCM in its recent Multi-Jurisdictional Benchmark Study. While there are some similarities, it is the differences that illustrate how varying criteria can lead to significantly different results.
The Blavatnik study assessed six 'component scores' when determining procurement effectiveness, against eight used by IACCM. While there were overlaps, the Blavatnik data was in several key areas either different or, in some cases, much narrower than the IACCM equivalent. For example, Blavatnik examined transparency and integrity, whereas IACCM looked at approaches to risk and contracting standards; Blavatnik scored e-procurement and handling of Small-Medium Enterprises, whereas IACCM looked more broadly at the use of technology and the quality of supplier relationships. As result, a number of countries achieved very different rankings on the Blavatnik table than they did in the IACCM assessment.
It's the outcomes that matter
Based on the respective reports, IACCM's work was in some cases not only broader, but perhaps also deeper. It gathered a wide range of inputs from primary sources, including from suppliers to government. This led to some quite different conclusions. As an example, Denmark achieved second place on the Blavatnik index, but was considerably lower in IACCM's rankings. That is because Blavatnik gave a high rating to the Danish e-procurement system (a view shared by IACCM), but appeared not to recognize that this covers only a very small percentage of spend. More than 90% of government procurement in Denmark is highly decentralized and, while there are some excellent local initiatives, these are not replicated across ministries. Indeed, a large proportion of expenditure is managed at a regional level, resulting in high levels of fragmentation and diversity of standards.
The United Kingdom is another example where extensive investment in building procurement capabilities has yet to yield the results that might be expected of a country that Blavatnik ranked in third place. This is illustrated not only in the IACCM findings, but also by the conclusions of an almost simulataneous report released by 'Reform', a think-tank for public services, which examined the state of public services commissioning. It concluded that there has been an imbalance in the investments made, with disproprtionate attention to the 'contracting-out' phase and insufficient on contract management and on supplier selection. With so much public service delivery now depending on private sector performance, this continues to result in regular and highly publicized exposures to cost and quality.
Some years ago, a former executive from the US government made the observation: “We often undertake a perfect procurement and achieve completely the wrong outcome”. His point was that the measurements and incentives associated with a 'good' procurement' are often perverse – for example, based on nominal savings at the time of contract, or on avoiding competitive challenge. IACCM's research confirmed that the public sector worldwide is to some extent struggling with outdated public procurement rules and attitudes to risk, resulting in a reduction in competitive bidding and real challenges in achieving the levels of supplier partnering that modern economies require.
The way forward
Addressing these issues is itself a key commercial challenge and cannot be achieved by a single jurisdiction. It is interesting to note that smaller economies are often far more effective at generating better results from their procurements. That's because they can often be more nimble in their actions and also because those actions may be less scrutinized and less likely to generate complaint. (Indeed, in the Blavatnik report, out of the top seven countries, four have a population under 10 million).
But at the other end of the scale, the United States frequently demonstrates creativity and innovation in its approaches to contracting and procurement. While not always successful, this readiness to experiment is essential to future development.
Ultimately, we must hope that studies such as those by Blavatnik and IACCM, together with the work of institutions such as the Open Government Partnership, will generate the global debate that is needed for meaningful reform of public procurement policies and practices. This is not a matter of academic debate – it is a topic that is fundamental to the quality and value we achieve from public services.
A summary of the IACCM Multi-jurisdictional study is available on request from email@example.com
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