Public procurement has been in the headlines recently, and not for wholly good reasons.
During the pandemic, governments around the world have rushed to buy essential kit – including face masks, gloves, medical equipment and vaccines – from suppliers.
This scramble has come at a price, with the balance of power moving from the buyer to the supplier. The race to secure supplies has risked mismanagement and led to accusations of favouritism. The whole process for many has seen a lack of transparency and co-ordination, placing trust in the system under intense pressure and scrutiny.
But amidst all the accusations and finger pointing, what must be remembered is that this is about how we spend public money and account for it.
What we need are new models of public procurement, something ACCA called for late last year in a report of the same name. We need the system renewed to ensure we secure a sustainable recovery.
What can be done?
Our report detailed several practical recommendations – from how to eliminate bribery and corruption to managing the need for purchasing at speed during a time of crisis.
Combating bribery and corruption can in part be tackled through strong and effective legislation and regulation. However, more open and accessible public procurement data is also essential to prevent and detect corruption.
We believe that governments should adopt e-Procurement systems for more efficient management of the procurement process, publishing reusable data from the system for monitoring and oversight using the Open Contracting Data Standard (OCDS) as set out by the Open Contracting Partnership.
Governments should also make it a condition of contracts that they are published on a centralised register to ensure full visibility, transparency and accountability of public authorities.
Auditors and finance professionals should engage with ‘red flag’ analysis to use this data to identify and predict corruption and bribery in the procurement process. Audits should become commonplace in all public procurement procedures and they should begin as early as possible in a bid to reduce the likelihood of corruption, while ensuring that auditors do not become part of the process.
Finance professionals and auditors must play an active but independent role in the procurement process from start to finish – having access to this data is vital in ensuring they can do this most effectively.
Trust is part of the equation too, yet our data found a trust deficit between buyer and supplier. Our research showed that while 60% of public sector respondents believed they could trust their private sector counterparts to fulfil their contracts, only 41% of private sector respondents said the public sector could be trusted in upholding its side of the deal.
Fixing this trust gap is again about ensuring full transparency in the procurement process but it’s also about investing in the commercial relationship. Governments should employ performance management techniques early on to monitor progress and communicate problems to suppliers. This can improve trust and communication between buyer and supplier and help ensure the contract is delivered on.
There are glimmers of good practice. Here in the UK for example, the National Audit Office (NAO) developed the COVID-19 cost tracker in a move to increase transparency and accountability for government spending during the COVID-19 pandemic.
This brings together data from across the UK government, estimates the cost of measures announced in response to the coronavirus pandemic and discloses how much the government has spent on these measures so far.
Efficient and effective
Public spending during and beyond the COVID-19 pandemic needs to be more efficient and cost effective. There is an opportunity now to tackle some of the biggest challenges of our time, including environmental catastrophe and rising social inequalities. For example, we can use public procurement to keep businesses –especially SMEs – afloat by publishing contracts early on centralised, open databases that are accessible to all.
We can maintain momentum in achieving the UN Sustainable Development Goals (SDGS) by buying from environmentally sustainable and socially-minded businesses. The selection of suppliers can be made faster while still including evaluation methods that account for alignment to the SDGs.
The role for finance professionals in helping to make, monitor and evaluate these changes is huge. They must be at the heart of this necessary evolution because they are best placed to help make these important financial decisions while continuing to hold government to account over how they spend during times when public money is scarce.
The global finance profession is needed now more than ever to help transform how the public sector responds to the crisis.