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Up Front

Rallying for Reform: Public Procurement, Good Governance, and Development Impact

Jeffrey Gutman

After many decades, the international finance institutions (IFIs), particularly the World Bank and the African Development Bank, are preparing to overhaul their policies and practices regarding public procurement.  This sets the stage for the various actors in the global development community to make their voices heard in shaping potential reforms.  Effective procurement should be seen as an important element of a country’s governance.  All too often, however, the “community” sees public procurement as either administrative minutiae, or a hotbed of fraud and corruption.  As a result, they either fail to engage in the discussion at all, or they aggressively push for increased safeguards in the policies and procedures governing bid and award.

Last week, as part of an ongoing effort to adopt a broader view of public procurement and its role in good governance, I moderated a panel at the ‘Advancing Good Governance’ seminar held at Oxford.  The seminar was organized by a consortium composed of Linklaters, Camfed International, the University of Oxford’s Department of International Development, and the Skoll Centre for Social Entrepreneurship at Oxford University’s Saïd Business School. The panel discussed my recent paper, “Is There Room for Discretion? Reforming Public Procurement in a Compliance-Oriented World,” which argues that a focus on the ultimate quality of procurement outcomes implies the need for greater attention to every stage of the procurement cycle, a better balance between compliance and discretion, and a more effective engagement of stakeholders beyond the procurement community.

The diversity of stakeholders was partly reflected in the composition of the panelists: Christiaan Poortman, senior adviser at Transparency International, Tim Thahane, member of parliament for Likhetlane Constituency in Lesotho, and Peter Trepte, senior fellow of public procurement law at the University of Nottingham.  The discussion among the panelists and the seminar participants illustrated the importance of such a broad dialogue amongst stakeholders and focused on the following points:

  1. Effective public procurement is the use of a country’s resources to provide goods and services for its citizens.  Quality outcomes require attention to all stages of procurement: upstream design, bid and award, and final delivery.  Present IFI policy emphasis on bid and award is insufficient.
  2. Growing efforts to address fraud and corruption have resulted in a “box-ticking” compliance and risk-averse culture, diverting attention from what is necessary to ensure quality outcomes, and has constrained the use of professional discretion even when appropriate.
  3. As failure in procurement is not only about fraud and corruption but a lack of competence, we should consider reframing the “compliance versus discretion” issue as one of “compliance versus competence.”  Defining competence includes not just the competence and professionalization of procurement staff, but also the participation of technical experts, private sector, and civil society as each brings a critical perspective to the process.
  4. If we are to redress the balance between discretion and compliance, there is a need for extensive transparency all through the procurement cycle and broad stakeholder engagement.  Civil society must sharpen its focus and involve itself in the process.  It is up to NGOs and other third-party actors to demand transparency from governments, IFIs, and the private sector, and to hold them accountable to the citizens who represent the final beneficiaries of public procurement.  This raised a challenge at the seminar as to defining where in the process civil society can be most effective, how to sustain such engagement over time, and what is appropriate in countries where political accountability hampers the credibility of institutional accountability.

It is time for the development community to assess procurement in terms of development outcomes.  The upcoming IFI reviews represent an opportunity to put forth an agenda for real reform, but the issue goes beyond just IFI-funded procurement.  Ultimately, all public procurement policy should be seen as a tool to promote citizen welfare and should be treated by citizens and civil society organizations as such.  As Mark Malloch-Brown stated in the seminar’s opening keynote, “If we’re ever going to get wealth to the poor, we must ensure that they have a voice to demand it.”