Public procurement is subject to many pressures, from cutting costs to meeting the demands of internal users and the public.
Public procurement is the use of public funds by the government through its ministries, departments and agencies, on behalf of its citizens, for the acquisition of goods, services and works with the best quality, and/or right quantity, at the best possible price, from the right place or source (contractors, suppliers and service providers), and for the right purpose using the best method(s) and in line with laid down rules and regulations, following due process (World Bank, 1995).
Furthermore, the essence of public procurement is to achieve value for money, which manifests in enhanced human welfare and improved economic growth. According to Nkinga (2003: 2), ―strong procurement management in the public sector is a tool for achieving political, economic and social goals. Thus, productive or sustainable public procurement is one that is growth-promoting and welfare-enhancing.
This training is designed to emphasise the need for the Lagos State Public Service to reconcile two seemingly irreconcilable purposes:
(a) to keep pursuing quality in procurement decisions; and (b) to keep cost down and controlled in the face of daunting economic challenges.
Being a theme with far-reaching ramifications for both the medium and long-term health of the government of Lagos State, I am delighted to deliver this opening address. In this address, I will be emphasizing the need to maintain and pursue quality and, briefly, to examine how procurement decisions can not only be creatively tailored to fit into available lean resources in a depressed economy, but could also be used as an instrument to chart the course out of economic depression.
According to Aigheyisi and Edore (2001), good “public procurement practices, according to the IEG World Bank (2014), are a major determinant of the effectiveness of public expenditure, and governments all over the world typically spend 5 – 20 percent of their gross domestic product (GDP) on procurement of goods and services. According to European Network on Debt and Development, EURODAD (2012), public procurement accounts for at least 15 percent of global GDP, and it is the largest share of government spending besides wages. Public procurement accounts for an average of 15% of GDP in OECD countries and 25-30% of GDP in developing and emerging market economies (Roos, 2012). In 2011 it accounted for 12% of GDP in the United States and 17% in the EU. (Moerenhout and Roe, 2012).
The quoted statistics above thus clearly show that procurement as a public service function must be given exceptional attention especially when there is paucity of funds and economic depression. Thus, as noted by Angel Gurria, “Public procurement can have a significant impact on policy outcomes . . . Until only a few years ago, public procurement was perceived as an administrative, back-office function. Today however, it is seen as a crucial pillar of services delivery for governments and a strategic tool for achieving key policy objectives: from budget accountability, to spending efficiency, to buying green and improving outcomes in health, and promoting socially responsible suppliers into the global value chain.”
“Strategic public procurement can also significantly support a more circular economy and transform supply-chain business models, given the magnitude of its size in government spending and its predominant role in delivering some of the most resource-intensive public services such as infrastructure. This calls for an approach that not only enables efficiency, growth and value for money, but also accomplishes strategic goals linked to a broader understanding of sustainability, cutting across both environmental and social objectives.”
Indeed, there are a number of challenges that are faced when rolling out strategic public procurement. For instance, a lack of understanding of the benefits of sustainable procurement amongst politicians and budget holders is a challenge. Public procurement is subject to many pressures, from cutting costs to meeting the demands of internal users and the public. These and many others are the issues that this training will address and I hope that you all will participate actively and constructively.
I will leave the deeper technical details to our facilitators, Messrs Midas Partners. Over the course of the last few years, they have been proven to be adept at assembling impressive faculties to deliver the most beneficial trainings even in the most complicated and technical areas.
In arguing for the pursuit of quality even in the face of a depressed economy, I proceed on the basis that the delivery of value to citizens is the fundamental objective of any democratically-elected government and that, in contemporary times, the delivered value must be delivered to the highest possible standard because citizens have become sophisticated and exposed to the standards of governance in other climes such that their expectations have been conditioned to demand and insist on compliance with global trends in governance and public administration at all levels of governance. Meeting these expectations is the central challenge for governments in contemporary times, even in the face of lean resources.
In an article titled, Government by Design, Diana Farrell and Andrew Goodman of McKinsey & Co. argued that one of the strategies for improving government perceived performance, including procurement decisions and activities, is by becoming better at collecting and analyzing relevant data. According to them, “Governments must decide what to measure and how, always with an eye on the overall goal of the programme or initiative.”
For one, a critical examination will reveal how civil servants can creatively utilize data to generate ideas and communicate government actions and performances in order to ensure positive perception (or, in the least, accurate perception) of government procurement decisions by the citizens. I therefore challenge the Lagos State Public Service to come up with data-backed and data-inspired ideas that will ensure and assure the quality of the government’s procurement activities. Another advocated strategy for ensuring the delivery of quality services by the public service including in the area of procurement, is to innovate to make government services more customer-centric. This is one of the subjects that have been previously explored in the trainings organised by the Lagos State Ministry of Establishments, Training and Pensions. In the article by McKinsey & Co. earlier referenced, the point was made that, “the private sector’s responsiveness to customer demands has led to heightened public expectations of government. Because people can do their banking and shopping online, for example, they expect to be able to” conclude transactions with government agencies with similar ease and speed as well.
In essence, procurement decisions would only be regarded as being of acceptable quality when they are made with the end-user in mind. In a recent publication, PwC, United States, asked and answered a germane question as follows: “What does a customer-centered organization look like? It’s an organization that considers the customer in everything it does, from procurement to deployment to the entire customer experience. It also speaks to its customers in their own language and makes it easy for them to align their goals with the mission at hand.” Thus, I dare say that, even in procuring items that would be exclusively used by public servants, the sole question should be whether the procured items would help the public service better serve its customer, the citizens.
The third strategy I want to highlight is that of actively soliciting citizens’ input to improve public services, including procurement activities. As noted, “Innovative governments are creating new ways for citizens to make their voices heard, giving them the ability to provide input into regulations, budgets, and the provision of services.” It has been further noted that, “Other governments are going even further to solicit citizen feedback: Iceland in 2010 chose 950 citizens at random to participate in the drafting of a new constitution, a significant example of ‘deliberative democracy’ at work. And the city of Cologne, Germany, has used participatory budgeting: residents helped decide how to allocate a portion of the municipal budget.”
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Dr. Benson-Oke is the Honourable Commissioner, Lagos State Ministry of Establishments, Training and Pensions