A great number of public administrations envision the digitalization of their procurement process, what we call e-GP. Because e-GP involves dramatic changes in their organization, this project requires a careful readiness assessment. We’ve been committed recently to carry out this assessment in two occasions in Equatorial Guinea and Central African Republic. Trying to figure out how public procurement would leverage digital requires an holistic vision and a constructive dialogue with multiple stakeholders inside and outside of the organization. Here are the key findings and potential pitfalls you should avoid in that process ?
What is the scope of e-GP ?
For a contracting authority, e-GP is a way to procure goods or services electronically. This involves a comprehensive array of methods and means to digitalize the entire procurement process, with aim to conduct complete requisition online from pre-awarding to post-awarding.
When implementing e-GP a first step consists in analyzing to what extend the current process mix tasks carried out manually with poorly automatized procedures and how deep is the gap to a complete digitalization. What we call functional analysis is a comprehensive mapping of processes, workflows and documents.
This preliminary gap analysis requires also sorting out at least 3 levels of interoperability: legal, business and technical. On the legal matter, it is key to check if processes are conformant and aligned to the public procurement law. This task reverts also to question of how the system can ensure greater transparency and prevent corruption, fraud setting up limitations, warning on potential risks like process override and increasing the global traceability throughout the system.
On the business rules, the purpose of this pre-study is also, to consider how e-GP could enhance visibility and improve decisions. This generally leads to the question of how the system can effectively retrieve the useful data and expose it to the agent in accordance with the task he is assigned to. As good data makes generally good decisions, the buyer is strengthened in its decisions by a system acting also as a gatekeeper enforcing the regulation. E-GP must be seen as a system providing more transparency and equity of treatment to the supplier involved in that procurement process. This analysis expands also to the business practices and in the backend, how e-GP should interact with the finances management system (IFMS) to deliver a better control over the public expenditure.
On the technical field, focus will be put on a systematic de-silo of operations. The data is retrieved from a legacy often scattered in several applications developed and functionally independent. This scope encompasses also recommendation on how the connectivity with the legacy can be expanded in particularly with the public finance management system. Hence, these questions lead to some observations.
How e-GP accommodates the public procurement law?
Most of African countries intend to reform their public procurement revamping their procurement law. In Equatorial Guinea the procurement law was outdated and based on a mining code from 1962 inherited from the Spanish law to carry out adjudication through open tenders mainly. This was before independence at a time were mining was the main outlet for Malabo.
The new procurement law introduces more conformances to the business environment introducing also framework agreement to better manage ordering and replenishment of goods and services. This “Proyecto de Ley” creates also a Regulation Authority with main assignment to ensure conformance checking and support the deployment of e-GP. Assessing the readiness to e-GP requires also to verify that digitalization do not breach into the law but further meet the conditions of the current state of play in the country and do not create threshold for businesses
How to assess the readiness of stakeholders?
There is often inconsistency between the ambition of establishing a fully digitalized system and the current state of play in the country. Most of African countries suffer of a weak and fragmented economy with an informal sector representing sometimes more than 60% of businesses. African economies often depend on a hypertrophic primary sector (mining, oil, coal extraction etc.) under control of a small number of major companies. On the purchase side, a large proportion of goods and services are imported and a little proportion procured nationally. The local businesses are showing a weak potential and financially poorly leveraged. Implementing e-GP in that context requires a solid change management program made of sensibilization and training and permanent support to potential suppliers by the professional associations and banks. This program must be supported also by facilitation measures. Change management will focus also on preventing non conformant practices with aim to fight against fraud and corruption and establish ethical rules. A purchase made through a direct deal with the supplier is more likely expose the buyer to corruption. In that sense, E-GP imposing formal procedures must be seen as a gatekeeper warning the public authority on potential deviation of practices. Disseminate best practices among suppliers and the community of buyers is generally a task carried out by the Regulation Agency (ARMP) here in Bangui (Centrafrican Republic).
ARMP Bangui RCA
In order to enhance transparency and ease access to public procurement information, ARMP will leverage e-GP to increase visibility on potential markets by a systematic publication of tenders over the internet on a dedicated Web site where suppliers will find contract and tenders notices, markets planification and useful guidance for submitting an offer to a tender and download the tender material directly from the site, later on submit to a tender electronically.
e-GP to master budget, investment and current expenditure
Within the entire finances management system, e-GP interacts at two levels of the chain of expenses: upstream, in budgeting and the allocation of credit lines and downstream for controlling budget consumption along with market execution.
In first instance, IFMS intends to improve the control over funds up to a predetermined limit imposed by the finance law voted by the parliament. E-GP is more focused on the current expenditure; the budget breakdown is managed according to the financing needs of the contracting authorities. It is much easier to control government expenditure at the « upstream » point of budget preparation than later during the execution of the budget. The procurement plan is designed to build up the budget along with the business needs of the different purchase departments. It is then consolidated into the e-GP with the purpose to prepare the final budget.
E-GP intends also to provide better control downstream. Finance control can be carried out at a level of detail sometimes inconsistent with the landmarks of the actual execution. Determine how expenses are actually engaged becomes fuzzier when decisions taken on the field are not enacted into the system. When information is better exposed to the decision makers along the chain of command, E-GP improves the quality of decisions of the department in charge of the control over finance engagement with a better monitor of the rate of incurring expenses.
e-GP for securing procurement process?
If e-GP magnifies the traceability of funds through the system from awarding to delivery and secure the procurement process to prevent deviant practices. e-GP aims also to improve the efficiency in procurement preventing the risk of a standalone decision often detrimental to a well-balanced approach between cost and the fulfillment of requirements. E-GP should contribute to the alignment of the organization through a single and seamless process and a convergence of the purchasing departments. In the upstream phase of preparation, e-GP improves the level of accuracy in the definition of the product or the service requirements. By easily sharing experiences internally or externally through a sourcing procedure with potential suppliers, e-GP provides a collaborative framework that fosters the dissemination of best practices among the buyer community. Dashboards help the purchase department to supervise activities and keep them in the limits of budget allocation, get a better control over the public expenditures and prevent deviating practices far before their occurrence. E-GP provides also a larger array of procedures more tailored to the type of purchase. Instead of using an open tender, a buyer may consider a framework agreement for procuring goods or services subject of replenishment or presenting a high degree of commonality. E-GP is designed to entrust decisions by establishing a climate of confidence in business among stakeholders.
In conclusion, is e-GP able to deliver?
e-GP is a sensitive project because of its wide scope involving many stakeholders that implementation may become particularly tricky and risks are high of cost overrun. African public authorities have fewer resources to manage the intricacies of these projects. Caught in the middle with complex needs and limited resources, they are more dependent on vendor guidance and miss of resource and skills to validate and thoroughly vet each claim or recommendation.
The assessment must be carried out considering the multiple facets of the project and do not stick only to technical enablement but business-related issues with avoidance of waterfall project with interdependent phases, likely to fail in delivering because of blown timelines.
Even if a large part of the project is IT, e-GP should not be IT driven only. In term of governance, it is important to include business practitioners in the project comity otherwise the project may fail to deliver. Careful attention will be paid to change management issues leading to decide several phases of implementation.