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Most experts are predicting that COVID-19 pandemic will not only cause hundreds of thousands of deaths, but also lead to deep socio-economic crises, with declining economic performance and millions of people in new needs for help.
The domestic mobilisation of resources seems to be the most effective tool to cope with decreased revenues and increased expenditure needs in the coming period. According to unofficial estimates, in less developed countries better functioning of the national public procurement systems may save up to 5 % of GDP (more in wealthier, but highly corrupted countries). What changes are necessary?
The “reforms” should focus both on effectiveness and efficiency. Effectiveness is not directly covered by many public procurement systems, where national procurement legislation does not include the planning phase. In such a case, the need to deal with ex-ante effectiveness evaluations before starting the process should be a “must”. Any decision about the purchase (especially of more expensive) goods, works or services should be based on relevant form of feasibility analysis (what and why do we need?). In more developed countries such mechanisms already exist and reflect Value for Money principle; however, in less developed countries these systems are either missing or are not well functional (some countries request ex-ante approval of more expensive purchases from a supervising body, but such a body normally does not have sufficient analytical capacity to decide correctly).
The “tough” task is to evaluate real efficiency/economy of governmental purchases (did we get best price?). Most statistics calculate the difference between the forecasted and the final price. However such an approach does not work at all, as more experienced contracting authorities all prefer to overestimate forecasted price to be safe (passive waste). Direct comparison of prices is possible only for homogeneous goods – this means in very few procurement cases. However, effective benchmarking can be the solution. Well-established benchmarking not only shows differences in purchasing prices for commodities, but also requests explanations and elaborations. Most purchases of goods and almost all purchases of services and works are non-homogeneous, so the difference can appear; it just needs to be explained and elaborated on.
The well functional systems of ex-ante evaluation of procurement needs and of ex-post benchmarking of results have great potential to help to save resources and could be promoted as an effective procurement tool by CEPA.
Juraj Nemec, member of the Committee of Experts on Public Administration