Contracts are the number one corruption risk governments face – “a lethal combination of money, discretion and secrecy”, according to the Open Contracting Partnership. With trillions of dollars at stake, public procurement is in desperate need of reform.
British civil servant Warren Smith has been working on government procurement since the 90s internet boom. He witnessed how technology fundamentally changed public service delivery – starting with the Government Digital Service (GDS) in the UK and then rippling across the world. Meanwhile, “it was almost like the antithesis of that in procurement”, he tells GovInsider.
Poor contracting allowed IT companies to charge the UK huge amounts for simple services – £30,000 (US$37,976) to edit text on a website in one case. Smith now leads the UK’s programme to reform tech procurement and has set out to do the same across the world.
He spearheaded the creation of the Global Digital Marketplace Programme to help governments across the world reform procurement. This was born out of the UK’s own experience over the last seven years when it set out to make procurement “simpler, more clearer, designing out any of the friction that creates barriers to entry for a more diverse range of suppliers”, says Smith, the programme’s Director.
The public-facing result of this work is a website – the Digital Marketplace – where UK agencies can buy tech systems and services. Over 90 percent of the suppliers on the website are small and medium entrepreneurs – that’s about 5,000 companies – and more than £6 billion (US$7.6 billion) has been spent through it.
But more than the website, what’s critical is the thinking and principles that have gone into creating a more open market for public procurement. It expanded the pool of suppliers who have access to government contracts, Smith says. And it allowed smaller companies to win business by redesigning the procurement experience around their needs.
Hack the contract
One example of this approach in action was the redesign of government contracts. The UK GDS brought lawyers, content specialists and service designers together to “hack the contract” – literally. They were given scissors and a contract which had been criticised for its length and complexity. “We just printed the thing out and set it on the wall. We kind of left it very open and we gave scissors to the lawyers,” Smith says.
“We kind of left it very open and we gave scissors to the lawyers.”
Over three days, they cut the length down to 50%, simply by questioning the language and removing duplication, he adds. This exercise led to a collaboration between the GDS and the national procurement agency to apply the same approach to all standard government contracts, he says.
There are two key lessons from this experience. If you want to tackle a monstrous problem like procurement, don’t try to bring it all down at once. “Start small, iterate wildly”, Smith says, building up momentum to tackle the larger issues.
Another takeaway is that this deceptively simple exercise changed the way people in the government approached the issues of procurement. It got civil servants to challenge the old ways – starting with one single contract, it snowballed onto other things that could be changed. “Lawyers were enthused by the fact that for once they’ve been able to challenge this kind of, almost entrenched, legacy element to their profession,” Smith says.
Culture of procurement
This takes us onto the more knotty area of procurement – the people. UK needed to fundamentally change the “culture of procurement” and the behaviour associated with it – from one that was old-fashioned and rigid to a more risk-taking and experimental approach to problem-solving.
Rather than issuing specific and locked-down set of requirements, procurement should start by stating the problems that must be solved. It should provide an understanding of users’ needs and the kinds of outcomes and impact the agencies wish to achieve, Smith says.
This would allow entrepreneurs to propose new solutions and ways to serve citizens. Procurement officials should play a central role in supporting agencies to work with startups to deliver outcomes, he says. “The procurement profession absolutely should be the convener, the custodian of that conversation” to bring in new ways of thinking to the government.
Open contracting data
The UK has adopted the Open Contracting Data Standard which requires all data to be published in reusable and machine readable formats. Access to this data allows people outside of government to understand where money is being spent and how that can be improved.
Data on the first and last stages of procurement are particularly critical, because that’s where people outside of government can intervene, Smith says. At the planning stage, before any money has been spent, civil society has the opportunity to challenge decisions and genuinely change the direction of spending.
And the final implementation stage is where the government actually spends the money, he adds. Data on this is crucial because it can be used to ensure that what was planned is actually put into practice.
Advising global governments
The Global Digital Marketplace Programme is using these lessons from the UK to advise governments across the world on five key areas. It will help civil servants ensure that they plan for how money should be spent. It will train them on designing contracts, and assuring the delivery of services. It will also encourage countries to publish open contracting data, and build institutional capabilities.
The initiative was launched a little more than a year ago and has £11 million (US$14.1 million) of funding until 2022, Smith says. The government has picked five countries to work with: Colombia, Indonesia, Malaysia, Mexico and South Africa.
Smith and his team are now meeting with colleagues in these countries to identify the challenges they are facing. “While the conversation starts with tackling corruption and increasing integrity, it very quickly turns to digital transformation of government”, he says.
He is working with ministries of finance, treasury, planning, economic development and industry at the national level, and similar counterparts in cities. It will also bring in the domestic supply chain and civil society organisations.
The programme comes at a time when global interest in procurement reform is picking up speed, and nations are building on the UK’s model. Malaysia’s GCIO, for instance, said this week that it plans to create its own digital marketplace and will “benchmark a lot with the UK”.
From Bogota to Putrajaya, the UK GDS has become a global model to reform digital service delivery, and a hugely successful export to governments. Could it now do the same for procurement?