There is a global race to reform procurement. Governments are finally starting to bust open the old ways of buying, allowing a new generation of startups to win deals.

A new report this week sets out the urgency, noting that procurement has favoured “insiders and incumbents”, while “ smaller and more agile organisations struggle to sell to governments”. With US$9.5 trillion spent on global public procurement each year, change is vital.

Malaysia is one of the nations joining the race. It plans to create a new digital marketplace that allows smaller suppliers to work with government. “It will be a very dynamic digital service that benefits not only government, but also business,” Dr Suhazimah Dzazali, Government CIO, tells GovInsider.

Malaysia govtech marketplace

A govtech marketplace in Malaysia would allow agencies to have quicker access to new technology. “Because our procurement method is pretty set in a certain cycle, certain processes, the government became slower to adopt and benefit from new applications out there,” Dr Suhazimah says.

The platform will allow government officials to work directly with tech suppliers and for companies to “subscribe” to public sector data.. The private sector can “complement” public services by building their own services “using government data”. The marketplace will be regulated, with the GCIO to set “standards” that buyers and suppliers would adhere to.

Building on UK’s model

Malaysia’s effort is part of a global movement to build online platforms for procurement. The report by Public.IO this week recommended that governments create and roll out a “single online system for accessing and bidding for public sector contracts”. This makes it easier for startups to find and tender for contracts, while giving governments a more accurate picture of their spend.

Procurement has favoured “insiders and incumbents”

The UK Government has been a leader in the race to reform procurement, launching a government digital marketplace four years ago for agencies to buy digital systems, cloud services, and IT services. Today, over £4.5 billion has been spent through the ‘Digital Marketplace’, and over 90% of suppliers in the programme – around 5,000 companies – are SMEs. “We benchmark a lot with the UK”, Malaysia’s Dr Suhazimah says.

The UK has launched the Global Digital Marketplace Programme – an £11 million (US$14.1 million) initiative to export lessons drawn from the UK’s own experience in reforming government procurement. Malaysia is among the first few countries to be part of the programme, along with Colombia, Indonesia, Malaysia, Mexico and South Africa.

Cloud trials for education and healthcare

Governments are also in a race to use public cloud, allowing them to access more services by startups as they open up their tech stack. Malaysian agencies and ministries want to start using public cloud services, Dr Suhazimah says, because they are cheaper and will allow the government to benefit from new services.

This requires a change to the country’s policies. “In Malaysia, there is a policy that classified information cannot be on public cloud. So we in MAMPU are thinking of finding a way to leverage on cloud services without compromising information security, when there is more and more there’s a demand out there for such services”.

As a result, the government is trialling a hybrid approach in the education and healthcare sectors, allowing agencies to store data in both the public cloud and on the government’s private servers. “We will try it out for particular use cases for over three to six months”. The agency is working with other central agencies including the Malaysian Digital Economy Corporation and the National Cyber Security Agency on this programme.

The education and health sectors were selected because “they require a lot of resources,” she says, and can save money through this approach. “It’s imperative we find a solution that will optimize the resources in a way and also without compromising security, without compromising the service level.”

The race to reform digital services is picking up speed as nations join in, changing their buying methods and adopting cloud computing. But it’s more of a marathon than a sprint to affect real change.