According to the European Commission, improving public procurement process can yield big savings: even a 1% efficiency gain could save EUR 20 billion per year. In our new digest, we look at how the coronavirus pandemic may serve as an additional stimulus for reforming the system and what needs to be done to find a balance between time, efficiency and compliance with procurement procedures.
1. Emergency procurement procedures
Many countries have revised their procurement procedures to save time. In an emergency situation, it is crucial to be able to quickly make informed decisions without compromising quality.
The European Commission has issued a Guidance on using the public procurement framework that is designed to help provide public bodies with a system for the fast and efficient procurement of required goods.
Many OECD countries are using emergency public procurement regulations based on provisions that allow the use of special procurement procedures. Such provisions allow for the necessary goods to be procured directly from suppliers or through a pre-approved list, without lengthy standard procurement procedures.
In March 2020, the United Kingdom adopted a policy document that serves as a guide to public procurement procedures during the COVID-19 pandemic. The document says that, if necessary, contracting authorities may use a standard procedure with accelerated timescales, and they can also extend or modify a contract during its term.
A critical measure for ensuring sound and balanced emergency procurement policies is the establishment of a centralised procurement coordination mechanism. Also, digitalisation is crucial here.
The Public Procurement Service of the Republic of Korea has developed an emergency procurement guideline. Measures are taken to stabilise supply and centralise the distribution of essential supplies. South Korea’s digital public procurement platform (Online Shopping Mall) has proved extremely useful in implementing these measures.
In Italy, the authorities have made prepayments and rapid decision-making in public procurement possible. The emergency measures included mechanisms for the centralised assessment of demand for goods, selection of suppliers and identification of end recipients, as well as the use of an online supplier directory. During the Italian crisis, preference was given to direct awards rather than to lengthy bidding procedures.
3. Joint procurement procedures
In 2014, the EU member states signed the Joint Procurement Agreement to Procure Medical Countermeasures. The main idea behind this mechanism is that countries can act as a major buyer, thus ensuring better prices and enabling priority deliveries to the countries most in need.
As of April 2020, the European Union had organised four procurement schemes for medical equipment related to the COVID-19 pandemic (including medical masks, personal protective equipment, medical ventilators and diagnostic kits) through the joint procurement mechanism. The total value of the PPE purchased was EUR 1.5 billion, and medical ventilators were estimated at EUR 790 million. Twenty-five European countries took part in the procurement schemes.
4. Support from international organisations
At the global level, international organisations help countries fine-tune their procurement processes. They provide hands-on support at all stages of procurement—from help with supplier identification to contract signing and monitoring of implementation.
In early April, the World Bank launched the COVID-19 Fast Track Facility, which represents a set of templates and guidelines, including:
fast-track procurement mechanisms: contracts are now subject to ex-post rather than ex-ante review by the Bank to accelerate procurement;
retroactive financing (financing of expenses incurred before the contract enters into force) can be used up to 40% of the contract value;
mechanisms that allow the use of customs documents as proof of import for the last 12 months.
During the COVID-19 pandemic, the United Nations Children’s Fund (UNICEF) issued a call for tender to supply personal protective equipment (PPE) to meet the needs of organisations such as WHO, IAEA, UNDP, UNICEF, the International Organisation for Migration and the International Federation of Red Cross and Red Crescent Societies. An important requirement for bidders is the ability to immediately provide products from their warehouses to use them promptly to fight against COVID-19.
5. Control by SAIs
In its guidance on public procurement during states of emergency, Transparency International highlights the need to implement additional oversight mechanisms over and above those foreseen by national and local government legislation. Supreme Audit Institutions are actively engaged in this work and are developing special mechanisms to improve transparency in public procurement, such as the Gosraskhody (State Expenditures) aggregator website of the Russian Accounts Chamber.
The Supreme Audit Institution of Panama has set up a special group to approve urgent purchases arranged to combat the spread of the virus and to deal with emergencies. The group coordinates the procurement of medicines, medical and laboratory equipment within accelerated timescales.
Based on the results of the last audit, Costa Rica’s SAI has developed and launched the “Transparency in Public Administration during the COVID-19 Emergency” portal, which provides up-to-date statistics and infographics on legislative initiatives adopted or under consideration in the context of the emergency, including those assessed by the SAI, as well as public procurement statistics approved by the Comptroller General’s Office.