Digital direction: how to use technology to procure better – and how to better procure technology
Governments spend huge sums on digital technologies so getting procurement processes – and price – right is vital. And so too is using digital technologies to drive purchasing efficiencies. During a Global Government Forum webinar, public sector procurement specialists from around the world shared their experiences of tech-driven procurement reform
At a time when budgets are notably constrained, governments must work hard to protect the public coffers. Given that purchasing accounts for a large proportion of government expenditure, improving procurement practices is one surefire way to ensure they get better value for money.
During a GGF webinar, experts from Singapore, the US, the UK and the OECD discussed how to harness digital technology to make the most of government purchasing, touching on using data insights to better understanding spending; the merits of cross-government procurement portals; and working with the private sector to broaden the supplier community.
Ser Huei, Singapore’s chief of government procurement and director of the Government Procurement Function Office at the Ministry of Finance, began by explaining how the city-state had leveraged technology for procurement.
Technology, he said, had presented many opportunities in procurement but also challenges. “There is pressure for us to keep up when our staff are used to buying easily from e-commerce platforms in their personal lives, and then they come to the office and they have to contend with very complicated processes.”
To bridge the gap, officials began to review procurement processes and policies, thinking always from a user perspective, “rather than trying to digitalise an inefficient process”.
They also looked beyond the procurement function, working closely with finance colleagues, and taking an end-to-end view of what the user goes through, from budgeting to procurement to contract management and payment.
Two years ago, the procurement function office also began making improvements to the way civil servants make small value purchases up to a few thousand dollars. To do this, officials from several agencies came together to identify the pain points and think about how things could be done differently. The result was the ‘Quick Buy Initiative’ which allows staff to buy from certain e-commerce platforms using the same portal they would at home, with billing going direct to their organisation. What used to take two weeks on average now takes as little as a day, Huei explained. And, because all the purchases are done digitally, the government can analyse and monitor trends easily.
Though the government didn’t have to develop a separate portal, Huei said the project involved a lot of work on the back end to enable the routing of purchase requests from officials to supervisors and concedes that the approach means a slightly lower precision in the tagging of payments. But it’s a trade off the government is willing to make.
Now the government is embarking on a revamp of a procurement portal used for larger payments, taking a similar end-to-end approach.
The risk of not undertaking such projects or updating and standardising processes, Huei said, is that that government “ends up with multiple different IT systems for different agencies and it’s not very cost efficient”.
Looking to the future, he said generative AI could be incorporated to help with the drafting of tender specifications and to provide guidance to inexperienced offices.
And, importantly, he said, the civil service would need to build its digital capabilities and compete for limited IT talent. “We need to skill up. Technology changes so rapidly that we need to stay abreast – and generative AI is one example. We need to remain agile, open to new technologies. But actually beyond technology, it’s about… having a group of people who understand operations and technology and can marry the two.”
Matthieu Cahen, senior policy analyst in the Public Governance Directorate of the OECD agreed with Huei that digital is often used as a “patch” on existing procurement processes and is not leveraged to its full potential.
He went on to give an overview of what’s happening on the global stage.
What he has seen over the last decade, he said, is a shift from “one-way information portals” that advertise government procurement opportunities to “two-way transactional systems” that interact with the private sector and allow leads to be submitted electronically. The latter are now common across the OECD’s 38 member countries.
However, that doesn’t mean the full production cycle is covered. “There is room for progress in many countries where the systems are not still not focusing enough on the contract management phase, which is of course critical to better understand the impact and the performance of public contracts,” Cahen said.
Moving on to the importance of green public finance, he shared the results of a survey launched by the OECD last year.
It focused in part on the way impact measurement is carried out and “whether countries were leveraging digital tools to report because, arguably, reporting through digital tools could automate processes, ease reporting requirements and lessen the burden on contracting authorities”.
What it found was that the vast majority of countries are using digital platforms that are integrated with electronic procurement systems to facilitate reporting, rather than relying on Excel files or paper-based forms.
However, “there are some countries that, although they have the strategies and political commitment to use public procurement to support and to address climate change, are still not required to report,” Cahen said.
And, of the countries that do report on the value of green public procurement, most report on the number of [relevant] public tenders rather than on the outcomes. “There is reporting on processes, but much less on what it means actually, and what the impacts are of those strategies.”
Next, Kevin Cunnington, former director general of the UK’s Government Digital Service (GDS) and executive advisor to Global Government Forum, shared a GDS success story conceived in 2010.
At the time, the UK government spent about £16bn (US$19.4bn) a year on technology, with about eight multinational suppliers.
“We invented a service called Digital Marketplace and by the time my captaincy finished in 2019, that £16bn bill was reduced to £9bn (US$10.9bn) – so nearly half of what it had been – and we had attracted 5,000 SMEs and SME services to working with government,” Cunnington explained.
In addition, about a third of that £9bn was spent with companies based in the UK so it was a boost for the UK economy.
The Digital Marketplace, now in its 13th iteration, is effectively a catalogue. Each year suppliers submit their services to be featured in it, describing what they do and what their pricing structures are and civil servants can then search the catalogue and pick out what they want. They can either “buy as read” from the supplier or go through a request for proposal if they want to negotiate.
Like in Singapore, the system means a process that used to take weeks, now takes hours.
What the GDS team had taken for granted, Cunnington admitted, was how much work went into setting the standards for the services you could procure.
As well as instructing suppliers on things like threat modelling, security, code review, and penetration testing, the team also “did an awful lot of work setting up things like accessibility standards and making sure suppliers understood them; we did a lot of work around what it would take to technically integrate with our architectures going forward so that we could use notification systems; and we did an awful lot of work around testing,” he said.
“I’d really forgotten how much work we did on the standards of the things we buy, compared to how we actually bought it. We tend to look back and say, ‘we did a lot of work on procurement’ – actually, we did maybe more work on setting the standards for procurement than we did on building the model itself.”
Laura Stanton is assistant commissioner for the Office of Information Technology Category at the US General Services Administration’s Federal Acquisition Service. She used her opening comments to tell the webinar’s audience about using data to monitor procurement spend and trends and to make improvements.
The US federal government spends about US$72bn on information technology contractual services a year and Stanton’s role involves working out what’s been spent in which categories, whether there are duplicative contracts, and how the government is engaging with the government’s diverse supplier community.
Like the UK, a key initiative has been to expand the number of companies selling to US government, first by identifying them and then by “making sure that we help them understand how to navigate a fairly complex public sector market”, Stanton said.
The government has a website, buy.gsa.gov, comprising a compilation of digital tools and resources for both buyers and suppliers, and all backed by data insights. Buyers can use it to ascertain what the top price is for a particular product and how they can go about negotiating, for example.
Then there’s GSA Advantage, a digital buying platform on which thousands of providers showcase their catalogues and through which officials acquire their products.
Similarly to Singapore, it has also established contracts that allow agencies to use commercial e-commerce platforms for purchases up to approximately US$10,000.
More broadly, there has also been a drive to buy common goods and services smarter. To do this, the federal government has been applying category management to its procurement processes since around 2015. “We recognise that we buy these common goods and services across the government and that we need to be buying them as an enterprise and not just as a whole series of individual agencies.”
Here again, data is used to determine what the government wants, how much it wants and whether it is understanding industry and industry cycles as best it can.
Stanton and her colleagues also look at total cost of ownership, “not just what you’re paying up front but what you’re paying through the lifecycle of that product and the capability needed to manage it”, and are also developing government-wide standards for buying common software, managing licences in a more consistent manner and standardising the terms and conditions that can be used in framework agreements.
Using technology in the buying approach has, Stanton said, “improved the buying experience of technology”.
Looking at her team’s successes, she says she is “very proud” that last year, around 37% of the US$72bn the government spent on IT went to small businesses.
Matthew Browne, deputy director of sourcing policy at the UK’s Government Commercial Function, which is based in the Cabinet Office, described a culture change programme which began four or five years ago and which focuses on the procurement of technology services.
The government has developed sourcing playbooks for the facilities management, construction, consultancy, and digital technology sectors. Unusually, this approach was developed as a joint endeavour between government and industry with working groups comprised of representatives of different sectors involved in discussions about what the right policy should be.
That, Browne said, gave government a different perspective, in that what might have looked sensible from its point of view, “could sometimes cause real problems for our suppliers… the dialogue with our supplier base has been really, really powerful”.
Browne went on to describe three key principles that the commercial function tries to adhere to. The first is setting projects up for success. There was a tendency for projects “to run before they could walk”, he said, so there is now more of a focus on getting the right building blocks in place from the start. “The benefit of that is that though it takes a little bit longer at the start, you actually end up doing things quicker.”
The second is a “whole category of reforms that are about having sensible commercial policies in place and not contributing to a race to the bottom on price… and I think this goes to something that a number of the speakers have already picked up on, which is making sure that we’re not inadvertently reducing the number of suppliers that can bid for our tenders”.
The third principle is ensuring there is greater consistency in terms of the financial health checks carried out on suppliers.
Browne also spoke of the need to consider the limitations of legacy systems and to ensure that when buying technology, government doesn’t end up being hamstrung by inflexible systems.
“We spend a lot of time thinking about the new and the cutting edge and I think actually, the challenge for us is slightly more mundane, in that we have quite a lot of legacy systems where we only have a single supplier that can manage that system for us. And so there’s a big focus on what do we do with those systems. And how do we get to something that’s more sustainable, but also, how do we avoid getting into that situation in the future?”
He added: “There’s a big focus on what we’re calling innovation and agile. And this is really about making sure that that the sort of procurement process we have in place doesn’t stop us doing sensible things… we don’t want to just work in what we would call a ‘waterfall’ style, where we know exactly what we want to buy and we go to market and we get bids back – it’s actually about learning lessons and innovating.”
Mirroring Cahen’s earlier point, Browne also touched on the importance of sustainability and ensuring that the digital services government buys contribute to its net zero targets; as well as on policy around things like cybersecurity, risk allocation and management of those risks; and making sure there’s a level playing field for SMEs.
He also mentioned a procurement bill currently going through parliament – drafted following the UK’s exit from the European Union – the objective of which is to ensure greater flexibility in the way government procures services.
“What we’re keen to do,” Browne said, “is work closely with the digital function in government to make sure that we take full advantage of those flexibilities. And we’re going to continue working with the digital function to make sure that the governance of how we approve projects doesn’t get in the way of moving in a quick and agile way.”
To embed the reforms Browne described, a central team is being set up to provide training to the public sector on how the principles work in practice. There is also a small team of commercial experts who can be parachuted into particularly challenging or high profile projects to help with implementation.
“I think the lesson for us has been that, in some ways, the easy thing is writing down what we should be doing – the tricky thing is actually making sure that people have the capability and the capacity to do it in practice.”
Following opening comments, panellists took questions from the webinar’s audience. These included:
- What they thought a supplier – particularly a small business supplier – might consider an ideal public procurement process.
- Panellists’ views on how the procurement profession should be reimagined – through culture change, reworked business models and adoption of technologies – to be truly digital.
- What resources were needed for a procurement digitalisation project from concept, to implementation, to maintenance, touching on how technology could help to ensure that suppliers adhered to their contracts and that governments were measuring impacts.
- What speakers learnt about procurement during the COVID-19 pandemic and how digital technologies could help governments address some of the concerns raised over that period.
Listen to the Q&A section of the webinar here:
To learn all this and more, you can watch the full Buying right: getting procurement right in the digital age webinar on our dedicated events page. The webinar, hosted by Global Government Forum, was held on 13 July 2023.
About Mia Hunt
Mia is a journalist and editor with a background in covering commercial property, having been market reports and supplements editor at trade title Property Week and deputy editor of Shopping Centre magazine, now known as Retail Destination. She has also undertaken freelance work for several publications including the preview magazine of international trade show, MAPIC, and TES Global (formerly the Times Educational Supplement) and has produced a white paper on energy efficiency in business for E.ON. Between 2014 and 2016, she was a member of the Revo Customer Experience Committee and an ACE Awards judge. Mia graduated from Kingston University with a first-class degree in journalism and was part of the team that produced The River newspaper, which won Publication of the Year at the Guardian Student Media Awards in 2010.
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