Procurement of Digital: Can We Simplify Complexity
In July this year, DIAL and Deloitte began work on the development of a toolset to support governments in low resource settings to improve their digital technology procurement outcomes.
In July this year, DIAL and Deloitte began work on the development of a toolset to support governments in low resource settings to improve their digital technology procurement outcomes. We actively chose government procurers as the key audience of this toolset because public procurement can be a powerful tool for change, used by governments not only to deliver services to citizens across all sectors from health, education and energy, to public transport, but also to drive and further policies ranging from sustainability to innovation and local technology sector development. Together with Deloitte, we concluded a period of stakeholder needs analysis with donors, implementers, and government stakeholders in Africa to assist us shape the toolset.
Digital technology holds the key to sustainable development, however, many country governments struggle to harness the power of digital technology for their citizens. The intricate complexities of public procurement processes and the overwhelming knowledge base of information needed to make sound buying decisions in an ever-changing digital market are an ongoing challenge. A fact also recognized by other government organizations: the Digital Buying Guide was recently published by the UK Government Digital Service (GDS) with the support of the Foreign, Commonwealth and Development Office (FCDO), the OECD, the International Telecommunication Union (ITU) and United for Smart Sustainable Cities (U4SSC).
When we set out on this journey, we hypothesized the existence of several barriers to the deployment of digital technology by governments, including under investment in building professional capability in procurement; a lack of cohesive government strategy to align procurement with national digital agendas; limited local market building to increase supply choice; challenges in identifying sustainable and scalable technology solutions. The needs analysis exercise both confirmed these barriers and shed light on further challenges facing government, as well as informing a deeper understanding of the current state of government approach to digital transformation in Africa.
We found the top challenges faced by governments and commented on or supported by other stakeholders are:
- Significant struggle in calculation of total cost of ownership when procuring technology
- Difficulties with understanding aspects of technology transfer, license management, and maintenance arrangements
- Lack of availability of talent and expertise
- The non-collaborative culture of government agencies
- Lack of knowledge of digital technology capabilities
- Neglect of change management and contract management administration
- Antiquated procurement processes and inflexible legislation offer limited options to procurement professionals willing to try new approaches
- A lack of strategic intent around procurement
- A lack of coherent approach to digital strategy preventing procurers from understanding their mandate to procure technology
In addition to exploring challenges, we discussed with government representatives the organizational structures in place to support procurement across their organizations. Governments have substantial spend volumes and we know pooling and demand aggregation to be consistent with attracting a wider range of supply options and driving pricing lower through volume, a topic that DIAL studied in 2019 and discussed in our blog Demand Aggregation – The Secret Ingredient to ICT4D Success. However, a lack of transparency and rigid public procurement practices often inhibit governments’ ability to access and use such mechanisms. We found centralized government procurement for digital technology is present in more countries than the initial hypothesis supposed. For example, in Nigeria this centralization is present at a state level and in Ghana at a national level. This allows central decision making on digital technology criteria and can bring benefits such as economies of scale through aggregated demand in tender and reduction in fragmented buying. We also explored the role of donors in the technology choices made by governments, because misaligned financing can drive further silos rather than a coherent strategic approach. We found that while donor intervention does influence government procurement decision-making and may not always be fully aligned with national digital strategies, overall, the intervention is useful, because it enables investment beyond what many governments can achieve with domestic resources alone.
A wide range of information and deeper understanding was collected on the issues that governments in Africa face during the procurement of digital technology and some of the solutions that could help. The implications of our findings for development of the procurement guidance include ensuring that we simplify and demystify where possible. As we develop the procurement guidance, we know it must be practical and customizable to account for different country government cultures and their mandates. It should assist procurers to navigate both legacy issues as well as new procurement issues, encouraging programmatic category level planning while supporting with tools and resources for delivery at a project level, improving value for money and return on investment by attracting wider supply options to government settings through more targeted demand analysis and better formulated buying requirements.
In many countries public procurement policy is often not pliable, and professionals are left with little option but to use prescriptive, traditional processes not suited to digital markets. We want procurement professionals to initiate dialogue that encourages governments to recognize that public procurement plays an important part in achieving transformation and development goals; to raise awareness that digital is a procurement specialization that requires dedicated expertise, and encourage harmonizing approaches to procurement of digital in line with practices that have been shown to work.