Public Procurement – Its importance

Concerns about public procurement have occupied a central space in Indian Media for two decades now. Since the Bofors scam, there has been no looking back.. We have had the Coal Scam, 2G Scam, Common Wealth Scam, and more recently some call it the Rafael scam.  Central to all of them is public procurement! While being a great subject for new paper headlines and a as a beating stick for politicians and bureaucrats, it has been of little interest for academicians,  professionals, and policy makers. I see some paradoxes here

a) Everyone does public procurement, hence everyone knows it: Incorrect.

Just because everyone does it does not imply that everyone knows it. Firstly, most people have not been formally trained it, and they have learned on the job. And secondly, if everyone knows about it, why do we have so many scams.

b) There is little to it, other than rules and procedures: Incorrect.

During my last count, there were six Nobel laureates in the filed of economics who had been recognized primarily for their contributions to procurement related works, and specifically public procurement. The ideas of incomplete contracts, contract theory, bundling, regulation, public and private good, long term contracts, common pool resources, etc, are all tough things to conceptualize theoretically. If they are enough to get someone a Nobel prize, it has to be something more than well documented rules and procedures.

Secondly, not everyone scam or everyone bureaucrat is dealing with following of rules. Scams have taken place when rules were redrafted and rewritten by the bureaucrats. However, those who write these rules are often no more wiser than those who had been following the rules. A fundamental recognition of what rules say, and why they say it is important for both — those who make rules and those who are to follow them.

c) It is the routine job and that of a low paid clerk: Incorrect.

There happen to be two levels here — procurement manager and procurement clerk. First the later — the procurement clerk. Yes, this is routine job and is often a low paid one. For this very reason, do not even expect this job to exist for long. The machines would take over, if they not already done. Procurement have become e-enabled.  There are no more large thick files, maintained by clerks following procedures. Our dog-headed perusal of rules and regulations has moved procurement to the work of bots and block chains, after ERPs and e-tending portals.

However, the second    — procurement manager is more interesting. The procurement managers role is not going anywhere. The procurement manager is the one who exercises discretion in purchasing decision making and who decides what rules to make.

As per ranking of 772 occupations to their survival probability in face of computerization, while the procurement manager ranks 146 and only has a 0.03 probability to get computerized, the procurement agent ranks 458 with a 0.77 probability to be computerized, and the procurement clerk ranks 715 and has a 0.98 probability to get computerized.

d) Public procurement is more about following rules, so there is not thing to learn when you know the rules. Incorrect

As identified above, the rule based decision making would get automated. It is the more higher value, long term contracting, strategic procurement, sensitive procurement and the like which needs attention, and the numerous scams happen in these areas. Firstly, it is of utmost importance to identify what is routine and what is strategic, and secondly what makes them so. Where is discretion required to be exercised, and what should guide exercising of discretion. Atleast public procurement does not allow one the freedom for — I did it because I felt like doing it!  One has to explicit and hence needs to know what to be explicit about.

e) There is no where to learn about it: Partially correct.

Learning about procurement leads one to slide presentations which copy and paste from codes and manuals — awareness sessions. There are a number of such learning opportunities, however, the academic in me detests them. Codes and manuals are required to be referred to, and not taught. Teaching them is a formal way of singing a lullababy in class, and little value addition to the audience.

With this recognition, my public procurement sessions steer away from codes and manuals, but instead attempt to identify the key ideas which drive the motivation of the codes and manuals. Hence, I rarely go beyond the preface and introduction, as class is oriented around identifying the manner in which the objective of the code/manual (stated in the introduction) gets covered in the contents of the document– identifying and drawing out the links.

However, there are a couple of good learning opportunities:

i) National Institute of Financial Management, Faridabad, Haryana runs a one week module on Public Procurement. When I last looked at its contents and schedule it looked interesting.

ii) AIMA and World Bank run a certification program on public procurement. This distance learning program has a number of interesting contents, and above all this may be the only formal certification course on the subject.

As a professional disciple, the subject of public procurement is important, having learnt it on job not all of us experts at it, it is more than simple rules and procedures, it is not routine and there do exist a few learning opportunities/ courses here. To summarize, the subject of public procurement has received little attention as professional subject of interest, despite repeatedly occupying media headlines. It is time it is given its due, and moved from media space to mental space of decision makers!

REFERENCE: THE FUTURE OF EMPLOYMENT: HOW SUSCEPTIBLE ARE JOBS TO COMPUTERISATION? Carl Benedikt Frey and Michael A. Osborne