“Buy Local / National” Moves In Public Procurement Could Lead To Dangerous Protectionist Behaviour

We wrote last week about the forces around the world that seem to be moving governments and nations towards a more protectionist attitude to trade and also to government procurement. This is being seen in Europe, Australia, the US, India and various African nations too. At its extreme, it sees government procurement expenditure primarily as a tool to support “local” or national interests and suppliers.

As this movement continues, we are seeing little written in defence of free trade, open access to markets, and the benefits of a public procurement approach that puts other factors – such as value – at the heart of the activity. So we thought it was worth re-stating the negatives around a protectionist approach to procurement, and some of the benefits of openness.

Corbyn & Labour – Using Public Procurement To Achieve Political and Social Goals

We started writing this article a few days ago, before the election announcement … it is perhaps even more relevant now!

So, our challenge for today is this. How do we start an article “Jeremy Corbyn made a speech recently” and retain our readers beyond that first sentence?

For our non-UK readers, Corbyn leads the Labour Party, which should be the main opposition party to the ruling Conservatives but under his stewardship has sunk in the opinion polls and is getting to the point where its actual survival is at risk. He is an old school socialist, of the sort we don’t see very often even in the Labour Party these days. Beyond that, there have been suggestions that on top of this political philosophy not appealing to many voters, there are issues with his basic intellect, leadership skills and judgement.

The Garden Bridge and the Sunk Cost Fallacy in Government Projects

We have written a number of times about the Garden Bridge project in London, mainly from the angle of the very flawed procurement process that was used to choose the designer and project management firm for the project. There was pressure from politicians for the procurement to choose two firms who were already involved in the work prior to the formal procurement process starting, and indeed those two firms were chosen. There are also general questions about the cost of the bridge and whether London needs another crossing of the Thames at this point.

But we don’t want to go into all that again today (you can read more here if you are interested in that history). Instead, we want to follow up on the recent comment of the new Mayor of London, Sadiq Khan. He gave his support to the bridge, to many campaigner’s dismay, and his argument seemed to include the concern that if it was scrapped now, the money spent already would have been wasted.

ProZorro – Set to Save the Ukraine from Public Sector Corruption

Ukraine’s new public sector eSourcing system is the country’s Trojan-like attempt to tackle corruption in the midst of austerity measures and territorial dispute. ProZorro, bearing the name of the fictional masked crusader bent on avenging the helpless and oppressed, and punishing corruption, has completed a year-long pilot and is now ready to be mandated as the electronic public procurement platform to run state procurement online. All public procurement is to be moved over to the system in August of this year.

The Wall Street Journal has a good article explaining more here, but behind the paywall, and of course there is more on the official website.

In a nutshell: Ukraine has been running a system that regulates paper document procedures for public procurement, but experiences of other countries have shown it that an electronic system can bring 10% to 20% savings in the first year. Ukraine believes that this rate could be significantly improved as the system lessens corruption. The Wall Street Journal reports that “… the procurement budget was around $11 billion in 2014, or 8.5% of its GDP of $131.8 billion, but an estimated 10% of that spending is lost to corruption, and another 10% wasted on pricey contracts owing to the lack of competition, “ as stated by Max Nefyodov, Ukraine’s deputy minister for economic development and trade.

Purchasing Cards – Why 50K Feels Different To Different Public Organisations

The US website Government Executive reported last week that the US military “wants to accelerate procurements by raising the “micro-purchase threshold” for using a government credit card from the current $3,000 maximum to $10,000 as part of the fiscal 2017 Defense authorization act.

The proposed language, first reported by the nonprofit Project on Government Oversight, would also require the Office of Management and Budget to update its guidance to help ensure that agencies follow “sound acquisition practices when using the government purchase card” and “maintain internal controls that reduce the risk of fraud, waste and abuse.”

Whilst the increase in the spend limit to $10,000 has not actually been approved, this interested us on several counts. My personal experience as a CPO in three large organisations, one of them a UK government department, was that Purchasing Cards were a useful tool for low-value procurement, and I certainly pushed their usage further in two of my three CPO roles.

Nigeria Arrests Senior Officials on Corrupt Procurement of Arms Charges to Tune of $15 Billion

It would be remiss of us not to mention the Nigerian arms fraud debacle that has swept the internet ‘newsrooms’ recently. Vice President Yemi Osinbajo, speaking on Monday, said that about $15 billion had been stolen from Nigeria’s public funds during the previous administration through fraudulent arms procurement deals. He is noted to have said that this “mind boggling” sum equates to “more than half of the current foreign reserves of the country” – a country which represents Africa’s largest oil exporter, already suffering the effects of the drop in crude oil prices on its state coffers, given oil sales make up about 70 percent of the national income.

Tens of years of endemic corruption have left a small group of elite rich among otherwise poverty-striken Nigerians. President Muhammadu Buhari was elected last year, after the previous tenure of Goodluck Jonathan on the strength of his commitment to fight corruption.