Government agencies spend U.S. $1.8 trillion annually on the procurement of goods and services needed to keep society running smoothly daily. These goods and services include everything from medications, electricity and gas to hospitals, public works, and national security. Treating bidders for these goods and services in a fair, transparent, and equitable manner is closely related to the efficiency of public procurement systems, as it is essential to encourage suppliers and the private sector to participate in public procurement.
However, that becomes difficult to manage and ensure with traditional systems or pen and paper approach since there is just so much money at stake and so many contracts to keep track of and complete according to legal requirements. The complex nature of the process itself, including the thousands of stakeholders involved, contributes to its vulnerability to inefficiencies. The more complex a government procurement system is, the more prone it is to errors. Even if these errors are simply incorrect calculations or misallocations, the waste of public funds can be significant. Not to mention that there is an entire industry of media and public watchdogs devoted to government mismanagement, so the damage to a government’s reputation in these cases can be significant. Furthermore, procurement errors erode overall confidence in the system’s ability to provide for fair competition and access to legitimate suppliers who become discouraged and harder to motivate to participate in the bidding process; leading to less competition, higher costs and a reduced drive toward innovation.
In 2015, the Organization for Economic Cooperation and Development recommended to its almost 40 member countries to facilitate access to procurement opportunities for potential competitors of all sizes, to use competitive bidding as the standard method of procurement, and to limit the use of exceptions such as direct contracting. Source-to-pay enables competitive bidding thus becomes a significant means of boosting efficiency by achieving better value for every dollar spent. These digital procurement tools set a standard method for conducting procurement that is effective at surfacing inefficiencies, preventing errors and discrepancies, and obtaining fair and reasonable pricing. Furthermore, they ensure competitive outcomes and grow the economy by providing access to SMBs, minority-owned and disadvantaged businesses to participate in government procurement.
Custom built for the public sector, source-to-pay tools are the solution for the government to increase transparency. They facilitate fair access to the public solicitation process, reduce direct and potentially compromising interactions between procurement officials and participating businesses, increase outreach and competition, and more easily detect irregularities in the process. This digitization of procurement is key to strengthening internal monitoring controls and detection of external breaches. If a breach should occur, eprocurement provides an electronic audit service trail that may facilitate investigations to increase accountability and prevent recurrences.
Efficient private sector businesses depend on data to make sound decisions related to budgets, planning and resources. Source-to-pay tools provide the government with the ability to leverage data to make similar well-informed decisions that impact the public funds. It also helps ensure that the project information is made progressively available as open data on widely used formats that are nonproprietary, searchable, sortable, platform-independent, and machine-readable. This is to ensure that the data is interoperable, easy for stakeholders to access, assess and analyze, and thus improve its effectiveness.
For government departments and organizations, source-to-pay systems offer unparalleled agility and transparency. All internal and external stakeholders can, with the click of a button, be immediately notified of changes in the content, delivery and completion schedules. This flexibility is critical to government organizations that are always subject to shifting priorities, budgets and political imperatives. Greater transparency grants public and government taxpayer watchdogs a clearer window on shifting deadlines and priorities which leads to more trust in public accounting.
This transparency provided by eprocurement allows processes and decisions to be monitored and reviewed frequently; as is offered at all stages of the procurement cycle, from the earliest needs assessment, to budget planning, execution decisions, delivery and auditing performance. Maximum transparency is crucial prior to the bidding stage to enable decision-makers and stakeholders to make informed decisions about the cost, quality, socio-economic benefits, and environmental impact of projects. Imagine the confusion, errors and opportunity for outside influence that would reign with every government department working with different systems and modules. Source-to-pay tools and platforms allow government agencies to standardize the procurement process and consolidate all relevant information for suppliers through one source or gateway. These tools also help businesses identify contracting opportunities through an open web portal that is centralized at each level of government, lowering barriers for smaller and minority owned or disadvantaged companies as it creates an open and level playing field for all. For the public procurement sector to remain resilient in face of uncertainty created by external influences and the aftereffects of the pandemic, digitizing end-to-end procurement is the only way forward.