The global finance profession is playing an increasingly critical role in helping transform how the public sector responds to the Covid-19 crisis.
By improving public procurement, finance professionals can work alongside governments to generate significant financial savings while delivering high-quality goods and services to meet urgent demand. If done well, there is also a significant opportunity to achieve wider environmental, social and economic goals through the procurement process.
In researching its recent report, New models of public procurement: a tool for sustainable recovery, ACCA spoke to more than 1,000 ACCA members and affiliates from the public and private sector in more than 90 countries to understand the biggest challenges affecting public procurement today.
Finance professionals can work alongside governments to generate significant financial savings while delivering high-quality goods and services to meet urgent demand
On the back of these findings, the report makes key recommendations on how best to approach these challenges, divided into the following categories:
- eliminating bribery and corruption
- improving the buyer-supplier relationship and promoting competition
- modernising and refocusing procurement to meet the challenges of a post-pandemic world
- public procurement as a tool in the Covid-19 recovery.
The recommended changes have the potential to generate sizeable financial savings for governments, strengthen the relationship between the public and private sector, and improve the general provision of public goods and services. All this could be possible while also working towards meeting national and international sustainability targets.
Social value creation
ACCA also held a global online discussion on public procurement, where the participants considered how the sector could create social value by, for example, supporting small and medium-sized businesses, supporting women-owned businesses and promoting wider sustainability efforts (see panel).
When navigating the economic fallout from Covid-19, it is essential to deliver public goods and services efficiently to serve the population optimally, as well as simultaneously managing public finances and driving efforts to maximise social value. This requires a multifaceted approach.
Rethinking how the public sector manages procurement will be vital for public sector finance professionals.
Deep dive on ‘value’
During ACCA’s online member discussion on public procurement, participants agreed that there was a common misconception of the term ‘value for money’ (which the OECD says is the main objective of public procurement), with cost minimisation being confused with other important factors. ‘Value’, understood holistically, encompasses a range of other factors beyond financial savings.
The European Parliament issued guidance to this effect in 2014, advising that contracts are awarded on the principle of ‘the most economically advantageous tender’ (MEAT) – see graphic below. This framework supports ‘value for money’ by including quality of the goods and services, innovation, price or lifecycle costs, and places greater emphasis on environmental and social considerations.
ACCA’s report points out that many countries have designed, and are implementing, sustainable public procurement policies, setting out how sustainable public procurement can be achieved.
This action plan could include one aspect of sustainability, such as environmental protection, or wider social aspects such as gender equality and the promotion of marginalised communities.