5 procurement strategies for navigating the COVID-19 crisis from around the world
Billions of people are being affected by the new coronavirus pandemic, setting off an unprecedented global health crisis. Behind the fight to save lives, there’s another crisis unfolding for governments who are scrambling to get life-saving health supplies to hospitals and keep society running as lockdown measures come into force worldwide. The choices governments make now will have a very real impact on the severity of the outbreak.
When essential items are scarce and time is of the essence, open and accountable procurement becomes an even more important safeguard. We heard from 150 procurement practitioners about promising approaches they’re seeing for keeping procurement fast, transparent and impactful, during a lively online discussion we hosted last week. In this post, we’ll share strategies that are being tested and are beginning to show results.
Procurement, especially for urgently needed medical equipment, can be slow. Governments are dealing with outdated systems and lack clear information and data, which hinders their ability to be agile and save lives. On top of that, stocks are rapidly decreasing while prices are increasing. It’s a suppliers’ market, not a buyers’ market. Our participants on the call talked of widespread price gouging, an influx of counterfeit items, cases of intermediaries winning contracts and leaving governments in the lurch when they can’t fulfill the orders, and difficulties when competing for supplies against private companies who aren’t bound by the same bureaucratic procedures as the public sector.
Procurement specialists will need to think strategically about the whole supply chain and long-term production capacity, rather than concentrating solely on transactions. Even if authorities secure items, there are numerous hurdles to ensuring they reach hospitals and help patients. Accountability Lab’s Blair Glencorse shared an example from Pakistan, where authorities are struggling to ensure first responders have the skills to operate ventilators and other medical equipment needed to treat COVID-19. And in Ukraine, more than 50,000 postal workers require protective gear as they continue to deliver parcels and provide other essential services, said Ukrposhta’s Oleksandr Nakhov, but there’s a lot of confusion over what kind of equipment is suitable for the different categories of staff. Transparency International’s Latin American chapters have also been focusing on a holistic approach, keeping attention on the wider value chain in the midst of an emergency, not only purchases, in their recommendations for reducing corruption risks in COVID-19 procurement.
After we discussed these immense challenges we transitioned to discuss what is working in the procurement responses. Practitioners shared solutions which we grouped into five categories.
Extraordinary times call for extraordinary measures. Governments can use emergency decrees, laws and policies to establish clear rules for purchasing even as they re-engineer their supply chains and adapt to a market in which sellers have all the bargaining power.
Centralizing procurement was a common piece of advice. Italy has centralized and radically simplified its procurement processes for emergency equipment, with the national procurement agency taking charge of buying ventilators. Ben Koberna shared the experience of his Ohio-based firm EASiBuy, which is sourcing and connecting vendors for personal protective equipment. As the federal government competes with states and cities in the US for the same items, demand is rising dramatically; in the US market, Koberna expected a doubling of prices and lead times for all items in the next few days.
In the Americas, many countries are centralizing procurement among two or three agencies, said the Inter-American Development Bank (IDB)’s Ana Cristina Calderón. For example, in the Domincan Republic it’s the ministry of health, while Honduras has an emergency commission.
Calderón also recommends including public procurement within fiscal policies and management in phase one of the emergency. See more on the Bank’s key areas of support for countries affected by COVID-19.
Portugal has introduced measures to deter price-gouging by pharmacies and other economic operators as part of its emergency procurement legal framework, said João Osório from the Public Procurement Institute (IMPIC). (Price-gouging by vendors to government has been another common problem worldwide.) The IMPIC configured the legal aspects on the public contracts register portal and issued technical guidance on how the existing national e-tendering platforms should configure the concerning interoperability to expedite contract publication.
Making sure transparency and open data are included in emergency regulations is critical. Policy makers should make clear that COVID-19 procurement data must be available for citizens as soon as possible to avoid losing key information and be able to hold suppliers accountable, says Nicolas Penagos, OCP’s Head of Latin America. In Colombia, even though COVID-19 contracts are being awarded directly, all the data must still be disclosed in an open format using the government’s e-procurement platform.
Ukraine excluded COVID-19 procurement from regular procurement laws, says OCP’s Viktor Nestulia, but procuring entities must report and publish their orders within one day of the contract being signed. Oleksandr Nakhov mentioned how these changes have improved procurement procedures for Ukraine’s postal service, a state-owned enterprise which is not only responsible for delivering parcels, but also acts as the only contact point for citizens to access essential public services in many small villages. Learn more about Ukraine’s approach and how to browse their COVID-19 data here.
Setting clear goals and priorities has been helpful for partner countries of the IDB, according to Ana Cristina Calderón. Governments are facing difficult moral trade-offs and having to make decisions at a very fast pace without much time to think, so they’re having to change their mindset, focus less on price than they would usually, and more on timely delivery, and adequate quality and quantity.
Coordination is also important. Emergency committees and other organizational structures should be consolidated for quick decision-making to avoid missing out on orders in a highly competitive market. Teams should be agile to respond to needs at the local and municipal level.
Helena Fonseca who chairs the Organization of American States’ Inter-American Network on Government Procurement spoke of the work being done by the development banks OAS, IDB and CDB to generate an action plan to support countries in Latin American and the Caribbean to mitigate COVID-19. Capacity building, implementation of e-procurement and use of open data will be essential components. They’ve found so far the main actions being taken by countries in the region are emergency declarations, and publication of information and guides for buyers on operating in emergencies, regulations and exceptions. Countries with transactional purchasing systems such as Chile, Colombia, Costa Rica, Ecuador, and the Dominican Republic, have coped by using electronic procurement. Many countries are using direct awards justified by the emergency, but some are using framework agreements.
Based on the experience of the Colombian think tank “Medicines, Information and Power” monitoring health procurement, Carolina Gomez recommends that central health authorities issue an essential list of medicines and devices needed to face the pandemic. This helps governments focus their efforts. The World Health Organization and their regional equivalents have such lists which can be adapted at the national level. Evidence also needs to be provided that these solutions are safe and effective. The think tank is compiling resources and recommendations, including patent status and generics competition, in Spanish on their website.
Governments can’t tackle this by themselves. They don’t have all the answers and they can’t find all the solutions. For example, the UK government has partnered with the private sector to come up with better solutions for ventilators.
Having access to open, complete and high-quality data can help to predict and manage supply chains. It’s critical for monitoring the performance of response measures. It’s also a key solution to face the crisis, a quick survey among the participants found. Governments that are already publishing open data, should continue to do so and document their procurement.
The national health institute in Colombia is disclosing tender data and all technical comments from potential suppliers. Although they’re awarding contracts directly, they’re also asking for quote and delivery times for some of the COVID-19 tests and lab supplies that they need.
Chris Smith talked about his experience working on emergency procurement for DFID during the Ebola crisis in 2014. He is worried about how manual procurement systems are going to cope with the COVID-19 response and warns that, without e-procurement, many purchasing officers are going to be “flying blind”. A lack of data on lead times and other important indicators exacerbates the problems posed by complex and congested supply chains in which buyers are willing to pay any price and production capacity is low. Another major challenge is that many donor-funded tender notices are locked behind paywalls.
In Portugal, the IMPIC created an open dataset on the national open data portal, which is updated weekly, to publish all the public contract awards using the emergency legal framework.
OCP has published guidance for publishers on integrating the disclosure of COVID-19 procurement in their systems, tips for using data for monitoring and a slide deck on investigating COVID-19 contract spending.
Juan Pane from Paraguay mentioned an alternative method for querying the relevant data by focusing on budget lines related to funds established to manage emergency spending.
As demand skyrockets, it will be very difficult to operate under normal transparency scenarios. Collecting high-quality data on suppliers and prices now will be critical for pursuing disciplinary action against fraud and other irregularities later.
4. Supplier insights
It’s hard in this situation to know where the needed items are, how much they cost, and whether those suppliers have worked with the government before. Having supplier search tools that are powered by open data, like Ukraine’s business intelligence platform, CoProcure or the GovShop in the USA are really helpful.
Ian Makgill from Spend Network mentioned their free platform OpenOpps, which aggregates data on tender opportunities worldwide. They’ve begun publishing insights on all suppliers globally who have won contracts in the last three years for items that will be needed to respond to the COVID-19 crisis. The idea is to help buyers struggling to find suitable suppliers when their usual vendors are unavailable. Spend Network would like to offer this service to as many countries as possible, but often can’t help because they haven’t made their data available as open data.
Carlos Santiso from the Development Bank of Latin America (CAF) said many start-ups seem to be using data and new technologies to provide different solutions. Governments should be considering how their policies can provide an opportunity for these small gov tech firms to work with the public sector, as Brazil and Colombia are doing. He mentions one example: a company called Munidigital which is helping small municipalities in Argentina and Brazil.
5. Civic monitoring
Oversight from the public is more important than ever. In Ukraine, civil society is using data to monitor how the government is responding to the crisis.
Diana Enachi from Moldova’s IDIS „Viitorul” discussed a public call by the civil society organisation for the government to amend rules which currently allow non-medical contracting authorities to continue purchasing non-critical items such as cars and renovation work, while health institutions have been told to suspend any procurement that is not medically urgent for responding to the crisis.
In India, the research organization CivicDataLab – which co-created Open Budgets India (OBI) – is building a COVID-19 Health Infrastructure Watch to monitor, analyze and predict the government’s spending and procurements on health infrastructure to combat the spread of COVID-19, said Gaurav Godhwani.
Response and recovery
Once the emergency subsides, procurement will continue to play an important role in the post-crisis recovery. When we want to revive the small business sector, when we go to build more infrastructure and help the economy to restart again, contracting and open contracting will remain critical. This is a focus area for the Development Bank of Latin America (CAF), according to Carlos Santiso. They are working to help countries put together a post-crisis recovery packet that embeds integrity and transparency.
This is only the beginning of our discussions around COVID-19 procurement. We plan to keep the conversation going and host more calls around specific regions and topics. We’d love to hear about what’s working where you are too. It’s a good reminder of what we’re up against and the collaborative solutions rapidly being developed. We’re all in this together, now more than ever!
You can listen to the full recording of this community call on Soundcloud and read the call notes here. Visit our website for all our COVID-19 emergency procurement resources.
Image credit: Flickr/Prachatai