When Developing Country Grants Have eProcurement Strings: Fascinating Experiments in Jamaica

Even though many would argue that spend analysis itself is likely to yield greater transparency into government spending and corruption, it's still a remarkable accomplishment for a government grant to come with eProcurement strings. But in Jamaica, courtesy of the Inter-American Development Bank (IDB), just such a situation is developing. Specifically, the Jamaican government is receiving a $79.6 million dollar grant, of which the Jamaican government must spend $1.2 million (either internally budgeted or from the proceeds) on a "state of the art eProcurement system." According to one of the executives at the organization making the grant, "the IDB, in disbursing the grant, had identified the strengthening of public financial and performance management as one of the key pillars to ensure that the public resources are equitably and efficiently used." The story suggests that technology will help "tighten the loopholes and vulnerability that lead to abuse of the system and corruption."

Yet as any semi-expert in procurement systems will tell you, simply budgeting for an implemented source-to-pay solution is not the same as realizing results from it. And when either private or public sector officials have a vested interest in maintaining the spending status quo or stashing their dirty procurement laundry of the past, a system itself is unlikely to deliver the types of results that adherents suggest it may. Even at Best Buy, a best-practice procurement organization in the retail space, a procurement manager was able to line his own pockets by awarding business to a supplier that supposedly was the lowest bidder in events, yet in reality, ended up being anything but (in this case the company was an active Ariba user). In other words, in the best of cases, systems simply make fraud more challenging to pull off, and potentially deter more casual theft.

I liken the system in Jamaica to a doorman building in a city like Chicago or New York. In our neighborhood in downtown Chicago, break-ins and theft at local walk-up apartments and houses are commonplace. Nearly all of our friends have been broken into in the past few years. Yet those in high-rise doorman building with relatively low-paid staff manning the cameras rarely, if ever, have break-ins. Granted, if someone wanted to break in to such a building, it would be relatively easy to pull of. But because the risk is higher, it rarely happens, except in the case of more professional criminal elements. Perhaps in Jamaica, procurement corruption will be reduced as a result of eProcurement. But it's just as likely that the system will perpetuate criminal spending and kick-back activity when it comes to larger contracts with more sophisticated work-arounds for the hardened fraudster type -- it will just make schemes a bit more difficult to pull off. After all, unless you change the culture, a P2P system will only serve as a minor roadblock.

Jason Busch

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