Professor Gustavo Piga raises big questions about public procurement

If you spend much of your life listening to people talking about procurement, or reading numerous articles, papers and so on, it can all get a little predictable at times. “I don’t want to read another piece about procurement aligning with organisational goals” someone said to me recently, which was a bit personally embarrassing as I was just writing something about – yes, procurement aligning with organisational goals that very day.

So it’s a real pleasure when someone shakes you out of that with some more controversial, different or counter-intuitive views. When they come towards the end of a long day’s conference proceedings, there is even more to be grateful for!

Thanks therefore to Gustavo Piga, Professor of Economics at the University of Rome Tor Vergata, who did just that at the recent Public e-Procurement conference in Lisbon. He is a respected academic, but has more direct experience; for instance, he chaired the Italian public sector central procurement organisation.

In Lisbon, he talked about the link between eProcurement (eSourcing really as we would call it), centralisation, economic growth and corruption in a fascinating session. Here are a few of his key points.

  • Data and research in Italy suggests that the use of eProcurement and online catalogue has not helped small firms – large firms still win most contracts.
  • Centralisation of procurement and eProcurement support each other and are “mutually reinforcing”. However well intentioned they may be, it is hard for central procurement bodies to run small value tenders and support SMEs (small firms).
  • The new EU Directives say that centralisation should be monitored to make sure it does not harm SMEs. But who will do that monitoring? How will it happen?
  • “I believe in procurement centralisation – but not of the procurement exercises, but of data”. Having that central view of data is powerful, as Piga says – but interestingly, he would not expose spend data to public view. He believes that just leads to meaningless discussions about prices (not the same as value, of course).

Finally, Piga talked about the dangers of corruption in public procurement, and the “four Cs” which, as he said, go together naturally. So if you have any one, you are more likely to have others. They are Collusion, Corruption, Criminality (organised crime) and Competence (or “lack of competence” really – if you have incompetent people running procurement, you are more likely to see the other problems).

So does eProcurement / eSourcing make corruption , collusion or criminality more or less likely? That’s a big question, and one we will leave for now and no doubt return to in the future. But thanks to Prof. Piga for a very stimulating 30 minutes in Lisbon.

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First Voice

  1. B.B Dlamini:

    Professor Gustavo is raising critical points.

    I am eager to know if e-procurement is the solution to solving procurement corruption.

    Put differently, what is the panacea for the pain point of procurement corruption?

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