B2B Payments

UK Setting The Wrong Example In eProcurement, Says Think Tank

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Industry experts agree that government policy can often be the catalyst to adoption of payments and finance technology in the private sector. Government eProcurement and digital invoice mandates set an example for an economy overall, helping private businesses understand the process of and benefits to implementing digital procurement, payment and accounting procedures.

Following the implementation of mandated eProcurement, the U.S. is now in the midst of readying for an eInvoicing mandate, a move regulators say will help small businesses manage their cash flow and improve visibility into B2B and B2G transactions.

But new analysis from the U.K. is casting doubt on whether governments can effectively break new ground in digital payments and trade and whether they can set a positive example for the rest of the market.

Analysts at Reform released their research on U.K. eProcurement practices earlier this month, finding that none of the 17 government departments that procure from the private sector could supply “robust data” on their deals.

That means the government is not sure how much it is spending on private sector deals or with whom they are doing business — “even the most basic questions do not have authoritative answers,” Reform’s report concluded.

The findings were published in Reform’s report “Cloud 9: The Future Of Public Procurement.”

According to reports, the vast range of estimates of how much government entities spend on their suppliers — between $57 billion and $86 billion — is evidence that digital procurement has not led to more transparent purchasing. These estimates have been made by the National Audit Office, the public accounts committee and other entities, reports said.

Reform also pointed to the government’s misplaced efforts on the procurement process instead of supplier and contract management. This strategy has led to abandoned tenders and wasted funds, the think tank argued.

The report’s co-author William Mosseri-Marlio concluded that the U.K. is “wasting billions of pounds because of poor procurement,” said Financial Times.

The U.K. has invested effort in improving its procurement policies and practices, most notably through its G-Cloud initiative, an online portal for software services launched by the Crown Commercial Service. Regulators have also said that they have achieved their previous goal of allocating 25 percent of procurement spend to SMEs, according to reports by Public Sector Executive.

But a closer look at some of the cases in the U.K. procurement procedure uncovered troubling practices.

For instance, Reform said, one government contractor said it took 137 meetings with a federal department to carry out their deal. Another contractor told researchers that it had to hire 70 new employees to cover the paperwork associated with three government contracts.

Such findings may not come as a surprise to some industry experts.

Last year, researchers for the Confederation of British Industry (CBI) found that 61 percent of its members saw no improvement among government works with regards to improving commercial skills over the last year; 21 percent actually saw a deterioration of those skills.

CBI also found that 67 percent of its members thought the government showed poor performance in efforts to standardize procurement procedure.

“We know public procurement reform takes time, but progress has been painfully slow,” said CBI Head of Public Services Jim Bligh in a statement at the time. “The Crown Commercial Service must complete its radical overhaul of the process and tackle inconsistency and poor standards.”

One year later, the latest analysis suggests little has changed for the better.

Governments may be an example to the public sector, but if the U.K. is to make that example a positive one, analysts at Reform suggested that officials begin looking to other governments.

According to reports, Reform suggested that the U.K. turn to the eProcurement practices among authorities in Estonia and South Korea; otherwise, the report’s co-author, Alex Hitchcock, said, “Savings from digital procurement are unlikely to materialize.”

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