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Aligning quality with cost effectiveness in Lagos

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By Akintola Benson Oke

IN an article titled, Government by Design, Diana Farrell and Andrew Goodman of McKinsey & Co. argued that one of the strategies for improving government’s perceived performance, including procurement decisions and activities, is by becoming better at collecting and analyzing relevant data. According to them, “Governments must decide what to measure and how, always with an eye on the overall goal of the programme or initiative.”

For one, a critical examination will reveal how civil servants can creatively utilize data to generate ideas and communicate government actions and performances to ensure positive perception (or, in the least, accurate perception) of government procurement decisions by the citizens. I, therefore, challenge the Lagos State Public Service to come up with data-backed and data-inspired ideas that will ensure and assure the quality of the government’s procurement activities.

Another advocated strategy for ensuring the delivery of quality services by the public service including in the area of procurement, is to innovate to make government services more customer-centric. This is one of the subjects that have been previously explored in the trainings organised by the Ministry of Establishments, Training and Pensions. In essence, procurement decisions would only be regarded as being of acceptable quality when they are made with the end-user in mind.

In a recent publication, PwC, United States, asked and answered a germane question as follows: “What does a customer-centered organization look like? It’s an organization that considers the customer in everything it does, from procurement to deployment to the entire customer experience. It also speaks to its customers in their own language and makes it easy for them to align their goals with the mission at hand.” Thus, I dare say that, even in procuring items that would be exclusively used by public servants, the sole question should be whether the procured items would help the public service better serve its customer, the citizens.

The third strategy I want to highlight is that of actively soliciting citizens’ input to improve public services, including procurement activities. As noted, “Innovative governments are creating new ways for citizens to make their voices heard, giving them the ability to provide input into regulations, budgets, and the provision of services.” It has been further noted that, “Other governments are going even further to solicit citizen feedback: Iceland in 2010 chose 950 citizens at random to participate in the drafting of a new constitution, a significant example of ‘deliberative democracy’ at work. And the city of Cologne, Germany, has used participatory budgeting: residents helped decide how to allocate a portion of the municipal budget.”

In addition to the foregoing, the cultivation of the following skills will also aid the attainment of the pursuit of quality in procurement decisions even in the face of a depressed economy: (a) The possession of conceptualisation skills. Business magnate, Chester I. Barnard argued the importance of conceptualisation skill when he wrote: “…the essential aspect of the (executive) process is the sensing of the organisation as a whole and of the total situation relevant to it.” The purport of this is that officers of the Lagos State Public Service must always be able to see how any procurement action or decision affects every part of the service and its service offerings.

(b) Paying attention to details. This is an important skill expected of civil servants who will pursue and deliver quality services. As important as it is for officers to see the big picture and think strategically, it is equally important for them to pay attention to the details. This does not mean that officers have to be involved in every minor decision, or undermine the decisions of subordinates and colleagues; rather, every officer must remain aware of the activities of the other officers and the status of projects, thus allowing autonomy whenever possible.

(c) Effective delegation of responsibilities and duties and collaboration with the private sector. This is also an art and skill that public servants must acquire and master. There is a fine line between delegating tasks to staff and shirking from responsibilities, knowing subordinates and colleagues will take up the slack. The Lagos State Public Service must navigate this distinction by assigning not just tasks, but clearly defined spheres of influence where officers have authority to make procurement decisions and to collaborate with the private sector.

Having set forth the foregoing, the pursuit of quality, as the ultimate objective of the procurement process even in a depressed economy, let me quickly examine the importance of the public service procurement functions in order to show how they may be utilized to respond to economic challenges. According to Aigheyisi and Edore (2001), good “public procurement practices, according to the IEG World Bank (2014), are a major determinant of the effectiveness of public expenditure, and governments all over the world typically spend five to 20 percent of their gross domestic product, GDP, on procurement of goods and services.

According to European Network on Debt and Development, EURODAD (2012), public procurement accounts for at least 15 percent of global GDP, and it is the largest share of government spending besides wages. Public procurement accounts for an average of 15% of GDP in OECD countries and 25-30% of GDP in developing and emerging market economies (Roos, 2012). In 2011 it accounted for 12% of GDP in the United States and 17% in the EU. (Moerenhout and Roe, 2012).

The quoted statistics above thus clearly show that procurement as a public service function must be given exceptional attention especially when there is paucity of funds and economic depression.  Thus, as noted by Angel Gurria,“Public procurement can have a significant impact on policy outcomes . . . Until only a few years ago, public procurement was perceived as an administrative, back-office function. Today however, it is seen as a crucial pillar of services delivery for governments and a strategic tool for achieving key policy objectives: from budget accountability, to spending efficiency, to buying green and improving outcomes in health, and promoting socially responsible suppliers into the global value chain.”

“Strategic public procurement can also significantly support a more circular economy and transform supply-chain business models, given the magnitude of its size in government spending.  and its predominant role in delivering some of the most resource-intensive public services such as infrastructure.

This calls for an approach that not only enables efficiency, growth and value for money, but also accomplishes strategic goals linked to a broader understanding of sustainability, cutting across both environmental and social objectives.”

Indeed, there are a number of challenges that are faced when rolling out strategic public procurement. For instance, a lack of understanding of the benefits of sustainable procurement amongst politicians and budget holders is a challenge. Public procurement is subject to many pressures, from cutting costs to meeting the demands of internal users and the public. These and many others are the issues that this training will address and I hope that you all will participate actively and constructively.

As always, I wish to thank all the people who have worked tirelessly to ensure the realization of this training including the principal officers at the Ministry of Establishments, Training and Pensions and other departments and offices that have been involved in organizing this training. We are also glad to have Messrs MIDAS Partners as the facilitators of this workshop. Once again, we all are indebted to the visionary and passionate leadership of His Excellency, Mr. Akinwunmi Ambode, the Governor of Lagos State. His interest in the progress of our dear Lagos State is beyond dispute.

 Dr.Benson Oke, is Commissioner, Lagos State Ministry of Establishments, Training and Pensions

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