Public procurement is a big customer of industry prompting commerce to pay attention to its dear customer, the government system. It is evident that although business is subdued, public sector is a significant source of business for the private sector. Inevitably, as the economy grows, the size of public expenditure becomes larger creating hype in public procurement activities to facilitate provision of public sector goods and services.
Report by Nyasha Chizu
There are generally two regimes of procurement, standard goods and services and new technology that can be acquired. Standard goods and services are products that are selected from existing products that are mostly available off the shelf. Such products include branded products wherein the supplier specifies the quality. The second regime of technology procurement can be used to stimulate innovation.
If government wants to develop a certain technology or industry, they ask industry to do it through public procurement. This has been experienced in Zimbabwe where the government is focusing on renewable energy and energy conservation. The government is forcing the private sector to innovate the development of solar and biogas as an alternative source of energy. The power utility is driving a campaign for conservation of electricity through use of energy saver bulbs. What this implies is that industry needs to innovate in response to government demands. The ordinary bulb manufacturers are obligated to focus on energy saver bulbs if they still want to remain in business.
Public technology procurement is therefore the demand side instrument for innovation or to innovate a new technology industry.
This is only achievable if the government, being the biggest consumer, fosters public procurement as an innovation policy instrument. The downstream benefit of such moves is that employment is created in the country. This is the only catalyst available to develop industry from a public sector perspective.
Government projects are contracted and the risk about the certainty of the market is thereby reduced giving some level of comfort to the suppliers. It is because the client, the government guarantees sales of the innovated products. To achieve innovation, public procurement must allow suppliers and manufacturers to explore better and efficient ways to provide solutions. The government must therefore design request for proposals that gives latitude to manufacturers to innovate by providing specifications of the desired output and providing the constraints of the solution as opposed to specifying architecture through compliance specifications. Compliance specifications limit innovation, they provide a straight jacket solution barring novelty.
The advent of public private partnerships as a form of procurement is the only hope that Zimbabwe has for the development of the health industry, better roads and rail networks, construction of dams and power stations. Such partnership approach offers a different procurement process in which it might be possible to imagine a better role for innovation. This is achieved by earlier consultation with the market, greater dialogue and creativity, value for money as opposed to lowest cost approach and innovative contractual agreements.
Such form of procurement can be used to promote indegenisation programme for Zimbabwe. The agreements can be crafted to include small to medium enterprises into the procurement process through subcontracting procedures. As new technology is procured, local SMEs are empowered through involvement. Therefore, public procurement can influence many areas and change the way of doing things in Zimbabwe.
In summary, public procurement is the biggest catalyst for the government to make better society, which is the power of public procurement.
lNyasha Chizu is a Fellow of the Chartered Institute of Purchasing and Supply writing in his personal capacity. Feedback: email@example.com