Public, private sector contracts operate with ‘trust deficit’

Governments around the world have faced challenges with public procurement due to the covid19 crisis, testing their ability and capacity to react quickly and efficiently to deliver life-saving goods and services to the public, asserts a new research report from ACCA (the Association of Chartered Accountants) New Models of Public Procurement: A Tool For Sustainable Recovery.

Surveying over 1,000 ACCA members and affiliates from both the public and private sector in over 90 countries including the Caribbean, ACCA’s research identifies a trust deficit between public sector buyers and private sector suppliers. Globally, only 41 per cent of private sector respondents believe the public sector can be trusted to uphold its side of the deal, compared with 60 per cent of public sector respondents stating they trust their private sector counterparts.

According to the 65 expert respondents in the Caribbean, the top three challenges faced are bribery and corruption (72 per cent); excessive reliance on a few key suppliers (72 per cent) and underdeveloped e-Procurement systems (46 per cent).

The majority of Caribbean respondents (80 per cent) said there is a need to promote ethical practices in the evaluation of bids for public procurement contracts, with the same percentage saying fair dealing with all bidders and suppliers is also needed.

Shelly-Ann Mohammed, head of ACCA Caribbean says: "The ‘need for speed’ approach during covid19 has created this distrust, which has created opportunities for misuse and mismanagement of public sector money. Our report calls for procurement modernisation, with audits commonplace in all public procurement procedures, beginning as early as possible in the bid process to reduce the likelihood of corruption, while ensuring that the auditors remain independent during the process."

Due to covid19 turbulence, a key recommendation in the report is to use public procurement as an opportunity to keep businesses – in particular, SMEs – afloat by publishing contracts early on centralised, open databases that are accessible to all.

Rachel Bleetman, ACCA’s public sector policy and research manager, and co-author of the report says: "There’s a growing need to ensure that public spending during and beyond the covid19 pandemic is not only made more efficient and cost-effective, but that it’s used as an opportunity to tackle some of the biggest challenges of our time – environmental catastrophe, rising social inequalities, ending corruption and meeting the needs for life-saving procurement."

Alex Metcalfe, ACCA’s head of public sector and report co-author adds: "Corruption costs the public sector significant sums of money every year and can create feelings of mistrust towards governments. So the role for finance professionals in helping to make, monitor and evaluate these changes is significant and, as this report demonstrates, the global finance profession is needed now more than ever to help transform how the public sector responds to the crisis."

Key findings reveal:

• 78 per cent of Caribbean respondents thought transparency to the public was a key policy objective for public procurement, compared with 73 per cent of North America and Europe respondents.

• Poor payment practices were identified as a main challenge by 39 per cent of those in the Caribbean, compared with over 60 per cent of respondents in the Middle East and Africa, and 41 per cent of those in South Asia.

• 45 per cent of respondents in the Caribbean wanted to improve environmental sustainability through public procurement compared with 57 per cent in North America and Europe.

Rachel Bleetman concludes: "In the Caribbean and on the global stage, there’s room for optimism here as the reforms we recommend around eliminating bribery and corruption, competition and the buyer-supplier relationship, modernisation and covid19 and the public procurement ‘need for speed’ will all make for stronger public procurement, which is an essential part of public sector spending that, until now, has received relatively little attention. Now’s the time for change, as history has long taught us that, out of crises, new opportunities can emerge."

The report can be downloaded at: https://www.accaglobal.com/gb/en/professional-insights/pro-accountants-the-future/New_models_public_procurement.html

The report was launched at ACCA’s annual virtual public sector conference on December 4, 2020. View at https://www.accaglobal.com/ca/en/member/discover/events/uk/2020/12/Virtual-ACCA-Public-Sector-Conference-2020.html