by Professor Albert Sanchez-Graells, University of Bristol Law School.
Approximately a third of public sector spending goes to procure third-party goods, services, and works. Procurement rules and policies seek to ensure that contract awards are free from corruption, conflicts of interest or anticompetitive practices, and that these vast sums of public funds generate value for money and support social, environmental, and innovative practices. There is always room for improvement, though. The adoption of digital technologies is seen as a strategic catalyst for procurement reform, to increase the effectiveness of procurement regulation. Digitalisation could reduce the administrative burden through automation, generate data insights to inform policies and boost efficiency in public spending, and serve as a living lab for GovTech experimentation.
However, the transformative potential presumed in digital technologies generates hype and excessive expectations on the true size and nature of the achievable improvements. It also tends to overshadow the required groundwork and preparatory investment. New digital governance risks and requirements are not always recognised or understood. The growing public sector digital capability gap raises further obstacles. Heightened expectations and a minimisation of the challenges can get on the way of successful reform. In ongoing research funded by the British Academy, I apply an innovative technology-centred methodology to assess the governance opportunities and challenges for procurement digitalisation. This blog post provides a summary of the main findings so far. I will also be discussing them with a stellar panel on 15 December 2022 (details and registration). (more…)
By Prof Albert Sanchez-Graells, Professor of Economic Law (University of Bristol Law School).
Blockchain or, more generally, decentralised ledger technologies (DLTs), are capturing the attention of policymakers. ‘Blockchain’ has become shorthand to refer to technology usually identified with the properties of a decentralised, trustless and immutable (or at least, tamper-proof) mechanism for information verification and recording that can enable self-executing digital transactions between anonymous parties (‘smart contracts’).
Blockchain’s touted tamper-proofness and potential to enable smart contracts are driving initiatives that seek to create automated ‘trust in trustless environments’ for public sector use cases, in particular concerning activities highly-exposed to corruption risks and/or the automation of administrative procedures devoid of discretion.
There are high economic stakes at play in public procurement—which represents around 12% of GDP and over a third of public expenditure in OECD countries, and even higher proportions in other economies. Coupled with the growing (over)reliance of policymakers on business consultants, the hype around blockchain—and, more generally, about public procurement 4.0—is perhaps particularly intense in this field of GovTech and RegTech.
Some legal scholars are rather optimistically jumping on the ‘disruptive technologies bandwagon’ and identifying blockchain as a main tool to increase the probity and efficiency of procurement governance at a national level.1 Some officially-backed ‘visions for the future’ go as far as promising blockchain-supported global e-procurement platforms capable of covering the entirety of procurement transactions carried out worldwide.
This is creating a set of expectations about how blockchain will revolutionise public procurement governance that does not translate into real action. Even further, I submit, blockchain is and will remain structurally inapt to generate such a governance revolution, for several reasons. (more…)