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World: Procurement Programs Seen As Key Part Of Government Reform

In the global economic environment, procurement services are increasingly viewed as a measure of a government's effectiveness. An international conference hosted by the United Nations last week in New York aimed to enhance government awareness of the need for public procurement reform. The conference attracted a small number of Eastern European companies eager to market their own services in the international procurement arena. RFE/RL correspondent Nikola Krastev reports.

New York, 25 June 2001 (RFE/RL) -- Governments are often the largest consumers of goods and services in a country. Large financial outlays for building materials and machinery are needed for everything from constructing roads to building schools and hospitals, equipping police forces, and providing clean water.

The methods governments use to buy -- or procure -- goods and services can have a huge impact on societies and local economies. A UN agency last week (20-21 June) sponsored a conference that sought to explore new ways for government procurement systems to function in transition and developing countries.

The aim of the conference was also to show that procurement reform can lead to changes in other areas of an economy, including increases in transparency and openness in the development process.

But former communist countries in transition face difficulties -- such as a lack of funding and poor access to information -- that have hindered procurement reform in the past.

Reinhart Helmke is the director of the United Nations Office for Project Services, known as UNOPS. He tells RFE/RL that the countries of Eastern Europe face the challenge of procuring goods and services in an increasingly competitive international marketplace.

"[These countries] may not be as knowledgeable in terms of the [procurement] practices as they exist in the international world markets. World markets in the last 10 to 15 years have grown incredibly more competitive than they were in the past. There are places where negotiations have become much tougher, where it is much more difficult to have information about all the alternatives and options that you have, and where the price range of things that you can find is much larger than it has ever been before."

Last week's UNOPS conference -- the second annual International Aid and Trade show -- attracted representatives from nearly 200 commercial, nonprofit and government entities around the world. Helmke says the show was designed to stimulate contacts between governments and procurement specialists:

"One of the things of the second International Aid and Trade show [is] exactly that idea: to bring as many people as we can from countries around the world, [who] have direct responsibility for procuring with government money, and expose them not only to the best prevailing [techniques] that are emerging in international markets, but also to make sure that they can start talking with each other and exchange whatever functions best."

Five Russian companies and one Bulgarian firm participated in last week's show, representing an increase from last year, when only two Russian companies took part. The high admission fee and travel costs have been cited as the main reason why many companies from Eastern Europe did not participate.

The show offered a wide-ranging display of the world's competing procurement providers. But Dmitry Grishin, an executive at the Russian Volga-Dnepr air-cargo company, told RFE/RL that the conference was more about networking and establishing contacts than it was about competition:

"Nobody expects any contracts to be signed immediately. Everybody is counting on there to be future developments from the connections established here, and hopes there will be positive results."

Another Russian taking part in the show was Victor Vechkomov, deputy director of Moscow's State Institute of Physical and Technical Problems. Vechkomov said the show provided Russia with a chance to display its continuing technical prowess. He noted the strong response to the Russian-made "Bogomol," or Mantis, portable robot, which can be used in clearing minefields.

"Our primary goal is to show that Russia, as always, remains a powerful country and is capable of producing high-technology equipment, not only begging for aid. Our secondary -- or probably our primary -- goal is to introduce this robot and to get some attractive offers, so we can improve it and accelerate our level of production."

Areas of civil conflict can sometimes provide a good opportunity for demonstrating how the procurement process works. The UN Mission in Kosovo, for example, has chosen UNOPS to be its international procurement agent as it moves to the next stage of reconstructing the war-ravaged province. Helmke says the agency will help Kosovo establish a modern procurement structure by the end of the year.

As the only self-financing entity in the UN system, UNOPS functions much like a commercial enterprise and supports itself from the fees earned for its services -- the Kosovo project being one of many.

Acknowledging the tremendous impact of the Internet on global business, experts at the Aid and Trade show also discussed the potential of e-commerce for revolutionizing the procurement process and stimulating its reform where needed.

Helmke says that the process of open procurement -- procurement through open bidding -- requires broad and efficient market research that can only be achieved on a solid electronic platform:

"I'm absolutely convinced that e-commerce has an ever-increasing opportunity, especially in Eastern Europe."

With the United States as a leading supplier, the UN alone buys goods and services valued at over $3 billion a year. The largest share of the funds -- more than 20 percent -- is allocated for the World Food Program.