GovernanceDec 05, 2022
Article | What is Public e-Procurement and Are Municipalities Ready for It?
- Ali Taha
Public e-procurement is the application of information and communication technology, such as internet-based systems, by governments in conducting their procurement relationship with bidders to meet the public sector’s needs of goods and services.
In Lebanon, Public Procurement Law No. 244/2021 (PPL) laid the foundation for a gradual transformation of public procurement into a digitized process. Article 66 of the law creates the central electronic platform that should host all public procurement activities and which will be managed and owned by the Public Procurement Authority (PPA).
There are doubts, however, about the capacity of government institutions to transition to an electronic procurement system. Moreover, past attempts to digitize the public sector and institute e-governance are not encouraging, as most were discontinued. Skepticism is especially more pronounced in the case of municipalities, which are experiencing a sharp drop in their revenues and a widening set of other social and economic challenges, primarily due to Lebanon’s ongoing financial meltdown.
Administrative and technical capacities
Municipalities in Lebanon differ in size based on area, population, municipal council, financial revenues, and administration. Around 70% of Lebanese municipalities are small, with a registered population of less than 4,000. Most of these municipalities are lacking in administrative capacity—it is estimated that about 400 municipalities have a very weak administration and another 400 with no employees whatsoever.
Moreover, with their paycheck losing most of its value, leaving them unable to meet their most basic needs, public employees are demoralized and unmotivated. For many, their salaries are now averaging $40 per month, which cannot even cover their transportation expenses. As a result, work stoppages are a regular occurrence among municipal employees, as is the case with central government workers.
Procurement-related knowledge and skills, especially those adapted to the provisions of the new PPL, are also often lacking. One reason for that is the common practice in Lebanese municipalities of having limited reliance on municipal employees to conduct procurement responsibilities. With municipal councils and associates handling procurement activities, the process is disrupted with each election cycle. Consequently, core municipal staff capacities don’t have a chance to develop adequately. As for digital literacy, it remains at a very low level among public employees, and training is certainly needed.
This is why Article 72 of the law stipulates that public procurement officers are required to participate in annual training by the Ministry of Finance – Institut des Finances Basil Fuleihan (IoF). As of September 2022, the institute has trained around 100 municipalities.
The deepening economic crisis is having a detrimental impact on public services. Government administration is close to complete paralysis as it struggles to maintain its underpaid staff, and cover its most pressing expenses. These difficulties are even more pronounced at the level of municipalities, particularly as the crisis helped intensify the reliance of local communities on services provided by their municipalities.
Fiscal challenges faced by municipalities can be broadly categorized as follows: gaps in the intergovernmental grant system, inefficiencies in local tax collection, and under-provision of complementary fiscal resources, in addition to the lack of tax adjustments that reflect the continuing depreciation of the Lebanese pound. The economic collapse has only exacerbated these challenges: municipalities are reluctant to pursue more aggressive tax collection due to the economic hardship suffered by residents, even as municipal revenues have become worthless due to the collapse of the Lebanese pound.
Under such conditions, municipalities can barely provide the most basic services, let alone invest in the implementation of new legislation, such as the PPL. For many municipal councils, their focus today is on essentials like securing electricity supply, managing waste, and paying salaries, with essential repairs and maintenance as the most pressing priorities.
Digitization in the public sector
Despite passing Lebanon’s long awaited Digital Transformation Strategy on 12 May 2022, the government’s record on digitizing the public sector is not very encouraging. In 2020, Lebanon ranked 127th among 193 countries worldwide on the UN’s e-Government Development Index and 148th in e-participation.
An assessment by the Samir Kassir Foundation (Skeyes) and Smartgov revealed that most of the Lebanese government’s platforms are in the early stage of e-government development and fail to meet basic standards for security, UX/UI design, speed, mobile-friendliness, or accessibility. Additionally, foreign contributions from the Arab Fund, EU, UNDP, World Bank, and other donors to fund interoperability initiatives have produced very little concrete progress.
Digitizing municipalities has not been any more successful. Hundreds of municipalities do not have an independent website, and resort to privately owned and managed domains to allocate a section that provides basic information. There are a few exceptions, such as the Zouk Michael and Jbeil-Byblos municipalities, which were able to digitize some of their services.
Social and cultural resistance
A culture of clientelism and opaqueness dominates Lebanon’s institutional mindset, exhibiting a strong resistance—or, at best, a lack of any enthusiasm—for reforms. The implementation of an e-procurement platform infringes on those norms and disrupts the business-as-usual mindset among government officials. This gap, along with divergence between social norms and legislation, has been a major factor determining the effectiveness and sustainability of law enforcement and policy implementation in Lebanon.
Such institutional difficulties are particularly worrying when it comes to the implementation of the PPL. Whereas efficiency might be a please-all outcome of digitization, in Lebanon, the same could not be said about transparency. The latter is viewed unfavorably by many in the political class and among government workers, which is unsurprising in light of decades of poor governance and widespread corruption.
Chances of success
Despite repeated failures at government reform, there are reasonable chances of success in this case. The Public Procurement Authority appears to be adamant about the full implementation of the law, and is being proactive in that respect. Its continued engagement with civil society can also be seen as a positive indicator.
Another promising sign is that the Institute of Finance, which lead the policy-making process of this reform and is responsible for the related training programs, is evidently invested in the successful implementation of the law. Having some of the key public stakeholders in a reform champion its implementation, as in this case, can certainly increase the chances of success. The institute and the PPA are nonetheless part of the weighed-down public sector, and unless proper funding and support is provided, its ability to ramp up its training programs on a national scale will be in jeopardy.
Lebanon’s international partners (both foreign governments and international organizations) are also playing a vital role in funding the implementation of this law, whether by supporting the drafting process, financing the platform, and providing funds or financial contributions to public institutions, such as the Office of the Minister of State for Administrative Reform (OMSAR) and the IoF, as well as local CSOs.
To help increase the chances of success, LCPS has compiled a set of recommendations from two roundtables and several one-on-one interviews with experts and stakeholders from the public and private sectors, international organizations, and civil society. These activities were part of a one-year project that was led by LCPS in 2022, with the support of the Center for International Private Enterprise (CIPE).
The recommendations include:
1) Ramping up capacity-building programs for municipalities, not just pertaining to the provisions of the law, but also in relation to their transition from a paper-based procurement process to a digitized one, and expanding these programs to include SMEs operating at the municipal level.
2) Top-down messaging matters, and when it comes to the end users of the platform, particularly municipal officials, highlighting the gains that could be garnered by adopting e-procurement can make them more invested in the success of this changed model of work.
3) As for the platform, it should have a user-friendly interface and a feature-rich Content Management System, and should be modular, flexible, scalable, interoperable, and secure.
4) It goes without saying that having reliable and accessible internet services is also a must.
A Policy Brief that LCPS had published on the implementation of public e-procurement at the municipal level provides an expanded account of the different ideas and recommendations mentioned in this article.
Why is e-procurement important?
The implementation of e-procurement came during a period of severe fiscal limitations and institutional challenges due to the ongoing economic crisis. But it is precisely because of these challenges that e-public procurement becomes a necessity. The volume of transactions, financial interests, complexity of the process, and close interaction between public officials and businesses, among a multitude of stakeholders, make public procurement one of the most corruption-prone government activities.
Digitizing the process is key to ensure “best value for money,” by enabling transparency, efficiency, and overall integrity of the procurement regime. E-procurement systems increase transparency by providing free access to relevant procurement information for all stakeholders, making contracting authorities more accountable to citizens. They also add efficiency by automating and standardizing procedures along the entire procurement cycle, thereby shortening the time it takes to perform tasks while reducing the margin for human error. Consequently, this decreases the administrative burden and transaction costs. The rewards of having a transparent electronic procurement system are thus significant, and the return on investment is clearly encouraging.
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