In recent years, countries around the globe have increasingly used public procurement more strategically, by leveraging its economic impact and its unique role as the interface between public service delivery, citizens and business. Governments aim to achieve broader policy objectives by using procurement’s vast economic potential. While they have to ensure that every cent of public money is efficiently spent, governments also seek to maximise impact on the economy, achieve broader policy objectives and address societal challenges.
Germany was one of the first countries to recognise the diverse effects of public procurement, acknowledging both its strategic and economic dimensions. Subsequently, Germany asked the OECD to review its federal procurement system, and the aspects that have a critical impact on the effectiveness of policies for inclusive growth and citizen well-being.
Indeed, public procurement strategies can play a critical role in addressing critical issues, ranging from ageing societies and climate change, to maintaining economic competitiveness through innovation and promoting inclusion to reduce inequalities. Like many other countries, Germany still has some way to go to achieve commitments under the Paris agreement, which will require substantial public investment. Moreover, estimates show that healthcare spending in Germany will increase from about 7.6% today, to 8.3% of GDP by 2060 due to demographic change.
This review demonstrates how a strong focus on capacity and competence can increase sustainability and innovation in public procurement processes. Germany is currently implementing an improved e-procurement system – a particularly daunting task given the German context, as information from different governmental levels has to be integrated and shared.
Similarly, while Germany is beginning to realise the benefits of consolidating procurement, more can be done to further analyse and communicate such benefits. Policy-makers and citizens are increasingly seeking to quantify the impact of strategic public procurement. The OECD has been at the forefront of operationalising strategic procurement, by setting global standards, providing evidence and offering practical support to countries.
This analysis presents a framework to discern and monitor the effects of public procurement. It builds on the OECD Framework for Measuring Well-Being and Progress and applies it to this area of public policy. The framework lays the foundations to systematically analyse public procurement systems in order to identify how they affect citizens’ well-being. Specifically, how public procurement influences natural, social, human and economic capital.
This review forms part of a comprehensive and commendable overhaul of Germany’s public procurement system. Germany and its reform programme are an interesting case study, providing insights into how governance and spending challenges can be tackled for the benefit of citizens’ well-being, so that public procurement can fully contribute to better policies for better lives.
Angel Gurría
OECD Secretary-General
