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Fiscal Rules
Governments use fiscal rules as guidelines to manage public finance transparently and consistently. Examples include the implementation of debt ceilings, or requirements to balance budgets over a set period.
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Budget Process
Budget processes determine where public money goes: which priorities get funded and which do not.
Procurement
Public procurement is the process by which governments purchase goods and services from the private sector.
Why redesign public procurement
Thinking in systems: enable innovation and collaboration
Rigid contracts that lock in predefined solutions and focus on managing risk can stifle the innovation that is needed to address complex societal challenges.
Few public agencies have the capacity, processes or incentives to assess bids against social and ecological outcomes. Siloed procurement also misses opportunities to pool resources and expertise across departments to promote systemic change.
Being distributive and regenerative by design: make procurement more inclusive and regenerative
Procurement often prioritises short-term deliverables and the lowest price available. Attempts to minimise risk through procurement create cumbersome tick-box bureaucracy.
Governments in lower-income countries are often forced to adopt budget-focused procurement practices to meet conditions for development assistance. This focus on costs and processes — rather than long-term outcomes — disadvantages purpose-driven enterprises and small local businesses who have fewer resources to navigate bureaucracy.
Lack of transparency in public procurement perpetuates corruption and marginalises purpose-driven enterprises that could deliver better outcomes.
Emerging alternatives: Redesigning public procurement
The examples below show different possibilities to redesign public procurement. Use them as inspiration to find an approach that works best for your context.
Integrating ecological and social criteria into public procurement
Governments set specific ecological and social requirements for purchasing decisions.
Learn more:
- Our policy case study provides an overview of different approaches taken by governments around the world.
- Examples of embedding ecological criteria in public procurement include the EU’s Green Public Procurement, which includes voluntary criteria, good practices and a training toolkit, and the Chinese governments centralised move to promote sustainable development in the construction sector. Wider details can be found in the OECD report Harnessing Public Procurement for the Green Transition.
- The Transnational Institute’s Progressive Public Procurement Toolkit highlights good practices from around the world for spending public money in ways that benefit local communities.
Mission-led public procurement
Governments can establish clear and ambitious missions to address interconnected societal challenges. In support of these missions, they can create procurement contracts that prioritise desired outcomes rather than simply dictating inputs or products.
Learn more: The UCL Institute for Innovation and Public Purpose offers rich resources including good practice case studies from around the world and specific learnings from the London Borough of Camden on mission-led public procurement.
Participatory procurement
Governments can ensure procurement remains transparent and foster public participation in processes and decisions.
Learn more:
- The Open Contracting Partnership provides guides and good practice examples from around the world.
- New Local’s Community Commissioning: Shaping Public Services through People Power report lays out the benefits of involving local communities in procurement and highlights key strategic decisions and methods for governments.
Source: Participedia
Procuring from regenerative enterprises
Governments can use public procurement to support enterprises that are more regenerative by design.
Learn more: Our policy case study provides an overview of common approaches adopted by governments around the world.
Source: COMACO
Share your ideas and tools
Do you have any other ideas on how governments can redesign public procurement? We would welcome your feedback and suggestions.
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