Public procurement projects are widely considered difficult to accomplish and require extensive thought prior to establishing the desired, efficient procurement system. What makes implementing new procurement ideas in the public realm is exacerbated by the context of the country interested in implementing these new procurement ideas.
As a business leader preparing new procurement strategies, one should consider the social-political environment they are immersed in (this is an important factor!).
Countries considered having low-levels of trust with government – and, subsequently, a significant lack of transparency in government – would prefer a very different public procurement system, compared to countries with trust and transparency.
Consider Country A: their social-political make-up is a low-trust, not-transparent environment. Country A would prefer a public procurement system that involves numerous levels of authority and heightened dependence on levels of power.
On the other hand, Country B (which supports a fully transparent government) would not be comfortable with a system involving numerous levels of hierarchy – Country B would prefer a system that is horizontal versus vertical.
The different social-political environments make it impossible to simply drag and drop procurement systems: there is no “one size fits all”.
Let’s examine China for a moment.
China is an interesting “company” due to their lack of transparency and low-trust environment. With a history of corruption in both the private and public sectors, and a strong ruling culture of rule by law, China is difficult to introduce to western procurement policies.
The concept of rule by law is significant to understanding the power politics at play within China. When a country is considered to follow a rule by law, there is, needless to say, an emphasis on people ruling by law.
When a country submits itself to the rule of law, there is no one who should be considered above the law, or able to wield the law. The difference is an implication of power and whether authorities are enforcing the law, or ruling with the law.
This small difference in wording makes a huge difference in context.
China’s public procurement history is rich with fast changing processes. Starting with the centrally planned economy in China, China has been consistently developing new procurement ideas.
Currently, China operates with an Agent-based Construction System. Benefits of the Agent-based Construction System (ACS) are the constant, explicit feedback delivered from end-users to government.
When considering the high-power distance environment within China, we’re able to also understand the way relationships operate in Agent-based Construction Systems.
The ACS involves the government deciding on a new public construction opportunity, which is then invested into by a construction management body. The construction management company would then hire contractors who would complete the project.
The effectiveness of the ACS in China is through a means of shifting procurement responsibilities away from the government, so the government can focus on regulating the market.
The ability to align responsibility and roles along hierarchical ties influences the productive adoption of new procurement ideas such as Agent-based Construction Systems.