A shared vision and clear communications across multiple partners were at the root  of the project’s success
A shared vision and clear communications across multiple partners were at the root of the project’s success

How a procurement transformation reduced sourcing cycles by 60%

9 December 2021

The dramatic transformation of public procurement in Saudi Arabia has brought wide-ranging benefits

An ambitious procurement transformation programme has enabled the Kingdom of Saudi Arabia to reduce its sourcing cycles by 60% and costs by 20%.

Over the past three years, the kingdom has reshaped demand and introduced category management, framework agreements and a new digital platform to manage $100bn of annual public procurement spend across 500 government entities and more than 12,000 procurement professionals.

Executive director of government procurement at the Government Expenditure and Projects Efficiency Authority (EXPRO), Hani Mirza, says: “It has been three long years of effort with multiple stakeholders on the line, so this is something to be proud of.”

Upon receiving the CIPS award for Best Procurement Transformation Programme, Mizra said: “It’s good to be compared with your peers on a global scale and this stands out as a great achievement.

“Entering the CIPS awards is a great opportunity – it’s great to network, to see what’s happening around the world and it’s a great learning opportunity.  We’re very fortunate to win.”

Three-step strategy

Before the transformation, the kingdom found that a combination of the legacy legal framework, an annual procurement budget increase of 12% and the absence of a category management methodology had caused inconsistent public spending behaviour with a high level of waste and low use of national resources.

It therefore conducted a three-phase plan. In the initial research phase, more than 650 contracts with a total value of more than $25bn across a range of spending categories were analysed, and many public sector procurement lawsuits were studied.

This diagnostics period also enabled them to undertake benchmark studies of international procurement practices to identify areas for internal improvement, which uncovered a need to amend existing procurement law to match new best practices.

Phase two encompassed the exciting work of designing solutions, whereby the kingdom drafted a legal framework that would enhance transparency, competitiveness, economic development, cycle time and spending efficiency.

In a huge move, a new central government body, EXPRO, was established to bring under one roof specification, central procurement of common items, development of category strategies, and reviews of tender documents for high-value contracts. A national procure-to-pay e-platform was also set up.

Under the final phase, the procurement law was updated and a change management strategy, including a risk management, communications and incentives plan, was implemented.  

More than 500 “change agents’’ from all government entities were assigned to support the transformation and were trained in how best to apply the new procurement law effectively. A central call centre was also opened to deal with inquiries and provide a feedback loop with stakeholders so continuous improvement was possible.

Transparent tendering

The transformation of public procurement has led to a far more agile and transparent process, which can be adapted as required. Suppliers have more visibility into government spending, while government entities are supported by following a simplified process using standardised templates and processes.

As a result, all procurement processes are now automated through a procure-to-pay platform; accurate data logs have meant the average bidding phase for contracts has been reduced from more than 400 days to 155 days; while payment upon completion has fallen from 150 days to just 45 across the entire public sector.

With the creation of EXPRO, framework agreements were signed with the private sector for commonly used goods and services, such as office supplies and IT hardware, with a minimum 20% cost reduction, an average delivery time of 14 days and an average payment time of six days.

The body was also able to reduce costs by up to 18% against old prices on $7m RFPs by applying category management strategic initiatives. Going forward, data logs created through the new e-platform will help to support fast-spend analytics and future cost-optimisation opportunities.

Collaboration is strength

The transformation of public procurement has had a broad scope of beneficiaries, with greater automation, economic gain and higher-quality bids for the public sector bodies. For the private sector, vendors are now able to access all RFPs and related bidding documents, and bidders excluded from contracts are notified of the reasons why via mandatory fields on the e-platform.

A shared vision and clear communications across multiple partners were at the root of the project’s success, according to Mirza. He says: “This achievement is a result of collaboration between the Ministry of Finance, Government Expenditure and Projects Efficiency Authority, and the National Center for Government Resources Systems (NCGR).

“This transformation in government procurement comes as a key enabler to realise Saudi Vision 2030 goals and of the Fiscal Sustainability Program, which aims to sustain and stabilise public finances while maintaining economic growth rates and raising the efficiency of government spending.”

In just three years, this systemic transformation has laid the foundations for a procurement system that will not only serve the best interests of the kingdom now but will grow and evolve with its future needs.

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