USTDA’s Global Procurement Initiative (GPI) educates public officials in emerging markets on how to establish procurement practices and policies that integrate life-cycle cost analysis and best value determination in a fair, transparent manner. The GPI helps partner countries acquire high-quality, long-lasting technologies, while building smart, sustainable infrastructure with overall savings to their government. These procurement methods also open markets to greater international competition.
Why the GPI is Necessary
Effective public procurement systems require good governance, transparency and accountability. Countries are best served when they have a level playing field to promote international competition and invest in quality infrastructure to sustain their economic growth. With government spending accounting for up to 20 percent of GDP in many emerging markets, sound procurement practices become vital to ensure the cost-effectiveness of public funds.
The GPI helps partner countries achieve these important objectives by demonstrating how high-quality solutions lead to lower overall costs over the entire useful life of a technology or equipment. GPI participants are taught to look beyond higher initial purchase prices and consider comprehensive service, maintenance agreements and other factors.
The GPI also demonstrates the risks associated with low-cost procurement policies, including the acquisition of low-quality solutions that shorten the useful life of an investment, have high ongoing operating costs and lead to a higher long-term total cost of ownership.
By helping partner countries create a level playing field for their public tenders, the GPI consequently promotes more inclusive and competitive international procurements that encourage firms to offer innovative, higher-value goods and services.
GPI Is a Unique, Targeted Tool
Since its establishment in 2013, the GPI has helped public procurement officials in partner countries across the world develop value-based procurement practices and policies by deploying custom-tailored solutions that leverage the expertise of USTDA’s institutional partners and collaborators, including universities, multilateral development banks and private sector experts. More specifically, GPI addresses the following four key areas of public procurement:
Best-value analysis considers whole-life costs, quality, resource allocation, timeliness and convenience to determine whether these elements as a whole constitute good value and provide economy, efficiency and effectiveness. In the context of procurement decisions, best value implies that bids are not awarded to the lowest cost bidder, but to the most qualified bidder that offers the overall best value for money.
Life-Cycle Cost Analysis (LCCA)
More than a simple cost comparison, LCCA offers sophisticated and analytical methods and fact-based tools to determine total costs of ownership and demonstrates that the purchase of high-quality products can lead to better long-term economic outcomes.
Procurement decisions that take a more comprehensive view of life-cycle costs and performance standards require objective evaluation of results and their impact on a country’s long-term economic development. GPI promotes objective evaluation, which involves the implementation of clear policies and processes as well as concrete metrics to justify higher-cost acquisitions and ensure objectivity and transparency.
Procurement specialists require specialized training to execute the sophisticated calculations required for best-value determinations and life-cycle cost analysis. The GPI strengthens the professional capacity of acquisition officials through knowledge-sharing with global experts on efficient, fair and modernized procurement practices.
How to Become a GPI Partner Country
Interested GPI partners may contact USTDA directly or through GPI’s partner organizations and collaborators. To receive GPI assistance and become a partner country, governments must demonstrate that they are:
- Committed to integrating best-value determinations in tenders and have established procurement laws that allow procuring entities to make determinations based upon evaluated price structures that can consider quality, value, fit for purpose or other criteria in addition to initial purchase price alone;
- Open to fair and transparent international competition; and,
- Dedicated to the long-term professionalization of their procurement workforce.
USTDA engages in a three-step process to determine whether a government meets the above criteria and obtains the background information necessary for creating a GPI program:
- USTDA conducts an internal, rigorous analysis on the country’s procurement policies, current practices and challenges, and the donor landscape;
- USTDA may then conduct a scoping mission to the country to meet with key stakeholders, enabling USTDA to learn more about the country’s procurement practices and challenges, how the GPI could make an impact, and how the GPI may complement other U.S. government/international donor economic development programs; and,
- If a country meets USTDA’s evaluation criteria, USTDA will draft a formal proposal to establish a GPI partnership, including the types of assistance that the Agency may provide.
USTDA’s GPI Toolkit
Under the GPI, USTDA provides customized country programs that include:
- Training: In-country and virtual training led by procurement and infrastructure experts from the GPI’s partner organizations;
- Study Tours: Sponsored visits for partner country delegations to visit key U.S. procurement stakeholders at the federal, state and local levels and receive more in-depth training; and
- Technical Assistance: Technical advisory support services to procuring entities, to assist with the implementation of value-based procurement methods and formulas to ensure the proper utilization and integration of methodologies learned throughout the GPI program.
GPI Organizational Partnerships and Support
The GPI works closely with partner organizations and collaborators to enhance its impact, gain access to new resources and technical expertise and ensure that our partner countries are well exposed to various best practices from around the world.
The GPI was founded in partnership with the Government Procurement Law Program at the George Washington University Law School. Since the GPI’s launch in 2013, professors from the Massachusetts Institute of Technology, Tufts University, and University of Tennessee have carried out various program activities. Given their importance to emerging market infrastructure funding and emphasis on procurement reform in international development assistance, the GPI partners with multilateral development banks including The World Bank Group and African Development Bank. Other global partners include Japan’s Ministry of Economy, Trade and Industry and Australia’s Department of Foreign Affairs and Trade, who also share USTDA’s goal of advancing quality infrastructure in emerging markets through best-value and international best practices in public procurement.
The GPI also collaborates with like-minded organizations and countries that have helped implement GPI programming, including the European Bank for Reconstruction and Development, Asian Development Bank, Inter-American Development Bank and Organization of American States.