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Promoting Local IT Sector Development Through Public Procurement

Report by UNCTAD, 2013

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This study seeks to address the link between public procurement and local IT sector development in developing and emerging economies, and to provide decision makers with an improved basis for understanding when and how public procurement can be leveraged for the development of a vibrant IT sector. The report proposes measures to promote ICT sector development and build local ICT capacities in developing and emerging economies.

PROMOTING
LOCAL IT SECTOR
DEVELOPMENT


THROUGH
PUBLIC PROCUREMENT


U N I T E D N AT I O N S C O N F E R E N C E O N T R A D E A N D D E V E L O P M E N T




PROMOTING
LOCAL IT SECTOR
DEVELOPMENT


THROUGH
PUBLIC PROCUREMENT


U N I T E D N AT I O N S C O N F E R E N C E O N T R A D E A N D D E V E L O P M E N T


New York and Geneva, 2013




ii PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


NOTE


In this Report, the terms country/economy refer, as appropriate, to territories or areas. The designations em-
ployed and the presentation of the material do not imply the expression of any opinion whatsoever on the part
of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area or of its
authorities, or concerning the delimitation of its frontiers or boundaries. In addition, the designations of country
groups are intended solely for statistical or analytical convenience and do not necessarily express a judgement
about the stage of development reached by a particular country or area in the development process. The major
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(OECD) (other than Mexico, the Republic of Korea and Turkey), plus the new European Union member countries
that are not OECD members (Bulgaria, Cyprus, Latvia, Lithuania, Malta and Romania), plus Andorra, Israel,
/LHFKWHQVWHLQ0RQDFRDQG6DQ0DULQR&RXQWULHVZLWK HFRQRPLHV LQ WUDQVLWLRQ6RXWK(DVW(XURSHDQG WKH
&RPPRQZHDOWKRI,QGHSHQGHQW6WDWHV'HYHORSLQJHFRQRPLHVLQJHQHUDODOOWKHHFRQRPLHVWKDWDUHQRWVSHFL-
ƄHGDERYH


Reference to companies and their activities should not be construed as an endorsement by UNCTAD of those
companies or their activities.


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$GDVKtLQGLFDWHVWKDWWKHLWHPLVHTXDOWR]HURRULWVYDOXHQHJOLJLEOH


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The material contained in this study may be freely quoted with appropriate acknowledgement.


UNITED NATIONS PUBLICATION


UNCTAD/DTL/STICT/2012/5


© Copyright United Nations 2013


All rights reserved




iiiPREFACE


PREFACE


The contribution that a dynamic local information technology (IT) industry makes to national economic develop-
ment – as a productive sector in itself and, more importantly, as an enabler of productive use of information and
communication technologies (ICTs) throughout the economy and society – has encouraged policy makers all
over the world to put in place public policies and programmes that facilitate its development.


A wide range of instruments are available to policy makers in this context. Designing and implementing public
SURFXUHPHQWSUDFWLFHVWKDWKHOSWRLQFUHDVHWKHSDUWLFLSDWLRQRIORFDO,7ƄUPVZKHQWKHSXEOLFVHFWRUDFTXLUHV,7
goods and services represents one such instrument. However, successful use of public procurement policies
requires a clear vision of the overall policy objective and a good understanding of the local IT sector’s strengths
and weaknesses.


Until now, relatively little attention has been paid to the link between public procurement and local IT sector de-
velopment in developing and emerging economies. This joint UNCTAD-BMZ study seeks to address this gap and
to provide decision makers with an improved basis for understanding when and how public procurement can be
leveraged for the development of a vibrant IT sector. The report builds on the analytical and practical experience
of UNCTAD and German development cooperation in designing and implementing measures to promote ICT
sector development and build local ICT capacities in developing and emerging economies.


7KHUHSRUWLGHQWLƄHVVHYHQPDLQVWUDWHJLHVFRXQWULHVPD\\FRQVLGHULQWKLVFRQWH[W%DVHGRQDUHYLHZRIWKHH[-
perience of Kenya, Senegal and Sri Lanka in this area, it distinguishes between elementary measures – such as
establishing open and competitive procurement processes or regular public-industry dialogues that all countries
should adopt – and more advanced measures that may be appropriate once a country reaches a certain thresh-
old level of maturity in its public procurement practices and IT sector capabilities. Policy makers need to identify
DEDODQFHGPL[RIVWUDWHJLHVVXLWDEOHWRWKHLUVSHFLƄFFRQWH[WHQFRPSDVVLQJFRPSOHPHQWDU\\LQWHUYHQWLRQVDWWKH
macro, meso and micro levels.


The successful application of public procurement for the promotion of local IT sector development is complex but
FDQEHDSRZHUIXOSROLF\\WRRO2XUH[SHFWDWLRQLVWKDWWKHƄQGLQJVDQGSROLF\\UHFRPPHQGDWLRQVLQFOXGHGLQWKLV
UHSRUWZLOOKHOSSXEOLFSURFXUHPHQWRIƄFLDOVSURPRWHUVRIWKH,&7VHFWRUHJRYHUQPHQWSURJUDPPHPDQDJHUV
ORFDO,7VRIWZDUHDVVRFLDWLRQVDQGWKHGRQRUFRPPXQLW\\WRLGHQWLI\\PRUHHIIHFWLYHVWUDWHJLHVLQWKLVƄHOG


Dr. Christiane Bögemann-Hagedorn
Director Deputy Director General


Division of Technology and Logistics Civil Society, Economic Policy and Private Sector
UNCTAD BMZ




iv PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


ACKNOWLEDGEMENTS


This report is a joint collaboration of the United Nations Conference on Trade and Development (UNCTAD) and,
on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), the Deutsche
Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH.


The study was prepared by a team led by Torbjörn Fredriksson (UNCTAD), Bernd Friedrich (GIZ) and Pierre
/XFDQWH*,=ZKLFKLQFOXGHG-RKDQQD'LHFNHU$QMD.LHIHU0DUWD3ÆUH]&XVÐFRRUGLQDWRUDQG7KRUVWHQ6FKHUI


Helani Galpaya provided inputs for chapters 1 and 2, conducted the case study on Sri Lanka and coordinated
the inputs for the case studies of Kenya and Senegal. Lishan Adem prepared the case studies of Kenya and
Senegal. The case study of Senegal draws largely on a previous study conducted for GIZ by Volker Brunsiek and
Hannes Restel on interoperability of IT systems in the Senegalese public sector and the promotion of IT SMEs
in Senegal.


Valuable comments on an earlier draft of the report were given by experts attending a peer review seminar hosted
by BMZ in Bonn in May 2012, including Volker Brunsiek, Petra Hagemann, Michael Minges, Lena-Sophie Müller,
Hannes Restel and David Souter.


Comments at different stages of the preparation of the report were provided by Omar Cissé, Reshan Dewapura,
D C Dissanayake, Susanne Dorasil, Susanne Geipert, Aruni Goonetilleke, Nicole Maldonado, Petra Mueller-
Glodde, Malick N’Diaye, Antoine Ngom, Karim Sy, Oumou Diop Sy, and Lucas von Zallinger. Various government
DJHQFLHVDQGSXEOLFRIƄFLDOVIURPWKHWKUHHFRXQWULHVVWXGLHGLQWKLVUHSRUWKDYHDOVRSURYLGHGFRPPHQWV:HDUH
very grateful for these invaluable inputs.


The cover and other graphics were prepared by Nadège Hadjemian and Nathalie Loriot carried out the desktop
publishing. The report was edited by Nancy Biersteker.


Financial support from the Governments of Germany and Finland is gratefully acknowledged.




v


CONTENTS


Note ..............................................................................................................................................................ii


Preface ......................................................................................................................................................... iii


Acknowledgements ......................................................................................................................................iv


List of abbreviations ..................................................................................................................................... vii


Executive Summary ......................................................................................................................................ix


CHAPTER 1. INTRODUCTION ............................................................................. 1


1.1 Importance of a dynamic local ICT sector ....................................................................2


7KHIRFXVRIWKHUHSRUWWKH,7VHUYLFHVLQGXVWU\\ ..........................................................3
1.3 The public sector as a key buyer of IT services ............................................................4


CHAPTER 2. OPPORTUNITIES AND CHALLENGES FOR THE LOCAL IT SERVICE
INDUSTRY TO SUPPLY THE PUBLIC SECTOR .................................... 5


6L]HDQGFRPSRVLWLRQRIWKH,&7VHFWRULQGHYHORSLQJFRXQWULHV ..................................6
2.2 Opportunities .............................................................................................................8


2.3 Challenges and barriers...............................................................................................9


2.4 Reconciling IT sector promotion with value for money in procurement .......................11


CHAPTER 3. PROCUREMENT STRATEGIES FOR PROMOTING THE LOCAL
IT SERVICES SECTOR .................................................................. 13


3.1 Establishing the basics..............................................................................................14


3.2 Strengthening the institutional framework ..................................................................15


3.3 Promoting good procurement practices ...................................................................17


3.4 Limiting market entry for foreign bidders ....................................................................20


3.5 Mitigating information asymmetries ...........................................................................21


6RIWZDUHGHVLJQWKDWIDFLOLWDWHVORFDOƄUPVpSDUWLFLSDWLRQ ...........................................21
$ZDUHQHVVUDLVLQJDQGFDSDFLW\\GHYHORSPHQWIRUORFDOƄUPVDQGSXEOLF


VHFWRURIƄFLDOV ...........................................................................................................25


CHAPTER 4. COUNTRY EXPERIENCES: THREE CASE STUDIES ........................... 27


4.1 Overall context ..........................................................................................................28


4.2 Kenya .......................................................................................................................30


4.3 Senegal ....................................................................................................................31


4.4 Sri Lanka ...................................................................................................................31


4.5 Summary of case studies..........................................................................................32


CHAPTER 5. CONCLUSIONS AND RECOMMENDATIONS .................................... 35


ANNEX 1. CASE STUDIES ............................................................................ 41


1.1 Kenya .......................................................................................................................42


1.2 Senegal .....................................................................................................................46


1.3 Sri Lanka ...................................................................................................................53


CONTENTS




vi PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


ANNEX 2. LIST OF PEOPLE INTERVIEWED ..................................................... 59


Bibliography ...............................................................................................................................................61


Endnotes ....................................................................................................................................................65


Boxes


1. Five areas of intervention for promoting the IT industry. .......................................................................14


2. The IT Industry Barometer ...................................................................................................................15


3. IT public procurement and local IT sector development in Singapore ...................................................16


%HQHƄWVRIHSURFXUHPHQWLQ&KLOHDQG&DQDGD...................................................................................19
%HQHƄWVRIKDYLQJJRYHUQPHQWZLGHVWDQGDUGVDQGDUFKLWHFWXUHV ......................................................23
5HSXEOLFRI.RUHDpVH*RY)UDPHDQHJRYHUQPHQWDUFKLWHFWXUHWKDWVWLPXODWHVORFDO,7


development .......................................................................................................................................24


7. E-Government Development Index ..........................................................................................................29


'RQRUpVUROHLQSURPRWLQJ60(SDUWLFLSDWLRQWKHH[DPSOHRIWKH6HQHJDOHVH*HUPDQFRRSHUDWLRQ ....47
3XEOLFSURFXUHPHQWRI,7(6VXSSRUWVORFDOƄUPVLQ6UL/DQND ..............................................................56


Box table


1. E-Government Development Index ......................................................................................................29


Tables


2(&',&7VHFWRUGHƄQLWLRQEDVHGRQ,6,&UHY ..................................................................3
2. Types of enterprises in the IT service industries of developing countries ................................................7


3. Overview of potential strengths, weaknesses, opportunities and threats of local SMEs in public
procurement of IT services. .................................................................................................................12


*RRGSURFXUHPHQWSUDFWLFHVDQRYHUYLHZRI2(&'DQG:,76$UHFRPPHQGDWLRQV ............................18
3URVDQGFRQVRIVHOHFWHGVFKHPHVIRUTXDOLW\\DVVXUDQFHDQGFHUWLƄFDWLRQ .........................................22
6. Selected socio-economic indicators for Kenya, Senegal and Sri Lanka ...............................................28


7. Spending and export orientation of computer software and services ...................................................29


8. Overview of the procurement strategies that have been adopted in Kenya, Senegal and Sri Lanka .....33


9. Strategies to promote local IT sector development through public procurement ..................................39


10. Procurement strategies adopted in Kenya ...........................................................................................45


11. Public procurement of ICT equipment/services, Senegal (2008–2010), in thousands dollars................48


12. List of IT projects in the public administration, Senegal ........................................................................49


13. Procurement strategies adopted in Senegal ........................................................................................51


14. Major IT system procurement projects carried out under e-Sri Lanka e-Government program ............55


15. Procurement strategies adopted in Sri Lanka ......................................................................................57


Figures


1. Value added of the ICT sector by main components, selected economies, latest year (in percentage) ...6


2. Value added in software and other IT services .......................................................................................8




viiLIST OF ABBREVIATIONS


LIST OF ABBREVIATIONS


ADB Asian Development Bank


ADIE State Agency for Informatics (Agence de Développement de l’Informatique de l’État – Senegal)


ARMP Public Procurement Regulatory Authority (Autorité de Régulation des Marchés Publics – Senegal)


BMZ Federal Ministry for Economic Cooperation and Development (Germany)


BPO Business process outsourcing


CMMI Capability maturity model integration


CMP Public procurement code (Code des marchés publics – Senegal)


DCMP Central Directorate of Public Procurement (Direction Centrale des Marchés Publics – Senegal)


EGDI E-Government Development Index


ERP Enterprise resource planning


FOSS Free and open source software


FDI Foreign direct investment


FITIS Federation of Information Technology Industry Sri Lanka


GDP Gross domestic product


GIC Government Information Centre (Sri Lanka)


GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH


HR Human resources


HRM Human resources management


ICT Information and communication technology


ICTA ICT Agency (Sri Lanka)


,' ,GHQWLƄFDWLRQGRFXPHQW


IFMIS Integrated Financial Management Information System


,6,& ,QWHUQDWLRQDO6WDQGDUG,QGXVWULDO&ODVVLƄFDWLRQ


,62 ,QWHUQDWLRQDO2UJDQL]DWLRQIRU6WDQGDUGL]DWLRQ


IT Information technology


ITES IT-enabled services


ITIL Information Technology Infrastructure Library


JICA Japan International Cooperation Agency


JV Joint venture


KTCIP Kenya Transparency and Communications Infrastructure Project


MIC Ministry of Information and Communication (Kenya)


MNC Multinational corporation


036EU %UD]LOLDQ6RIWZDUH3URFHVV,PSURYHPHQW3URJUDP




viii PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


OECD Organisation for Economic Co-operation and Development


237,& 2UJDQL]DWLRQRI3URIHVVLRQDOVRI,QIRUPDWLRQDQG&RPPXQLFDWLRQ7HFKQRORJLHV
(Organisation des Professionnels des Technologies de l’Information
et de la Communication – Senegal)


3,1 3HUVRQDOLGHQWLƄFDWLRQQXPEHU


PMP Project management professional


PPDA Public Procurement and Disposal Act


PPOA Public Procurement Oversight Authority


PPP Public-private partnerships


SME Small and medium enterprise


6:27 6WUHQJWKVZHDNQHVVHVRSSRUWXQLWLHVDQGWKUHDWV


UCAD University Cheikh Anta Diop


UNCTAD United Nations Conference on Trade and Development


UNCITRAL United Nations Commission on International Trade Law


VAT Value added tax


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ixEXECUTIVE SUMMARY


EXECUTIVE SUMMARY


Developing a thriving information and communi-
cation technology (ICT) sector is a priority for many
developing and emerging economies. It drives private
sector productivity and competitiveness, creates
employment and spurs innovation, including in
low- and middle-income countries. Its contribution
to economic development is twofold. First, the ICT
sector itself contributes to GDP growth. Second,
ƄUPV RUJDQL]DWLRQV DV ZHOO DV LQGLYLGXDOV KDYH
greater opportunities to use ICT productively when
ORFDOO\\ EDVHG ƄUPV DUH DYDLODEOH WR SURYLGH UHOHYDQW
ICT products and services at affordable prices and
LQD WLPHO\\PDQQHU$JDLQVW WKLVEDFNJURXQG ƄQGLQJ
effective policies to support ICT sector development
is important.


To this end, the study focuses on how public IT
investments and related public procurement can
VXSSRUW WKH GHYHORSPHQW RI ORFDO ,7 ILUPV :KLOH
leveraging public procurement is potentially a
powerful instrument for governments to consider,
it has hitherto been insufficiently explored in most
developing and emerging economies.


:LWKLQ WKH ,&7 VHFWRU ,7 VHUYLFHV RIIHU WKH PRVW
promising opportunities in this context. In most
developing countries with a nascent IT industry,
providing services for the local market is often the
most natural entry point for newly established
enterprises. At the same time, the government and
public sector is often the largest buyer of IT services.
The increasing deployment of e-government services
and the associated demand for IT services from the
public sector represent a key market for local IT
ƄUPV2SSRUWXQLWLHVIRUWKHPWRSDUWLFLSDWHLQSXEOLF
SURFXUHPHQWWHQGHUVH[LVWHVSHFLDOO\\LQ
• Projects requiring local language, local presence


or local-foreign partnerships


• System integration contracts
• Bespoke IT systems
• Low-value contracts


However, the participation in public tenders of local IT
60(VLVRIWHQFKDOOHQJHGE\\


• The technical complexities of IT procurement (such
as legacy or lock-in issues)


• The lack of IT standards and interoperability
frameworks


• Inadequate procurement frameworks and weak
procurement capacities


• The use of previous experience or bid/performance
requirements to mitigate procurement risks


• The restricted access to tender notices, either
because of their cost or their limited publication


The primary aim of public procurement is to obtain
value for money. This is best served by having
D UHDVRQDEO\\ ODUJH QXPEHU RI ƄUPV t ORFDO DQG
international – competing in the tendering process.
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IT services industry does not need to be inconsistent
with this objective. Various measures can be used to
SURPRWH WKH SDUWLFLSDWLRQ RI ORFDO ,7 ƄUPV LQ SXEOLF
tenders while, at the same time, maintaining a
competitive bidding process.


7KH VWXG\\ LGHQWLƄHV VHYHQ GLVWLQFW VWUDWHJLHV WKDW
governments can implement to promote the local IT
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1. Ensuring that key conditions for success are in


SODFHDVKDUHG,7DQGSXEOLFSURFXUHPHQWSROLF\\
a critical mass of public ICT projects and a good
understanding of the capabilities of the local IT
services sector.


2. Strengthening the institutional framework.
3. Establishing good practices along the entire


procurement process.
4. Providing targeted preferential treatment of local


VXSSOLHUV ZLWKRXW MHRSDUGL]LQJ WKH TXDOLW\\ RI WKH
goods or services procured.


5. Increasing the options for SMEs to submit bids.
6. Adopting best practice software design to facilitate


ORFDOƄUPSDUWLFLSDWLRQ
7. Promoting awareness and capacity development,


ERWK DPRQJ ,7 ƄUPV DQG LQ UHOHYDQW SXEOLF
authorities.


Case studies of Kenya, Senegal and Sri Lanka are
used to illustrate to what extent these options may be
feasible in the context of different ground-level reali-
ties. Each of the three countries has leveraged these
strategies to varying degrees to promote their local IT
VHUYLFHVƄUPV


In Sri Lanka, ICTA (the agency responsible for large
e-government programmes) has stimulated local IT
SMEs development by establishing a framework of




x PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


transparent and competitive tender procedures, and
using a wide range of public procurement strategies
and tools. For instance, by providing targeted
SUHIHUHQWLDOPDUNVWRORFDOƄUPVLWKDVHQFRXUDJHGMRLQW
ventures between local and international enterprises,
and promoted technological capacity development
DPRQJORFDOƄUPV


In Senegal, a policy and legal environment to support
ORFDO,7ƄUPVpSDUWLFLSDWLRQLQSXEOLFSURFXUHPHQWKDV
been put in place. However, results on the ground
have so far been modest. There is scope for making
procurement procedures more transparent (e.g. by
improving the technical content of tender documents
and by providing feedback on the tender process).
Senegal has not yet adopted strategies to bridge in-
formation asymmetries, use best practice software
design, or provide training to local SMEs.


Kenya has seen limited progress to date in involving
WKH ORFDO ,7 VHFWRU LQ SXEOLF SURFXUHPHQW :KLOH
the existing policy framework is favourable to the
promotion of SME participation, it focuses mainly on
supporting export-oriented IT-enabled services (ITES).
Sound and transparent public procurement practices
are only partially implemented. As in the case of
Senegal, strategies to bridge information asymmetries
or to use best practices in software design have yet to
be developed.


In all three country studies, most actions have been
taken at the macro level (for example, with the
establishment of enabling legislation). Interventions at
the meso and micro level to strengthen the contribution
of national IT associations and develop the capabilities
of local IT SMEs have been limited.


Using public procurement strategies to promote the
local IT services industries is a complex and thus
challenging endeavour. In order to succeed, key
agencies of the government need to be on board
and agree on a strategy that is in line with broader
development plans. It requires a clear vision of
the overall objectives to be achieved and a solid
understanding of strengths and weaknesses of the
domestic IT services industry. Its successful application
also necessitates a certain level of capabilities in both
the public and the private sector.


For those Governments that decide to leverage public
procurement for the development of local IT services,
the following recommendations are made with regard
to the seven strategies.


1. Ensure that key conditions for success
are in place: a shared IT and public
procurement policy, a critical mass of
public ICT projects and a good understanding
of the capabilities of the local IT services sector.


It is essential to secure the commitment from
key authorities. First, the different ministries and
agencies involved should agree on a common
vision and objective. This requires that public
procurement policies are effectively integrated
in broader ICT policies. Second, the promotion
of domestic demand for IT services should be
UHFRJQL]HG DV D FRPSOHPHQW WR HIIRUWV DLPHG
at supporting export-led growth of the sector.
Third, before launching a major initiative to lever-
age public procurement, governments should
explore their current and future needs for e-
government systems. Finally, an understanding
of the capabilities of the local IT services sector
has to be developed at an early stage to assess
the kind of projects that could be undertaken by
domestic suppliers.


2. Strengthen the institutional framework:
promoting public-private sector coordination
and designating an agency to spearhead public
procurement for local IT sector development.


The competitiveness of local IT industries is
most effectively improved if all relevant stake-
holders cooperate in strategy formulation and
implementation. Effective private-public dia-
logue is important to identify barriers to local IT
sector participation in public procurement and
the need for capacity development among lo-
cal SMEs. Public sector coordination is required
to implement IT standards and interoperability
frameworks, pool tenders and adopt good pro-
curement practices.


The successful implementation of public pro-
curement strategies that also promote local IT
ƄUPSDUWLFLSDWLRQPD\\ UHTXLUH LPSURYHPHQWV LQ
the institutional set-up. Countries may consider
promoting an agency or a department to spear-
head public procurement for local IT sector
development. Such sponsoring should be ac-
FRPSDQLHGE\\VXIƄFLHQWƄQDQFLDOWHFKQLFDODQG
KXPDQUHVRXUFHV:LWKRXWDZHOOJRYHUQHGDQG
WUDQVSDUHQWSURFHVVDQGVXIƄFLHQWUHVRXUFHVLW
may result in unwanted effects, such as added
bureaucracy and wasteful use of limited re-
sources.




xiEXECUTIVE SUMMARY


3. Establish good practices along the entire
procurement process.


Countries should establish clear, transparent and
open tender procedures to ensure successful out-
comes of any public procurement processes. E-
procurement can help to make bidding processes
more open and transparent. Governments can
start by putting in place some of the easier to ex-
ecute applications of an e-procurement system,
such as the online publication of tenders and pro-
curement notices.


4. Provide targeted preferential treatment of
local suppliers without jeopardizing the
quality of the services procured.


The use of preferential marks for local experience,
local language and local presence within open
and competitive public procurement processes
can be effective in terms of encouraging the par-
WLFLSDWLRQ RI ORFDO ƄUPV 6XFK SUHIHUHQWLDOPDUNV
can also be used as an incentive for the formation
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ZKLFKFDQDOORZORFDODQGOHVVH[SHULHQFHGƄUPV
to build relevant skills.


5. Increase the options for SMEs to submit bids.


In order to reduce the threshold for local SMEs to
participate in the bidding process, governments
should consider providing concessions on bid and
performance guarantee requirements. Another way
to increase the options to submit bids for SMEs that
have limited experience in public procurement is to
use quality control criteria other than a previous track
UHFRUGVSHFLƄFDOO\\OLQNHGWRSXEOLFSURFXUHPHQW


6. Adopt best practice software design to facilitate
ORFDOƂUPSDUWLFLSDWLRQ


The use of modular design of systems and archi-
tecture allows for the tendering of smaller projects
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proach, however, requires a certain degree of au-
thority to establish technical standards, advanced
technical software development skills among the
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dards and interoperability frameworks.


:KHUHIHDVLEOH*RYHUQPHQWVVKRXOGFRQVLGHUWKH
use of free and open source software (FOSS) since
it can bring positive results in the form of reduced
costs and greater possibilities for local suppliers
to provide solutions. Meanwhile, common barri-
ers to FOSS adoption include a shortage of skilled


FOSS developers and lobbying against the use of
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7. Promote awareness and capacity
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and in relevant public authorities.


A common obstacle to greater involvement of
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DYDLODEOHRSSRUWXQLWLHVDPRQJ,7ƄUPVDQGSXEOLF
authorities responsible for the procurement
process. Measures to raise the level of mutual
awareness are therefore recommended. Beyond
awareness-raising, governments – ideally in
collaboration with IT industry associations – should
also consider providing training for SMEs on how
to submit bids. Such training does not appear to
be widespread yet but it has had positive results
when applied.


There may also be a case for sponsoring programmes
to enhance the capabilities of SMEs to work with
relevant FOSS that is likely to be applied in the
development of new e-government applications.
Adequate attention should be paid to raising the
awareness and knowledge among public authorities
responsible for IT procurement with regard to best
practices in IT public procurement and on technical
DUHDVHJ)266LQWHURSHUDELOLW\\VWDQGDUGVHWF7KH
mix of strategies chosen must be adapted to the
VSHFLƄFFLUFXPVWDQFHVLQHDFKFRXQWU\\


Governments of countries with a nascent IT services
sector should at least consider implementing the es-
sential strategies (including establishing the basics,
promoting good procurement practices, develop-
LQJ WKH FDSDFLWLHV RI ORFDO ƄUPVDQGSXEOLF RIƄFLDOV
and providing targeted preferential treatment for local
suppliers). Implementing one or two carefully de-
signed e-government projects with the involvement
of domestic SMEs can help to showcase their poten-
tial and to build trust between the public and private
sectors.


In countries with more mature capacities in the local IT
sector, and with robust public procurement systems
in place, more sophisticated strategies may generate
positive impacts. One example might be promoting
a national e-government architecture that is modular,
open and reusable. E-procurement represents an-
other option to make bidding processes more open
and transparent.


The practical implementation of various strategies
may require interventions not only at the macro level




xii PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


but also at meso and micro levels. Involving the lo-
cal IT industry association in the mapping of the local
sector or in public-private dialogue are examples of
VLJQLƄFDQWPHVR OHYHO LQWHUYHQWLRQV0LFUR OHYHO LQWHU-
ventions, such as training of enterprises in the areas
of FOSS, procurement procedures, quality standards,
DQGFHUWLƄFDWLRQPHWKRGVDUHFULWLFDOLQRUGHUWRH[SDQG
WKHEDVHRI,7ƄUPVWKDWDUHHTXLSSHGWRSDUWLFLSDWHLQ
public procurement. The responsibility for encourag-
ing and developing such capabilities should not rely
exclusively on national ICT agencies or procurement
RIƄFHV1DWLRQDO ,7 LQGXVWU\\DVVRFLDWLRQVVKRXOGDOVR
be invited and encouraged to play an active role.


'RQRUJRYHUQPHQWVDQGLQWHUQDWLRQDOƄQDQFLDOLQVWLWX-
tions should take the wider impact of IT programmes
and e-government projects on local IT sector growth
DQG FRPSHWLWLYHQHVV LQWR DFFRXQW ZKHQ ƄQDQFLQJ
projects in developing and emerging economies.
This may, for example, involve the integration of
JUHDWHU ƅH[LELOLW\\ LQ WKHSURFXUHPHQWSURFHVVHVDQG
WKHDOORFDWLRQRIVXIƄFLHQW UHVRXUFHV WRGHYHORS WKH
capacities of local suppliers. In addition, donors may
support strengthening local institutions – e.g. na-
tional IT industry associations – that provide training
and other services to local IT SMEs. They may also
commission further research in this area to assess
the impact of different policies and strategies.




1. INTRODUCTION


KEY MESSAGES


A dynamic local ICT sector contributes to economic growth in two ways:


• The ICT sector itself contributes to GDP.
• Firms in other sectors as well as public sector organizations and individuals have greater opportunities to use ICT productively when locally
EDVHGƂUPVFDQSURYLGHUHOHYDQW,&7SURGXFWVDQGVHUYLFHVDWDIIRUGDEOHSULFHVDQGLQDWLPHO\\PDQQHU


Within the ICT sector, the IT services industry provides the largest opportunities for market entry as well as returns on investment in developing
and emerging economies. Some IT services are knowledge- and skill-intensive; the required capital investment is comparatively low and does
not constitute an entry barrier as in other ICT industries (such as ICT manufacturing or telecommunication services).


In most developing countries with a nascent IT industry, providing services for the local market is often the most natural entry point for new
enterprises. Entry into international markets requires additional capabilities.


At the same time, the government is often the largest buyer of IT services. Because of this, public sector procurement of IT services can have
DPDMRULQƃXHQFHRQWKHHYROXWLRQRIWKHORFDO,7VHUYLFHVLQGXVWU\\


Taking into account the strategic importance of public demand, particularly in the early stage of the IT services industry, governments should
FRQVLGHUWKHLPSDFWWKHLUSXEOLF,7LQYHVWPHQWVDQGUHODWHGSXEOLFSURFXUHPHQWPD\\KDYHRQWKHGHYHORSPHQWRIORFDO,7ƂUPV




2 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


industry (including software development), and
the role of the public sector as a key buyer of IT
services.


• &KDSWHU EULHƅ\\ H[DPLQHV WKH VWUXFWXUH RI ,&7
sectors in developing and emerging economies
DQG LGHQWLƄHVRSSRUWXQLWLHVDQGFKDOOHQJHV IDFHG
E\\ ORFDO ,7 ƄUPV DVVRFLDWHG ZLWK SXEOLF VHFWRU
procurement.


• Chapter 3 discusses strategies that governments
and the public sector can develop and execute
WR SURPRWH ORFDO ,7 ƄUPV WKURXJK SXEOLF VHFWRU
procurement.


• Chapter 4 further examines these strategies
through three country case studies (Kenya,
Senegal and Sri Lanka).


• &KDSWHU VXPPDUL]HV WKH PDLQ ƄQGLQJV DQG
presents key policy recommendations.


1.1 IMPORTANCE OF A
DYNAMIC LOCAL
ICT SECTOR


Various macro and micro level studies have concluded
that the productive use of ICT results in, among oth-
ers, higher productivity among individuals, businesses
and government, and that it also drives innovation in
all sectors (UNCTAD 2009 and 2010). As such, most
countries today actively promote the adoption and
productive use of ICT.


:KLOHWKHSHUYDVLYHXVHRI,&7LVDNH\\GULYHURIHFR-
nomic growth, the local production of ICT goods and
services also has an important economic impact. The
performance of the local ICT sector is relevant for two
IXQGDPHQWDOUHDVRQV


• 7KH ,&7 VHFWRU LWVHOI PD\\ VLJQLƄFDQWO\\ FRQWULEXWH
to GDP. In several developing countries, the ICT
sector – comprising a wide array of economic
activities ranging from low value-added activities
which generally require low skills, such as
the distribution of hardware, to skill-intensive
high value-adding activities, such as software
GHYHORSPHQW t LV FKDUDFWHUL]HGE\\ UHODWLYHO\\ KLJK
productivity and rapid growth.


• Firms in other sectors as well as public sector
RUJDQL]DWLRQV DQG LQGLYLGXDOV ZLOO KDYH JUHDWHU
opportunities to use ICT productively if locally
EDVHGƄUPVFDQSURYLGHUHOHYDQW,&7SURGXFWVDQG
services at affordable prices and in a timely manner.


As highlighted by BMZ (2011), nurturing a national ICT
VHFWRUPD\\FRQWULEXWHWR


It is widely acknowledged that the information and
communication technology (ICT) sector functions as
a growth engine in many economies. A thriving ICT
sector drives private sector productivity and competi-
tiveness, creates employment and spurs innovation.
5HFHQWVWXGLHVFRQƄUP WKDWDOVR LQ ORZDQGPLGGOH
income countries, a functioning ICT sector contrib-
utes to economic growth. As a result of technological
change and new business models, many employment
opportunities are emerging in this sector also in low-
income countries (UNCTAD 2011b). Consequently,
the promotion of a competitive local ICT sector has
become a priority for governments in many develop-
ing and emerging economies.


:KLOHFKDQJHVLQWKHJOREDOODQGVFDSHLQFOXGLQJWKH
LQWHUQDWLRQDOL]DWLRQ RI WKH SURGXFWLRQ RI ,&7 JRRGV
and services, have enhanced the scope of exporting
such products, the domestic market remains the fo-
FXV IRUPRVW ORFDO ,&7ƄUPV LQGHYHORSLQJFRXQWULHV
However, the adoption and use of ICT by the private
sector is often limited, making domestic demand by
the government crucially important for the sector to
develop. This role is accentuated with the increasing
deployment of e-government services, which require
the supply of a variety of ICT goods and services.


This report places the spotlight on how public pro-
curement can be used among other tools to promote
a more competitive local IT sector. Its analysis and
ƄQGLQJVDUHDLPHGDW
• Policy makers, policy advisors and government


auditors in developing and emerging economies
entrusted with promoting the local IT industry.


• Public procurement specialists and legal experts
tasked with advising and revising the legal
framework on public procurement.


• *RYHUQPHQW &KLHI ,QIRUPDWLRQ 2IƄFHUV ZKR DUH
responsible for maintaining and upgrading IT
services within the public sector, as well as public
sector personnel responsible for the development,
deployment and operation of e-Government
services.


• Donor agencies supporting IT deployment and
XWLOL]DWLRQLQGHYHORSLQJFRXQWULHVWKDWLQOLQHZLWK
the Accra Agenda for Action, are committed to
“KHOS LPSURYH ORFDO ƄUPpV FDSDFLW\\ WR FRPSHWH
VXFFHVVIXOO\\IRUDLGIXQGHGSURFXUHPHQW” (art. 18)1.


7KHVWUXFWXUHRIWKHUHSRUWLVDVIROORZV


• Chapter 1 outlines the importance of developing
a local ICT sector, in particular the IT services




3CHAPTER 1 : INTRODUCTION


• Economic growth
• Increased exports
• Increased investments (as countries with strong IT


sectors attract more FDI)


• Employment creation
• Improved competitiveness (including through


spill-over effects)


• Innovation
• Branding and repositioning a country’s image


The weight of the ICT sector in the national economy
varies considerably across economies. In terms of eco-
nomic value added, there is growing evidence that a
ZLGHUQXPEHURIGHYHORSLQJFRXQWULHVDUHEHQHƄWLQJIURP
ORFDO,&7VHFWRUJURZWK81&7$'DQGE


• In Cameroon, the ICT sector has been making a
vital contribution to an otherwise relatively stagnant
economy. Between 2000 and 2008, it grew annually
EHWZHHQDQG1]ÆSDHWDO


• In Egypt, the ICT sector’s value added reached
} ELOOLRQ LQ FRUUHVSRQGLQJ WR RI
GDP. Moreover, in 2009, it recorded the highest
growth rate of all industries in the country (El-
Shenawy 2011).


• In India, the contribution of the ICT sector towards
GDP rose from 3.4% in 2000/01 to 5.9% in 2007/08,
with a compound annual growth rate above 20%
for this period (Malik and Mundhe 2011).


• In Malaysia, the ICT sector contributed about 9%
WRZDUGV*'3 LQDGHFOLQHKRZHYHUZKHQ
compared to the beginning of the decade when
sector contribution was 11.4%. (Ramasamy and
Ponnudurai 2011).


• ,Q %UD]LO WKH HYROXWLRQ RI WKH ,&7 VHFWRU LQ WKH
UHFHQWGHFDGHƅXFWXDWHGZLWKDFRQWUDFWLRQDWWKH
beginning of the decade followed by rapid growth.
On average, between 2000 and 2007, it grew at an
average rate of 2.1%. At the end of that period, it
accounted for approximately 5% of total business
sector value added (Porcaro and Jorge 2011).


In employment terms, the sector carries particular
ZHLJKW LQ FRXQWULHVZLWK D VL]HDEOH ,&7PDQXIDFWXU-
ing sector (e.g. Malaysia, the Republic of Korea, and
Singapore), as well as in countries which are large
exporters of IT services and ITES2 (e.g. Egypt and
Mauritius). The ICT sector typically accounts for a
larger share of value added than of employment,
UHƅHFWLQJ UHODWLYHO\\ KLJK FDSLWDOLQWHQVLW\\ 81&7$'
2011). Nevertheless some subsectors of the ICT sec-


tor like the IT service industry (see chapter 1.2) are
very skills-driven and less capital intensive.


1.2 THE FOCUS OF THE
REPORT: THE IT SERVICES
INDUSTRY


7KH2(&'pV,&7VHFWRUGHƄQLWLRQ3 identi-
ƄHV,&7HFRQRPLFDFWLYLWLHVLQGXVWULHVDVWKRVHZKRVH
production of goods and services are “primarily in-
WHQGHG WR IXOƄO RU HQDEOH WKH IXQFWLRQ RI LQIRUPDWLRQ
processing and communication by electronic means,
including transmission and display” (OECD, 2007).
7KH 2(&' ,&7 VHFWRU FODVVLƄFDWLRQ4 LGHQWLƄHV WKUHH
JURXSV RI LQGXVWULHV ,&7 PDQXIDFWXULQJ ,&7 WUDGH
DQG ,&7 VHUYLFHVZKLFK DUH VXEGLYLGHG LQWR YDULRXV
sub-groups (see Table 1).


7DEOH 2(&',&7VHFWRUGHƂQLWLRQ
EDVHGRQ,6,&UHY


6RXUFHOECD, 2007.


,&7PDQXIDFWXULQJLQGXVWULHV


2610 Manufacture of electronic components and boards
2620 Manufacture of computers and peripheral equipment
2630 Manufacture of communication equipment
2640 Manufacture of consumer electronics
2680 Manufacture of magnetic and optical media


,&7WUDGHLQGXVWULHV


4651 Wholesale of computers, peripheral equipment and software
4652 Wholesale of electronic and telecommunications equipment


and parts


,&7VHUYLFHLQGXVWULHV


5820 Software publishing


61 Telecommunications


6110 Wired telecommunications activities
6120 Wireless telecommunications activities
6130 Satellite telecommunications activities
6190 Other telecommunications activities


62 Computer programming, consultancy and related activities


6201 Computer programming activities
6202 Computer consultancy and computer


facilities management activities
6209 Other information technology and


computer service activities


631 Data processing, hosting and related activities;
Web portals


951 Repair of computers and communication equipment


9511 Repair of computers and peripheral equipment
9512 Repair of communication equipment


IT Services




4 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


This report focuses mainly on the IT services industry,
comprising computer programming, consultancy and
related activities (sub-group 62) and data processing,
hosting and related activities and web portals (631) as
these activities are expected to provide the most op-
portunities in the context of public procurement in the
IT area in developing and emerging economies.


$VGLVFXVVHGLQ%0=


• The IT equipment/hardware industry (sub-groups
2610, 2620, 2630, 2640 and 2680) is capital-
intensive and dominated by large multinational
corporations (MNCs). Local hardware companies
in most developing countries outside East Asia are
mostly engaged in sales and distribution. Thus, the
value added of this segment in these economies
is generally low when compared to IT services
(sub-group 62 and 631), and its contribution to
economic development limited.


• IT services, particularly software development, are
more knowledge- and skill-intensive. The required
capital investment, including hardware and
software development tools, is comparatively low
and does not constitute an entry barrier as in other
parts of the ICT sector (notably ICT manufacturing
or telecommunication services).


In the remainder of this report, the term “IT services”
will be used to refer to sub-groups 62 and 631. An im-
portant subcomponent of this category concerns the
production of software products and services. Actu-
DOO\\DQXPEHURIƄUPVLQWKHVRIWZDUHSXEOLVKLQJ
VXEJURXSPD\\ZHOOEHƄUPVWKDWDUHDOVRDFWLYHLQWKH
62 sub-group (i.e. those that create and market their
RZQVRIWZDUH$GGLWLRQDOO\\ƄUPVLQWKHVXEJURXS
may also be active in the 9511 (repair of computers
and related equipment) sub-group.


The telecommunications industry (sub-group 61) will
be covered only peripherally. This is not because tele-
communications are unimportant. On the contrary,
their importance for growth and employment in de-
veloping countries is well documented, and the wide
DYDLODELOLW\\ RI VSHFLƄF PRELOH SKRQH SODWIRUPV DUH
opening up opportunities for local software developers
to enter the mobile phone software application mar-


ket, as highlighted in the Information Economy Report
81&7$'D+RZHYHULQWKHVSHFLƄFLQVWDQFHRI
government procurement, the opportunities for local
ƄUPVLQWHOHFRPPXQLFDWLRQVDUHUHODWLYHO\\OLPLWHG


1.3 THE PUBLIC SECTOR
AS A KEY BUYER OF
IT SERVICES


In most developing and emerging economies with
a nascent IT industry, providing services for the lo-
cal market is often the natural entry point for new
enterprises. Entry into international markets requires
additional capabilities – for instance, in terms of re-
VRXUFHV RU TXDOLW\\ FHUWLƄFDWLRQ ,Q DGGLWLRQ LQ PDQ\\
developing countries, the government is the larg-
est buyer of IT services. The recent deployment of
e-services in the areas of e-government, e-health,
DQG HOHDUQLQJ t IUHTXHQWO\\ ƄQDQFHG RU FRƄQDQFHG
by donors – is boosting such demand. The growing
promotion and adoption of e-procurement5 and open
government6 platforms will further expand public sec-
tor demand for IT services (including software). It may
as well increase public scrutiny of how public funds
are spent, including IT services.


There is a general shortage of data on the public
sector’s spending on IT in developing and emerging
HFRQRPLHV:KDW OLWWOH GDWD WKDW H[LVW KRZHYHU XQ-
derpins the assertion that public sector demand is
crucial for the promotion of IT services industries. For
instance, the results of IT industry surveys in Bulgaria,
Guatemala, Honduras and Macedonia (BASSCOM
2011, SOFEX 2011, AHTI 2011, MASIT 2011) show
that, in all these countries, the public sector is among
the largest buyers of IT services.


Given the strategic importance of public demand,
particularly at an early stage of IT industry develop-
ment, governments should consider the impact that
their level of public IT investments and the design of
public procurement have on the development of lo-
FDO,7ƄUPV7RWKLVHQGFKDSWHUH[DPLQHVVSHFLƄF
advantages that local IT services SMEs enjoy, and the
challenges they may face in supplying IT services to
the public sector.




2. OPPORTUNITIES AND


CHALLENGES FOR THE


LOCAL IT SERVICE


INDUSTRY TO SUPPLY


THE PUBLIC SECTOR


KEY MESSAGES
0RVW,7VHUYLFHVƂUPVLQGHYHORSLQJDQGHPHUJLQJHFRQRPLHVDUHSURGXFLQJVHUYLFHVVXFKDVVRIWZDUHUHVHOOLQJLQVWDOODWLRQFXVWRPL]DWLRQ
and training linked to imported, foreign packaged software and various kinds of IT consultancy services for the domestic market.


7KHLQFUHDVLQJGHSOR\\PHQWRIHJRYHUQPHQW LQLWLDWLYHVDQGWKHDVVRFLDWHGGHPDQGIRU ,7VHUYLFHVUHSUHVHQWDNH\\PDUNHWIRUVXFKƂUPV
The main opportunities for them to participate in public procurement tenders exist in:


• Projects requiring local language, local presence or local-foreign partnerships
• System integration contracts
• Bespoke IT systems
• Low-value contracts


However, the participation in public tenders of local IT SMEs – which have fewer resources and products/qualities that are less well known by
SXEOLFVHFWRURIƂFLDOVtLVSDUWLFXODUO\\FKDOOHQJHGE\\


• The technical complexities of IT procurement (such as legacy or lock-in issues)
• The lack of IT standards and interoperability frameworks
• Inadequate procurement frameworks and weak procurement capacities
• The use of previous experience or bid/performance requirements to mitigate procurement risks
• The restricted access to tender notices, either because of their cost or their limited publication


7KHSULPDU\\DLPRISXEOLFSURFXUHPHQWLVWRREWDLQYDOXHIRUPRQH\\7KLVLVEHVWVHUYHGE\\KDYLQJDUHDVRQDEO\\ODUJHQXPEHURIƂUPVtORFDO
DQGLQWHUQDWLRQDOtFRPSHWLQJLQWKHWHQGHULQJSURFHVV6RPHPHDVXUHVFDQEHXVHGWRSURPRWHWKHSDUWLFLSDWLRQRIORFDO,7ƂUPVLQSXEOLF
tenders while maintaining a competitive environment.




6 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


7KLV FKDSWHU H[DPLQHV WKH VSHFLƄF DGYDQWDJHV DQG
UHVXOWLQJRSSRUWXQLWLHVWKDWORFDO,7VHUYLFHVƄUPVHV-
SHFLDOO\\VPDOODQGPHGLXPVL]HGHQWHUSULVHV60(V
may have – in comparison to large and well-estab-
OLVKHG ORFDO DQG LQWHUQDWLRQDO ƄUPV t LQ VXSSO\\LQJ ,7
services to the public sector. The prospects for local
ƄUPVWRGHOLYHUVHUYLFHV LQUHVSRQVHWRSXEOLFVHFWRU
tenders are the greatest in relatively small projects,
EHVSRNHV\\VWHPVV\\VWHPVWKDWUHTXLUHFXVWRPL]DWLRQ
to the local context, or in projects that require local
partners.


7KHFKDSWHUWKHQ ORRNVDWUHDVRQVZK\\VHL]LQJVXFK
RSSRUWXQLWLHVFDQRIWHQEHGLIƄFXOWXQGHUH[LVWLQJJRY-
ernment procurement practices. The limited adoption
RIJRRGSURFXUHPHQWSURFHVVHVDQGLQVXIƄFLHQWSUR-
curement capacities are among the main challenges
IDFHGE\\ORFDO,7VHUYLFHVƄUPV5HTXLUHPHQWVUHODWHG
WR KDYLQJ SUHYLRXV SURMHFW H[SHULHQFH DQG VXIƄFLHQW
ƄQDQFLDO UHVRXUFHV DQG FKDOOHQJHV UHODWHG WR WKH
VSHFLƄFFRPSOH[LW\\RI,7SURFXUHPHQWVXFKDVWHFK-
nological lock-in or interoperability issues, also limit
the participation of smaller and newer players.


To provide an explanation of the context in which
these opportunities and challenges arise, the analysis
starts with a brief description of the nature of the ICT
sector and, in particular, the IT services industry in de-
veloping and emerging economies.


2.1 SIZE AND COMPOSITION
OF THE ICT SECTOR IN
DEVELOPING COUNTRIES


7KHUHDUHRQO\\DIHZVWXGLHVWKDWHVWLPDWHWKHVL]HRIWKH
ICT sector in developing countries. Only a limited num-
ber of countries have adopted international standards
LQUHSRUWLQJRQWKHVL]HRUFRPSRVLWLRQRIWKHVHFWRUOHW
alone on the public procurement of IT services.


Nevertheless, the available data unveils some of the
characteristics of the ICT sector in developing and
emerging economies. The composition of the ICT
sector differs considerably across countries (see Fig-
ure 1). 7HOHFRPPXQLFDWLRQV VHUYLFHV in developing
countries account, broadly speaking, for the most sig-
QLƄFDQWVKDUHRI,&7VHFWRUYDOXHDGGHG,&7JRRGV
PDQXIDFWXULQJ represents a small proportion in all but
a few developing countries that are primarily found
LQ (DVW DQG 6RXWKHDVW $VLD ,7 VHUYLFHV LQ ƄJXUH
entitled computer and related activities) represent a
VLJQLƄFDQWSURSRUWLRQ LQPRVWHFRQRPLHV LQFOXGHG LQ
the chart. At the same time, private sector data shows
that computer software and services account for a
higher percentage of the total ICT expenditure in de-
veloped than in developing countries.7


Exports of &RPSXWHU6RIWZDUH DQG ,QIRUPDWLRQ6HU-
YLFHV generally account for a higher percentage of


0 20 40 60 80 100


Malaysia (2007)


Croatia (2007)


Mexico (2008)


Russian Federation (2008)


Brazil (2007)


Uruguay (2007)


Mongolia (2007)


Cuba (2007)


Mauritius (2008)


Chile (2004)


Kazakhstan (2006)


Azerbaijan (2006)


Manufacturing


Wholesale and renting


Telecommunications


Computer and
related activities


n.a.


Percentage


)LJXUH 9DOXHDGGHGRIWKH,&7VHFWRUE\\PDLQFRPSRQHQWVVHOHFWHGHFRQRPLHVODWHVW\\HDULQSHUFHQWDJH


6RXUFHUNCTAD (2011b).




7CHAPTER 2 : OPPORTUNITIES AND CHALLENGES FOR THE LOCAL IT SERVICE INDUSTRY TO SUPPLY THE PUBLIC SECTOR


GDP in developed than in developing countries.
Some developing countries, however, have managed
WR JHQHUDWH VLJQLƄFDQW ,7 VHUYLFHV H[SRUWV VXFK DV
Costa Rica (3.6% of GDP), India (2.4%), the Philip-
pines (1.2%) and Sri Lanka (0.6%) (UNCTAD 2012a).
This suggests that pursuing strategies for export-ori-
ented software and information services can pay off.
At the same time, from a development perspective, it
is very important to develop a competitive IT industry
to support the IT needs of the domestic private and
public sector (UNCTAD 2012a).


Traditionally, the ICT sector has been dominated by
large public and (predominantly) private corporations,
particularly in capital-intensive areas. However, there
are also important opportunities for smaller businesses
– especially as hardware becomes less of a factor in the
ICT industry – and many new job opportunities have
emerged for ICT SMEs (UNCTAD 2010 and 2011b).


In developing countries, the following types of enter-
SULVHVFDQEHGLVWLQJXLVKHGLQWKH,7VHUYLFHVLQGXVWU\\
VRIWZDUH UHVHOOHUV DQG VXSSRUW SURYLGHUV VRIWZDUH
SURGXFHUV VRIWZDUH VHUYLFH SURYLGHUV ,7 DQG EXVL-
QHVVFRQVXOWLQJƄUPVDQGRWKHU,7VHUYLFHVSURYLGHUV
5L]N DQG (O.DVVDV 5RHGLQJ HW DO
(Table 2). In many developing countries, in particular
LDCs, most domestic IT enterprises belong to the cat-
egory of software resellers and support providers and
other IT service providers (UNCTAD 2012a).


,QSUDFWLFHPDQ\\ƄUPVSURYLGHVHUYLFHV LQPRUHWKDQ
one category and may also move between them. It is
FRPPRQIRUORFDO,7ƄUPVWRVWDUWE\\UHSUHVHQWLQJDIRU-
eign vendor as a local reseller of products and support,
and then seek to move up to the next level by becom-
ing producers of their own software (UNCTAD 2012a).


7KHRSSRUWXQLW\\IRUYDOXHFUHDWLRQIRU,7VHUYLFHVƄUPV
varies according to the nature of the activity (data en-
try, software/IT services or software products) and
market orientation (domestic or export sales). Figure 2
represents these different products and services and
markets according to their level of value creation and
along a typical timeline.


)RUPRVW ,7 VHUYLFHV ƄUPV LQ GHYHORSLQJ FRXQWULHV
producing services for the domestic market – such
DV UHVHOOLQJ LQVWDOODWLRQ FXVWRPL]DWLRQ DQG WUDLQLQJ
linked to imported, foreign packaged software – is
the natural entry point with the lowest entry barrier
(Heeks, 1999). A key inhibitor for expanding activi-
ties towards software development, and thus moving
up the value chain, has traditionally been a lack of
technological capabilities combined with limited use
of ICTs and demand for software applications in the
private and public sector.8


Producing software and other IT services for exports
UHTXLUHVJUHDWHUFDSDELOLWLHV5HODWLYHO\\IHZƄUPVIURP
GHYHORSLQJDQGHPHUJLQJHFRQRPLHVtVXFKDVƄUPV
from India and the Philippines – have managed to en-
ter this market, although the number is increasing.


The production of application packages involves
high barriers to entry and is subject to intense com-
petition. Since few places are insulated from foreign
FRPSHWLWLRQ GRPHVWLF ƄUPV KDYH WR FRPSHWH ZLWK
imported proprietary software, often developed and
GLVVHPLQDWHG ZLWK WKH EDFNLQJ RI VL]HDEOH EXGJHWV
for research and development, advertising, sales and
marketing. The main opportunity to move into soft-
ware products typically lies in the development of
applications tailored to local conditions (e.g. business
culture, legal framework and languages).


7DEOH 7\\SHVRIHQWHUSULVHVLQWKH,7VHUYLFHLQGXVWULHVRIGHYHORSLQJFRXQWULHV


7\\SHRIHQWHUSULVH 'HVFULSWLRQ


Producers of own software
products


Can be separated into three subcategories: producers of standardized business products, R&D-based
products and embedded systems products.


Software resellers and support
providers


Typically act as agents or resellers for other software suppliers, such as proprietary packaged software.
Support can range from installation and maintenance of the software to sophisticated consultancy and
customization work. ICT trade industries


Software service providers Develop software for others by offering consultant or development services.


IT and business consulting
ƂUPV


Tend to focus on the customization of software, training and consulting on enterprise-level software
solutions, be localized and relatively small in size.


IT service providers Include Internet service providers and application service providers. Their role increases with a growing
reliance on web-based and cloud-based software applications. These companies may offer access to their
networks, systems and applications


6RXUFH5L]NDQG(O.DVVDV.




8 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


Several key trends in the IT industry offer opportunities
for IT services SMEs in developing and emerging econ-
RPLHVWRSDUWLFLSDWHLQKLJKHUYDOXHDGGHGDFWLYLWLHV9


• Rising demand for offshore and outsourcing
services.


• Increasing adoption of component-based software
engineering, which provides opportunities to
SDUWLFLSDWHLQJOREDOYDOXHFKDLQVE\\VSHFLDOL]LQJLQ
WKHSURGXFWLRQRIVSHFLƄFFRPSRQHQWV


• Increasing use of free and open source software
(FOSS).


• Growing market for mobile applications.


2.2 OPPORTUNITIES


As argued in chapter 1, given the relatively low use
of software amongst consumers and businesses, and
WKHGLIƄFXOW\\LQHQWHULQJWKHFRQVXPHUPDUNHWZKLFKLV
dominated by off-the-shelf applications by established
global competitors), the public sector constitutes an


)LJXUH 9DOXHDGGHGLQVRIWZDUHDQGRWKHU,7VHUYLFHV


Value added


Time


Growth path


Software services


Software products


Data entry


Software/IT services


for domestic market


Software products


for domestic market


Software/IT services


for exports


Software products


for exports


6RXUFHUNCTAD (2012a), adapted from BMZ (2011).


important and strategic market for local IT services
ƄUPV


This section examines areas where markets exist for
ORFDO ,7VHUYLFHVƄUPVDQGZKHUHWKHVHtGHSHQGLQJ
on their business segment and capabilities – may
KDYHDQDGYDQWDJHRYHUIRUHLJQƄUPV


2.2.1 E-government
Information technology is instrumental for the public
VHFWRU WR IXOƄO LWV PLVVLRQ HIƄFLHQWO\\ FRVWHIIHFWLYHO\\
DQGWUDQVSDUHQWO\\%KDWDQJDUHWDO&LERUUDDQG
1DYDUUD DPRQJ RWKHUV &RQVHTXHQWO\\ PDQ\\
developing countries have embarked on initiatives
aimed at re-engineering and automating govern-
ment processes, and providing electronic services to
FLWL]HQVDQGEXVLQHVVHV7KHODWHVW8QLWHG1DWLRQV(
Government Survey (United Nations 2012) found that
the sustained integration, expansion, and consolida-
tion of government online offerings has led to more
WKDQD}SHUFHQW LQFUHDVH LQ WKHZRUOGDYHUDJHRI
e-government development in the past two years.




9CHAPTER 2 : OPPORTUNITIES AND CHALLENGES FOR THE LOCAL IT SERVICE INDUSTRY TO SUPPLY THE PUBLIC SECTOR


The increasing deployment – even if only moderate
– of e-government services in developing countries
expands the domestic demand for IT services and of-
IHUVPDUNHWRSSRUWXQLWLHVIRUORFDOƄUPV


2.2.2 Local language capabilities
/RFDOƄUPVKDYHDGLVWLQFWDGYDQWDJHZKHQ,7V\\VWHPV
require the use of local languages. E-government ap-
plications, for example, may require local language
user interfaces as well as corresponding character
sets and storage capabilities. In addition, command
of the local language may be crucial when interacting
ZLWK XVHUV JRYHUQPHQW RIƄFLDOV DQG RWKHU VWDNH-
holders during the development, deployment and
maintenance of IT systems. Furthermore, local lan-
guage capabilities may be required for the preparation
of user manuals and for carrying out training to rollout
DV\\VWHP1HHGOHVVWRVD\\ORFDOƄUPVDUHPRUHOLNHO\\
to be familiar with local languages as well as with lo-
cally rooted communication patterns. These factors
DUHDGYDQWDJHRXVIRUORFDOƄUPVWRUHVSRQGVXFFHVV-
fully to public tenders, either alone or as a partner to
ELGGLQJLQWHUQDWLRQDOƄUPV


2.2.3 Local presence requirements
Occasionally, having a local presence throughout the
country is required for the deployment, operation and
maintenance of public sector IT systems. Such re-
TXLUHPHQWV FDQ RIWHQ RQO\\ EH IXOƄOOHG E\\ ORFDO ƄUPV
particularly the larger ones that either possess their
RZQQHWZRUNVRIUHJLRQDORIƄFHVRUDUHLQDSRVLWLRQWR
HVWDEOLVKDSUHVHQFHVZLIWO\\)RUIRUHLJQƄUPVtHVSH-
cially those without any local presence – establishing a
regional presence may not be straightforward or cost
HIIHFWLYH,QVXFKFDVHVORFDO,7ƄUPVLQFOXGLQJ60(V
PD\\IXQFWLRQDVSDUWQHUVHLWKHUIRUODUJHORFDOƄUPVRU
IRUIRUHLJQƄUPV


3DUWQHULQJZLWKIRUHLJQƂUPV
&ROODERUDWLRQEHWZHHQ ORFDO DQG IRUHLJQ ,7 ƄUPVPD\\
be required, if not mandated, by public sector procure-
ment rules. Areas in which voluntary partnerships are
often established include on-site technical and user
support after IT systems have been deployed. Although
WKHYDOXHDGGLQJDFWLYLWLHVE\\ORFDOƄUPVPD\\EHOLPLWHG
some amount of technical knowledge transfer usually
takes place. If partnerships continue beyond single
contracts, for similar systems and/or in more than one
SXEOLFVHFWRURUJDQL]DWLRQWKHDPRXQWRIYDOXHDGGHG
DFWLYLWLHVFDUULHGRXWE\\ ORFDO ƄUPVPD\\ LQFUHDVHRYHU


time. Moreover, continuous partnerships with foreign
ƄUPVFDQSURYLGHORFDOƄUPVZLWKYDOXDEOHLQVLJKWVLQWR
the operations of their foreign partners, be it in using the
latest software development methodologies and tools,
or in managing projects and customers.


/RFDOƂUPVDVV\\VWHPLQWHJUDWRUV
(YHQZKHQ ORFDO ƄUPV ODFN WKHH[SHUWLVH LQGRPDLQ
VSHFLƄF VRIWZDUH LQWHJUDWLQJ RU SDUWLDOO\\ LQWHJUDWLQJ
V\\VWHPVLVDQDFWLYLW\\WKDWWKH\\PLJKWFDUU\\RXW:KLOH
YDULRXVLQWHUQDWLRQDOƄUPVSURYLGHWKHOLFHQVHVIRUWKH
GLIIHUHQW VRIWZDUH FRPSRQHQWV RI D IXOOƅHGJHG V\\V-
WHPORFDOƄUPVPD\\EHFDOOHGXSRQWRLQWHJUDWHWKHVH
components into a fully functional system. Depending
on the system, integration may range from low to high
value adding activities. In any case, the opportunity
WRJDLQH[SHULHQFHZLWKV\\VWHPLQWHJUDWLRQFDQEHQHƄW
ORFDOƄUPVDQGKHOSWKHPGHYHORSWKHLUVNLOOVZKLOHDW
the same time adding references needed to be able to
qualify for future bidding.


2.2.6 Bespoke IT systems
,QWHUQDWLRQDOƄUPVKDYHRIWHQGHYHORSHGWKHLUFRPSH-
WHQFLHVRQVSHFLƄFSURGXFWVDQGVHUYLFHVLQUHVSRQVH
to the needs of the public sector in developed
countries. Therefore, the level of functionality and
complexity inherent in their products is usually high,
ZKLFKWHQGVWREHUHƅHFWHGLQWKHSULFHVWUXFWXUH7KH
public sector in many developing countries usually
has simpler requirements and more limited budgets.
Simpler products, customised to their requirements,
may therefore often be the preferred choice. The need
for such bespoke systems therefore provides oppor-
WXQLWLHV IRU ORFDOƄUPVtSURYLGHG ORFDOH[SHUWLVHDQG
capabilities are available.


2.2.7 Low value contracts
Occasionally, IT systems tendered by the public sector
in developing countries require only basic functionality
and have thus a contractual value that may be un-
LQWHUHVWLQJIRU LQWHUQDWLRQDOƄUPV7KLVJDSLQELGGHUV
OHDYHVWKHƄHOGRSHQIRUORFDO60(V


2.3 CHALLENGES AND
BARRIERS


:KLOHWKHUHDUHVHYHUDOLQVWDQFHVZKHUHORFDO,7ƄUPV
can compete or collaborate with large national and in-
WHUQDWLRQDOƄUPVLQUHVSRQVHWRSXEOLFVHFWRUWHQGHUV
reality suggests a different picture. As illustrated in




10 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


WKHFRXQWU\\FDVHVWXGLHVVHH6HFWLRQDQG$QQH[}
many local IT services SMEs fail to even submit a bid, let
DORQHWREHDZDUGHGDQGVXFFHVVIXOO\\IXOƄODFRQWUDFW


This section examines some of the main challenges
DQGEDUULHUV ORFDOƄUPV IDFHZKHQELGGLQJ IRUSXEOLF
sector IT tenders.


0DQ\\EDUULHUVWKDWH[LVWIRUORFDO,7VHUYLFHVƄUPVZLWK
UHJDUGWRSXEOLFVHFWRUWHQGHUVFDQEHH[SODLQHGE\\


• 7KHVSHFLƄFFRPSOH[LW\\RI,7SURFXUHPHQW
• The lack of interoperability of IT systems.
• Inadequate procurement frameworks and weak


procurement capacities.


• Information asymmetries in procurement.
• Lack of awareness by procuring entities and local


IT sector.


• Additional transaction costs associated with the
adoption of measures addressing information
asymmetries.


2.3.1 Complexity of IT procurement
The public procurement of IT products and services is
often a complex process. The characteristics of IT sys-
tems (such as the wide range of available standards
or the short innovation cycles) make their procurement
particularly challenging. Some of these challenges in-
clude eliciting user requirements, managing lock-in
and legacy issues, and ensuring the interoperability of
systems.


7KHLGHQWLƄFDWLRQVHOHFWLRQDQGSKUDVLQJRIWHFKQLFDO
VSHFLƄFDWLRQV IRU ,7 VHUYLFHV UHTXLUHV VRXQG NQRZO-
edge of technologies and good procurement practices
E\\,7PDQDJHUVDQGSURFXUHPHQWRIƄFHUV7KHODFNRI
VXFKNQRZOHGJHPD\\ UHVXOW LQXQFOHDU VSHFLƄFDWLRQV
issued along tender notices.


Lock-in situations where ties to the original vendor
extend beyond the initial contract period either for
technical (e.g. the need to adapt interrelated systems)
or institutional (e.g. the associated costs of retraining
staff to work on the new IT system) reasons are par-
ticular harmful for local companies, especially when
they are late entrants in the market.


2.3.2 Lack of interoperability of
IT systems


The interoperability of IT systems – i.e. the ability of IT
systems to communicate with each other and share
data – is a primary concern in IT procurement. Full or


partial interoperability can be mandated in tenders by
prescribing certain standards. Unless these standards
are protected by intellectual property rights owned by
one market player or consortium, this not only facili-
tates interoperability, but also stimulates competition.
7KH GHƄQLWLRQ DQG SUHVFULSWLRQ RI VWDQGDUGV KDYH
varying effects on interoperability and competition, de-
pending on their degree of openness and complexity.
7KHGHJUHHRIRSHQQHVVDIIHFWVWKHQXPEHURIƄUPV
that have the rights to use them (Europe Economics
2012). The complexity and, thus, ease of implemen-
WDWLRQ KDV DQ LPSDFW RQ WKH QXPEHU RI ORFDO ƄUPV
possessing the capability to apply them.


2.3.3 Inadequate procurement
frameworks and weak
procurement capacities


Inadequate public procurement frameworks are an-
other challenge that local IT services SMEs face.
These failures are often general public sector procure-
ment limitations, not exclusive to IT procurement, and
their redressing requires a wide range of measures.
Moreover, the lack of clear policies in areas related to
the procurement of IT services, ambivalent legislation
and regulations, and shortcomings in public sector
coordination (e.g. absence of interoperability frame-
works) are examples of institutional constraints that
can inhibit the participation of SMEs in public sector
WHQGHUV *HQHUDOO\\ VPDOOHU ƄUPV DUH ƄQDQFLDOO\\ DQG
RUJDQL]DWLRQDOO\\ SRRUO\\ HTXLSSHG WR XQGHUVWDQG DQG
navigate through complex and opaque procurement
procedures.


3XEOLF VHFWRU RUJDQL]DWLRQV LQ GHYHORSLQJ FRXQWULHV
often have inadequate procurement capacities, par-
ticularly with regard to the procurement of IT services.
)RU LQVWDQFH WKH LGHQWLƄFDWLRQRI WKH ,7UHODWHGVWDQ-
dards to be included in the requirements catalogue
for target systems requires adequate knowledge of
VXFKVWDQGDUGV,QDGGLWLRQSURFXUHPHQWRIƄFHUVDQG
RWKHURIƄFLDOVRIWHQQHHGWREHFRPHDFTXDLQWHGZLWK
and apply the procurement processes and rules of dif-
IHUHQW LQWHUQDWLRQDOGRQRUVƄQDQFLQJ ,7SURJUDPPHV
which stretches their capacities.


2.3.4 Information asymmetries
in procurement


3XEOLFVHFWRUSURFXUHPHQWRIƄFHUVRIWHQKDYHOLPLWHG
knowledge of the quality of IT products and services
RIIHUHGE\\SRWHQWLDOELGGHUV,QRUGHUWRPLQLPL]HWKH




11CHAPTER 2 : OPPORTUNITIES AND CHALLENGES FOR THE LOCAL IT SERVICE INDUSTRY TO SUPPLY THE PUBLIC SECTOR


risks involved when procuring goods and services, the
public sector usually imposes a variety of rules, which
LQFOXGHVUHTXLULQJ


• %LGGLQJ ƄUPV WR KDYH SUHYLRXV H[SHULHQFH LQ
successfully delivering services of a similar nature
DQGVLPLODUVL]HHJHƄOLQJRIWD[UHWXUQV,QODUJHU
WHQGHUVWKLVDXWRPDWLFDOO\\GLVTXDOLƄHVORFDO60(V
which may, at best, have implemented only small
SURMHFWV LQ WKHSDVW (YHQ ODUJH ORFDO ƄUPVPD\\
QRW SRVVHVV SUHYLRXV H[SHULHQFH LQ WKH VSHFLƄF
GRPDLQHVSHFLDOO\\ LI LW LV WKH ƄUVW WLPH WKHSXEOLF
sector is tendering for IT services in the particular
domain.


• Bid and/or performance guarantees or bonds for
tenders above a certain value. Bid and performance
JXDUDQWHHV DUH XVXDOO\\ ƄQDQFLDO FROODWHUDO
requested by the public sector (awarding party)
from successful bidders to ensure that bidders,
once under contract, will carry out the project and
complete it as per the contractual agreement.
Such guarantees are often provided by guarantors
– e.g. in the form of bonds issued by an insurance
company or a bank – in favour of the awarding
party. Guarantors generally require contractors
to deposit the equivalent amount of money (or
other collateral), thus tying up contractors’ assets.
SMEs in particular may be unable to provide
enough collateral for the duration of the project.
&UHGLWVFRULQJV\\VWHPVRUFDVKƅRZEDVHGOHQGLQJ
mechanisms, which can enable banks to issue
ERQGV ZLWKRXW W\\LQJ XS ƄUPVp DVVHWV DUH OHVV
prevalent in developing countries.


Such rules, which aim at mitigating the risks from in-
formation asymmetries in procurement can create a
YLFLRXVF\\FOHZKHUHORFDOƄUPVHVSHFLDOO\\60(VWKDW
have not previously done similar work or have limited
FROODWHUDODUHXQDEOHWRHYHQTXDOLI\\IRUDWHQGHU:LWK-
out winning at least one tender, they are then unable
to gain the necessary experience to bid the next time
the public sector issues a new tender.


2.3.5 Lack of awareness in procuring
HQWLWLHVDQGORFDO,7ƂUPV


Procuring entities are in general unaware of the broad
set of skills and capabilities available in the local IT
sector. The lack of data available on the capabilities of
the local IT sector as well as the limited dialogue with
the local IT sector have helped sustain widespread
preconceptions of the quality of services provided by
SMEs.


Local SMEs are often unaware of opportunities to ten-
GHUIRUSXEOLFVHFWRUSURMHFWVEHFDXVH


• Tender notices (e.g. expressions of interest,
requests for proposals) are published in
publications that they usually do not access.


• The cost of obtaining bid documents is too high.
• The public sector simply does not invite smaller


ORFDOƄUPVWRELG


Such information gaps may often be aggravated by
weaknesses in public procurement processes men-
tioned earlier in section 2.3.3.


2.3.6 Additional transaction costs
7KHUHDUHYDULRXVPHDQVWRPLQLPL]HWKH LQIRUPDWLRQ
asymmetries highlighted above in order to reduce the
EDUULHUVIRU60(VVXFKDV
• Accepting proof of quality other than previous


ZRUNHJTXDOLW\\FHUWLƄFDWLRQV


• Encouraging modular designing and breaking up
tenders for IT services correspondingly.


• Concessions on bid and performance guarantee
requirements.


Many of these solutions, which will be discussed in more
detail in chapter 3, impose additional costs on either
the buyer, or the supplier, or both. In the case of certi-
ƄFDWLRQVDVSURRIRITXDOLW\\WKHFRVWVRIREWDLQLQJDQG
PDLQWDLQLQJVXFKFHUWLƄFDWHVDUHERUQHE\\WKHVXSSOLHU,Q
the case of breaking up an IT system into smaller com-
ponents and procuring each component separately, the
costs increase for the buyer who has to manage mul-
tiple contracts instead of (ideally) only one. Furthermore,
technically seasoned staff are required on the buyer’s
VLGHWRHQVXUHWKDWWKHVHSDUDWHSDUWVKDUPRQL]H


2.4 RECONCILING IT SECTOR
PROMOTION WITH VALUE
FOR MONEY IN
PROCUREMENT


The primary aim of public procurement is to obtain
value for money. Procurement entities are tasked with
SURFXULQJ V\\VWHPV WKDW IXOƄO WKH WHFKQLFDO VSHFLƄFD-
tions at the lowest total cost of ownership. This is
best served by having a reasonably large number of
ƄUPVt ORFDODQG LQWHUQDWLRQDOtZLWKH[SHULHQFHDQG
relevant products and services competing in the ten-
dering process. Procurement entities are generally not
entrusted with ensuring that local SMEs submit bids
and are given a chance to deliver.




12 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


7KHDLPRISURPRWLQJORFDO,7ƄUPVPD\\DWƄUVWJODQFH
DSSHDUWREHLQFRQƅLFWZLWKWKHDIRUHPHQWLRQHGJRDO
*LYLQJ SUHIHUHQFH WR ORFDO ƄUPVPD\\ UHTXLUH LPSRV-
LQJEDUULHUVWRIRUHLJQƄUPVZKLFKPD\\UHVXOWLQIHZHU
TXDOLƄHG ƄUPV FRPSHWLQJ IRU WKH WHQGHU 0RUHRYHU
ORFDO ƄUPVPLJKW YLHZ VXFK EDUULHUV WR IRUHLJQ ƄUPV
as an opportunity to provide mediocre products and
services. Such implications would serve neither the
interests of the public sector, nor the general public,
QRU WKRVH RI WKH ORFDO ƄUPV 5HGXFLQJ FRPSHWLWLRQ
DPRQJELGGHUVE\\VHWWLQJXSDUWLƄFLDOEDUULHUVZLOOOLNHO\\
UHGXFH ORFDOƄUPVp LQFHQWLYHV WR LQQRYDWHDQGWREH-
come competitive, reducing their chances to compete
in international markets in the future.


,WLVWKHUHIRUHYLWDOWRDFNQRZOHGJHVXFKFRQƅLFWVRI
interests and to develop strategies suitable for the
VSHFLƄFFLUFXPVWDQFHVZLWKLQHDFKFRXQWU\\&RXQ-
tries where IT industries are underdeveloped may
need to adopt strategies that, for example, require


LQWHUQDWLRQDO ƄUPV WR FROODERUDWH ZLWK ORFDO ƄUPV
instead of strategies that outright exclude foreign
ƄUPV


The goals discussed above may be mutually reinforc-
ing when considering long-term implications. Every
ORFDO ƄUP WKDWZLQV D SXEOLF WHQGHU EHFDXVH RI DG-
justed public procurement policies that encourage
local participation) is one more potential competitor
in future tenders. If such promotional policies are not
LPSOHPHQWHGLQWKHVKRUWWHUPORFDOƄUPVPD\\QHYHU
be able to qualify for more advanced projects in the
future. The public sector would thus be forced to con-
tinue to rely on foreign suppliers in the long run, which
may, among others, also result in sustained higher
costs in future.


7DEOH SUHVHQWV D 6:27 DQDO\\VLV RI WKH PDLQ
strengths, weaknesses, opportunities and threats to
ORFDO ƄUPVp SDUWLFLSDWLRQ LQ SXEOLF SURFXUHPHQW RI ,7
services.


7DEOH 2YHUYLHZRISRWHQWLDOVWUHQJWKVZHDNQHVVHVRSSRUWXQLWLHVDQGWKUHDWVRIORFDO60(VLQSXEOLF
SURFXUHPHQWRI,7VHUYLFHV


6WUHQJWKV 2SSRUWXQLWLHV


Local language skills
Local presence
)OH[LELOLW\\WRELGIRUV\\VWHPVRIORZƂQDQFLDOYDOXH


E-government and e-procurement
3DUWQHULQJZLWKIRUHLJQƂUPV
/RFDOƂUPVDVV\\VWHPLQWHJUDWRUV
Bespoke systems
Collaboration with other enterprises


:HDNQHVVHV 7KUHDWV


Lack of previous experience in public procurement
Lack of means to sustain bid and performance
guarantees
/LPLWHGSURFXUHPHQWFDSDFLWLHVE\\ƂUPV
Focus on low value added activities


Ineffective procurement frameworks and processes (including unsupportive policies,
unclear regulations, lack of public sector coordination)
Inadequate implementation of tendering processes
Limited procurement capacities in the public sector
Technology/vendor lock-in
Lack of IT standards and interoperability frameworks
Lack of modular systems and open e-government architectures


6RXUFHUNCTAD and BMZ.




3. PROCUREMENT


STRATEGIES FOR


PROMOTING THE LOCAL


IT SERVICES SECTOR


KEY MESSAGES
Governments can implement a combination of procurement strategies to promote the local IT services sector, including:


1. Establishing the basics.
• Making sure that public procurement is aligned with IT sector promotion strategies
• Ensuring there is a critical mass of IT-related procurement
• Understanding the current state of the local IT services industry


2. Strengthening the institutional framework.
• Coordinating across the public sector and the industry
• Designating a lead agency to spearhead public procurement for local IT sector development


3. Promoting good procurement practice.
• Establishing transparent and open tender procedures
• Deploying e-procurement systems


4. Limiting market entry to foreign bidders.
• Providing preferential marks for local experience, local language and local presence


5. Mitigating information asymmetries.
• Making concessions on bid and performance guarantee requirements
• Accepting proof of quality other than previous work


3URPRWLQJVRIWZDUHGHVLJQWKDWIDFLOLWDWHVORFDOƂUPVpSDUWLFLSDWLRQ
• Prescribing open standards and interoperability frameworks
• Adopting the modular design of IT systems in the public sector
• Promoting FOSS


3URYLGLQJDZDUHQHVVDQGFDSDFLW\\GHYHORSPHQWIRUORFDOƂUPVDQGSXEOLFVHFWRURIƂFLDOV




14 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


This chapter examines various strategies that gov-
ernments in developing and emerging economies
may adopt to strengthen the local IT services sector
through public procurement of IT services. Needless
to say, all proposed strategies must be balanced and
FXVWRPL]HGGHSHQGLQJRQWKHVSHFLƄFFRXQWU\\pVVLWX-
ation in terms of, for example, its level of institutional
capacity or IT industry sophistication.


3.1 ESTABLISHING THE BASICS
A key requirement to foster the participation of local IT
VHUYLFHVƄUPVLVWRHQVXUHWKDW,7SURFXUHPHQWVWUDWH-
JLHVDUHFRKHUHQWtWKDWLVWKDWWKH\\ƄWZLGHU,7VHFWRU
promotion policies and take into account the country
and sector context.


The following sub-sections propose a set of activities
that policy makers should consider carrying out before
developing and implementing procurement-related IT
sector promotion strategies.


3.1.1 Public procurement as part of IT
sector promotion strategies


A suitable public IT procurement strategy cannot be
developed without taking related strategies into ac-
count. These include, but are not limited to, economic
and social development strategies, high-level IT and
information society strategies, and e-government
strategies. Public procurement strategies should be
aligned with, if not integrated into, these strategies.


Leveraging public procurement is one among many
policy measures that can be applied to promote local
,7VHUYLFHVƄUPV%0=pV0DQXDOIRU,76HFWRU3URPR-
WLRQLGHQWLƄHVƄYHVHWVRILQWHUYHQWLRQPHDVXUHV
for promoting the IT industry (see Box 1).


It is important to understand the role of public procure-
ment in combination with these other policy measures,
such as the promotion of IT networks, human capac-
LW\\GHYHORSPHQWƄQDQFLQJRILQQRYDWLRQRUSURPRWLRQ


%R[ )LYHDUHDVRILQWHUYHQWLRQIRUSURPRWLQJWKH,7LQGXVWU\\


The BMZ IT Sector Promotion Manual and Toolbox outline a strategic approach to IT sector promotion in developing
countries. The methodology is based on a modular approach comprising ƄYHVHWVRILQWHUYHQWLRQPHDVXUHVIRUSUR-
PRWLQJ WKH,7LQGXVWU\\LQGHYHORSLQJFRXQWULHV


1. ,7VWUDWHJ\\GHYHORSPHQWt WREULQJ WRJHWKHUDOO UHOHYDQWVWDNHKROGHUVDQGKHOSGHƄQHSROLFLHVPHDVXUHVDQG
DFWLRQVWRLQFUHDVHWKH,7LQGXVWU\\pVLQWHUQDWLRQDOFRPSHWLWLYHQHVV


2. 7KHSURPRWLRQRI,7FOXVWHUVDQGQHWZRUNV – to support collaboration in the IT sector and the improvement of
V\\VWHPLFFRPSHWLWLYHQHVV


3. 7KHDGYDQFHPHQWRIFDSDFLW\\GHYHORSPHQWDQGWUDLQLQJtWRWDFNOHJHQHUDOGHƄFLHQFLHVLQWKH,7HGXFDWLRQ
DQGWUDLQLQJV\\VWHPLQVXIƄFLHQWFDSDELOLWLHVDQGVNLOOVRQWKHFRPSDQ\\OHYHODQGWKHODFNRILQVWLWXWLRQDOFDSDELOLWLHV
LQWKHSXEOLFVHFWRUWRVXSSRUWWKH,7LQGXVWU\\


4. ([SRUWSURPRWLRQ – including the development and implementation of export-oriented strategies and the devel-
RSPHQWDQGLPSOHPHQWDWLRQRIFRQFUHWHVSHFLDOL]HGH[SRUWSURPRWLRQPHDVXUHVIRUWKHORFDO,7LQGXVWU\\VXFKDV
LQIRUPDWLRQDQGDGYLVRU\\VHUYLFHVRUFOXVWHUPDUNHWLQJDQG


5. 'RPHVWLFPDUNHWGHYHORSPHQW – to open up the growth potential of domestic markets to local IT companies, thus
creating an additional source of income and revenue streams, and ORFDOLQQRYDWLRQ to promote new, IT-related prod-
ucts, services and processes that improve the innovation capacity and competitiveness of other domestic industries.


The manual and the toolbox promote DQ LQWHJUDWHGDSSURDFK for IT sector promotion in developing and emerging
HFRQRPLHVEDVHGRQWKHIROORZLQJWKUHHSLOODUV


• Promoting V\\VWHPLFFRPSHWLWLYHQHVV, where all relevant stakeholders on the three systemic levels (i.e. the so- called
PDFURPHVRDQGPLFUR levels) are included in the design and implementation of IT sector promotion measures.


• The use of a F\\FOLFDOPRGHO where, through iterative development phases, feedback and suggestions from different
stakeholders as well as the results of monitoring and evaluation continuously feed into IT sector promotion measures.


• Using a PRGXODUVWUXFWXUH to allow stakeholders and project teams of IT sector promotion to adjust the sequence
DQGLQWHQVLW\\RIWKHVXSSRUWPHDVXUHVWRWKHVSHFLƄFQHHGVDQGFRQGLWLRQV


&ROODERUDWLRQ LV UHFRJQL]HG DV D FURVVFXWWLQJ HOHPHQW &ROODERUDWLRQ DQG FORVH LQWHUDFWLRQ EHWZHHQ VWDNHKROGHUV
is needed to design and implement viable support measures for the local IT industry, to allow exchange of relevant infor-
mation, knowledge transfer and capacity development.


6RXUFHBMZ (2011).




15CHAPTER 3 : PROCUREMENT STRATEGIES FOR PROMOTING THE LOCAL IT SERVICES SECTOR


it will be necessary to conduct a survey in cooperation
with the private sector, ideally through its associations.
In this regard, GIZ’s IT Industry Barometer can be a
useful tool to gather information on the local IT sector
(see Box 2). A detailed description of how to carry out
an IT company survey is available in BMZ (2011).


3.2 STRENGTHENING
THE INSTITUTIONAL
FRAMEWORK


3.2.1 Coordination across the public
sector and the industry


The public sector’s demand for IT goods and ser-
vices evolves with the innovation cycles in the IT
sector. Existing procurement strategies therefore
need to be regularly updated, based on a dialogue
between the public sector and the IT sector. Both
the domestic as well as the international competi-
tiveness of local IT industries are most effectively
improved if all relevant stakeholders cooperate in
strategy formulation and implementation. In this re-
gard, it is essential that stakeholders on the three
systemic levels – macro, meso and micro – are in-
cluded in the dialogue.


tours to potential export markets. If such measures are
GHHPHGWREHPRUHHIIHFWLYHWKH\\VKRXOGEHSULRULWL]HG


3.1.2 Critical mass of IT-related
procurement


Developing procurement strategies targeting the pro-
PRWLRQRIORFDO,7ƄUPVPDNHVPRUHVHQVHLIDFULWLFDO
mass of tenders in this area is expected. Forecasts
for tenders that include IT services therefore provide
useful information.


3.1.3 Understanding the current state
of the local IT services industry


Before embarking on the development of procure-
ment strategies for the IT sector, policy makers should
analyse the current state of the IT sector in their coun-
WU\\$6:27DQDO\\VLVPD\\EHXVHIXOWRLGHQWLI\\WKHFRUH
strengths and competencies of the local IT services
industry and the type of IT services that it may be
able to provide. This would also address the lack of
awareness of public procurement entities on local ca-
SDELOLWLHVVHH}


Since it is likely that comprehensive and up-to-date
data on the local IT sector are unavailable at this point,


%R[ 7KH,7,QGXVWU\\%DURPHWHU


The IT industry barometer (ITIB) is a tool developed by GIZ to gather and analyse quantitative and qualitative information
on the performance of an IT industry and to identify relevant IT industry trends.


,7,%VXSSRUWV,7VHFWRUSURPRWLRQLQLWLDWLYHVE\\


• Helping to monitor and evaluate the performance of the IT industry.


• Providing accurate statistical information on the IT sector and allowing informed decision-making and better plan-
ning – particularly important for developing and emerging economies where reliable statistics on the IT industry are
often not available.


• Serving as an “early warning system” for the IT industry.


7KHEDURPHWHULVHODERUDWHGEDVHGRQWKHUHVXOWVRIDEXVLQHVVVXUYH\\RI,7ƄUPVFRYHULQJWKHIROORZLQJVXEMHFWV


• General information


• Statistics


• Human resources


• Forecast


• Current issues and comments


The survey is conducted electronically using an online survey tool. The questionnaire is designed to allow for easy and
VZLIWDQVZHULQJE\\,7FRPSDQLHV,QIRUPDWLRQRQLQGLYLGXDOFRPSDQLHVLVNHSWVWULFWO\\FRQƄGHQWLDOVLQFHWKHUHVXOWVRIWKH
survey are only published in aggregated form.


The data collected through the survey are then analysed and used to prepare an IT industry report, which provides con-
FUHWHLQIRUPDWLRQDERXWWKHLQGXVWU\\DQGLGHQWLƄHVUHOHYDQWPDUNHWDQGLQGXVWU\\WUHQGV7KHUHSRUWFRQVWLWXWHVDIRXQGDWLRQ
for the formulation of appropriate support measures for the IT industry.


6RXUFHBMZ (2011).




16 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


• At the PDFUR OHYHO, SXEOLF VHFWRURUJDQL]DWLRQV
should coordinate to set IT and interoperability
standards, pool tenders, and design and
execute the public procurement strategy. Such
RUJDQL]DWLRQV LQFOXGH WKRVH SURFXULQJ ,7 JRRGV
and services at the national, regional and local
OHYHOV RI JRYHUQPHQW WKH JRYHUQPHQW HQWLW\\
responsible for the supervision of the public
DGPLQLVWUDWLRQ DQG WKH PLQLVWU\\ RU DJHQF\\
responsible for the promotion of the IT sector.


• At the PHVR OHYHO, IT industry associations, IT
clusters and chambers of commerce play an
LPSRUWDQW UROH HJ E\\ LQIRUPLQJ ƄUPV DERXW
tenders – thus mitigating the lack of awareness
RIORFDOƄUPVVHHWUDLQLQJWKHPWRUHVSRQG
correctly to tenders, and managing capacity
GHYHORSPHQW SURJUDPV LQFOXGLQJ FHUWLƄFDWLRQ
programs) aimed at developing technical and
PDQDJHPHQW FDSDELOLWLHV DPRQJ ORFDO ƄUPV
0HVR OHYHO RUJDQL]DWLRQV FDQ DOVR KHOS EXLOG
FRQVRUWLD RI ORFDO ,7 ƄUPV WR UHVSRQG WR ODUJH
tenders, or to arrange partnership between
ORFDODQGIRUHLJQƄUPV)XUWKHUPRUHPHVROHYHO
RUJDQL]DWLRQV DUH LQVWUXPHQWDO ZKHQ VXUYH\\LQJ
the local IT sector to determine its strengths and
ZHDNQHVVHV VHH %R[} $Q 81&7$':,76$
survey of 38 national IT/software associations
(UNCTAD 2012a) indicates that two-thirds of the
associations survey their members, and almost
half of them do so at least annually. IT/software
associations are also instrumental in supporting
national ICT policy formulation. A majority of
these associations provide training services but
relatively few (a third of the respondents) have


been involved in providing services leading to
LQWHUQDWLRQDOO\\ UHFRJQL]HG FHUWLƄFDWLRQV VHH
7DEOH}


• At the PLFUROHYHOƄUPVSRWHQWLDOO\\ELGGLQJIRU
public sector contracts require access to tender-
related information and an understanding of IT
public procurement processes and rules. Firms
PD\\ DFWLYHO\\ SDUWLFLSDWH LQ WKH LGHQWLƄFDWLRQ
DQG GHƄQLWLRQ RI ,7 QHHGV RU LQ WKH VKDSLQJ RI
public procurement processes, e.g. by providing
feedback on the experience of such processes.
Governments may assume an active role in
developing capacities of local SMEs, for example
WRXSJUDGHWKHLUVNLOOVRUREWDLQFHUWLƄFDWLRQV


Besides raising awareness, coordination among
stakeholders can also result in a decision to share
the costs incurred in IT sector promotion activities (as
seen above in section 2.3.6). Such costs may be dis-
tributed across several projects over time, and may be
primarily borne by a designated public sector organi-
]DWLRQ RWKHU WKDQ WKHRQH LQYROYHG LQ WKH LPPHGLDWH
procurement), such as the agency responsible for ICT
sector promotion. It may also be partly shouldered by
IT associations.


More formal types of collaboration between public
and private actors, such as public-private partner-
ships (PPPs), have also been used to enable local IT
ƄUPVWRJDLQH[SHULHQFHLQGHOLYHULQJVHUYLFHVWKURXJK
the participation in public sector projects. PPPs are
particularly relevant in the development and admin-
LVWUDWLRQRI ,7 SURJUDPPHV WKDW GXH WR WKHLU VL]H RU
FULWLFDO VLJQLƄFDQFH UHTXLUH LPSRUWDQW FRPPLWPHQWV
from both the public and the private sector. Such
partnerships allow the sharing of risks and rewards.


%R[ ,7SXEOLFSURFXUHPHQWDQGORFDO,7VHFWRUGHYHORSPHQWLQ6LQJDSRUH


7KH*RYHUQPHQWRI6LQJDSRUHKDVHQFRXUDJHGORFDO,7ƄUPVWRGHYHORSVWDWHRIWKHDUWVROXWLRQVIRUYDULRXVJRYHUQPHQW
branches and has later promoted these solutions on an international level through government-to-government partnerships.


,Q WKH6LQJDSRUHJRYHUQPHQWRXWVRXUFHG ,7V\\VWHPVZRUWK}PLOOLRQWRWKHSULYDWHVHFWRUXVLQJD333DS-
SURDFK7KH,7ƄUPVUHWDLQWKHH[FOXVLYHULJKWWRPDQDJHDQGPDLQWDLQWKHVHV\\VWHPVDQGWRUHVHOOWKHH[SHUWLVHJDLQHG
to other countries.


Even very basic systems, such as government email, are implemented through this approach. The government owns the
email content, sets quality of service standards and indicators, engages in independent performance audits, and pays for
the service, while the private sector provider owns the hosting environment, pays for capital and operating costs, and is
responsible for the quality of services. Many other government systems in Singapore operate under similar arrangements
(e.g. the Lifestyle Portal for the National Services and various trade platforms such as TradeXchange).


Examples of companies that were incubated in this way and successfully became international players include Crimison
Logic, IDA International, NCS, novaCITYNETS, and Ecquaria.


6RXUFH 6HDK&KLQ6LRQJ3XEOLFDQG3ULYDWH3DUWQHUVKLS6LQJDSRUHpVH[SHULHQFHKWWSVLWHUHVRXUFHVZRUOGEDQNRUJ
INFORMATIONANDCOMMUNICATIONANDTECHNOLOGIES/Resources/D1S3aP3-JosephTeo.pdf




17CHAPTER 3 : PROCUREMENT STRATEGIES FOR PROMOTING THE LOCAL IT SERVICES SECTOR


The Government of Singapore has encouraged local
IT sector development through the use of PPPs (see
Box 3). However, in developing countries with limited
local capabilities, PPPs may tend to favour larger lo-
cal and foreign enterprises with previous experience in
this type of collaboration.


3.2.2 Designating a public agency to
spearhead public procurement
for local IT sector development.


$QXPEHURISXEOLF VHFWRURUJDQL]DWLRQVDUH LQYROYHG
in the procurement of IT goods and services at the na-
tional, regional, and local levels of government. There
may also be, at all levels, entities responsible for the
oversight of the public administration, for the promotion
of ICTs for development and of the IT sector. Moreover,
rules on public sector procurement at the national level
may not necessarily apply to sub-national levels.


Section 3.2.1 discusses a context in which a wide
QXPEHU RI SXEOLF VHFWRU RUJDQL]DWLRQV SDUWLFLSDWH LQ
public sector procurement, applying different sets of
UXOHV,QVXFKDFRQWH[WFRRUGLQDWLQJWKHVHRUJDQL]D-
tions is crucial to developing and executing strategies
targeting the development of local IT industries. One
SXEOLFVHFWRURUJDQL]DWLRQPD\\EHDVVLJQHGWR IXQF-
tion as the coordinating body. This, however, will only
produce results if coordination processes are well-
governed and transparent. Otherwise, the attempt to
FRRUGLQDWH DFWLYLWLHV DPRQJ SXEOLF VHFWRU RUJDQL]D-
tions may rather lead to unnecessary bureaucracy and
wasteful use of limited resources.


3.3 PROMOTING GOOD
PROCUREMENT
PRACTICES


3.3.1 Implementing transparent and
open tender procedures


Procurement is a government activity that is highly
vulnerable to bribery and corruption due to the com-
SOH[LW\\ RI LWV SURFHVVHV DQG WKH ODUJH ƄQDQFLDO ƅRZV
between the public and private sector (OECD 2005).
Implementing transparent tender procedures can ef-
fectively reduce the risk of fraud and corruption and
SURYLGHDOOƄUPVZLWKPRUHHTXDORSSRUWXQLWLHVWRVXS-
ply the public sector.


Good procurement practice starts at the pre-bidding
stage when the public sector develops the require-


PHQWV IRU WKHXSFRPLQJ WHQGHU8QGXH LQƅXHQFHFDQ
EHH[HUWHGDWWKLVVWDJHE\\ƄUPVZLWKqVSHFLDODFFHVVr
WRSXEOLFVHFWRUGHFLVLRQPDNHUV,QƅXHQFLQJWKHWHFK-
QLFDOVSHFLƄFDWLRQVRIWKHWHQGHURUWKHVHOHFWLRQFULWHULD
is a way to enhance the chances of winning a tender
while appearing to participate in a transparent and fair
tendering process. The use of standards in technical
VSHFLƄFDWLRQV RU WKH GHYHORSPHQW DQG DGRSWLRQ RI
well-designed templates for IT tender documents are
possible ways to remedy such shortcomings.


Attention to good procurement practice is essential up
WRWKHYHU\\HQGRIWKHSURFHVVLHXQWLOWKHƄQDOSD\\-
ment is made to the contractor. Delays in payment by
WKHSXEOLF VHFWRU FDQEH DPDMRU SUREOHP IRU ƄUPV
HVSHFLDOO\\WRWKRVHZKHUHWKHFDVKƅRZIURPFRQWUDFWV
feeds a large share of their operational budget. De-
layed payments can result in severe liquidity problems
DQGOLPLWWKHSDUWLFLSDWLRQRIƄUPVZLWKVPDOOƄQDQFLDO
reserves.


Consequently, developing an end-to-end strategy to
ensure good procurement practice is critical. A num-
ber of internationally established best practices for
public procurement in general can be considered in
WKLVFRQWH[WVHHIRUH[DPSOH2(&':,76$
2004). There are also treaties, laws and conventions
applicable at national, regional and international level
regarding procurement, such as the United Nations
Convention Against Corruption (UNCAC), as well as a
reference legislative text – namely the United Nations
Commission on International Trade Law (UNCITRAL)
Model Law on Procurement of Goods, Construction
and Services.


Table 4 provides an overview of good procurement
practices based on the OECD’s Principles for Integrity
in Public Procurement10DQG:,76$pV%HVW3UDFWLFHV
in Government IT Procurement.11 Some of these
practices are particularly important to ensure a level
SOD\\LQJƄHOGIRUWKHSDUWLFLSDWLRQRIORFDO60(VLQFOXG-
ing timely and open information and communication
RQ ELGV QHXWUDO WHFKQLFDO VSHFLƄFDWLRQV EDVHG RQ
performance requirements, clear selection and award
criteria, detailed feedback to unsuccessful bidders,
and timely payments.


The adoption of good public procurement practices
requires appropriate rules and regulations, as well
as capacity development measures within the public
sector. These should focus on enabling designated
staff to design processes for IT public procurement of
various types of IT goods and services, employing stan-
dards, drawing up and using IT tender templates, etc.




18 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


7DEOH *RRGSURFXUHPHQWSUDFWLFHVDQRYHUYLHZRI2(&'DQG:,76$UHFRPPHQGDWLRQV


3UHWHQGHULQJSKDVH


Needs
assessment


– Reduce information asymmetry with the private sector.
t8VHDYDOLGDWLRQV\\VWHPWKDWLVLQGHSHQGHQWIURPWKHHQWLW\\PDNLQJWKHƂQDOGHFLVLRQ


Planning and
budgeting


– Align procurement with the overall investment decision-making process.
– Establish clear and reasonable time frames for the entire bidding process and apply them consistently.
– Budget realistically.
– Elaborate detailed business cases for larger projects, as these pose higher risks.
t'HƂQHUHVSRQVLELOLWLHVFOHDUO\\
– Ensure separation of duties and authorisation.
t(QVXUHWKDWRIƂFLDOVDUHDZDUHRIWKHWUDQVSDUHQF\\UHTXLUHPHQWV


'HƂQLWLRQRI
requirements


t7DNHSUHFDXWLRQDU\\PHDVXUHVWRSUHYHQWFRQƃLFWRILQWHUHVWFROOXVLRQDQGFRUUXSWLRQ
t0DNHUHTXLUHPHQWVSHFLƂFDWLRQVDYDLODEOHWRDOOSDUWLHV
t(QVXUHWKDWWHFKQLFDOVSHFLƂFDWLRQVDUHQHXWUDOVSHFLƂFDQGEDVHGRQSHUIRUPDQFHUHTXLUHPHQWV(1)
t+DQGOHUHTXHVWVIRULQIRUPDWLRQFRPPHQWVDQGSURSRVDOLQDWLPHO\\DQGHIƂFLHQWPDQQHU
t8VHH[SHULHQFHTXDOLƂHUVSDVWH[SHULHQFHSURYHQFDSDELOLW\\LQDSDUWLFXODUWHFKQRORJ\\VRIWZDUHGHYHORSPHQW


methodology, proven management experience, etc.) as selection criteria.
– Ensure an equitable distribution of risks.
t:HLJKWKHULVNVDQGEHQHƂWVRIKDYLQJDSUHGHWHUPLQHGOLVWRIVXSSOLHUVFDUHIXOO\\EHIRUHPDNLQJDGHFLVLRQWRXVHVXFKDOLVW
– Establish and use one standard of terms and conditions for low risk contracts across all public sector


agencies to avoid proliferation of different sets of terms and conditions.
t'HƂQHVHOHFWLRQDQGDZDUGLQJFULWHULDFOHDUO\\DQGREMHFWLYHO\\(2) and announce them well before the closing of the bid.


Clearly state the economic, social and environmental criteria used to evaluate bidders (e.g. favouring bidders from
economically disadvantaged areas, using environmentally-friendly materials, etc.).


Choice of
procedure


t3URYLGHFOHDUJXLGDQFHLQGHWHUPLQLQJWKHRSWLPDOSURFXUHPHQWVWUDWHJ\\WKDWEDODQFHVDGPLQLVWUDWLYHHIƂFLHQF\\ZLWKIDLU
access for suppliers.


– Take precautionary measures for enhancing integrity where competitive tendering is not required by regulation.
Promote a consistent strategy and limit the abuse of non-competitive tendering on the basis of legal exceptions
(e.g. contract splitting for the sole purpose of achieving low monetary value contracts, use of extreme urgency,
abuse of other exceptions based on a technicality or exclusive rights, and untested continuation of existing contracts).


7HQGHULQJ3KDVH


Invitation
to tender


– Provide information on the procurement opportunities in a consistent manner:
• Publish the notice for the invitation to bid publicly
• Do not disclose sensitive or non-public information contained in bids to competitors
• Set competition levels to avoid inadequate pricing and collusive bidding
t5HTXHVWOLYHWHVWVDQGGHPRQVWUDWLRQVVHOHFWLYHO\\DQGDOORFDWHVXIƂFLHQWWLPH


Evaluation
and award


t3XWPHFKDQLVPVLQSODFHWRDGGUHVVDQGRYHUVHHFRQƃLFWRILQWHUHVWDQGFRUUXSWLRQLQ
• 7KHHYDOXDWLRQSURFHVVPLWLJDWHFRQƃLFWVRILQWHUHVWHJPDNHVXUHWKDWDWOHDVWWZRSHRSOHDOZD\\VDSSURYHDSDUWLFXODU


activity
• 7KHDSSURYDOSURFHVVSXWHIIHFWLYHPHDVXUHVLQSODFHWRHQVXUHVHSDUDWLRQRIƂQDQFLDOFRQWUDFWXDODQGSURMHFWDXWKRULW\\
t(QVXUHVHFXULW\\DQGFRQƂGHQWLDOLW\\RILQIRUPDWLRQVXEPLWWHG
t'HƂQHDQGIROORZDFOHDUSURFHGXUHIRURSHQLQJWKHWHQGHU
– Keep formal records of the whole procedure.
t1RWLI\\WKHVHOHFWHGELGGHUSURPSWO\\DQGLQIRUPDQGRIIHUGHEULHƂQJWRWKHORVLQJELGGHUV
– Set up a formal complaints procedure, including referral to higher authorities and to an independent authority.


3RVWWHQGHULQJSKDVH


Contract
management


– Clarify expectations, roles and responsibilities for the management of the contract.
– Monitor the performance of the contractor to ensure the quality and timing of the process.
– Ensure that subcontractors and partners are chosen in a transparent way and kept accountable.


Order and
payment


– Verify that the receipt of goods/services is in line with expected standards.
t6HSDUDWHGXWLHVDQGRUVXSHUYLVLRQRISXEOLFRIƂFLDOVWRHQFRXUDJHDSSURSULDWHDFFRXQWLQJDQGSD\\PHQWV
– Ensure timely release of funds to make payment against contractual conditions.


1RWH)XQFWLRQDORUSHUIRUPDQFHVSHFLƄFDWLRQVGRQRWVSHFLI\\WKHDFWXDOPHWKRGVSURGXFWVGHVLJQPHWKRGVRIGHYHORSPHQWRU
technologies to be used but rather specify the actual functional performance sought by the procuring entity.


1RWH:,76$LQFOXGHVDOVRLQLWVGHƄQLWLRQRIIDLUFULWHULDq,QSDUWLFXODUFULWHULDPXVWWUHDWIRUHLJQƄUPVWKHVDPHDVQDWLRQDO
FRPSDQLHV”.


6RXUFH81&7$'DQG%0=EDVHGRQ2(&'DQG:,76$




19CHAPTER 3 : PROCUREMENT STRATEGIES FOR PROMOTING THE LOCAL IT SERVICES SECTOR


3.3.2 Deploying e-procurement
systems


(SURFXUHPHQW FRPSULVHV WKH GLJLWL]DWLRQ RI SXEOLF
procurement processes and may include one or more
RIWKHIROORZLQJSURFHVVHV
1. (QRWLƄFDWLRQ WKH SXEOLFDWLRQ RI WHQGHUV DQG


procurement notices on the Internet
2. E-submission, the submission of bids online
3. (DZDUGVWKHƄQDOVHOHFWLRQRIVXSSOLHUVLQFOXGLQJ


e-auctions)
4. E-ordering, the automatic placement of orders online


(including e-catalogues and electronic markets)
5. E-invoicing, the provision of electronic invoices
6. E-payment, the online payment of contracts


(SURFXUHPHQW JRHV EH\\RQG VLPSOH GLJLWL]DWLRQ RI
SURFHVVHV ,W UHTXLUHV WKH UHRUJDQL]DWLRQRIEXVLQHVV
processes and the adaptation of policy, regulatory and
administrative frameworks.


The advantages of e-procurement systems are en-
hanced transparency (transactions12 between public
VHFWRU RUJDQL]DWLRQV DQG WKHLU FRQWUDFWRUV DUH SXE-
OLFL]HG UHGXFHG DGPLQLVWUDWLYH DQG ELGGLQJ FRVWV
WKURXJK VWUHDPOLQLQJ DQG VWDQGDUGL]LQJ SURFXUHPHQW
processes, and reduced overall tendering costs as a
UHVXOWRIPRUHHIƄFLHQWRSHUDWLRQVDQGDODUJHUQXPEHU
of potential contractors (Singer et al, 2009).


7KH EHQHƄWV RI HSURFXUHPHQW IRU WKH SXEOLF VHFWRU
in terms of cost savings have been researched and
documented for some countries. For example, Bik-


VKDSDWKLHWDO VKRZDQG}SHUFHQWFRVW
VDYLQJV UHVSHFWLYHO\\ LQ WKH DQG ƄQDQ-
cial years in the Indian state of Andhra Pradesh due
to an increase in the number of bidders per tender,
and savings of $560,000 a year in tender advertising
IHHV%R[}SURYLGHVH[DPSOHVRI WKHDFKLHYHPHQWV
of the e-procurement systems of Chile and Canada.
7KH FRVW VDYLQJV DQG RWKHU EHQHƄWV UHVXOWLQJ IURP
e-procurement will largely depend on the individual
context.13


Despite its potential advantages, e-procurement is not
yet common, even in developed countries. In Europe,
IRULQVWDQFHHQRWLƄFDWLRQKDVEHHQZLGHO\\GHSOR\\HG
but other more advanced and complex features of e-
procurement services are less prevalent. By the end
RI} OHVVWKDQ}SHUFHQWRISXEOLFSURFXUHPHQW
expenditure of a set of early adopter countries was
conducted electronically (CapGemini et al 2010).


According to the UN-sponsored technical consulta-
tion meeting held in the Republic of Korea (UNDESA
2011), the main obstacles to the diffusion of e-pro-
FXUHPHQWLQGHYHORSLQJFRXQWULHVDUH
• Lack of awareness and capacity building


programmes, including lack of government policies
and legal frameworks and lack of institutional
capacity for public procurement


• Reluctance of procurement agencies to adopt
e-procurement systems


• Immature IT infrastructure for e-commerce and in-
country IT divides


%R[ %HQHƂWVRIHSURFXUHPHQWLQ&KLOHDQG&DQDGD


&KLOH&RPSUD


%\\SXEOLFDJHQFLHVZHUHWUDGLQJPRUHWKDQELOOLRQDQGFRQGXFWLQJDOPRVWKDOID}PLOOLRQWHQGHULQJSURFHVVHV
RYHUWKH,QWHUQHWHDFK\\HDU7KLVJHQHUDWHGPRUHWKDQ}PLOOLRQSXUFKDVHRUGHUVZKLFKJUHDWO\\ LPSURYHGFRQGLWLRQV
RIHIƄFLHQF\\DQGWUDQVSDUHQF\\%XVLQHVVHVKDYHDOVRJDLQHGEHWWHUDFFHVVWRWKHPDUNHWDQGWKHQXPEHURIVXSSOLHUV
doing business with the State has tripled. More than 82,000 businesses place bids and/or are awarded contracts with
WKH6WDWHRQWKH,QWHUQHWHDFK\\HDU0LFURVPDOODQGPHGLXPVL]HGEXVLQHVVHVKDYHEHQHƄWHGWKHPRVWIURPWKLVQHZ
PDUNHWSODFH)LQDOO\\WKHV\\VWHPVPDQDJHGE\\&KLOH&RPSUDVDYHDURXQG}PLOOLRQLQSXEOLFH[SHQGLWXUHHDFK\\HDU


&DQDGD0HU[


The Government of Canada has moved all public procurement on-line to the so-called Merx procurement system. This
V\\VWHPKDVOHGWRVDYLQJVRIDERXW&$'}PLOOLRQD\\HDULQSKRWRFRS\\LQJPDLODQGFRXULHUIHHV0RUHRYHU0HU[KHOSV
UHGXFLQJWKHFRVWVRISURMHFWVE\\DERXW}SHUFHQWDFURVVWKHERDUGZKLOHHQKDQFLQJWKHTXDOLW\\RIVXEPLVVLRQVE\\
facilitating access to opportunities for a larger number of bidders. Furthermore, the approach has encouraged the private
VHFWRUWREHFRPHPRUHFRPSHWLWLYHDQGKDVPDGHWKHELGGLQJRSSRUWXQLWLHVPRUHDFFHVVLEOHWRDOOƄUPVLUUHVSHFWLYHRI
WKHLUVL]H7KH0HU[V\\VWHPKDVEHHQVRVXFFHVVIXOWKDWWKH*RYHUQPHQWIXQGVWKHVXEVFULSWLRQFRVWRIDQ\\&DQDGLDQ
ƄUPDV WKHDGYDQWDJHVRIKDYLQJPRUHVXEVFULEHUVFRPSHWLQJ WRSURYLGHJRRGVDQGVHUYLFHVRXWZHLJK WKHFRVWVRI
VXEVLGL]LQJWKHVHVHUYLFHV


6RXUFHUNCTAD (2011a).




20 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


• /DFN RI FURVVJRYHUQPHQWDO FRRUGLQDWLRQ
GLIƄFXOWLHVLQOHJLVODWLRQDQGPXOWLSOHSODWIRUPV


• Ineffective implementation because of inadequate
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has not been accompanied by procurement reform


• &URVVERUGHU HSURFXUHPHQW EDUULHUV HOHFWURQLF
signatures are recognised only domestically.


Supplier adoption is crucial to the success of e-
procurement systems (Vaidya, 2006). Awareness,
WUDLQLQJ DQG FDSDFLW\\ GHYHORSPHQW VLPSOLƄHG DQG
VWDQGDUGL]HG SURFHGXUHV DQG WKH SURYLVLRQ RI DGYL-
sory services can help local SMEs in submitting bids
on e-procurement platforms.


Demand aggregation – various public sector depart-
ments grouping their purchases together to enjoy
volume discounts offered by suppliers – is occasion-
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by using a full-scale e-procurement system (e.g. Eu-
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VXFKDJJUHJDWLRQ FDQDOVR FUHDWH D VLJQLƄFDQWEDU-
rier to SME participation, since it merges potentially
small contracts – suitable for SMEs – into larger
contracts (see section 2.3 describing the barriers to
SME participation). To alleviate such barriers, some
e-procurement systems facilitate supply aggregation
by enabling SMEs to submit joint bids (Smith 2001,
$UR]DPHQDDQG:HLQVFKHOEDXP


In geographically large countries or those with an un-
reliable postal system, an e-procurement system or,
more simply, the acceptance of bids via e-email, can
save costs for SMEs by eliminating the need to travel
to the location where bids must be submitted.


3.4 LIMITING MARKET ENTRY
FOR FOREIGN BIDDERS


3.4.1 Exclusion of foreign bidders
A straightforward method of ensuring that local IT
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WRH[FOXGHIRUHLJQƄUPVIURPELGGLQJ


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• +DYHDUHJLVWHUHGEXVLQHVVHQWLW\\LQWKHFRXQWU\\
• Are registered in the country and have been


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• Do a certain minimum percentage of value addition
in the country for the project/service in question
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material, labour and resources are sourced and
FRQVXPHGZLWKLQWKHFRXQWU\\DQGRU


• Are majority-owned by nationals.


There are at least two potential barriers for the pub-
lic sector to adopt policies limiting foreign competition
ZKHQWHQGHULQJIRU,7SURGXFWVDQGVHUYLFHV7KHƄUVWLV
OLQNHGWRWKH:RUOG7UDGH2UJDQL]DWLRQ:72$JUHHPHQW
on Government Procurement (GPA14) that countries vol-
untarily become a signatory to and adopt. Any GPA
party offering products or services should be treated in
a manner no less favourable than any other GPA party.
This precludes the ability of a signatory country to grant
domestic preference in public sector procurement over
products, services and suppliers from other GPA parties.


As far as developing countries are concerned, the
limitations imposed by the GPA to provide domestic
preference are negligible. Most developing countries
are not signatories to this agreement – of the 41 nations
that are signatories to the GPA, the only developing and
emerging economies are Armenia, China, Hong Kong
SAR, and the Republic of Korea. Interestingly, several
of these economies have well documented policies of
government-led actions to promote their domestic high
WHFKQRORJ\\VHFWRUV2(&'6LQJK0RUH-
over, not all government procurement is covered by
GPA (only the procuring entities listed in the schedule
DQGRQO\\SURFXUHPHQWVDERYHVSHFLƄHGDPRXQWV


The second barrier with regard to limiting market en-
try for foreign bidders relates to restrictions imposed
by donor agencies funding IT projects in developing
countries. For example, it is common to specify that
only projects below a certain value can qualify for
SXUHO\\GRPHVWLFVRXUFLQJZKHUHRQO\\GRPHVWLFƄUPV
DUH LQYLWHGRUHOLJLEOH WRELG LQ WKH ƄUVWSODFH2WKHU
projects must be open to internationally competitive
bidding, although certain allowances can be made
for domestic suppliers (e.g. allocation of preferential
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limitations, donors sometimes restrict the exclusion of
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Bank rules for the procurement of consultancy services
state that short-listing exclusively domestic consul-
tants is only permitted when it can be demonstrated
WKDWDqVXIƄFLHQWQXPEHURITXDOLƄHGQDWLRQDOƄUPVDUH
available” and the exclusion of foreign bidders is still
“likely to result in proposals with competitive costs”
:RUOG%DQN


Even without formal barriers, mandating purely local
participation should still be done with great care. In




21CHAPTER 3 : PROCUREMENT STRATEGIES FOR PROMOTING THE LOCAL IT SERVICES SECTOR


countries where the local IT sector is under-devel-
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small number of bids, potentially raising the price and
reducing the scope for innovative solutions. In such a
situation, the public sector is unlikely to obtain value
for money. Excluding foreign bidders should therefore
only be considered in a targeted and measured man-
ner, which ensures that neither overall competition nor
WKHYDOXHIRUPRQH\\SULQFLSOHLVMHRSDUGL]HG


3.4.2 Allocation of preferential marks
for local experience, local
language and local presence


A more practical measure to facilitate greater participa-
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ORFDOƄUPV)RUH[DPSOHDFHUWDLQSHUFHQWDJHRIPDUNV
can be allocated for local presence and experience,
and local language capabilities. Bidders with a local
business registration or local partners that add a certain
percentage of value locally15 would receive such marks.
7KH:RUOG%DQNIRUH[DPSOHDOORZVXSWR}SHUFHQW
of total marks to be allocated for local suppliers or bids
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common form of domestic preference is to give local
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WDLQSHUFHQWDJH UDQJHRI WKH LQWHUQDWLRQDO ƄUPpVSULFH
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and the European Investment Bank (2011)).


Domestic preference within internationally competi-
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:KHQFRQGXFWLQJ,7WHQGHUVZLWKVRPHDPRXQWRIOR-
cal preference, international bidders must partner with
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execute the project by themselves. However, they
may also seek partners that are actively involved and
thus add value to the products and services in hand.
$VQRWHGEHIRUHLQFKDSWHUORFDOƄUPVPD\\DOVREHQ-
HƄWIURPNQRZOHGJHWUDQVIHULQVXFKDVFHQDULR


3.5 MITIGATING INFORMATION
ASYMMETRIES


Chapter 2 discussed how certain procurement rules
aimed at mitigating information asymmetries in pro-
curement – such as requirements for performance
guarantees or requirements for previous work of a
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public sector can execute several strategies to avoid
VXFKSHQDOL]DWLRQV


3.5.1 Concessions on bid and
performance guarantee


requirements
As mentioned in chapter 2, the inability to obtain
performance guarantees required in public sector ten-
GHUVLVDNQRZQEDUULHUIRUVPDOOƄUPVWRVXEPLWELGV
One option is for the public sector and industry as-
sociations to create concessionary loan schemes or
commercial insurance products that cover these risks,
WKHUHE\\KHOSLQJORFDOƄUPV


It may also be possible for the public sector to elimi-
nate performance guarantee requirements for tenders
of below a certain threshold value.


3.5.2 Accepting proof of quality
other than previous work


Instead of relying on previous experience in supplying
the public sector to ensure the quality of IT services
EHLQJSURFXUHGSXEOLFVHFWRURUJDQL]DWLRQVFDQUHYHUW
to other quality measures to assess the capability of
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quired services.


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bidder to signal capability through the posses-
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tion schemes are depicted in Table 5. In addition to
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WLRQV DQG TXDOLƄFDWLRQV RI WHDPPHPEHUV FDQ DOVR
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cations are PMP (Project Management Professional),
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vendors, Microsoft, and others.


Another approach to ensure quality is to contract
independent quality assurance. This is useful when
the public sector contractor does not have the nec-
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documents, and to ensure that the deliverables meet
these criteria.


3.6 SOFTWARE DESIGN THAT
FACILITATES LOCAL FIRMS’
PARTICIPATION


Apart from procurement-centric strategies, there are
certain established technology practices that can fa-
FLOLWDWHORFDOƄUPpVSDUWLFLSDWLRQLQWHQGHUV




22 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


3.6.1 Promoting interoperability and
open standards


Interoperability refers to the property of diverse sys-
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WRJHWKHU &DELQHW 2IƄFH ,QWHURSHUDELOLW\\
DPRQJ SXEOLF VHFWRU RUJDQL]DWLRQV *RYHUQPHQWWR
Government) and between public sector and business
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the success of e-government projects (Pardo and Tayi,
:DQJHWDO ,QWHURSHUDELOLW\\ LVDIXQGD-
mental requirement to enable other desired features,
such as modular design of IT systems (see section
3.6.2). Moreover, as discussed in section 2.3.2, the
more open the standards used in public sector IT ten-
ders, the more likely that local SMEs can participate in
these tenders.


Interoperability in public sector IT systems requires
common IT architectures and standards as well as


7DEOH 3URVDQGFRQVRIVHOHFWHGVFKHPHVIRUTXDOLW\\DVVXUDQFHDQGFHUWLƂFDWLRQ


6\\VWHP Pros &RQV


ISO standards
(International
Organization for
Standardization)


• This family of standards is internationally well-known and addresses
systemic management.


• ISO 9001 is one of the most widely used quality standards
• ,62FHUWLƂFDWLRQRIWHQUHTXLUHGLQSULYDWHDQGSXEOLFSURFXUHPHQW
• Applicable to companies from different industries and regardless of their


size
• $GGLWLRQDO,7VSHFLƂFVWDQGDUGVDUHDYDLODEOHHJ,62,62


• ISO 9001 standard is not software-
VSHFLƂF


• ,62FHUWLƂFDWLRQLQYROYHV
substantial investments in terms
of resources


• Can create additional overhead and
slow down processes


CMMI
(Capability Maturity
Model Integration)


• Probably the most renowned standard for the IT industry
• Widely used by IT and software companies around the world
• 'HVLJQHGVSHFLƂFDOO\\IRUWKH,7DQGVRIWZDUHLQGXVWU\\
• 3URYLGHVJXLGDQFHIRUHIƂFLHQWLPSURYHPHQWDFURVVPXOWLSOHSURFHVV


disciplines in an organization.
• Compatible with other methods such as ISO standards, ITIL and Agile
• Continuous improvement of the CMMI model


• Comparatively complex and
demanding quality model which
might overstretch the resources and
capabilities of SMEs


• Requires highly trained employees
to manage the system


• Implementation incurs substantial
costs


ITMark
(of the European
Software Institute)


• Less complex than other standards and therefore easier to implement
• 6SHFLƂFDOO\\GHVLJQHGIRU,7DQGVRIWZDUH60(V
• Relatively cost-effective standard
• &RPELQDWLRQRI&00,,62DQGVTXDUHGPHWKRG
• Provides effective quality management coaching system for SMEs


• Still relatively unknown at the inter-
national level


• Lack of awareness and market
penetration


• Only a small number of companies
FHUWLƂHG


• %HQHƂWVQRWVXIƂFLHQWO\\FRPPXQLFDWHG
within the IT industry


MPS.BR
(Brazilian
Software Process
Improvement
Programme)


• 6SHFLƂFDOO\\GHYHORSHGIRU,760(VLQ%UD]LO
• %DVHGRQWKHVWDQGDUGV,62(,&,62(,&DQG&00,
• Continuous improvement of the standard
• Allows for gradual implementation making it particularly suitable for SMEs
• 3URYLGHVFRVWHIIHFWLYHTXDOLW\\FHUWLƂFDWLRQ
• Based on an integrated approach including marketing of the standard as
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• &XUUHQWO\\FRQƂQHGWRWKH%UD]LOLDQ
market


• Lack of international awareness
and reputation


• Lack of market penetration


ITIL
(IT Infrastructure
Library)


• Well-established and internationally recognized standard for IT service
management


• Maps the entire IT service lifecycle,
• Underpins the ISO/IEC 20000 standard


• 1RRUJDQL]DWLRQDOFHUWLƂFDWLRQ
possible


• Only focused on IT services


6RXUFHUNCTAD (2012a).


VXVWDLQHGVXSSRUWƅDQNHGE\\ORFDOFDSDFLW\\GHYHORS-
ment in these areas. For example, a feasibility study on
the promotion of interoperable IT systems in the public
sector and the reinforcement of SMEs in Senegal con-
cluded that the development of interoperability in the
public sector could only realistically be recommended
as a long-term approach (Brunsiek and Restel, 2011).


3.6.2 Modular design of IT systems in
the public sector


Modularly designed software or systems have proven
to have fewer errors, require less time for implementa-
WLRQ DQG EH OHVV FRVWO\\ WRPDLQWDLQ +DVV XQGDWHG
Sun Microsystems, 2007). Consequently, modularity
has become the norm when designing software sys-
tems.


Systems that have been segregated into distinct
modules can be tendered separately or in groups (as




23CHAPTER 3 : PROCUREMENT STRATEGIES FOR PROMOTING THE LOCAL IT SERVICES SECTOR


enterprise information architecture frameworks, ser-
vice management standards and project management
methodologies. An example of a government-wide
application would be a payment module, to be used in
every application that includes payments to and from
the government. Similarly, the archival system could
EHVWDQGDUGL]HGDQGXVHGE\\DOOSXEOLFVHFWRURUJD-
QL]DWLRQV


The Republic of Korea has developed govern-
ment-wide IT standards and has developed an
open-source-based public sector information ar-
chitecture called eGovFrame. This architecture was
instrumental in stimulating local IT SME development,
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IT investments and the quality of e-government ser-
YLFHVVHH%R[}


However, the economic and technical challenges for
tendering the system in separate modules must also
be considered. From a technical perspective, sepa-
rate modules need to be smoothly integrated. This
requires additional resources (e.g. to contract a third
party to carry out the system integration) as well as the
availability of interoperability standards. Apart from the
complexity of publishing multiple tenders for modular-


opposed to the system as a whole). The separate
tendering of modules provides additional opportuni-
ties for local IT services SMEs to win public contracts
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WKHVHOHFWLRQFULWHULDJLYHQWKDWDWKHUDQJHRIH[SHU-
tise required will be limited to those needed for the
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performance guarantees will be lower.


Modularity should not be limited to individual public
sector projects. Ideally, the overall public sector infor-
mation architecture should be modular, reusable and
open (see Box 5). Such government-wide architecture
would facilitate the participation of SMEs in two ways.
First, it enables the modular design and tender of IT
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they may have fewer resources/experience to design
all the elements of a new system.


$SDUW IURP GHƄQLQJ JRYHUQPHQWZLGH LQWHURSHUDELO-
ity frameworks, governments should, for example,
specify and mandate common security platforms, ap-
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%R[ %HQHƂWVRIKDYLQJJRYHUQPHQWZLGHVWDQGDUGVDQGDUFKLWHFWXUHV


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HQYLURQPHQWRIKHWHURJHQHRXV,7UHVRXUFHVDQGPXOWLSOHRUJDQL]DWLRQDOXQLWVZKLFKDUHXVXDOO\\UHVSRQVLEOHIRUWKHVSHFL-
ƄFDWLRQDQGSURFXUHPHQWRIWKHLU,7V\\VWHPV


Distributed systems rarely use technology from one single vendor, as a single vendor will be unable to provide a solution
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collaborate and their solutions can interoperate in the provision of distributed systems. Such standards will enable users
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• &DQEHIHGHUDWHGDOORZLQJDV\\VWHPWREHFRPELQHGZLWKV\\VWHPVIURPGLIIHUHQWDGPLQLVWUDWLYHRUWHFKQLFDOGRPDLQV
to achieve a single objective.


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resources and interactions, together with provision of fault tolerance that allows the remainder of a distributed system
to continue to operate in the event of failure of some part.


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heterogeneity of supporting software and hardware.


6RXUFH Based on the Reference Model for Open Distributed Processing (ITU-T Rec. X.901 – X.904 or ISO/IEC 10746).




24 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


L]HGV\\VWHPVPDQDJLQJVHSDUDWHWHQGHUV LQVWHDGRI
a single one also adds to the tendering costs. Award-
ing contracts to a single supplier may also reduce
the overall contract cost when compared to multiple
contracts with multiple suppliers. Similarly, standards
such as the eGovFrame may not be fully replicable in
many developing countries given, among others, the
large upfront development costs involved. However,
its philosophy and deployment approach – such as
the use of existing open source solutions and the ef-
forts made to develop the capacity of SMEs – can well
be applied in developing countries.


3.6.3 Free and Open Source Software
(FOSS)


Free and open source software (FOSS) is software for
which the source code is freely available. Just like pro-
prietary software, FOSS comes with user licenses and
relies on IP regulation for protection and legal remedy.
However, FOSS licenses specify certain freedoms to use,


copy, study, modify and redistribute the software.16 Such
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without having to pay a licence fee, provide governments
LQGHYHORSLQJFRXQWULHVZLWKRSSRUWXQLWLHVWR


• Reduce dependence on proprietary technologies
and its vendors, e.g. with regard to future updates
as well as to maintenance and adaptation of the
software to local needs. Proprietary technologies
may shield its vendors from competition. In contrast,
reliance on FOSS enables more companies to
supply products and related services.


• Lower costs and increase local value creation. In
SXEOLF VHFWRU RUJDQL]DWLRQV ZLWK D ODUJH QXPEHU
of users, the total cost of licenses for proprietary
software can be considerable and, in a developing-
country context, such license fees are often paid
to foreign companies. FOSS is not free of cost
– although it entails no licensing fees, services
IRU WKH GHYHORSPHQW FXVWRPL]DWLRQ LQVWDOODWLRQ
maintenance and support must still be procured.


%R[ 5HSXEOLFRI.RUHDpVH*RY)UDPHDQHJRYHUQPHQWDUFKLWHFWXUHWKDWVWLPXODWHVORFDO,7GHYHORSPHQW


In the Republic of Korea, a government-wide standard framework, eGovFrame, has stimulated the growth of local IT
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to prevent repeated development of the same functions among different government systems, 67 e-government projects
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2SHQQHVVLVDFRUHHOHPHQWRIWKHGHVLJQRIH*RY)UDPHDQGIROORZVIRXUPDMRUDSSURDFKHV


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selected for use in eGovFrame, which provides common modules and standard templates to developers and also
serves as a platform for developing common functions.


• 2SHQSURFHVVHVWKHGHYHORSPHQWSURFHVVUHƅHFWHGLQSXWVIURPRYHUVWDNHKROGHUV


• 2SHQRXWSXWVWKHVRXUFHFRGHDQGRWKHURXWSXWVDUHDYDLODEOHRQOLQH


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As a result of this strategy, the participation by SMEs in the public procurement of IT services has increased. Since its
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HQWHUSULVHVRIDOOVL]HV


7KHHVWDEOLVKPHQWRIDVWDQGDUGL]HGDQGLQWHURSHUDEOHIUDPHZRUNDQGWKHUHXVDELOLW\\RIFRPSRQHQWVKDYHOHGWRVLJQLƄ-
cant cost savings. From 2009 to January 2012, the eGovFrame was used in over 152 e-government projects and, by
WKHHQGRIQHDUO\\}PLOOLRQKDGEHHQVDYHG,QDGGLWLRQ.RUHDpVH[SRUWVRIHJRYHUQPHQWVROXWLRQVKDYHZLGHO\\
EHQHƄWHGIURP.RUHDpVH[SHULHQFHDQGH[FHHGHG}}PLOOLRQLQ


6RXUFH www.egovframe.go.kr, UNCTAD (2012a), Korea IT Times (2012).




25CHAPTER 3 : PROCUREMENT STRATEGIES FOR PROMOTING THE LOCAL IT SERVICES SECTOR


However, such services can be sourced locally, if
available.


• Develop their human capital since the collaborative
production process of FOSS encourages local
learning.


• Address concerns related to national security.


Thus, the adoption of FOSS by the public sector offers
greater potential for local SMEs to participate in public
procurement. Moreover, if governments design systems
that are modular, it is more likely that FOSS applications
are already available and ready for deployment, or that
DYDLODEOHDSSOLFDWLRQVFDQEHFXVWRPL]HGZLWKUHDVRQ-
DEOHHIIRUW7KLVPD\\JLYHORFDOƄUPVDJUHDWHUFKDQFHRI
competing with foreign suppliers.


Governments have followed different strategies re-
garding the use of FOSS (see UNCTAD 2004 and
D 'HVSLWH WKH EHQHƄWV RI )266PDQ\\ SXEOLF
VHFWRURUJDQL]DWLRQV LQGHYHORSLQJFRXQWULHV VWLOO UHO\\
RQSURSULHWDU\\VRIWZDUH7KHPDLQUHDVRQVIRUWKLVDUH


• Familiarity with proprietary software.
• 3URFXULQJHQWLWLHVLQSXEOLFVHFWRURUJDQL]DWLRQVIHHO


more comfortable opting for branded proprietary
software produced by vendors that offer training,
maintenance and support along with its software
licenses.


• The transition to FOSS potentially incurs new costs
in the short-term.


• There may also be concerns regarding the
interoperability between FOSS and existing
proprietary systems.


• Local capacity on FOSS may be limited, because
IT-related capacity development – from basic
computer literacy to higher education – has in the
past mainly focused on proprietary technologies.


Taking all these arguments into account, the wider use
of FOSS in the public sector needs to be accompanied
by supporting measures, such as the development
of relevant skills and capabilities in the IT sector (as
was the case in the Republic of Korea). Such sup-
port measures, which go beyond the mission of
SXEOLFSURFXUHPHQWRIƄFHVPD\\UHTXLUHDFRQFHUWHG
and coordinated effort by different public institutions
(e.g. Ministry of Education or IT promotion agencies),
universities and training institutions, and the local IT
LQGXVWU\\WRSURYLGHDQGƄQDQFH)266WUDLQLQJ


During the past decade, both developed and devel-
RSLQJ FRXQWULHV KDYH LQYHVWHG UHVRXUFHV LQ GHƄQLQJ
and implementing an enabling environment for FOSS.


Efforts have been made towards leveling the playing
ƄHOGIRU)266E\\YDULRXVJRYHUQPHQWV)RUH[DPSOH
Malaysia has adopted a comprehensive, long-term
program for evolving a parallel open software eco-
system. This effort has helped the Government move
VLJQLƄFDQWO\\ WRZDUGV VHOIUHOLDQFH 7KH DSSURDFK WR
FOSS needs to be adapted on a case-by-case basis
LQDFFRUGDQFHZLWKWKHVSHFLƄFVRFLDOHFRQRPLFDQG
political situation (UNCTAD 2012a).


3.7 AWARENESS RAISING
AND CAPACITY
DEVELOPMENT FOR
LOCAL FIRMS AND
PUBLIC SECTOR
OFFICIALS


Increasing awareness among local SMEs about the
opportunity that may exist in public procurement and
IRVWHULQJJUHDWHUXQGHUVWDQGLQJDPRQJSXEOLFRIƄFLDOV
DERXW WKH SRWHQWLDO RI ORFDO ƄUPV LV D EDVLF VWHS WR
promoting local IT sector development (see section
,QDGGLWLRQVSHFLƄFFDSDFLW\\GHYHORSPHQWHI-
IRUWVDGGUHVVHGWRORFDO60(VDQGSXEOLFRIƄFLDOVDUH
also required.


A common barrier to potential SME bidders is the of-
ten burdensome procedures that have to be complied
with when responding to public sector tenders (see
section 2.3.3). Tender documents tend to be exten-
sive and complex, and rules about tender submission
are not always intuitive. Providing information – ideally
in cooperation with IT-related associations – on how
to navigate through the bidding process and how to
complete the documentation could reduce bid rejec-
tion due to technicalities.


(TXDOO\\ LPSRUWDQW IRU GHYHORSLQJ ORFDO ƄUP FDSDFLW\\
LVWUDLQLQJSXEOLFRIƄFHUVLQYROYHGLQSURFXUHPHQWVR
that their actions are not only aligned to local IT sector
promotion strategies, but also to enable them to de-
sign and carry out tenders in ways that avoid erecting
XQQHFHVVDU\\ EDUULHUV WR ORFDO ƄUPSDUWLFLSDWLRQ3UR-
curement managers often lack IT sector-related skills
and thus cannot deal with the dynamic requirements
of IT procurement. The balance between securing
the best value for money (again, the core principle in
public procurement) and designing procurement pro-
FHVVHVLQVXFKDZD\\WKDWORFDO,7ƄUPVFDQSDUWLFLSDWH
often requires a unique approach to procurement.


Next, the seven sets of strategies described in this
chapter are analysed in Chapter 4 with respect to their
XVHLQWKUHHFRXQWULHV.HQ\\D6HQHJDODQG6UL/DQND






4. COUNTRY


EXPERIENCES:


THREE CASE STUDIES


KEY MESSAGES


.HQ\\D6HQHJDODQG6UL/DQNDKDYHOHYHUDJHGSXEOLFSURFXUHPHQWWRYDU\\LQJGHJUHHVWRSURPRWHORFDO,7VHUYLFHVƂUPV


In Sri Lanka, the ICT Agency (the agency responsible for large e-government programmes) has stimulated local IT SMEs development by
establishing a framework of transparent and competitive tender procedures, and using a wide range of public procurement strategies and
WRROV)RULQVWDQFHE\\SURYLGLQJWDUJHWHGSUHIHUHQWLDOPDUNVWRORFDOƂUPVLWKDVHQFRXUDJHGMRLQWYHQWXUHVEHWZHHQORFDODQGLQWHUQDWLRQDO
HQWHUSULVHVDQGSURPRWHGWHFKQRORJLFDOFDSDFLW\\GHYHORSPHQWDPRQJORFDOƂUPV


,Q6HQHJDOWKHSROLF\\DQGOHJDOHQYLURQPHQWWRVXSSRUWORFDO,7ƂUPVpSDUWLFLSDWLRQLQSXEOLFSURFXUHPHQWDSSHDUVWREHLQSODFH+RZHYHU
practical results have so far been modest. There is scope for making procurement procedures more transparent (e.g. by improving the techni-
cal content of tender documents and by providing feedback on the tender process). Senegal has not yet adopted strategies to bridge informa-
tion asymmetries, use best practice software design or provide training to local SMEs.


Kenya has seen limited progress in involving the local IT sector in public procurement. The existing policy framework is favourable to the
promotion of SME participation but focuses in particular on supporting export-oriented IT-enabled services. Sound and transparent public
procurement practices are only partially implemented. As in the case of Senegal, strategies to bridge information asymmetries or to use best
practices in software design are not yet in place.




28 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


This chapter examines three countries that have
made efforts to promote and develop their local ICT
sector. In-depth case studies of Kenya, Senegal, and
Sri Lanka are reviewed to identify ground-level reali-
ties, successes and failures of using procurement as a
strategic tool in this context.


Kenya, Senegal and Sri Lanka were selected on the
basis of their relatively developed local ICT sectors,
geographic representation, and/or UNCTAD and GIZ
existing experience in the countries. The case stud-
ies provided an opportunity to conduct a reality check
from concrete experiences related to the use of public
procurement as a tool to strengthen the ICT sector,
but do not necessarily represent best practice.


In the cases of Kenya and Sri Lanka, in-depth quali-
WDWLYHLQWHUYLHZVZHUHKHOGGXULQJƄHOGYLVLWVZLWKNH\\
stakeholders. The Senegal case draws on recent work
commissioned by GIZ on behalf of BMZ in the country
(Brunsiek and Restel, 2011) and on an analysis of ex-
isting documents. Annex II lists the people interviewed
for each case study.


Section 4.1 presents an overview of the socioeconomic
context, the local ICT market and sector characteris-
tics, and ICT use and procurement in the public sector
in the three countries. Sections 4.2 to 4.4 present a
brief analysis of the extent to which the seven broad
strategies described in chapter 3 have been applied
in each country. A more detailed examination of the
national ICT market and sector characteristics and
of how these strategies have been used in the three
countries is provided in Annex I. The chapter con-
cludes with a summary of the case studies.


7DEOH 6HOHFWHGVRFLRHFRQRPLFLQGLFDWRUVIRU.HQ\\D6HQHJDODQG6UL/DQND


,QGLFDWRU .HQ\\D 6HQHJDO 6UL/DQND


Population (2011) }PLOOLRQ }PLOOLRQ }PLOOLRQ
GPD per capita (PPP, $) (2011) $ 1'981 $ 5'620
GPD per capita (current $) (2011) $ 1'034 $ 2'400
GDP growth 2005-2010, CAGR2 4.6% 3.4 % 6.4%


Adult literacy rate (2011) 50% 92%
Sectoral composition of the economy
as % of GDP (2011)


55% services
25% agriculture
20% industry


60% services
DJULFXOWXUH
22% industry


58% services
13% agriculture
29% industry


Ranking in World Bank’s 2012 Doing Business survey
(out of 183 countries)1


109 154 89


Ranking in Transparency International 2011
Corruption Perception Index1 (out of 182 countries)


154 112 86


4.1 OVERALL CONTEXT
6RFLRHFRQRPLFFRQWH[W


A country’s social, economic and political situation
provides the context in which the private sector op-
erates, and has an impact on the successful ultimate
ability of certain strategies to be successfully applied.
Table 6 gives an overview of key socioeconomic indi-
FDWRUV2XWRIWKHWKUHHFRXQWULHV6UL/DQNDEHQHƄWV
from a more favourable socioeconomic context, with
a higher GDP per capita, higher literacy rate and a
somewhat lower perceived incidence of corruption.
Kenya and Senegal are similar in terms of GDP per
FDSLWD DQG ERWK DUH VLJQLƄFDQW SOD\\HUV LQ WHUPV RI
economic activity) in their respective regions.


,&7PDUNHWDQGVHFWRUFKDUDFWHULVWLFV


Market estimates suggest that ICT spending in the
three countries is comparable in volume. Kenya and
Sri Lanka spent approximately $3.1 billion on ICT
goods and services in 2011, and Senegal slightly
less ($2.6 billion) (Table 7). The bulk of this expendi-
ture was for hardware and communications, whereas
computer software and information services generally
UHSUHVHQWHGOHVVWKDQ}SHUFHQWRIWRWDO,&7VSHQG-
LQJUDQJLQJIURP}SHUFHQWLQ.HQ\\DWRRQO\\}SHU
cent in Sri Lanka.


7KHUHDUHOLPLWHGRIƄFLDOGDWDRQWKHVL]HDQGFRPSR-
sition of the ICT sector in the countries concerned.
1RQHRI WKHFRXQWULHVKDVDQ\\VLJQLƄFDQWSURGXFWLRQ
or exports of ICT goods. According to UNCTAD statis-
tics,17 the export of ICT goods corresponded to about
RQH}SHUFHQWRUOHVVRIWRWDOPHUFKDQGLVHH[SRUWVLQ


1 Lower numbers indicate a better ranking.
2 Compound Annual Growth Rate
6RXUFH81&7$'DQG%0=EDVHGRQ:RUOG%DQN8QFWDGVWDW7UDQVSDUHQF\\,QWHUQDWLRQDODQGLQGLYLGXDOFRXQWU\\JRYHUQPHQWSXEOLFDWLRQV




29CHAPTER 4 : COUNTRY EXPERIENCES: THREE CASE STUDIES


%R[ (*RYHUQPHQW'HYHORSPHQW,QGH[


The United Nations E-Government Survey 2012 assesses the state of e-government in 190 countries. Its E-Government
Development Index (EGDI) measures the enthusiasm and capacity of national administrations to deliver electronic public
services. It is based on a survey of the online presence of all 193 Member States, which assesses the technical features
RIQDWLRQDOZHEVLWHVDVZHOODVHJRYHUQPHQWSROLFLHVDQGVWUDWHJLHVDSSOLHGLQJHQHUDODQGLQVSHFLƄFVHFWRUVIRUWKH
delivery of services.


7KH(*',LVDFRPSRVLWHLQGH[RIWKHPRVWLPSRUWDQWGLPHQVLRQVRIHJRYHUQPHQWVFRSHDQGTXDOLW\\RIRQOLQHVHUYLFHV
development status of telecommunication infrastructure, and inherent human capital. On the Online Service Index, which
assesses the scope and quality of e-government services, Kenya ranks slightly better than Senegal and Sri Lanka.


According to the EGDI 2012 (see Box table 1), Kenya and Sri Lanka display similar levels of willingness and capacity to
use ICT to deliver public services, while Senegal lags particularly due to weaknesses in human capital (lower literacy and
educational enrolment ratios).


6RXUFH UNCTAD and BMZ based on United Nations (2012).


7DEOH 6SHQGLQJDQGH[SRUWRULHQWDWLRQRIFRPSXWHUVRIWZDUHDQGVHUYLFHV


.HQ\\D 6HQHJDO 6UL/DQND


29(5$//5$1.,1*RXWRIFRXQWULHV 119 163 115


2QOLQH6HUYLFH,QGH[ – scope and quality of online services 0.431 0.346 0.379


Stage I Emerging information services: Information on public policy,
regulations, documents and links to other departments is provided.
Easy access to current and archived information.


100% 92%


Stage II Enhanced information services: Enhanced one-way
or simple two-way Government-to-citizen communication
(e.g. downloadable forms). Audio/ video capabilities offered.
Multilingual sites.


62% 31% 48%


Stage III Transactional services: Two-way communication with
their citizens, incl. requesting/receiving inputs on public initiatives.
6RPHHDXWKHQWLFDWLRQLVUHTXLUHG3URFHVVQRQƂQDQFLDO
WUDQVDFWLRQVHJHYRWLQJGRZQXSORDGLQJIRUPVƂOLQJWD[HV
RUDSSO\\LQJIRUFHUWLƂFDWHVDVZHOODVƂQDQFLDOWUDQVDFWLRQV


12% 13%


Stage IV Connected services: Proactive request of information
and opinions from citizens. E-services cut across the public
institutions in a seamless manner. Integrated applications.
Citizen-centric approach provides tailor-made services.
Citizens empowered to have a voice in decision-making.


28% 36% 29%


,QIUDVWUXFWXUH,QGH[– development status of telecommunication
infrastructure 0.121 0.128 0.192


+XPDQ&DSLWDO,QGH[– inherent human capital 0.711 0.327 0.736


Total ICT
VSHQGLQJ


}PLOOLRQ
LQFOXGHV


FRPPXQLFDWLRQV
KDUGZDUHDQGFRPSXWHU
VRIWZDUHDQGVHUYLFHV


&RPSXWHUVRIWZDUH
DQGVHUYLFHVVSHQGLQJ
}PLOOLRQ


&RPSXWHUVRIWZDUHDQGLQIRUPDWLRQ
VHUYLFHVH[SRUWV
}PLOOLRQ


Total $VRIWRWDO,&7VSHQGLQJ Total
5DWLRWR&RPSXWHU
VRIWZDUHDQG
VHUYLFHVVSHQGLQJ


$V
RI*'3


Kenya p 295 9.3 0 0.00 <0.01


Senegal p 6 0.08 <0.01


Sri Lanka p 56 1.8 265 0.6


6RXUFH81&7$'DQG%0=EDVHGRQ:,76$,+6*OREDO,QVLJKW:72


%R[WDEOH (*RYHUQPHQW'HYHORSPHQW,QGH[




30 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


6UL/DQNDLVWKHRQO\\FRXQWU\\ZLWKVL]HDEOHH[-
SRUWVRIVRIWZDUHDQGLQIRUPDWLRQVHUYLFHV7DEOH}
,Q6UL/DQNDpV ,&7VHFWRUFRQWULEXWHG}SHU
cent to the GDP (Central Bank of Sri Lanka 2010).


,&7XVHDQGSURFXUHPHQWLQWKHSXEOLFVHFWRU


Kenya, Senegal and Sri Lanka have all adopted na-
tional ICT strategies to increase the use of ICTs in the
public sector. Moreover, they have implemented, to
varying extents, a range of e-government programmes
VHH%R[}7KHVHVWUDWHJLHVDQGSURJUDPPHVKDYH
fostered increased demand for ICT goods and ser-
vices by the public sector.


4.2 KENYA
In Kenya, public procurement is not part of ICT sec-
WRU SURPRWLRQ VWUDWHJLHV :KLOH WKH SURPRWLRQ RI D
local ICT sector, in particular the export-oriented ITES,
is a strategic national policy goal, the role of public
procurement as a means to support this aim has not
been explicitly considered.


The number of existing and planned e-government
deployments suggests that there is a window of op-
portunity to leverage public sector procurement for the
development of the local IT services industry. Donor
countries can play a crucial role in this context given their
SDUWLFLSDWLRQLQWKHƄQDQFLQJRIHJRYHUQPHQWLQLWLDWLYHV


Two key factors help explain why this has not happened
yet. First, coordination across the public sector in is-
sues regarding procurement is inadequate. The current
OHJDO IUDPHZRUN HVWDEOLVKHVD IXOO\\ GHFHQWUDOL]HGSUR-
curement process and leaves public procurement to
the discretion of various tender committees and pro-
curement units. At the institutional level, there has been
limited interaction between the key procurement entities
like the Public Procurement Oversight Authority (PPOA)
and relevant ICT bodies. Second, coordination with
the IT services industry is non-existent. Mutual mistrust
between public procuring entities and SMEs is wide-
spread. Procurement entities have limited awareness of
the current capabilities of the local IT services industry
and SMEs perceive the public procurement market as
GLIƄFXOWWRSHQHWUDWHGXHWRFRUUXSWLRQDQGUHGWDSH1R
public agency spearheads public procurement for local
IT sector development in Kenya.


Kenya has enacted legislation and regulations with
WKH DLP RI HVWDEOLVKLQJ VRXQG DQG HIƄFLHQW SXEOLF
procurement systems that ensure value for money,
HIƄFLHQF\\LQVHUYLFHGHOLYHU\\DQGWUDQVSDUHQF\\ZKLOH
at the same time promote the participation of lo-


cal SMEs. However, the positive impact of these
regulations has so far been limited. The implemen-
tation of sound procurement systems has been
inconsistent. For example, delays in procurement
processes, including payment, are hampering SME
participation. A number of actions have helped, or
are planned to help, enhance the implementation of
sound procurement systems (e.g. a manual on tech-
QLFDO VSHFLƄFDWLRQV DQG D WHPSODWH IRU ,&7 WHQGHUV
have been prepared), but, without greater human
resources capacities in procurement departments,
WKHVHPD\\QRWEH VXIƄFLHQW WR OHYHUDJHSXEOLF SUR-
FXUHPHQWIRUORFDO,7ƄUPVGHYHORSPHQW


Kenya has no e-procurement system. A planned e-
procurement module is yet to be implemented, as part
of the new Integrated Financial Management Informa-
tion System (IFMIS) currently being revised.


The provisions available under the Public Procurement
and Disposal Act (PPDA) to provide preference to lo-
cal SMEs are not being fully exploited, largely due to
D ODFNRIDZDUHQHVVDPRQJSXEOLFSURFXUHPHQWRIƄ-
FLDOVRQWKHVHƅH[LELOLWLHV*XDUDQWHHUHTXLUHPHQWVFDQ
be used at the discretion of the procuring entity but
interviews suggested that concessions on guarantee
UHTXLUHPHQWVDUHQRWEHLQJPDGH4XDOLW\\FHUWLƄFDWLRQV
are not used as proof of quality other than previous
ZRUN*LYHQWKH LQVLJQLƄFDQWXSWDNHRI IRUPDOTXDOLW\\
FHUWLƄFDWLRQV E\\ ,7 VHUYLFHV ƄUPV WKHLU DFFHSWDQFH
would have limited value.


Current public sector software design does not facili-
WDWH WKHSDUWLFLSDWLRQRI ORFDO ,7VHUYLFHVƄUPV LQSXEOLF
procurement. Moreover, the country does not have a
comprehensive e-government interoperability framework.
:KLOH WKH H*RYHUQPHQW 'LUHFWRUDWH KDV WDNHQ VRPH
steps to adopt modular architecture for its shared ser-
vices, there is no systematic approach to modular design
LQHJRYHUQPHQW.HQ\\DKDVQRWKDGDQRIƄFLDOSROLF\\VXS-
porting FOSS. Still, in September 2012 the e-Government
Directorate indicated its intention to progressively migrate
its IT operations to FOSS. Vendor lock-in, widespread
presence of proprietary solutions, and lack of adequate
human capacity currently limit the uptake of FOSS.


Capacity building is available for public procurement
RIƄFLDOVEXW LV QRW VXIƄFLHQW 7KH.HQ\\DQ ,QVWLWXWHRI
Supplies Management provides training and certi-
ƄFDWLRQ WR SXEOLF RIƄFLDOV DQG LW HQYLVDJHV SURYLGLQJ
training for SMEs and raising awareness on public
procurement provisions. However, lack of funding and
inadequate coordination have limited the reach of the
capacity development activities.




31CHAPTER 4 : COUNTRY EXPERIENCES: THREE CASE STUDIES


4.3 SENEGAL
National policies in Senegal promote ICTs both as a
key economic sector as well as a tool for improving
the functioning of the public administration and for fa-
cilitating access to public services.


Senegal has a critical mass of IT-related public pro-
curement. A number of e-government projects have
EHHQLPSOHPHQWHGDQGDVLJQLƄFDQWQXPEHURIWKHVH
SURMHFWV DUH ƄQDQFHG E\\ LQWHUQDWLRQDO GRQRUV:KLOH
ORFDOƄUPVDUHHQFRXUDJHGWRSDUWLFLSDWHLQQDWLRQDOH
government projects, most donor-funded projects are
DZDUGHGWRLQWHUQDWLRQDOƄUPV


:LWKWKHVXSSRUWRIWKH6HQHJDOHVH*HUPDQ60(&RP-
petitiveness Programme, the public administration has
conducted a mapping of the ICT sector in Senegal.
0RUHRYHUSXEOLFRIƄFLDOVSDUWLFLSDWHLQDQRQJRLQJGLD-
logue with IT companies in collaboration with the industry
association, OPTIC. At the same time, there is limited co-
ordination among public institutions involved in IT-related
procurement as public entities are independent in the
way they acquire related goods and services and the ICT
policy and public procurement policy are not linked.


No agency is at present spearheading public procure-
PHQWIRUORFDO,7VHFWRUGHYHORSPHQW:KLOHWKH6WDWH
Agency for Informatics (ADIE) is responsible for the na-
tional e-government strategy, the automation of public
sector institutions and the development of an e-gov-
ernment architecture and interoperability framework,
it does not coordinate public IT procurement. There is
only limited coordination between the Central Depart-
ment for Public Procurement (DCMP) and ADIE.


Senegal has established sound policy, institutional
and legislative frameworks for public procurement that
include various provisions for promoting the participa-
tion of local SMEs. These provisions include measures
to break down large tenders, the allocation of prefer-
ential marks for local presence, foregoing guarantee
requirements for tenders under $100,000 or for intel-
lectual services tenders, and a requirement to publish
tenders online and to inform rejected candidates.


Notwithstanding these provisions, the participation of
local SMEs in the public procurement system has so
IDUEHHQOLPLWHG0DLQEDUULHUVLQFOXGH


• Complex legislation, where procedures and
provisions are distributed over different laws and
regulations.


• Prerequisites for bidding, such as evidence of at
least three years’ experience, tender guarantees in


the case of tenders for ICT goods, or the need to
purchase tender documents.


• 8QFOHDU WHFKQLFDO VSHFLƄFDWLRQV WKDW SUHYHQW WKH
submission of a competitive bid.


• Partial online publication of public tenders.
• Limited feedback on tender evaluation outcomes.


Current software design practices do not facilitate
WKHSDUWLFLSDWLRQRI ORFDO ƄUPV 7KH ODFNRI FRKHUHQW
and consistent guidelines for e-government-related
projects on the part of the Government as well as the
ODFNRIFRRUGLQDWLRQDPRQJGRQRURUJDQL]DWLRQVKDV
resulted in the purchase of heterogeneous IT systems
ZLWK OLPLWHG LQWHURSHUDELOLW\\ :KLOH WKH *RYHUQPHQW
has taken a series of actions to promote an interoper-
DELOLW\\DQGVWDQGDUGVIUDPHZRUNWKHODFNRIƄQDQFLDO
resources and technical capabilities limits its actual
deployment. The use of modular design of IT systems
in the public sector, while encouraged by the Govern-
ment, is not well documented.


There is a lack of adoption of FOSS by public insti-
tutions and an absence of a critical mass of FOSS
developers in the public sector, even if ADIE has set
an example by using FOSS for its operations, and uni-
versities encourage the use of FOSS.


The Government has an annual training plan for ca-
pacity building in public procurement. However,
interviews with stakeholders indicate capacity weak-
nesses among stakeholders in regard to public
procurement of IT services. In cooperation with Ger-
many (and possibly other donors), a training course for
JRYHUQPHQWRIƄFLDOVLQYROYHGLQSXEOLFSURFXUHPHQWLV
EHLQJSODQQHGWRLPSURYHWKHWHFKQLFDOVSHFLƄFDWLRQV
of IT tenders.


4.4 SRI LANKA
The Government of Sri Lanka considers public
procurement as part of IT sector promotion strate-
gies, particularly in the context of the e-Sri Lanka
Initiative, a large ICT-enabled development program
started in 2003. The public procurement linked to
WKLVLQLWLDWLYHKDVHQDEOHGVLJQLƄFDQWSDUWLFLSDWLRQRI
ORFDO,7ƄUPV7KHH6UL/DQND,QLWLDWLYHDOVRLQFOXGHV
a Private Sector Development Program, although it
mainly focuses on promoting export-oriented soft-
ZDUHƄUPV


Sri Lanka has a critical mass of IT-related procurement.
$VSDUWRI WKHH6UL/DQND ,QLWLDWLYHRYHU}PLOOLRQ
have been disbursed since 2003 in the e-Government




32 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


Program implemented by the ICT Agency (ICTA). The
program includes a number of projects for automating
public sector processes, for creating large data re-
positories (e.g. ePopulation Register, Land Registry),
as well as a broadband network that connects public
VHFWRURUJDQL]DWLRQV,QWHUQDWLRQDOGRQRUVLQSDUWLFX-
ODUWKH:RUOG%DQNKDYHSOD\\HGDNH\\UROHLQƄQDQFLQJ
WKLV DQGRWKHU SXEOLF SURJUDPV:KLOH ,&7$PD\\EH
the single largest buyer of ICT goods and services, it
is not the only one. Sri Lanka’s public administration
also procures related goods and services outside the
e-Sri Lanka Initiative.


The public administration in Sri Lanka has made con-
crete efforts to understand the current state of the
local IT services industry and coordinate with the IT
sector. Surveys and publications on the sector and
its workforce are available and the public sector has
formal and informal interactions with multiple industry
associations.


ICTA has spearheaded public procurement for local
IT sector development. As a single agency handling a
large volume of e-Government projects and endowed
with an overarching mandate, ICTA has been able to
take a visible and leading role in promoting the develop-
PHQWDQGLQWHUQDWLRQDOL]DWLRQRIORFDO,7VHUYLFHVƄUPV


On the other hand, coordination across different parts
of the public sector takes place only to a limited ex-
WHQW$OWKRXJKWKHEXGJHWVSHFLƄHGWKDWDOO,&7
procurements should go through ICTA, in reality this
does not always happen.


Good procurement practices have been promoted
E\\ ,&7$ ,&7$ WHQGHUV DUH EDVHG RQ :RUOG %DQN
procurement processes and, while burdensome, are
considered to be relatively transparent and open.
However, other public tenders where ICTA is not in-
volved are perceived to be less transparent. Sri Lanka
has not used e-procurement tools for its public pro-
curement processes.


Sri Lanka has successfully deployed a range of strate-
JLHVWRLQFUHDVHWKHSDUWLFLSDWLRQRIORFDOƄUPVLQSXEOLF
IT-related tenders, including the allocation of preferen-
tial marks, the use of measures to mitigate information
asymmetries, and the use of a software design that
IDFLOLWDWHVORFDOƄUPSDUWLFLSDWLRQ$VDUHVXOWRIDVDP-
ple of 13 key e-services procured by ICTA, all but one
LQFOXGHGDORFDOƄUPLQWKHZLQQLQJELG


ICTA has used the opportunities available to provide
domestic preference within internationally competitive
bidding. In tender evaluations, ICTA has regularly al-


ORFDWHGPDUNVXSWR}SHUFHQWRIWKHWRWDOPDUNV
DV DOORZHG E\\:RUOG %DQN UXOHV WR GRPHVWLF ƄUPV
This practice has promoted joint ventures between
LQWHUQDWLRQDO DQG ORFDO ƄUPV ZKLFK RYHU WLPH KDYH
encouraged knowledge transfer and technological
OHDUQLQJE\\ORFDOƄUPV$QRIƄFLDOGLUHFWLYHUHTXHVWLQJD
PLQLPXPRI}SHUFHQWORFDOYDOXHDGGLWLRQLIWKHVRIW-
ware is bought from a foreign supplier has not proved
to be effective, however.


Concessions on bid and performance guarantee require-
ments are not made in public sector tenders. Potential
bidders do not necessarily consider such guarantee re-
quirements as a barrier to entry. On the other hand, in
DGGLWLRQ WRSUHYLRXVZRUNH[SHULHQFHTXDOLW\\FHUWLƄFD-
WLRQVZKLFKDUHLQFUHDVLQJO\\FRPPRQDPRQJƄUPVLQ6UL
Lanka, have been accepted as proof of quality.


Technology-related strategies adopted by ICTA have
also contributed to the participation of local SMEs in
public sector tenders. ICTA, which has a reasonable
amount of authority to set policy on technical mat-
ters, has established clear interoperability standards
and has implemented a modular e-government archi-
WHFWXUH7KHVPDOO VL]HRIHDFKPRGXOHKDV UHVXOWHG
in tenders that are more attractive to SMEs and lo-
FDO ƄUPVZLWKVSHFLƄFH[SHUWLVH+RZHYHUQRRIƄFLDO
policy supporting FOSS use in the public administra-
tion exists. ICTA has also employed alternative public
procurement processes and hired individual local
FRQVXOWDQWVWRVHUYHDVSHFLƄFGHPDQGIRU,7VHUYLFHV
where agile software development (a non-traditional
approach to software development) was used.


Awareness-raising and capacity development activi-
WLHVKDYHKHOSHGSURPRWH ORFDOƄUPVpSDUWLFLSDWLRQ LQ
public tenders. ICTA has conducted training work-
VKRSV IRU ORFDO ELGGHUV DORQJ :RUOG %DQN WHQGHU
guidelines to address the fact that many non-compli-
ant bids (often due to small technicalities) were being
submitted. As a result, ICTA has experienced a reduc-
tion in non-compliant bids.


4.5 SUMMARY OF CASE
STUDIES


This chapter has presented the actions taken in three
developing countries to encourage and promote the
GHYHORSPHQW RI ORFDO ,7 VHUYLFHV ƄUPV E\\ OHYHUDJ-
ing public procurement. The methods used and the
achievements reached differ among the three coun-
WULHV UHƅHFWLQJ WRVRPHH[WHQW WKHLUYDU\\LQJ OHYHOVRI
GHYHORSPHQW7DEOH}




33CHAPTER 4 : COUNTRY EXPERIENCES: THREE CASE STUDIES


Among the three countries reviewed, Sri Lanka ap-
pears to have had the most success in terms of
HQJDJLQJ ORFDO ,7 VHUYLFHV ƄUPV LQ SXEOLF WHQGHUV
In particular, ICTA, the principal agency responsible
for the implementation of large e-government pro-
grammes, has expanded the potential opportunities
available to local SMEs by establishing a framework of
transparent and competitive tender procedures. Sev-
eral factors have enabled ICTA to assume an effective
role as a lead agency. First, ICTA has been given a
reasonable amount of authority to design policy on
technical matters (such as setting interoperability
standards). Second, Sri Lanka has a more developed
local IT services sector than Kenya and Senegal, with
several local exporters. This allows for the use of a
wider range of public procurement strategies and
tools. Finally, ICTA employs a team of skilled techni-
cal staff and now enjoys several years of experience,
which has enabled it to earn trust and recognition.


1RWH /LPLWHGrefers to the implementation of one or two actions relevant for the strategy. 0RGHUDWHO\\refers to the implementation of
several actions relevant for the strategy.


6RXUFHUNCTAD and BMZ.


In Senegal, the policy and legal environment for help-
LQJ ORFDO ,7 ƄUPV SDUWLFLSDWH LQ SXEOLF SURFXUHPHQW
appears to be in place. However, practical results
have been modest so far. Several basic conditions
still need to be acquired to address this situation.
First, there is scope for making procurement proce-
dures more transparent. For instance, the technical
content of tender documents is often inadequate for
SMEs to be able to submit offers and there is limited
feedback on the tender process. Second, coordina-
tion among public agencies could be enhanced. Third,
implementing existing policies (such as the provision
IRU SUHIHUHQWLDO PDUNV WR TXDOLƄHG ORFDO 60(V DQG
disseminating knowledge about the nature and capa-
bilities of the local ICT sector among relevant public
authorities would be very valuable. Senegal has not
embraced measures to bridge information asymme-
tries, use best practice software design, or provide
training to local SMEs.


7DEOH 2YHUYLHZRIWKHSURFXUHPHQWVWUDWHJLHVWKDWKDYHEHHQDGRSWHGLQ.HQ\\D6HQHJDODQG6UL/DQND


.HQ\\D 6HQHJDO 6UL/DQND
(VWDEOLVKLQJWKHEDVLFV
Public procurement as part of IT sector promotion strategies No Yes Yes


Critical mass of IT-related procurement Yes Yes Yes


Understanding the current state of the local IT services industry No Moderately Yes


6WUHQJWKHQLQJWKHLQVWLWXWLRQDOIUDPHZRUN
Coordination across the public sector and the industry Moderately Moderately Moderately


Agency/department spearheads public procurement for local IT sector
development


No No Yes


3URPRWLQJJRRGSURFXUHPHQWSUDFWLFHV
Implementing transparent and open tender procedures Moderately Limited Moderately


Deploying e-procurement systems No Limited No


/LPLWLQJPDUNHWHQWU\\IRUIRUHLJQELGGHUV
Exclusion of foreign bidders No No Limited


Allocation of preferential marks for local experience, local language
and local presence


No Yes Yes


0LWLJDWLQJWKHHIIHFWVRILQIRUPDWLRQDV\\PPHWULHVLQSURFXUHPHQW
Concessions on bid and performance guarantee requirements No No No


Accepting proof of quality other than previous work No No Yes


6RIWZDUHGHVLJQWKDWIDFLOLWDWHVORFDOƂUPVpSDUWLFLSDWLRQ
Promoting interoperability and open standards Limited Limited Yes


Modular design of IT systems in the public sector Limited No Yes


Promoting FOSS No Limited No


$ZDUHQHVVUDLVLQJDQGFDSDFLW\\GHYHORSPHQWIRUORFDOƂUPVDQGSXEOLFVHFWRURIƂFLDOV
$ZDUHQHVVUDLVLQJDQGFDSDFLW\\GHYHORSPHQWIRUORFDOƂUPVDQGSXEOLF
VHFWRURIƂFLDOV


Moderately Limited Moderately




34 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


:KLOH KDYLQJ WKH KLJKHVW VSHQGLQJ RQ ,&7 JRRGV
and services among the three countries, Kenya
has so far seen limited progress in involving the lo-
cal IT sector in public procurement. The existing
policy framework is in many regards favourable to
SME participation. However, the main policy focus
has been on supporting export-oriented ITES. De-
spite some public-private dialogue, the development
of a clear strategy to improve the understanding
about and to strengthen the capabilities of local IT
SMEs could go a long way towards enabling them
to participate more effectively in public procurement


projects. Sound and transparent public procurement
practices are currently only partially implemented. As
in the case of Senegal, strategies to bridge informa-
tion asymmetries or to use best practices in software
GHVLJQ WR IDFLOLWDWH ORFDO ƄUP SDUWLFLSDWLRQ KDYH QRW
been adopted.


In the three country studies, most actions have been
taken at the macro level (for example, with the estab-
lishment of enabling legislations). Interventions at the
meso and micro level to strengthen the contribution of
national IT associations and develop the capabilities of
local IT SMEs have been limited.




5. CONCLUSIONS AND


RECOMMENDATIONS


KEY MESSAGES


Governments wishing to leverage public procurement for promoting local IT sector development are recommended to:


• Ensure that key conditions for success are in place: a shared IT and public procurement policy, a critical mass of public ICT projects and
a good understanding of the capabilities of the local IT services sector.


• Strengthen the institutional framework, promoting public and private sector coordination and designating an agency to spearhead public
procurement for local IT sector development.


• Establish good practices along the entire procurement process.


• Provide targeted preferential treatment of local suppliers without jeopardizing the quality of the goods or services procured.


• Increase the options for SMEs to present bids.


• $GRSWEHVWSUDFWLFHVRIWZDUHGHVLJQWRIDFLOLWDWHORFDOƂUPSDUWLFLSDWLRQ


• 3URPRWHDZDUHQHVVDQGFDSDFLW\\GHYHORSPHQWERWKDPRQJ,7ƂUPVDQGLQUHOHYDQWSXEOLFDXWKRULWLHV




36 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


The promotion of the domestic ICT sector is a prior-
ity for many developing and emerging economies. It
LVQRWRQO\\DSURGXFWLYHDQGG\\QDPLFVHFWRU LQ LWVHOI
it also plays a crucial role in ensuring that ICTs can
be used throughout the economy and society. The
performance of the local ICT sector is therefore a key
determinant of the ability of countries to transition to
an inclusive Information Society.


:LWKLQ WKH ,&7VHFWRU WKLV UHSRUWJLYHVSDUWLFXODUDW-
tention to IT services since this industry provides the
largest opportunities for market entry and for returns
on investment in developing and emerging econo-
mies.


Leveraging public procurement is one of several ways
in which governments can support the IT services
sector. In low-income economies, where IT use in the
domestic private sector is relatively poorly developed,
the public sector often represents the most important
market for IT services. In general, opportunities in the
public sector are expanding as governments are in-
creasingly deploying systems to provide e-services to
FLWL]HQVDQGEXVLQHVVHV


The primary aim of public procurement is to obtain
the best value for money. The promotion of the local
IT services industry, however, does not need to be
inconsistent with this objective. On the contrary, the
strengthening of the local IT industry increases the
number of potential suppliers that can bid for public
tenders in the future, thus increasing competition.
:KHQGRPHVWLF FDSDELOLWLHV DUH XQGHUGHYHORSHG RQ
the other hand, the public sector is forced to procure
imported solutions, which may be more expensive.


Some countries have already taken wide ranging ac-
tions in using public procurement to promote the local
IT industry with positive results. As outlined in the case
study, Sri Lanka has implemented practical measures
through which e-government projects were able to
JHQHUDWHRSSRUWXQLWLHVIRUORFDOƄUPV


Leveraging public procurement for IT sector develop-
ment nonetheless remains a relatively new policy area
in most developing and emerging economies. It is a
complex policy instrument and its successful appli-
cation requires a certain level of capabilities (in both
the public and the private sector) as well as open and
transparent procurement processes.


For those Governments that decide to leverage public
procurement for the development of local IT services,
the following seven strategic recommendations are
made.


(QVXUHWKDWNH\\FRQGLWLRQVIRUVXFFHVVDUH
LQSODFHDVKDUHG,7DQGSXEOLFSURFXUHPHQW
SROLF\\DFULWLFDOPDVVRISXEOLF,&7SURMHFWV
DQGDJRRGXQGHUVWDQGLQJRIWKHFDSDELOLWLHV
RIWKHORFDO,7VHUYLFHVVHFWRU


Before taking concrete steps to link the two policy
objectives of promoting the local IT sector while at
the same time procuring value for money, govern-
ments should ensure that a number of key conditions
are in place. First, it is essential to secure the com-
mitment from key authorities. The fact that in most
cases several different ministries and agencies are
involved makes it particularly important to achieve
a common vision and objective towards which the
relevant parties can work. This requires that pub-
lic procurement policies are effectively integrated in
broader ICT policies.


Second, the promotion of domestic demand for IT
VHUYLFHV VKRXOG EH UHFRJQL]HG DV D FRPSOHPHQW WR
efforts aimed at supporting export-led growth of the
sector. The public sector can stimulate domestic
suppliers to upgrade and innovate, and to develop
capabilities that can subsequently be applied in the
export market as well.


Third, before launching a major initiative to leverage
public procurement, governments should explore their
current and future needs for e-government and other
IT systems. It may only make sense to dedicate sig-
QLƄFDQWUHVRXUFHVWRDGMXVWSXEOLFSURFXUHPHQWLIWKHUH
is, or will be, a critical mass of procurement projects.


Finally, at an early stage, governments should develop
an understanding of the capabilities of the local IT
services sector so that a realistic assessment of the
kind of projects that could be undertaken by domes-
tic suppliers in the short and medium term becomes
possible.


6WUHQJWKHQWKHLQVWLWXWLRQDOIUDPHZRUN
SURPRWLQJSXEOLFSULYDWHVHFWRUFRRUGLQDWLRQ
DQGGHVLJQDWLQJDQDJHQF\\WRVSHDUKHDG
SXEOLFSURFXUHPHQWIRUORFDO,7VHFWRU
GHYHORSPHQW


The competitiveness of local IT industries are most
effectively improved if all relevant stakeholders co-
operate in strategy formulation and implementation.
Effective private-public dialogue is important to iden-
tify barriers to local IT sector participation in public
procurement and the need for capacity development
among local SMEs. Close coordination among public




37CHAPTER 5 : CONCLUSIONS AND RECOMMENDATIONS


sector organisations is required to set IT and interop-
erability standards, pool tenders and adopt good
procurement practices.


The successful implementation of public procure-
PHQW VWUDWHJLHV WKDW DOVR SURPRWH ORFDO ,7 ƄUP
participation may require improvements in the in-
stitutional set-up. The approach chosen will need
to be tailored to the particular circumstances of
each country. Countries may consider promoting
an agency or a department to spearhead public
procurement for local IT sector development. Such
VSRQVRULQJ VKRXOG EH DFFRPSDQLHG E\\ WKH VXIƄ-
FLHQW ƄQDQFLDO WHFKQLFDO DQG KXPDQ UHVRXUFHV ,Q
6UL/DQNDWKH,&7$JHQF\\ZDVDEOHWRIXOƄOWKLVUROH
DIWHU LWZDVHQGRZHGZLWKDGHTXDWHKXPDQDQGƄ-
nancial resources and given the necessary authority
to set technical standards. Such an agency/depart-
ment may also take an active role in coordinating
policy across different government institutions, and
in consulting with the private sector.


However, sponsoring an agency to take this role will
only produce results if coordination processes are
well-governed and transparent. Otherwise, the at-
tempt to coordinate activities among public sector
RUJDQL]DWLRQVPD\\ UDWKHU OHDG WR XQQHFHVVDU\\ EX-
reaucracy and wasteful use of limited resources.


(VWDEOLVKJRRGSUDFWLFHVDORQJWKHHQWLUH
SURFXUHPHQWSURFHVV


Establishing clear, transparent and open tender pro-
cedures is essential to ensure successful outcomes
RIDQ\\SXEOLFSURFXUHPHQWSURFHVVHV:KHQWKHVHDUH
absent, there is a greater risk that tenders are awarded
to those suppliers that are the best connected rather
than to those that can offer the best value for money.
,QWHUYLHZVZLWK ORFDO ,7ƄUPV LQWKHFRXQWULHVVWXGLHG
in this report indicated that the lack of transparent
and open procurement procedures was a major bar-
rier to their participation. The main barriers cited by IT
SMEs (although these are not exclusive to IT public
procurement) were the lack of easy access to tender
documents and other key procurement information,
inadequate quality of tendering documents, lack of
feedback on unsuccessful bids and frequent payment
delays. Implementing clear, open and transparent ten-
der procedures remains an essential step in order for
a procurement-based sector promotion instrument to
be effectively applied.


E-procurement can help make public procurement
processes more open and transparent. The three


FRXQWULHVVWXGLHGXWLOL]HGHSURFXUHPHQW LQD UDWKHU
limited manner, which indicates that there may be
YDULRXVREVWDFOHVKLQGHULQJWKHGLJLWL]DWLRQRISXEOLF
procurement processes. Governments could start by
putting in place some of the easier to execute ap-
plications of an e-procurement system, such as the
online publication of tenders and procurement no-
tices.


3URYLGHWDUJHWHGSUHIHUHQWLDOWUHDWPHQWRI
ORFDOVXSSOLHUVZLWKRXWMHRSDUGL]LQJWKH
TXDOLW\\RIWKHVHUYLFHVSURFXUHG


Governments may consider different options to give
local IT services suppliers a certain advantage when
bidding for public tenders. In this context, an out-
right ban on foreign bidders is not advisable. Indeed,
none of the countries studied have followed such
an approach. However, the lawful use of preferen-
tial marks for local experience, local language, and
local presence within open and competitive pub-
lic procurement processes can be effective means
WR HQFRXUDJH WKH SDUWLFLSDWLRQ RI ORFDO ƄUPV 6XFK
preferential marks can also be used as an incentive
for the formation of joint ventures between local and
IRUHLJQ ƄUPVZKLFKFDQDOORZ ORFDO DQG OHVV H[SH-
ULHQFHG ƄUPV WR EHFRPHPRUH DFFXVWRPHG WR WKH
public procurement process. In Sri Lanka, this kind
of collaboration helped to build relevant skills and
UHSUHVHQWHGDVWHSSLQJVWRQHIRUORFDOƄUPV7RPDLQ-
tain a competitive environment, preferential marks
should be strategically targeted only to those areas
where the local industry has the capabilities needed
WRSURGXFHELGVRIVXIƄFLHQWO\\KLJKTXDOLW\\7KLV IXU-
ther underscores the importance of public authorities
having a good understanding of the strengths and
weaknesses of the local IT sector.


,QFUHDVHWKHRSWLRQVIRU60(VWRSUHVHQW
bids.


In order to reduce the threshold for local SMEs to
participate in the bidding process, governments may
consider adjusting various criteria against which bids
are assessed. First, it may be appropriate to provide
concessions on bid and performance guarantee re-
TXLUHPHQWV :KLOH WKH FDVH VWXGLHV LQFOXGHG LQ WKLV
report did not feature such concessions, several
SMEs interviewed remarked that limitations imposed
E\\ JXDUDQWHH UHTXLUHPHQWV UHSUHVHQWHG D VLJQLƄFDQW
barrier. The introduction of concessions could also be
used strategically in such projects that are particularly




38 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


suited for local SMEs with appropriate capabilities and
experience.


Another way to increase the options to present bids
for SMEs that have limited experience in public pro-
curement is to use quality control criteria other than
D SUHYLRXV WUDFN UHFRUG VSHFLƄFDOO\\ OLQNHG WR SXEOLF
procurement. Alternative quality signals may include
ƄUPSURGXFWRUH[SHUWFHUWLƄFDWLRQ7KHDFFHSWDQFH
of such signals is recommended especially where a
large number of enterprises have obtained a certain
OHYHORIUHFRJQL]HGTXDOLW\\FHUWLƄFDWLRQ


$GRSWEHVWSUDFWLFHVRIWZDUHGHVLJQWR
IDFLOLWDWHORFDOƂUPSDUWLFLSDWLRQ


The way in which a public IT project is designed can
KDYHDPDMRULPSDFWRQWKHDELOLW\\RIORFDOƄUPVWRSDU-
ticipate in the procurement process. Governments may
consider relevant steps to make IT projects more con-
ducive to the participation of smaller bidders. These
may include the use of modular design of systems and
architecture to allow for tendering of smaller projects.
However, the successful use of this approach requires
a certain degree of authority to establish technical stan-
dards and advanced technical software development
skills within the relevant authorities. It also necessitates
clear assignment of who will be responsible for systems
integration and careful attention to IT and interoper-
ability standards. The establishment of interoperability
and standard frameworks, and the promotion of open
standards, can help to increase the potential number of
bidders and fosters the participation of IT SMEs. The
establishment of quality assurance panels of senior ex-
perts may be helpful to support the use of a modular
e-government architecture.


Governments should also consider the use of FOSS
where feasible. FOSS has not been adopted formally
nor is it widely encouraged by the governments in the
three countries studied. In other countries, however,
the promotion of FOSS use has had positive results in
the form of reduced costs, greater possibilities for lo-
FDOVXSSOLHUVWRSURYLGHVROXWLRQVWDLORUHGWRWKHVSHFLƄF
needs of the users, and reduction of errors. Meanwhile,
barriers to FOSS adoption may include a lack of a
critical mass of skilled FOSS developers and lobbying
DJDLQVWWKHXVHRI)266E\\SURSULHWDU\\VRIWZDUHƄUPV


Flexibilities should be provided to ensure that traditional
procurement methods do not prevent the adoption of
agile software development methodologies that have
the potential to deliver appropriate solutions in shorter
periods of time and at a lower cost.


3URPRWHDZDUHQHVVDQGFDSDFLW\\
GHYHORSPHQWERWKDPRQJ,7ƂUPV
DQGLQUHOHYDQWSXEOLFDXWKRULWLHV


A common obstacle to greater involvement of local IT
VHUYLFHVƄUPVLVDODFNRIDZDUHQHVVRIDYDLODEOHRS-
SRUWXQLWLHV7KLVDSSOLHVWRERWKƄUPVLQWKH,7VHFWRU
and to public authorities responsible for the procure-
ment process. Measures to raise the level of mutual
awareness are therefore recommended as a mecha-
QLVPWRSURPRWHJUHDWHUSDUWLFLSDWLRQRIORFDOƄUPV


Beyond awareness-raising, governments – ideally
in cooperation with IT-related associations – should
DOVRFRQVLGHUWKHRUJDQL]DWLRQRIWUDLQLQJVHVVLRQVIRU
SMEs on how to submit tenders. Such training does
not appear to be widespread yet but it has had posi-
tive results when applied. In Sri Lanka, for example, it
helped to lower the incidence of non-compliant bids
on the basis of mere technicalities.


There may also be a case for sponsoring programmes
to enhance the capabilities of SMEs to work with
relevant FOSS that is likely to be applied in the develop-
ment of new e-government applications. By boosting
WKHH[SHUWLVHDPRQJORFDO,7VHUYLFHVƄUPVLQUHOHYDQW
areas, the chances increase that domestic suppliers
possess the required expertise to submit a winning bid.
It may be appropriate to establish a programme in col-
laboration with the public agencies responsible for SME
development, as well as with national IT/software asso-
FLDWLRQWRRUJDQL]HVXFKWUDLQLQJDFWLYLWLHVDVZHOODVWR
HQFRXUDJHWKHFHUWLƄFDWLRQRI60(VDQGSURIHVVLRQDOV


Adequate attention should be paid to raising the
awareness and knowledge among public authorities
responsible for IT procurement with regard to best
practices in IT public procurement and in technical ar-
eas (e.g. FOSS, interoperability standards, etc.). This
is essential to ensure that procurement strategies are
GHVLJQHGLQVXFKDZD\\WKDWORFDOƄUPVDUHJLYHQDIDLU
chance to compete.


Overview of strategies
The mix of strategies chosen will have to be adapted
WR WKH VSHFLƄF FLUFXPVWDQFHV LQ HDFK FRXQWU\\ 7D-
EOH}SURYLGHVDQRYHUYLHZRIWKHGLIIHUHQWVWUDWHJLHV
available, distinguishing between those that can be
regarded as “essential” and should be considered as
a priority, and “advanced” strategies that are more
resource-intensive and that require a high level of
commitment and stronger capabilities in the private
and public sectors.




39CHAPTER 5 : CONCLUSIONS AND RECOMMENDATIONS


Governments of countries with a nascent IT services
sector should at least consider implementing the es-
sential strategies mentioned above (for instance,
GHYHORSLQJWKHFDSDFLWLHVRIORFDOƄUPVWRSDUWLFLSDWH
in public procurement processes or providing targeted
preferential treatment for local suppliers without jeop-
DUGL]LQJWKHTXDOLW\\RIWKHJRRGVRUVHUYLFHVSURFXUHG


Implementing one or two carefully designed e-govern-
ment projects with the involvement of domestic SMEs
can help to showcase their potential and change
perceptions across the public and private sectors. In
many developing and emerging economies, a sense
of mistrust remains between the public and private
sector that hampers effective public-private dialogue
in the area of public procurement.


In countries with more mature capacities in the local
IT sector and with robust public procurement systems
in place, more sophisticated strategies may generate
positive impact. For instance, they might promote a


national e-government architecture that is modular,
open and reusable. E-procurement represents an-
other option to make bidding processes more open
and transparent. This has already been tried and
tested with positive outcomes in countries such as
Chile and Canada.


The practical implementation of various strategies
may require interventions not only at the macro level
but also at meso and micro levels. Involving the lo-
cal IT industry association in the mapping of the local
sector or in public-private dialogue are examples of
VLJQLƄFDQWPHVR OHYHO LQWHUYHQWLRQV0LFUR OHYHO LQWHU-
ventions, such as training of enterprises in the areas
of FOSS, procurement procedures, quality standards,
DQGFHUWLƄFDWLRQPHWKRGVDUHFULWLFDOLQRUGHUWRH[SDQG
WKHEDVHRI ,7ƄUPV WKDWDUHHTXLSSHG WRSDUWLFLSDWH
in public procurement. This should be a key objec-
tive for the government, with a view to securing more
competition among potential suppliers when future


7DEOH 6WUDWHJLHVWRSURPRWHORFDO,7VHFWRUGHYHORSPHQWWKURXJKSXEOLFSURFXUHPHQW


(VVHQWLDO $GYDQFHG


(VWDEOLVKLQJWKHEDVLFV


Public procurement as part of IT sector promotion strategies X


Critical mass of IT-related procurement X


Understanding the current state of the local IT services industry X


6WUHQJWKHQLQJWKHLQVWLWXWLRQDOIUDPHZRUN


Coordination across the public sector and the industry X


Agency/department spearheads public procurement for local IT sector development X


3URPRWLQJJRRGSURFXUHPHQWSUDFWLFHV


Implementing transparent and open tender procedures X


Deploying e-procurement systems X


/LPLWLQJPDUNHWHQWU\\IRUIRUHLJQELGGHUV


Exclusion of foreign bidders Not recommended Not recommended


Allocation of preferential marks for local experience, local language and local presence X


0LWLJDWLQJWKHHIIHFWVRILQIRUPDWLRQDV\\PPHWULHVLQSURFXUHPHQW


Concessions on bid and performance guarantee requirements X


Accepting proof of quality other than previous work X


6RIWZDUHGHVLJQWKDWIDFLOLWDWHVORFDOƂUPVpSDUWLFLSDWLRQ


Promoting interoperability and open standards1 X X


Modular design of IT systems in the public sector1 X X


Promoting FOSS X


$ZDUHQHVVUDLVLQJDQGFDSDFLW\\GHYHORSPHQWIRUORFDOƂUPVDQGSXEOLFVHFWRURIƂFLDOV


$ZDUHQHVVUDLVLQJDQGFDSDFLW\\GHYHORSPHQWIRUORFDOƂUPVDQGSXEOLFVHFWRURIƂFLDOV X


1RWHV
1. :KLOHLQWHURSHUDELOLW\\RSHQVWDQGDUGVDQGPRGXODUGHVLJQFDQEHHDVLO\\PDQGDWHGRUXVHGLQLQGLYLGXDOV\\VWHPVWKHXVHRIPRGXODU


reusable and open approaches at a government-wide level may require more resources and a higher level of commitment.


6RXUFHUNCTAD and BMZ.




40 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


procurement projects are announced. The responsi-
bility for encouraging and developing such capabilities
should not rest exclusively with national ICT agencies
RUSURFXUHPHQWRIƄFHV1DWLRQDO,7VRIWZDUHDVVRFLD-
tions can also be invited and encouraged to play an
active role.


'RQRUJRYHUQPHQWVDQGLQWHUQDWLRQDOƄQDQFLDOLQVWLWX-
tions should take the wider impact of IT programmes
and e-government projects on local IT sector growth
DQG FRPSHWLWLYHQHVV LQWR DFFRXQW ZKHQ ƄQDQFLQJ
projects in developing and emerging economies. The
study has shown that the promotion of local IT sec-
tor development through public procurement can
WDNHSODFHZLWKRXWMHRSDUGL]LQJSURFXUHPHQWLQWHJULW\\
:KHQ ƄQDQFLQJ HJRYHUQPHQW SURJUDPPHV GRQRU
agencies should therefore consider different ways of
strengthening the interface between public procure-
ment and local IT sector development and ensure that
local SMEs have a fair chance to compete. This may


UHTXLUHJUHDWHUƅH[LELOLW\\LQSURFXUHPHQWSURFHVVHVDQG
WKHDOORFDWLRQRIVXIƄFLHQW UHVRXUFHV WR WKHSURYLVLRQ
of training of local suppliers. In addition, donors may
support the strengthening of local institutions – e.g.
national industry associations – that provide training
and other services to local IT SMEs. They may also
commission further research in this area to assess the
impact of different policies and strategies.


There is considerable scope for enhancing the partici-
SDWLRQRI ORFDO ,7ƄUPV LQSXEOLFSURFXUHPHQW:KHQ
successfully implemented, this can help develop the
necessary critical mass of local demand to make a
local IT sector more competitive, while at the same
time expand the supplier base on which future public
procurement projects can draw. Governments should
VHL]H WKLV RSSRUWXQLW\\ WR VSHHGXS WKH WUDQVLWLRQ WR-
wards a more inclusive Information Society, generate
high value added jobs, spur local innovation and learn-
ing, and reduce the cost of procurement.




ANNEX 1.


CASE STUDIES




42 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


1.1 KENYA


1.1.1 ICT market and sector
characteristics


Of the three countries, Kenya spends the most
on ICT. Most of its ICT expenditures are on tele-
FRPPXQLFDWLRQVZKLOH}SHUFHQW LVGHGLFDWHGWR
FRPSXWHU VRIWZDUH DQG VHUYLFHV 7DEOH} :KLOH
the combined employment in the ICT and ITES
VHFWRULVRYHUZKLFKDPRXQWVWR}SHU
cent of the total labour force), the non-telecom
formal employment (that is, in computer software,
computer services, and as well as ITES) was only
10,000.18 As a large share of these 10,000 was
LQYROYHGLQ,7(6,7VHUYLFHVDWWKHPRPHQWHPSOR\\
a very small workforce.


The Government has focused its ICT sector devel-
opment strategy on developing the export sector,
and has concentrated its attention particularly on
the development of ITES. The Kenya ICT Board
promotes the growth of technology companies
that serve international customers. The Govern-
PHQWKDVVHWXSWD[IUHH]RQHVDQGIXQGHGYDULRXV
projects to promote exports. Kenya now hosts
several world-class business process outsourcing
(BPO) operations, including call centres, enabled
by improved international broadband connectivity in
recent years. In contrast, the development of the
local IT services market has hitherto attracted only
OLPLWHG DWWHQWLRQ <HW VRPH ORFDO ƄUPV t VXFK DV
Ushahidi19 and Pamoja20– have succeeded in devel-
oping web-based niche solutions targeted towards
users in Kenya and worldwide. The rapid expansion
of mobile phone use is creating growing demand
for mobile applications. In 2011, there were over
}PLOOLRQPRELOHVXEVFULSWLRQVDQG}PLOOLRQPR-
bile money subscriptions for a population of about
}PLOOLRQSHRSOH81&7$'E


Kenya has several industry associations in the ICT
DQG ,7(6 VHFWRUV ZKLFK KDYH SOD\\HG D VLJQLƄFDQW
UROH LQ QDWLRQDO ,&7 SROLF\\ GHYHORSPHQW :DHPD HW
al. 2010). TESPOK (Telecommunication Service
Providers of Kenya) is the umbrella organisation for
Internet Services Providers. KITOS (Kenya Informa-
tion Technology and Outsourcing Society) is the ITES
and BPO industry association. A civil society orga-
QL]DWLRQ .,&7$1(7 FRPSULVHV D ORRVH QHWZRUN RI
donors and NGOs and takes an active part in Inter-
net governance.


1.1.2 Public procurement strategies
(VWDEOLVKLQJWKHEDVLFV


Kenya’s National ICT Policy (MIC 2006), and likely
its revised 2012 version, focuses its ICT sector de-
velopment strategy on developing the export sector,
particularly the ITES sector. The Kenya ICT Board was
established in 2007 to advise the government on the
development and promotion of ICT industries and to
promote Kenya as an ICT destination, especially pro-
moting BPO and offshoring. National policy has not
considered the role of public procurement in the de-
velopment of the national ICT sector.


In 2004, the e-Government Directorate was estab-
lished to coordinate e-government services across
ministries and to develop a national e-government
strategy. The Directorate is, inter alia, responsible
for developing and enforcing standards to promote
interoperability of systems and data. The Kenya ICT
Board has also played a substantial role in the execu-
tion of e-government programmes21 and in supporting
wider ICT use in the public sector.


Several projects were launched as part of the
2004-2009 e-government strategy, including the Gov-
ernment Exchange (a virtual private network for the
government), a call centre, an enterprise messaging
and collaboration system, a national portal, a national
GDWDFHQWUHDQGDVHULHVRIFLWL]HQFHQWULFDSSOLFDWLRQV
that are available directly through the e-government
portal. Some of these applications include PIN and
9$7FHUWLƄFDWHDSSOLFDWLRQVRQOLQHWD[UHWXUQƄOLQJDQG
the customs clearance system (Simba System). Other
online services include driving licences, company reg-
istration, the land title registration systems and the
recent open government data portal.22 Additional e-
government services are also provided in several other
areas such as health and education. The Integrated
Financial Management Information System (IFMIS), an
Oracle-based enterprise resource planning system, is
the largest e-government project. Despite the num-
ber of services being provided online, the availability
of e-government services is not yet widespread.23 The
draft Connected Kenya ICT Master Plan 2012-2017
includes e-government as one of the three strategic
pillars of the national ICT strategy.24


Hardware and proprietary software represent the main
IT-related procurement expenses. Large contracts are
typically awarded to a limited number of suppliers.25


'RQRUƄQDQFLQJHVSHFLDOO\\IURPWKH:RUOG%DQNKDV
been important for the expansion of e-government




43ANNEX 1 : CASE STUDIES


DSSOLFDWLRQV LQ .HQ\\D 6LQFH WKH:RUOG %DQN
KDV DOORFDWHG D WRWDO RI } PLOOLRQ LQ FUHGLW IRU D
multi-year Kenya Transparency and Communications
Infrastructure Project (KTCIP), which aims at improv-
ing connectivity and supporting e-government and
e-procurement applications.26


Comprehensive data on the IT services sector are not
available. The new Small and Micro Enterprises Bill
is expected to provide the legal framework for (and
encourage) the registration of SMEs. This may help
GHYHORSDUHJLVWU\\RIORFDO,7ƄUPV


6WUHQJWKHQLQJWKHLQVWLWXWLRQDOIUDPHZRUN


Coordination on public procurement matters across
the public sector is only partial. The current legal
IUDPHZRUN HVWDEOLVKHV D IXOO\\ GHFHQWUDOL]HG SURFHVV
and leaves public procurement to the discretion of vari-
ous tender committees and procurement units. There
is limited interaction between the key procurement
entities like the Public Procurement Oversight Author-
ity (PPOA) and the relevant ICT bodies (the Ministry of
Information and Communication, the Directorate of e-
Government and the Kenya ICT Board), each with their
own respective policy goals. However, there is a cer-
tain level of coordination between the PPOA and the
Kenyan Institute of Supplies Management, which sup-
SRUWVFDSDFLW\\EXLOGLQJRISXEOLFSURFXUHPHQWRIƄFLDOV


Coordination with the IT services industry has been
limited. The fragmentation of the industry associations
and their focus on telecommunications and export-
oriented activities can be regarded as a weakness
with regard to raising awareness of the potential con-
tributions by the local IT services sector to the public
procurement market. It has not been a priority for any
association to direct the government’s attention to le-
veraging public procurement for the growth of the IT
services sector.


Mutual mistrust between public procuring entities and
SMEs is a major stumbling block. Procurement entities
perceive local IT SMEs as being under-resourced, pro-
viding low quality products, and unable to deliver on
time. At the same time, the SMEs’ overall perception
LVWKDWLWLVGLIƄFXOWWRSHQHWUDWHWKHSXEOLFSURFXUHPHQW
market due to corruption and red tape. Despite efforts
to reduce corruption in public procurement, it remains
a major issue.27 Several enterprises interviewed pre-
ferred to sell their products and services to the private
sector rather than to the public sector. Some had al-
together given up considering the public sector as a
possible market for their businesses.


Kenya does not have a public agency that spearheads
public procurement for local IT sector development.
The Directorate of e-Government and different author-
ities procure ICT goods and services internally without
coordination at the national level.


3URPRWLQJJRRGSURFXUHPHQWSUDFWLFHV


Kenya has enacted legislation and regulations with the
DLP WR HVWDEOLVK VRXQG DQG HIƄFLHQW SXEOLF SURFXUH-
PHQWV\\VWHPVWKDWHQVXUHYDOXHIRUPRQH\\HIƄFLHQF\\
in service delivery and transparency, while at the
same time promoting the participation of local SMEs.
However, the implementation of sound procurement
systems has been inconsistent. SMEs often do not
get access to key procurement information (including
procurement plans, tender notices, contract awards,
procurement statistics, legal and policy documents,
and studies) as these are not available online. Long
delays at each stage of the procurement process also
PDNHLWGLIƄFXOWIRU60(VWRSDUWLFLSDWHLQSXEOLFSUR-
curement. The delay of payments has been singled
out as the most serious problem in the procurement
process. Legislation states that payments should be
made within 30 days. In reality, however, payments
may take as long as 180 days to be released. Failure
to adhere to legislated accounting stipulations, exces-
VLYH EXUHDXFUDF\\ LQVXIƄFLHQW IXQGV FRUUXSWLRQ VWDII
absences, and poor work ethics all contribute to such
payment delays.28


These challenges are not exclusive to IT public pro-
curement and a number of actions have helped, or
are planned to help, enhance the implementation of
sound procurement systems. For instance, PPOA
KDV SURGXFHG DPDQXDO RQ WHFKQLFDO VSHFLƄFDWLRQV
and the E-government Directorate plans to develop
WHPSODWHV IRU ,&7 WHFKQLFDO VSHFLƄFDWLRQV +RZHYHU
the PPOA manual is not widely used by SMEs in the
preparation of tender documents and adequate hu-
man resources have not been allocated to develop
templates of ICT tenders. There are also plans to de-
velop e-procurement as a module of IFMIS, but there
have been delays in launching this system.


3URPRWLQJORFDO60(SDUWLFLSDWLRQLQSXEOLF
SURFXUHPHQW


The new Constitution of Kenya (2010), the Public
Procurement and Disposal Act (PPDA) of 2005,29


the Public Procurement and Disposal Regulations of
2006 and the Supplies Practitioners Management Act
of 200730 provide the legal and policy framework for
SME participation in public procurement. Together,




44 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


they give explicit preference to the participation of
ORFDO ƄUPVZLWKD YLHZ WR LPSURYLQJ ORFDO HFRQRPLF
growth. Article 227 of the Constitution of Kenya and
Section 39 of the PPDA provide special preferences
for the participation of SMEs in public procurement.
These include the exclusion of foreign bidders under
certain circumstances (i.e. “ZKHUHWKHIXQGLQJLV
IURP WKH *RYHUQPHQW RI .HQ\\D RU D .HQ\\DQ ERG\\
DQGWKHDPRXQWVDUHEHORZWKHSUHVFULEHGWKUHVKROG”
($UW}33'$)).


However, according to the interviews held with several
stakeholders, there is inconsistent implementation of
these provisions. Public agencies, both the ICT de-
partments and the procurement divisions, are often
not aware of the PPDA’s provisions for local SME in-
volvement.


The proposed and pending Small and Micro Enter-
prises Bill, once enacted by parliament, is expected
WRJLYHOHJLVODWLYHUHFRJQLWLRQIRU ORFDOƄUPV7KHOHJ-
LVODWLRQSURSRVHVWRDOORFDWH}SHUFHQWRIWKHYDOXH
of public procurement to local SMEs. In procurement
WHUPVWKLVZRXOGDPRXQWWR}SHUFHQWRI*'3D
substantial sum that should boost the growth of local
ƄUPVLQFOXGLQJLQWKH,7VHFWRU


0LWLJDWLQJLQIRUPDWLRQDV\\PPHWULHV


Guarantee requirements can be used at the discretion
of the procuring entity (art. 57 PPDA) and interviews
suggested that concessions on guarantee require-
ments are not being made. The Kenyan IT services
VHFWRUKDVQRZHOOGHƄQHGZD\\RIPHDVXULQJWKHTXDO-
LW\\ RI LWV SURGXFWV DQG VHUYLFHV2QO\\ IRXU ,&7 ƄUPV
ZHUH ,62 FHUWLƄHG LQ 7R DGGUHVV WKH OLPLWHG
XSWDNHRITXDOLW\\FHUWLƄFDWLRQV WKH.HQ\\D ,&7%RDUG
SODQV WR LQWURGXFH D ORFDOLVHG VRIWZDUH FHUWLƄFDWLRQ
SURJUDPPHLQ*LYHQWKHLQVLJQLƄFDQWDGRSWLRQ
RIIRUPDOTXDOLW\\FHUWLƄFDWLRQVE\\,7VHUYLFHVƄUPVWKH
DFFHSWDQFHRITXDOLW\\FHUWLƄFDWLRQVDVSURRIRITXDOLW\\
other than previous work would have limited value.


6RIWZDUHGHVLJQWKDWIDFLOLWDWHVORFDOƄUPVp
SDUWLFLSDWLRQ


Kenya has not yet developed and established a
comprehensive e-government interoperability frame-
work or a set of standards. The absence of such a
framework hampers data sharing, the transfer of
documents, and the exchange of information across
RUJDQL]DWLRQV DQG V\\VWHPV 2QH RI WKH UROHV RI WKH
H*RYHUQPHQW'LUHFWRUDWHLVWRGHƄQH,7DQGLQWHURS-
erability standards. Interviews revealed that the main
barriers to increased interoperability levels in Kenya


DUH QRW WHFKQLFDO EXW RUJDQL]DWLRQDO LVVXHV VXFK DV
lack of collaboration among different units, resistance
due to perceived loss of control over information and
security considerations.


The E-Government Directorate has taken some ini-
tiative to adopt modular architecture for its shared
services. The implementation of a systems-wide mod-
ular architecture requires considerable investment and
coordination that has not yet been forthcoming.


The Government does not have an explicit policy
promoting FOSS in the public administration and the
use of FOSS solutions in the administration has so far
been limited. The regulatory framework (including the
PPDA31 and the Kenyan ICT sector policy guidelines32)
SURYLGHV WKHEDVLV IRUD OHYHOSOD\\LQJƄHOG IRUSURSUL-
etary software and FOSS suppliers. For instance,
the Kenyan ICT sector policy guidelines of 200633


“encourage[s] [..] LQFUHDVLQJ DZDUHQHVV DPRQJ
VWDNHKROGHUVRI WKHRSSRUWXQLWLHVRIIHUHGE\\GLIIHUHQW
VRIWZDUHPRGHOV LQFOXGLQJ SURSULHWDU\\ RSHQVRXUFH
DQGIUHHVRIWZDUHr+RZHYHULQWHUYLHZVZLWKƄUPVUH-
vealed that public institutions express a preference for
“tested” proprietary software. Public administrations
are often locked into the use of proprietary software
solutions and technologies (e.g. Microsoft dominates
RIƄFH VRIWZDUH DQG IHZ SXEOLF SURFXUHPHQW RIƄFHV
have embraced open source alternatives. A study
commissioned by the Linux Professional Association
of Kenya in 201034 notes that, although there has been
some improvements, many public tenders still do not
FRQIRUPWRRIƄFLDO UHJXODWLRQVDQG IDYRXUSURSULHWDU\\
software. For instance, contrary to Art. 34 of PPDA,
technical requirements in public tenders often refer
to a particular trademark, name, producer or service
producer. The report provides two additional reasons
for the wider preference for proprietary software in
WKHSXEOLFDGPLQLVWUDWLRQOLPLWHGIDPLOLDULW\\ZLWK)266
DPRQJSURFXUHPHQWRIƄFHUVDQGDUHSRUWHGVKRUWDJH
of advanced FOSS skills in the market. In Septem-
ber 2012, the e-Government Directorate indicated its
intention to progressively migrate its IT operations to
FOSS.35


$ZDUHQHVVUDLVLQJDQGFDSDFLW\\GHYHORSPHQW
IRUORFDOƄUPVDQGSXEOLFVHFWRURIƄFLDOV


Interviews with the Kenya Institute of Supplies Man-
DJHPHQW UHYHDOHG WKDW DOWKRXJK VLJQLƄFDQW HIIRUWV
have been made in training and certifying procurement
RIƄFHUVWKHUHLVOLPLWHGDZDUHQHVVRIVWDWHRIWKHDUW
procurement techniques and tools that could improve
transparency and SME participation.




45ANNEX 1 : CASE STUDIES


7DEOH 3URFXUHPHQWVWUDWHJLHVDGRSWHGLQ.HQ\\D


+DVWKHVWUDWHJ\\EHHQDSSOLHGLQ.HQ\\D" ,PSDFWVFRPPHQWV


(VWDEOLVKLQJWKHEDVLFV


3XEOLFSURFXUHPHQWDVSDUWRI,7
VHFWRUSURPRWLRQVWUDWHJLHV


1R The National ICT Policy of 2006 and its revised
version of 2012 promote the local ICT sector but it does
not consider the role of public procurement.


Efforts have focused on the promotion of
ITES exports. Public procurement is not
yet leveraged to stimulate local IT services
ƂUPV


&ULWLFDOPDVVRI,7UHODWHG
SURFXUHPHQW


Yes. National county connectivity programs and
community development learning centres. E-government
services include a citizen portal, shared e-services
(HR, customs, IFMIS, tax, ID and passport issuance)
and other planned projects (pension administration,
driver licensing, land title and company registration
systems). IFMIS (Integrated Financial Management
Information System), an Oracle-based ERP, is the largest
e-government project. The draft ICT Master Plan
LQFOXGHVHJRYHUQPHQWDVRQHRIWKH
three strategic pillars of the national ICT strategy.


E-government programmes represent a
window of opportunity. Donors play a key
UROHJLYHQWKHLUƂQDQFLDOSDUWLFLSDWLRQLQ
such programmes.


8QGHUVWDQGLQJWKHFXUUHQWVWDWHRI
WKHORFDO,7VHUYLFHVLQGXVWU\\


1R&RPSUHKHQVLYHGDWDRQORFDOƂUPVDUHQRWDYDLODEOH New SME legislation is expected to provide
the legal framework for (and encourage)
the registration of SMEs. This may help
GHYHORSLQJDUHJLVWU\\RIORFDO,&7ƂUPV


6WUHQJWKHQLQJWKHLQVWLWXWLRQDOIUDPHZRUN


&RRUGLQDWLRQDFURVVWKHSXEOLF
VHFWRUDQGWKHLQGXVWU\\


0RGHUDWHO\\ Some level of coordination between
Kenyan Institute of Supplies Management and the
Public Procurement and Oversight Authority (PPOA).
Limited coordination between public sector stakeholders
(e.g. the ICT and procurement departments).
Fragmented ICT industry associations.


The legislative framework calls for
coordination but, in practice, coordination
is limited.


$JHQF\\GHSDUWPHQWVSHDUKHDGV
SXEOLFSURFXUHPHQWIRUORFDO,7
VHFWRUGHYHORSPHQW


1R Different authorities (i.e. Directorate of e-Government,
Ministries) procure ICT goods and services internally
without coordination at the national level.


Limited interaction between the key
procurement entities like the PPOA and
the relevant ICT bodies (the Ministry of
Information and Communication, the
Directorate of e-Government and the
Kenya ICT Board).


3URPRWLQJJRRGSURFXUHPHQWSUDFWLFHV


,PSOHPHQWLQJWUDQVSDUHQWDQG
RSHQWHQGHUSURFHGXUHV


0RGHUDWHO\\ PPOA has produced a manual on technical
VSHFLƂFDWLRQVDQGDWHQGHUWHPSODWH
The E-government Directorate plans to develop
WHPSODWHVIRU,&7WHFKQLFDOVSHFLƂFDWLRQV


'LIƂFXOWLHVLQDFFHVVLQJWHQGHULQIRUPDWLRQ
and delays in procurement processes,
including payment, hamper SMEs
participation. The PPOA manual is not
used widely by SMEs. Adequate human
resources have not been allocated to
develop templates for ICT tenders.


'HSOR\\LQJHSURFXUHPHQWV\\VWHPV 1RW\\HW E-procurement is planned to be implemented
as a module of IFMIS.


There have been delays in
launching the new IFMIS.


SMEs have large capacity weaknesses. The majority
of SMEs in Kenya lack the necessary skills to partici-
pate in public procurement processes, in particular to
prepare relevant tender documents. Limited under-
standing of public procurement systems often results
in submission of non-compliant bids. The Kenyan In-
stitute of Supplies Management and the PPOA have


on-going initiatives to address these capacity gaps,
ZKLFKDUH\\HWLQVXIƄFLHQWWRVXEVWDQWLDOO\\LQFUHDVH60(
participation in public procurement.


7DEOH}SURYLGHVDQRYHUYLHZRIWKH,&7SXEOLFSUR-
curement strategies that have been applied in Kenya
and a preliminary assessment of their impact.




46 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


1.2 SENEGAL


1.2.1 ICT market and sector
characteristics


The Senegalese ICT sector is among the most dy-
QDPLF LQ :HVW $IULFD36 Private estimations suggest
that the telecommunications sector represents around
}SHUFHQWRIWKHFRXQWU\\pV*'337 ICT-related manu-
IDFWXULQJ LV LQVLJQLƄFDQW DQG WKH ,7 VHUYLFHV VHFWRU
is small but growing, comprising 50–100 software
developers and IT services providers involved in ap-
plications development (InfoDev, 2008).


Software development is often performed by units or
departments within larger IT and ICT groups, such as
Seninfor, FTF and Groupe Chaka, but also by a grow-
LQJQXPEHURIVPDOOVSHFLDOL]HGƄUPVVXFKDV*6,(
Technologie, Sen-Site, Synapsys Conseil, and GCS
(InfoDev, 2008). Many of these companies deliver
basic software development and IT services for out-
sourcing contracts with French companies.


According to InfoDev (2008), most ICT service pro-
viders (including web designers, Internet value added
service providers, and ICT consultants) do not have the
capacity or capability to operate on the international
market. Since the domestic market is quite narrow, this


/LPLWLQJPDUNHWHQWU\\IRUIRUHLJQELGGHUV


([FOXVLRQRIIRUHLJQELGGHUV 1R The legal framework allows the provision of exclusive
preference to local SMEs in certain circumstances (where
the funding is 100% from the Government of Kenya or a
Kenyan body; and the amounts are below the prescribed
threshold. (Art. 39 PPDA)), but this is not applied in
practice.


Inadequate understanding and
implementation of the Public Procurement
and Disposal Act (PPDA), inconsistent
implementation of strategies related to
procurement rules.


$OORFDWLRQRISUHIHUHQWLDOPDUNV
IRUORFDOH[SHULHQFHORFDOODQJXDJH
DQGORFDOSUHVHQFH


1R The legal framework gives explicit preference to the
SDUWLFLSDWLRQRIORFDO,&7ƂUPV$UW33'$EXWLWLVQRW
applied in practice.


Inadequate understanding and
implementation of the PPDA, inconsistent
implementation of strategies related to
procurement rules.


0LWLJDWLQJWKHHIIHFWVRILQIRUPDWLRQDV\\PPHWULHVLQSURFXUHPHQW


&RQFHVVLRQVRQELGDQG
SHUIRUPDQFHJXDUDQWHH
UHTXLUHPHQWV


1R$UWRI33'$DOORZVSURFXULQJHQWLWLHVWRUHTXLUH
tender security and to determine the form and amount of
the guarantee requirements.


Use of guarantee requirements is at
the discretion of the procuring entity. In
practice, no concessions on guarantee
requirements are used.


$FFHSWLQJSURRIRITXDOLW\\RWKHU
WKDQSUHYLRXVZRUN


1R.HQ\\DQ,&7VHFWRUKDVQRZHOOGHƂQHGZD\\RI
measuring the quality of its products and services.
2QO\\IRXU,7ƂUPVZHUH,62FHUWLƂHGLQ
The Kenya ICT Board plans to introduce a localized
VRIWZDUHFHUWLƂFDWLRQSURJUDPPHLQ


No industry association supports the
attainment of standards.


6RIWZDUHGHVLJQWKDWIDFLOLWDWHVORFDOƂUPVpSDUWLFLSDWLRQ


3URPRWLQJLQWHURSHUDELOLW\\DQG
RSHQVWDQGDUGV


/LPLWHGXVH Currently in the planning stage.
7RGHƂQHLQWHURSHUDELOLW\\DQGVWDQGDUGVLVRQH
of the roles of the e-Government Directorate.


0RGXODUGHVLJQRI,7V\\VWHPVLQ
WKHSXEOLFVHFWRU


/LPLWHGXVH Some initiatives by the E-Government
Directorate have been taken to adopt modular
architecture for its shared services.


Full implementation requires considerable
investment and coordination that has not
yet been forthcoming. More systematic
treatment needed.


3URPRWLQJ)266 1R.HQ\\DGRHVQRWKDYHDQRIƂFLDOSROLF\\VXSSRUWLQJ
FOSS. In September 2012, the e-Government Directorate
indicated its intention to progressively migrate its IT
operations to FOSS.


Vendor lock-in, widespread presence of
proprietary solutions, and lack of adequate
human capacity limit the uptake of FOSS.


$ZDUHQHVVUDLVLQJDQGFDSDFLW\\GHYHORSPHQWIRUORFDOƂUPVDQGSXEOLFVHFWRURIƂFLDOV


$ZDUHQHVVUDLVLQJDQGFDSDFLW\\
GHYHORSPHQWIRUORFDOƂUPVDQG
SXEOLFVHFWRURIƂFLDOV


0RGHUDWHO\\ The Kenyan Institute of Supplies
0DQDJHPHQWSURYLGHVWUDLQLQJDQGFHUWLƂFDWLRQWRSXEOLF
SURFXUHPHQWRIƂFLDOVDQGLWHQYLVDJHVSURYLGLQJWUDLQLQJ
for SMEs and raising awareness of public procurement
provisions.


Lack of funding and inadequate
coordination has limited the reach of the
capacity development activities.


7DEOH 3URFXUHPHQWVWUDWHJLHVDGRSWHGLQ.HQ\\D(continued)


6RXUFHUNCTAD and BMZ.




47ANNEX 1 : CASE STUDIES


VHJPHQWLVVWLOODWDQHPEU\\RQLFVWDJH7KH:HVW$IUL-
can market, however, presents a good opportunity for
6HQHJDOHVHƄUPV)RULQVWDQFHDPDSSLQJRIWKH,&7
sector in Senegal commissioned by GIZ on behalf of
BMZ (GIZ/OPTIC 2012) found that, within the broader
,&7DQG ,7(6 LQGXVWU\\}SHUFHQWRI WKH ƄUPVVHU-
viced the regional market. Moreover, the report found
WKDWGHVSLWHPRVWRIWKHPEHLQJ60(V}SHUFHQW
RI6HQHJDOHVH,&7ƄUPVVHUYLFHGWKHJOREDOPDUNHWt
VXJJHVWLQJDJUHDWHU OHYHORI LQWHUQDWLRQDOL]DWLRQWKDQ
indicated in the InfoDev (2008) report. Many SMEs in
the industry operate in the informal sector, are rapidly
established and often disappear within a short period
of time (GIZ/OPTIC 2012).


7KH2UJDQL]DWLRQ RI 3URIHVVLRQDOV RI ,QIRUPDWLRQ DQG
Communication Technologies (OPTIC) is the only ICT
industry association in Senegal. OPTIC is a member
of the National Council of Employers and includes the
main ICT companies and telecommunications op-
erators. OPTIC works closely with the Government on
policy issues and provides a platform for public-private
dialogue and the promotion of partnership and invest-
ment.


1.2.2 Public procurement strategies
(VWDEOLVKLQJWKHEDVLFV


National policies in Senegal promote ICT both as a key
economic sector as well as a tool for improving the
functioning of the public administration and for facili-
tating access to public services.


7KH QHZ 3XEOLF 3URFXUHPHQW &RGH &03 GHƄQHV
favourable conditions for the participation of Sen-
HJDOHVH DQG :HVW $IULFDQ (FRQRPLF DQG 0RQHWDU\\
Union enterprises in public procurement. However,
the expected positive impact of this legislation has so
far been limited. The legislation is relatively new and
requires reconciliation with older codes to ensure a
coherent approach to public procurement.


The Government has forged a comprehensive col-
laboration programme with the German Government
to increase the competitiveness of Senegalese SMEs
in the ICT sector (among other sectors) (see box 8).
This is a medium term project – which may need to
continue for several years.


Senegal has a critical mass of IT-related public pro-
curement. The State Agency for Informatics (ADIE)
manages various e-government projects such as con-
nection of courts and the national ID project. Other
projects exist in e-education, e-health and e-trade.
GAINDE 2010, a customs management system, is
an advanced system managed by the government. A
port community system is planned.


According to the study commissioned by GIZ on
behalf of BMZ (GIZ/OPTIC 2012) (and based on
the data available in the public procurement portal),
between 2008 and 2010, the public administration
SURFXUHGELOOLRQ&)$IUDQFV}PLOOLRQDQQXDOO\\
RQ,&7JRRGVDQGVHUYLFHVVHH7DEOH}*,=237,&
2012). The Ministry of Economy and Finance was
the top procurer, followed by the Ministry of Urban


%R[ 'RQRUpVUROHLQSURPRWLQJ60(SDUWLFLSDWLRQWKHH[DPSOHRIWKH6HQHJDOHVH*HUPDQFRRSHUDWLRQ


The Government has forged a comprehensive collaboration programme, “Promoting the competitiveness and growth of
VPDOODQGPHGLXPVL]HGHQWHUSULVHVDQGFDSDFLW\\GHYHORSPHQWLQWKHPLFURƄQDQFHVHFWRUrZLWKWKH*HUPDQ)HGHUDO
Ministry for Economic Cooperation and Development to increase the competitiveness of Senegalese SMEs.38 The multi-
\\HDUSURJUDPPHIRFXVHVRQWKHSURPRWLRQRIWKH,&7VHFWRUDVRQHRIWKHSULRULW\\VHFWRUVGHƄQHGE\\WKH
Senegalese Government. In this regard, it aims at improving the participation of SMEs in public procurement, at establish-
LQJDJRRGXQGHUVWDQGLQJRIWKHORFDO,&7VHFWRULQFOXGLQJWKHFUHDWLRQRIDUHJLVWU\\IRUORFDO,&7ƄUPVDQGDWSURPRWLQJ
DQLQWHURSHUDELOLW\\DQGVWDQGDUGVIUDPHZRUNIRUSXEOLFVHFWRURUJDQLVDWLRQV6PDOO6HQHJDOHVH,&7ƄUPVDUHDPRQJWKH
PDLQEHQHƄFLDULHVRIWKHSURMHFW


7KHSURJUDPpVPDLQDSSURDFKLVWRSURPRWHSXEOLFSULYDWHGLDORJXHZLWKWKHDLPWRGHƄQHDQGLPSOHPHQWMRLQWVROXWLRQV
to the challenges faced by small enterprises because of an unfavourable business and investment climate. It promotes
DQGVXSSRUWVFRRSHUDWLRQEHWZHHQPLQLVWULHVJRYHUQPHQWDODQGQRQJRYHUQPHQWDORUJDQL]DWLRQVDVZHOODVZLWKWKH
private sector.


7RGDWHWKHSURJUDPPHKDVFDUULHGRXWDQH[WHQVLYHVXUYH\\LQFROODERUDWLRQZLWKWKH2UJDQL]DWLRQIRU,&7SURIHVVLRQDOV
(OPTIC) to map the state of the ICT sector in Senegal. It has also supported the Senegalese government in identifying
the major challenges to SMEs participation in public procurement and in promoting government systems interoperability.
Further activities to address these challenges will be implemented during the course of the program.


6RXUFHBMZ.




48 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


Development and Public Health and the Ministry of
Technical Education and Professional Training.


:KLOHQRWDOOUHODWHGSXEOLFSURFXUHPHQWDUHUHSRUWHG
in the portal (GIZ/OPTIC 2012), the study reveals a
high level of supplier concentration in the provision of
,&7VHUYLFHV WR WKHSXEOLF VHFWRU2XWRI WKH}GR-
PHVWLFƄUPVSDUWLFLSDWLQJ LQ ,&7SXEOLFSURFXUHPHQW
WKUHHƄUPVDFFRXQWHGIRU}SHUFHQWRIWKHWRWDO,&7
public procurement between 2008 and 2010.


Senegal relies on donor funding for the implementation
RI D VLJQLƄFDQW DPRXQW RI ,&7 DQG HJRYHUQPHQW
UHODWHG SURMHFWV VHH 7DEOH} :KLOH VRPH GRQRU
projects (for example, the University Cheikh Anta Diop
(UCAD)/ADIE project for connection of courts) have
LQYROYHGORFDOƄUPVWKHPDMRULW\\RIWKHSURMHFWVZHUH
H[HFXWHGH[FOXVLYHO\\E\\ IRUHLJQ ƄUPV VHH7DEOH}
The demand to procure the latest and best solution
KDVDOVRIDYRXUHGLQWHUQDWLRQDOƄUPV


1RWH ([FKDQJHUDWH &)$)UDQFV
6RXUFHGIZ/OPTIC (2012).


7DEOH 3XEOLFSURFXUHPHQWRI,&7HTXLSPHQWVHUYLFHV6HQHJDOLQWKRXVDQGVGROODUV


$XWKRULW\\ 2008 2010 Total


Ministry of Finance and Economic Development (Tax Directorate) 360 2'316 4'241 6'916


Ministry of Urban Development and Housing 3'934 - - 3'934


Ministry of Finance and Economic Development -
Information Management Directorate (DTAI)


819 2'303


Ministry of Technical and Vocational Education - 1'586 531 2'118


Ministry of Finance and Economic Development -
Economic and Financial Cooperation Directorate (DGF)


195 642 919


Ministry of Finance and Economic Development -
Customs Director General (DGD)


1'200 - - 1'200


Ministry of Finance and Economic Development -
Directorate of Administration and Equipment


- -


Ministry of Finance and Economic Development -
Customs Director General (DGD/DPL)


- -


Ministry of Finance and Economic Development -
Customs Director General (DGD)/DPL/BSB)


- -


State Agency for Informatics - -


Ministry of Finance and Economic Development (DSPRV) - 689 - 689


Ministry of Finance and Economic Development (CEPDPS) 622 - - 622


Ministry of Education for Pre-School, Elementary & Intermediate Levels
Education


146 561


Ministry of Armed Forces 464 - - 464


Ministry of Finance and Economic Development (PCRBF) 98 350 -


Ministry of Health and Public Hygiene - -


Chief Cabinet Secretary (SAGE) 218 220 - 439


Ministry of Technical and Vocational Education - 323 102 425


Deposits and Consignments Fund - 368 - 368


Ministry of Interior (DBM) 92 98 358


Total 33'222




49ANNEX 1 : CASE STUDIES


6RXUFHBased on Brunsiek and Restel (2011) and communications from Ministry of Economy and Finance.


7DEOH /LVWRI,7SURMHFWVLQWKHSXEOLFDGPLQLVWUDWLRQ6HQHJDO


0LQLVWU\\3XEOLFHQWLW\\ 3URMHFWQDPH 'HVFULSWLRQ 3DUWLFLSDQWFRXQWU\\ )LQDQFLQJ7HQGHUW\\SH


State Agency for
Informatics (AIDE)


SAFI Government Intranet project,
Internet sites and national
portal


Governments of the
Republic of Korea
and China


([WHUQDOƂQDQFLQJ,QWHUQDWLRQDOFDOO
for tenders under the partnership
agreement (China/ Korea)


Ministry of Economy
and Finance


SYGMAP Procurement management
system, a software for
monitoring procurement
value chain


Financed by the
Government of
Senegal


,QWHUQDOƂQDQFLQJ2SHQFDOOIRU
tender (national)


Ministry of Economy
and Finance-DTAI


Payroll management system Tunisia External funding (World Bank)/
International call for tenders


Ministry of Economy
and Finance


ASTER 3XEOLFƂQDQFLDODQG
accounting system


France International call for tenders under
the partnership agreement


Ministry of Economy
and Finance


Gaïnde
ORBUS


Integrated customs system. Senegal (VWDEOLVKPHQWRIDƂUP*,(*DÌQGH
2000 for ORBUS) and internal IT staff
from the Customs Directorate
(for GAINDE)


Ministry of Economy
and Finance


SIGFIP ,QWHJUDWHGSXEOLFƂQDQFH
management system


Cote d’Ivoire International call for tenders under the
partnership agreement


Ministry of Economy
and Finance


SIGTAS ,QWHUQDOƂQDQFHWD[
management system


Canada ([WHUQDOƂQDQFLQJLQWHUQDWLRQDOFDOO
for tenders


Ministry of Public
Administration


GRH Human resources management
database


Senegal ,QWHUQDOƂQDQFLQJQDWLRQDOFDOOIRU
tenders


Ministry of Interior National ID
Project


A national identity card,
electoral list, passport


Senegal/ Malaysia ,QWHUQDOƂQDQFLQJRSHQFDOOIRUWHQGHU
and within the partnership agreements


Ministry of Justice - Connection of courts (carried
out with AIDE)


- Development of an application
for judicial authorities (carried
out with the University Cheikh
Anta Diop (UCAD))


Senegal
(UCAD/AIDE)


([WHUQDOƂQDQFLQJ(XURSHDQ8QLRQ


Partly because of the informality and rapid turnover
of SMEs in the sector, there is limited information
available on the portfolios and capabilities of ICT
ƄUPV LQ 6HQHJDO 7KLV FRQVWUDLQV GHFLVLRQPDNHUV
(both private and public actors) in designing strate-
gies for the development of the sector. To address
this shortcoming, the Senegalese-German SME
Competitiveness Programme is in the process of
developing further mapping mechanisms for the
VHFWRU 3XEOLF RIƄFLDOV SDUWLFLSDWH LQ WKH RQJRLQJ
dialogue between IT companies and public institu-
tions in collaboration with the industry association
OPTIC.


,QVWLWXWLRQDOIUDPHZRUN


There is limited coordination among institutions in-
volved in IT-related public procurement. The State
Agency for Informatics (Agence de Développement
de l’Informatique de l’État -ADIE) is responsible for


the national e-government strategy, the automation of
public sector institutions, and the development of an
e-government architecture and interoperability frame-
work. However, Ministries, Departments, and other
government entities are generally independent in the
way they acquire products and services.


Strong leadership could enhance policy coherence
and coordination among public institutions.


There is no agency spearheading public procure-
PHQW IRU ORFDO ,7 VHFWRUGHYHORSPHQW:KLOH$',( LV
responsible for the national e-government strategy,
the automation of public sector institutions and the
development of an e-government architecture and in-
teroperability framework, it does not coordinate public
IT procurement. Different ministries and departments
purchase IT independently. Some of these tenders are
overseen by DCMP, but there is limited coordination
between ADIE and DCMP.




50 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


3URPRWLQJJRRGSURFXUHPHQWSUDFWLFHVDQG
RWKHUPHDVXUHVVXSSRUWLQJ60(SDUWLFLSDWLRQ
LQSXEOLFSURFXUHPHQW39


Senegal has established sound policy, institutional,
and legislative frameworks for public procurement
and has updated the corresponding laws. In 2008,
an auto-evaluation of its overall public procurement
system based on the OECD-DAC methodology situ-
ated Senegal in the group B (A-best performance,
D-weakest performance).40 The most important legal
document in the context of public procurement is the
Public Procurement Code (Code des marchés publics
– CMP) enacted in 2011.


An institutional framework for managing and overseeing
public tenders has also been set up. The Central Depart-
ment for Public Procurement (DCMP) is responsible for
overseeing key public procurement projects a priori and
the Public Procurement Regulatory Agency (ARMP) for
overseeing projects a posteriori and for regulation.


The CMP includes various provisions for the promo-
WLRQRIORFDO60(VDQGGHƄQHVWKHIROORZLQJPHDVXUHV


• Breaking down large tenders into smaller packages
to encourage SMEs participation.


• /RFDO DQG:HVW$IULFDQ(FRQRPLFDQG0RQHWDU\\
8QLRQ :$(08 60(V FDQ EH JLYHQ SUHIHUHQFH
SURYLGHG WKH\\ KDYH HTXLYDOHQW TXDOLƄFDWLRQV DQG
DUH QRW PRUH WKDQ } SHU FHQW PRUH H[SHQVLYH
than international applicants.


• Tender guarantees are not required for software
and computer services or for group biddings when
the volume of the contract is below $100,000.


• All bids should be evaluated transparently on the
basis of consistent selection criteria and rejected
candidates must be informed.


A number of supplementary criteria apply to the ten-
GHURI,QWHOOHFWXDO6HUYLFHVLQFOXGLQJ,7VHUYLFHV


• Only preselected suppliers can bid.
• The technical quality of the offer (both in terms


RI ƄUPVpH[SHULHQFHDQG WKH WHFKQLFDOGLPHQVLRQ
of the proposal), and not only the price, is a key
evaluation criteria.


However, tenders for purchases that involve both the
acquisition of IT goods and services are often clas-
VLƄHG DV HTXLSPHQW WHQGHUV DQG GR QRW LQFOXGH WKH
additional criteria for intellectual services. As a conse-
quence, these tenders may not include the necessary
elements that would allow interested suppliers to fully
evaluate the tender.


Notwithstanding the provisions for the promotion of
ORFDO60(VWKHSDUWLFLSDWLRQRIWKHVHƄUPVLQWKHSXE-
lic procurement system has so far been limited. Main
EDUULHUVLQFOXGH
• Complex legislation, where procedures and


provisions are distributed over different laws and
regulations. SMEs usually lack the expertise or
UHVRXUFHVWRXQGHUVWDQGWKHRYHUDOOSURFHGXUH


• Prerequisites for bidding, such as evidence of at
least three years’ experience, tender guarantees in
the case of tenders for ICT goods, or the necessity
WRSXUFKDVHWHQGHUGRFXPHQWV


• 8QFOHDU WHFKQLFDO VSHFLƄFDWLRQV SUHYHQW WKH
VXEPLVVLRQRIDFRPSHWLWLYHELGDQG


• Missing feedback in cases where bids were
rejected.


The Government has taken steps to increase trans-
parency by ensuring that public tenders are available
through a central web site – www.marchespublics.sn.


It is unlikely that the public administration will accept
proof of quality other than previous work (i.e. quality
FHUWLƄFDWLRQVVLQFHWKHUHLVOLPLWHGSURJUHVVRQFHUWLƄ-
FDWLRQRIƄUPVLQWKH,7VHUYLFHVVHFWRU


6RIWZDUHGHVLJQ


Senegal has not yet published an interoperability
framework or architectural standards. As mentioned
earlier, ADIE is responsible for the development of an
e-government architecture and interoperability frame-
work. However, the lack of coherent and consistent
guidelines for ICT and e-government-related projects
on the part of the government, as well as a lack of co-
RUGLQDWLRQDPRQJGRQRURUJDQL]DWLRQVKDVUHVXOWHGLQ
the purchase of heterogeneous ICT systems, creating
interoperability problems.


:LWKWKHVXSSRUWRIWKH6HQHJDOHVH*HUPDQFRRSHUD-
tion program (see box 8), the government has taken
steps to promote IT standards and interoperability
IUDPHZRUNEHWZHHQSXEOLFLQVWLWXWLRQV7KHODFNRIƄ-
nancial resources and technical capabilities and the
limited use of ADIE for promoting IT standards and
interoperability framework have stalled progress in this
area, however.


The Government has also taken some practical steps
to encourage the use of open source software in the
public sector. ADIE has set an example by using open
source software for its operations. It runs Linux on
LWVƄOHHPDLODQGGLUHFWRU\\VHUYHUVDQGXVHV0\\64/
AB’s open-source database. Its enterprise resource




51ANNEX 1 : CASE STUDIES


planning solutions also run on Linux servers.41 Despite
the encouragement by ADIE and universities to use
FOSS, there is a lack of adoption of FOSS by public
institutions, in which there is still a tendency to prefer
proprietary software. The absence of a critical mass of
FOSS developers in the public sector and of technical
support, as well as the lack of a clear policy support-
ing the use of FOSS in the public sector, explain the
limited uptake of FOSS in public institutions in Senegal
DVLVWKHFDVHDOVRLQRWKHU:HVW$IULFDQHFRQRPLHV42


$ZDUHQHVVUDLVLQJDQGFDSDFLW\\EXLOGLQJ


The Government has implemented a number of train-
ing courses and seminars, provided by DCMP and


ARMP. For instance, in cooperation with Germany (and
possibly other donors), a training course is planned for
JRYHUQPHQWRIƄFLDOVLQYROYHGLQSXEOLFSURFXUHPHQWWR
LPSURYHWKHWHFKQLFDOVSHFLƄFDWLRQVRI,7WHQGHUV


The government has an annual training plan for ca-
pacity building in public procurement. Since 2008,
over 6,000 actors have received training.43 How-
ever, interviews with stakeholders indicated capacity
weaknesses among stakeholders in regard to public
procurement of IT services.


7DEOH}VXPPDUL]HVKRZWKHVHYHQEURDGVWUDWH-
gies described in chapter 3 have been applied in
Senegal.


7DEOH 3URFXUHPHQWVWUDWHJLHVDGRSWHGLQ6HQHJDO


+DVWKHVWUDWHJ\\EHHQDSSOLHGLQ6HQHJDO" ,PSDFWVFRPPHQWV


(VWDEOLVKLQJWKHEDVLFV


3XEOLFSURFXUHPHQWDVSDUWRI,7
VHFWRUSURPRWLRQVWUDWHJLHV


Yes. National policies in Senegal promote ICTs both as
a key economic sector, and as a tool for improving the
functioning of the public administration and for facilitation
of access to public services.


The Public Procurement Code (CMP) enacted in 2011
GHƂQHVIDYRXUDEOHFRQGLWLRQVIRUWKHSDUWLFLSDWLRQRI
Senegalese and WAEMU SMEs in public procurement.


The Senegalese-German SME competitiveness programme
supports the participation of SMEs in public procurement.


Actual focus is on promoting the export of
BPO services.


The legislation is relatively new and
requires reconciliation with older codes
to ensure a coherent approach to public
procurement


Medium term project – may need to
continue for several years.


&ULWLFDOPDVVRI,7UHODWHG
SURFXUHPHQW


Yes. The State Agency for Informatics (ADIE) manages
various e-government projects such as connection of
courts and the national ID project. Other projects exist
in e-education, e-health and e-trade. GAINDE 2010, a
customs management system, is an advanced system
managed by the Government.


/RFDOƂUPVDUHHQFRXUDJHGWRSDUWLFLSDWH
in national e-government projects.
Most donor-funded projects, however,
DUHELDVHGWRZDUGVLQWHUQDWLRQDOƂUPV


8QGHUVWDQGLQJWKHFXUUHQWVWDWH
RIWKHORFDO,7VHUYLFHVLQGXVWU\\


0RGHUDWHO\\ The Senegalese-German SME
Competitiveness Programme has developed a
mapping of the ICT sector in Senegal.


/DFNRIZHOOGHƂQHGQDWLRQDOSODQIRU
registration of SMEs.


6WUHQJWKHQLQJWKHLQVWLWXWLRQDOIUDPHZRUN


&RRUGLQDWLRQDFURVVWKHSXEOLF
VHFWRUDQG
WKHLQGXVWU\\


0RGHUDWHO\\ There is limited coordination among
institutions involved in ICT-related public procurement.


3XEOLFRIƂFLDOVSDUWLFLSDWHLQWKHRQJRLQJGLDORJXH
between IT companies and public institutions in
collaboration with industry association OPTIC.


Lack of leadership for coordination of
public ICT procurement and inadequate
linkages between ICT policy and public
procurement policy.


Dialogue with private sector is not regular.


$JHQF\\GHSDUWPHQWVSHDUKHDGV
SXEOLFSURFXUHPHQWIRUORFDO,7
VHFWRUGHYHORSPHQW


1R ADIE is responsible for the national e-government
strategy, the automation of public sector institutions, and
the development of an e-government architecture and
interoperability framework. ADIE does not coordinate public
IT procurement. Ministries and departments purchase IT
independently. Some tenders are overseen by DCMP.


Limited coordination between ADIE and
DCMP.




52 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


3URPRWLQJJRRGSURFXUHPHQWSUDFWLFHV


,PSOHPHQWLQJWUDQVSDUHQW
DQGRSHQWHQGHUSURFHGXUHV


/LPLWHG Initiatives are underway for improving good
procurement practices. The CMP promotes good
procurement practices and the web portal aims to
increase transparency. The Senegalese-German SME
competitiveness programme outlines measures for
HQKDQFLQJWKHTXDOLW\\RIWHFKQLFDOVSHFLƂFDWLRQV


The 2008 auto-evaluation score of its overall
public procurement system is B (A-best,
D-weakest). Interviews suggest that lack of
awareness, inadequate technical content of
tendering documents, and limited feedback
on tender evaluation outcomes are some of
the challenges ahead.


'HSOR\\LQJHSURFXUHPHQW
V\\VWHPV


/LPLWHG DCMP has established a portal for public tenders
www.marchespublics.sn .


Not all public tenders have been published
online.


/LPLWLQJPDUNHWHQWU\\IRUIRUHLJQELGGHUV


([FOXVLRQRIIRUHLJQELGGHUV 1R


$OORFDWLRQRISUHIHUHQWLDOPDUNV
IRUORFDOH[SHULHQFHORFDO
ODQJXDJHDQGORFDOSUHVHQFH


Yes. The legislative framework (CMP) provides for
DZDUGLQJFRQWUDFWVWRTXDOLƂHGORFDO60(VHYHQLIWKH
RIIHUSULFHLV}SHUFHQWKLJKHUWKDQWKDWRIDTXDOLƂHG
IRUHLJQƂUP


The CMP was adopted in 2011 but has
not been fully implemented. Its impact in
encouraging the participation of local ICT
enterprises has yet to be seen.


0LWLJDWLQJWKHHIIHFWVRILQIRUPDWLRQDV\\PPHWULHVLQSURFXUHPHQW


&RQFHVVLRQVRQELGDQG
SHUIRUPDQFHJXDUDQWHH
UHTXLUHPHQWV


1R No progress has been made in removing bid guarantee
requirements.
The Senegalese-German SME competitiveness programme
outlines measures for reducing onerous requirements.


The CMP and older codes still include
onerous requirements such as a security
GHSRVLWRI}SHUFHQWIRUKDUGZDUHDQG
}SHUFHQWRIWKHSURFXUHPHQWRIJRRGVDQG
services exceeding $ 100,000.
Firms are still required to submit evidence
of at least three years expertise in same
area and a detailed turnover of the last
three years.


$FFHSWLQJSURRIRITXDOLW\\RWKHU
WKDQSUHYLRXVZRUN


1R /LPLWHGSURJUHVVRQFHUWLƂFDWLRQRI
ƂUPV1RIRUPDOSODQH[LVWVWRHQFRXUDJH
FHUWLƂFDWLRQRUTXDOLW\\FRQWURORI
SURIHVVLRQDOVDQGƂUPVLQWKH,&7VHFWRU


6RIWZDUHGHVLJQWKDWIDFLOLWDWHVORFDOƂUPVpSDUWLFLSDWLRQ


3URPRWLQJLQWHURSHUDELOLW\\DQG
RSHQVWDQGDUGV


/LPLWHG With the support of the German-Senegal SMEs
competitiveness programme, the government has taken
a series of actions to promote an interoperability and
standards framework.


/DFNRIƂQDQFLDOUHVRXUFHVDQGWHFKQLFDO
capability. Limited utilization of ADIE for
promoting an interoperability and standards
framework.


0RGXODUGHVLJQRI,7V\\VWHPVLQ
WKHSXEOLFVHFWRU


/LPLWHG With the support of the German-Senegal SMEs
competitiveness programme, the government has taken
a series of actions to promote an interoperability and
standards framework.


/DFNRIƂQDQFLDOUHVRXUFHVDQGWHFKQLFDO
capability. Limited utilization of ADIE for
promoting an interoperability and standards
framework.


3URPRWLQJ)266 /LPLWHG ADIE and universities encourage the use of FOSS. Despite the encouragement by universities
and ADIE, there is a lack of adoption of
FOSS by public institutions and absence
of a critical mass of FOSS developers
in the public sector. Tendency to prefer
proprietary software over FOSS.


$ZDUHQHVVUDLVLQJDQGFDSDFLW\\GHYHORSPHQWIRUORFDOƂUPVDQGSXEOLFVHFWRURIƂFLDOV


$ZDUHQHVVUDLVLQJDQGFDSDFLW\\
GHYHORSPHQWIRUORFDOƂUPVDQG
SXEOLFVHFWRURIƂFLDOV


/LPLWHGThe government has an annual training plan for
capacity building in public procurement.
In cooperation with Germany (and possible other donors) a
WUDLQLQJFRXUVHIRUJRYHUQPHQWRIƂFLDOVLQYROYHGLQSXEOLF
SURFXUHPHQWWRLPSURYHWKHWHFKQLFDOVSHFLƂFDWLRQVRI,7
tenders is being planned.


,QVXIƂFLHQWFDSDFLW\\GHYHORSPHQWDQG
inadequate coordination between agencies.
Interviews with stakeholders indicate
capacity weaknesses among stakeholders
in regard to public procurement of IT
services.


7DEOH 3URFXUHPHQWVWUDWHJLHVDGRSWHGLQ6HQHJDO(continued)


6RXUFHUNCTAD and BMZ.




53ANNEX 1 : CASE STUDIES


1.3 SRI LANKA


1.3.1 ICT market and sector
characteristics


,Q 6UL /DQNDpV ,&7 VHFWRU FRQWULEXWHG } SHU
FHQW WR WKH*'3 GRZQ IURPDERXW}SHUFHQW LQ
2007), and was the largest contributor to GDP growth
(Central Bank of Sri Lanka, 2007 and 2010).


Exports of software products and services dominate
WKH ,7 LQGXVWU\\7KH\\KDYHJHQHUDWHGRYHU}PLO-
OLRQLQUHYHQXHVLQXSIURP}PLOOLRQLQ
}SHU FHQW JURZWK 3:& ([SRUW UHYHQXHV
are almost evenly split between software products and
services (unlike neighbouring India in which exports
are dominated by software services). The production
of software products is an important factor for ICT
sector development, because it contains more value
addition and can bring intellectual property based rev-
enues in the long term.


As in the other two countries, there is no significant
ICT manufacturing, though some assembly work
takes place for computer and peripheral equip-
ment.


In 2010, the IT sector in Sri Lanka comprised
}FRPSDQLHVHQJDJHGLQH[SRUWVRIWKHPZHUH
VPDOOOHVVWKDQHPSOR\\HHVZHUHPHGLXPVL]HG
HPSOR\\HHVDQGKDGPRUHWKDQ}HP-
ployees. These companies employed over 10,000
SHRSOH}SHUFHQWPRUHWKDQLQ3:&
In 2011, the Economist Intelligence Unit ranked the
Sri Lankan IT industry 56th in overall competitiveness
out of 66 countries (as a point of reference, India was
ranked 34th)44.


:KLOHVRPHƄUPVRQO\\SURGXFHVRIWZDUHIRUH[SRUWV
PDQ\\ RWKHU ƄUPV ODUJH DQG VPDOO WDUJHW WKH ORFDO
market and have local clients in the private and pub-
lic sector. The reasons for targeting the local market
include diversifying sales geographically to mitigate
LQFRPH ƅXFWXDWLRQV DQG DFTXLULQJ H[SHULHQFH LQ
government e-service systems as a reference for fu-
ture bids for international projects.


The largest industry association is the Software Ex-
porters Association. However, the most relevant
association to support the development of smaller
ORFDO ,7ƄUPV LV WKH)HGHUDWLRQRI ,QIRUPDWLRQ7HFK-
nology Industry Sri Lanka (FITIS), an umbrella
RUJDQL]DWLRQUHSUHVHQWLQJWKHLQWHUHVWVRIPRUHORFDO
,&7ƄUPV


1.3.2 Public procurement strategies
(VWDEOLVKLQJWKHEDVLFV


The Government of Sri Lanka has clearly placed public
procurement as part of IT sector promotion strategies,
particularly in the context of the e-Sri Lanka Initiative.


The e-Sri Lanka Initiative, a large ICT-enabled de-
velopment program established in 2003, includes a
3ULYDWH 6HFWRU'HYHORSPHQW 3URJUDP 36'3:KLOH
the visible activities of the PSDP have focused almost
exclusively on exports (i.e. promoting Sri Lanka as a
premier destination for IT and ITES outsourcing), the
initial design of e-Sri Lanka/ICTA took into account the
QHHGWRSURPRWHORFDOƄUPVGXULQJHJRYHUQPHQWSURM-
ect procurement.


Sri Lanka has a critical mass of IT-related procurement.
The e-Sri Lanka Initiative was budgeted at around
} PLOOLRQ ZLWK } PLOOLRQ IXQGHG E\\ WKH :RUOG
Bank, and the remainder by the Government of Sri
/DQNDDQGRWKHUGRQRUV$QRWKHUDGGLWLRQDO}PLO-
OLRQKDYHVXEVHTXHQWO\\EHHQDOORFDWHGE\\ WKH:RUOG
Bank. A key pillar in the e-Sri Lanka Initiative was the
Re-Engineering Government Program, whose aim has
been to reform public sector processes and to bring
SXEOLFVHUYLFHVRQOLQH6RIDUDERXW}SHUFHQWRIWKH
LQLWLDOH6UL/DQNDEXGJHWRUDURXQG}PLOOLRQKDYH
been allocated to the programme and disbursed to
procure IT services and IT equipment. The program
includes a number of projects for automating public
sector processes (e.g. ePensions, eRevenue License,
eSamurdhi (social protection payment scheme)), for
creating large data repositories to be used by these
automated processes (e.g. ePopulation Register,
Land-registry) as well as a broadband network – the
Lanka Government Network – that connects public
VHFWRU RUJDQL]DWLRQV DFURVV WKH FRXQWU\\ ,Q DGGLWLRQ
funding for common services such as a Government
Internet Data Center and payment gateways are pro-
vided under the project, as is funding for the websites
RIPRVWSXEOLFVHFWRURUJDQL]DWLRQV


The total ICT budget for the public sector is not pub-
OLVKHGDQGLVGLIƄFXOWWRHVWLPDWH0DQ\\SXEOLFVHFWRU
funded projects have IT components, large or small.
7KH}PLOOLRQIRUH*RYHUQPHQWKDVEHHQƄQDQFHG
E\\WKH:RUOG%DQNRWKHUGRQRUVDQGWKH*RYHUQPHQW
of Sri Lanka. The Asian Development Bank (funding
a large IT in Education initiative), the United Nations
Development Programme, and the Japanese Inter-
national Cooperation Agency have also funded IT
projects in the public sector of Sri Lanka. In addition,




54 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


the Government uses its own funds for the procure-
ment of IT goods and services, independent of the
e-Sri Lanka initiative.


The Government of Sri Lanka has made clear efforts
to understand the current state of the local IT services
industry and coordinate with the sector. Surveys and
publications on the IT sector and its workforce are
available.


6WUHQJWKHQLQJWKHLQVWLWXWLRQDOIUDPHZRUN


ICTA has a clear leading role for e-government projects.
The handling of a large volume of e-government projects
as well as its level of authority to set policy on technical
matters, has enabled ICTA to take a visible and lead-
ing role in promoting e-government and encouraging the
SDUWLFLSDWLRQRIORFDO,&7ƄUPVLQSXEOLFVHFWRUWHQGHUV


The public sector has formal and informal interactions
with multiple industry associations. Meanwhile, coor-
dination across the public sector takes place only to
a limited extent. For instance, while the 2011 budget
VSHFLƄHGWKDWDOO,&7SURFXUHPHQWVVKRXOGJRWKURXJK
ICTA, this does not always happen in practice. Strate-
gies coordinated and implemented through ICTA are
seen as positive by interviewees, even though not all
JRYHUQPHQWRUJDQL]DWLRQVDGKHUHWRWKHP


3URPRWLQJJRRGSURFXUHPHQWSUDFWLFHV


:KLOHWKH:RUOG%DQNSURFXUHPHQWSUDFWLFHVXVHGE\\
ICTA are perceived to be burdensome, almost all the
interviewees claimed that they were fair and transpar-
HQW6RPH IRXQG WKDW WKH:RUOG%DQNpVSURFXUHPHQW
practices (as implemented by ICTA) were the most
straightforward because the process is documented
and published, the contract conditions are published
along with the call for tenders, and the requirements are
clearly spelled out. Government-funded procurements
were considered opaque. During interviews, examples
ZHUHFLWHGRI ODUJH ƄUPVZLWK WKH qULJKW FRQQHFWLRQVr
having won government-funded tenders that provided
outdated technology or did not provide value for money.
For these reasons, many of the interviewees, including
those that have unsuccessfully bid for ICTA tenders,
have indicated a clear preference for participating in
ICTA’s tenders over other public projects.


3URPRWLQJORFDO60(SDUWLFLSDWLRQLQSXEOLF
SURFXUHPHQW


ICTA has had remarkable success in assisting local
,7ƄUPVZLQNH\\ WHQGHUV7DEOH}FRQWDLQV LQIRUPD-
tion on 13 key e-Services procured by ICTA. Of those
tenders, all but one included at least one local partner


LQ WKHZLQQLQJELG/RFDOƄUPVHLWKHU LQGLYLGXDOƄUPV
RUMRLQWYHQWXUHVRIWZRRUPRUHORFDOƄUPVKDYHZRQ
VHYHQRIWKHWHQGHUV7KHRWKHUƄYHZHUHDZDUGHGWR
MRLQWYHQWXUHVEHWZHHQORFDODQGLQWHUQDWLRQDOƄUPV


In 2005, the Ministry of Finance issued a circular (a di-
UHFWLYHLVVXHGWRDOOSXEOLFVHFWRURUJDQL]DWLRQVVWDWLQJ
that “All Public Sector Agencies, including state banks
DQGFRUSRUDWLRQVVKRXOGHQVXUHDPLQLPXPRI}SHU
cent value addition from a local partner in Sri Lanka, if
the software is bought from a foreign supplier”.45 During
interviews, however, it became clear that many stake-
holders were not aware of the policy. Those that were
aware of it were the IT industry professionals that had
been involved in the lobbying activities leading to it, and
the procurement professionals within ICTA. However,
DOOWKRVHLQWHUYLHZHGUHFRJQL]HGWKDWWKHFLUFXODUKDVQRW
yet been effectively implemented. No tenders meeting
the above mentioned requirement could be found. In its
current form, the directive may not be practical because,
DVLQGXVWU\\H[SHUWVFODLPWKH}SHUFHQWYDOXHDGGLWLRQ
is too high a bar to cross. For example, local systems
LQWHJUDWRUVVD\\ WKH\\FDQ UDUHO\\DGGPRUH WKDQ}SHU
cent in value on a project if the software is licensed from
overseas. Moreover, foreign funded IT projects are ruled
by bilateral agreements which prevent the implementa-
WLRQRIVXFK}SHUFHQWORFDOYDOXHDGGLWLRQFODXVH


ICTA has also successfully used the opportunities
available to provide domestic preference within inter-
nationally competitive bidding. In tender evaluations,
,&7$KDVUHJXODUO\\DOORFDWHGPDUNVXSWR}SHUFHQW
RIWKHWRWDOPDUNVDVDOORZHGE\\:RUOG%DQNUXOHVWR
GRPHVWLFƄUPVLHWKRVHUHJLVWHUHGDVƄUPVXQGHUWKH
laws of Sri Lanka). This practice has promoted joint
YHQWXUHVEHWZHHQLQWHUQDWLRQDODQGORFDOƄUPVZKLFK
over time, have encouraged knowledge transfer and
WHFKQRORJLFDO OHDUQLQJ E\\ ORFDO ƄUPV ,QWHUYLHZVZLWK
industry stakeholders show instances where a local
ƄUPDFWLQJDV MXQLRUSDUWQHU LQD MRLQWYHQWXUH LQLWLDOO\\
started providing only basic technical support to the
client after system implementation. However, during
DVHFRQGLPSOHPHQWDWLRQRIDVLPLODUV\\VWHPWKHƄUP
was able to handle more complex technical support,
thus increasing local value addition.


Concessions on bid and performance guarantee re-
quirements are not made in public sector tenders.
Potential bidders do not necessarily consider such
guarantee requirements to be a barrier to entry. On the
RWKHUKDQGTXDOLW\\FHUWLƄFDWLRQVKDYHEHHQDFFHSWHG
DVSURRI RI TXDOLW\\4XDOLW\\ FHUWLƄFDWLRQV DUH LQFUHDV-
LQJO\\FRPPRQDPRQJƄUPVLQ6UL/DQND7KHPDMRULW\\




55ANNEX 1 : CASE STUDIES


RI,&7H[SRUWLQJƄUPVKDYHVRPHTXDOLW\\FHUWLƄFDWLRQ
3:&


Technology-related strategies adopted by ICTA are
paving the way for local SMEs to participate in ten-
ders. These include the incremental deployment of
interoperability standards and the implementation of a
PRGXODUHJRYHUQPHQWDUFKLWHFWXUH7KHVPDOOVL]HRI
each module has resulted in tenders more attractive to
60(VDQGORFDOƄUPVZLWKVSHFLƄFH[SHUWLVH+RZHYHU
QR RIƄFLDO SROLF\\ VXSSRUWLQJ )266XVH LQ WKH SXEOLF
administration appears to exist. Interviewees cited sig-
QLƄFDQWOREE\\LQJE\\SURSULHWDU\\ƄUPVDVDUHDVRQZK\\
a public sector FOSS policy had not been adopted.


To support the use of a modular e-government
architecture, ICTA has adopted additional quality as-


surance mechanisms. For example, it has used third
party tools46 to track software faults. It has also started
KLULQJVHSDUDWHTXDOLW\\DVVXUDQFHƄUPVWRHQVXUHWKH
TXDOLW\\ RI WKH VRIWZDUH GHYHORSHG E\\ WKH ƄUPV WKDW
won the tenders. ICTA established panels of senior
experts and formed the Software Architecture Group
of Experts (SAGE) committees. Each key e-Services
project has a SAGE committee, which meets at regu-
lar intervals, especially during the software design
phase. The vendor has to present its system design
for evaluation and has to answer questions posed by
the SAGE committee. A key factor that has enabled
SAGE committees to improve the quality of systems
being designed is that the members of each SAGE
committee have been handpicked for their expertise
and include some of the top experts in Sri Lanka.


3URMHFWV\\VWHPIRUZKLFKSURFXUHPHQW
ZDVFDUULHGRXW


1XPEHURISDUWLHV
VXEPLWWLQJ([SUHVVLRQ
RI,QWHUHVWVWDJH


)LQDOFRQWUDFW
DZDUGHGWR


&RQWUDFW
YDOXH


8VHRIPDUNVIRUORFDO
SUHVHQFHRUORFDO


H[SHUWLVHLQHYDOXDWLRQ
LQVWDJHRU


1 ePensions [Automation of government
employee pension payments] ƂUPV


-9RIƂUPV
(2 local and 1 int’l ) pp Yes, 5%


2 eServices Quick Win [Pilot project for proof
of concept] ƂUPV-9V


-9RIƂUPV
(1 local and 1 int’l) p Yes, 5%


3 Lanka Gate eServices Project ƂUPV-9V ORFDOƂUP p Yes, 5%


4 Lanka Gate eServices projects for
Department of Examinations and National
Water Supply and Drainage Board


ƂUPV-9V -9RIƂUPV(1 local and 1 int’l ) p Yes, 5%


5 Lanka Gate eServices projects for
Department of Immigration and Emigration
and Bureau of Foreign Employment


ƂUPV-9V -9RIƂUPV(1 local and 1 int’l) p Yes, 5%


6 Sahana Disaster Management System for
the National Disaster Relief Services Centre ƂUPV-9V -9RIORFDOƂUPV p Yes, 5%


e-Divisional Secretariats [Regional
government administrations] ƂUPV-9V LQWpOƂUP p No


8 eHRM [e-Human Resource Management] ƂUPV -9RIORFDOƂUPV p Yes, 10%


9 e-Samurdhi – HRM Module [Samurdhi is
the social welfare payment system]


ORFDOƂUPV
LQWpOƂUPV
1 JV (local + int’l)


ORFDOƂUP p Yes, 15%


10 e-Samurdhi – CRM module ORFDOƂUPVLQWpO
ƂUPV-9ORFDOLQWpO ORFDOƂUP 98’000 No


11 e-Samurdhi – PPM Module ORFDOƂUPVLQWpO
ƂUPV-9ORFDOLQWpO


JV with local lead
partner 115’500 No


12 e-Samurdhi – SQA ORFDOƂUPV ORFDOƂUP 100’500 No


13 Provincial Land Management Information
System ORFDOƂUPV ORFDOƂUP 50’000 No


7DEOH 0DMRU,7V\\VWHPSURFXUHPHQWSURMHFWVFDUULHGRXWXQGHUH6UL/DQNDH*RYHUQPHQWSURJUDP


1RWH -9 -RLQW9HQWXUHLQWpO ,QWHUQDWLRQDO
(*) 9DOXHLQLVDSSUR[LPDWHGEDVHGRQDQH[FKDQJHUDWHRI /.5
6RXUFHICT Agency of Sri Lanka.




56 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


%R[ 3XEOLFSURFXUHPHQWRI,7(6VXSSRUWVORFDOƂUPVLQ6UL/DQND


In contrast to Kenya and Senegal , the Sri Lankan ITES sector is smaller than the software sector (while also being
GRPLQDWHGE\\H[SRUWV ,Q WKH ,7(6H[SRUWVHFWRUKDGJHQHUDWHGRQO\\PLOOLRQ LQUHYHQXHZLWKƄUPVHQ-
JDJHGLQDFWLYLWLHV3:&7KHUHLVOLWWOHORFDORXWVRXUFLQJE\\6UL/DQNDQƄUPVWRƄUPVWKDWDUHQRWSDUWRIWKHSDUHQW
company group.


The public sector is not a frequent user of BPO. However, one exception is the Government Information Centre (GIC) that
ZDVHVWDEOLVKHGLQWRKDQGOHFLWL]HQFDOOVUHODWHGWRYDULRXVSXEOLFVHUYLFHV,QVWHDGRIFUHDWLQJDQHZFDOOFHQWUH
staffed by public sector employees, the private sector was invited to bid for the contract to operate the GIC. The logic
behind this was that Sri Lanka had a large number of call centres already established that were serving the US and UK
markets. The time difference meant that call centres were mostly unused during daytime, i.e. business hours when citi-
]HQVZRXOGFDOOWRPDNHTXHULHVDERXWSXEOLFVHUYLFHV7KHH[SHFWHGFRVWVDYLQJVZHUHDPRWLYDWRUIRUWKHSURFXUHPHQW
of private sector services for the GIC.


6RXUFH UNCTAD and BMZ.


ICTA has also employed alternative public procure-
ment processes and hired individual local consultants
WRVHUYHDVSHFLƄFGHPDQGIRU,7VHUYLFHVZKHUHDJLOH
software development47 (a non-traditional approach
to software development) was used. ICTA used a
PRGLƄHG DJLOH VRIWZDUH GHYHORSPHQW PHWKRGRORJ\\
to achieve the implementation of a high-level system
at the Registrar General’s Department in record time,
DQGZLWKDKLJKOHYHORIHQGXVHUEX\\LQ7KHƄUPLQL-
tially selected to implement the system had missed the
deadlines and the project was about to be cancelled
GXHWRQRQGHOLYHU\\:LWKVRPHƅH[LELOLW\\IURPWKHSUR-
curement team, ICTA was able to hire individual local
consultants who were paid on a time basis (as op-
posed to a traditional procurement system that pays
on an estimated total price). The software licenses and
hardware required were purchased directly by ICTA.
The availability of technical competency within ICTA
enabled good project management. Such situations
are ideal for highly competent individual consultants or
60(V7KHSURMHFWVRIIHUORZHUƄQDQFLDOULVNVEHFDXVH
fees are based on actual efforts and not on (often in-
accurate) estimates of system implementation cost.


Sri Lanka’s public procurement strategies have pro-
moted the growth of several privately-owned local IT
VHUYLFHV ƄUPVZKLFK DUH QRZ DEOH WR VHUYH LQWHUQD-
WLRQDOFOLHQWV6RPHRIWKHVHH[DPSOHVLQFOXGH
• $ SULYDWH VHFWRU ƄUP WKDW LPSOHPHQWHG VHYHUDO


human resource management (HRM) solutions for
WKH *RYHUQPHQW ZLWK ,&7$:RUOG %DQN IXQGLQJ
Following that experience, the company invested
further in the development of their HRM product.
They were able to sell the product for a donor funded
JRYHUQPHQW SURMHFW LQ 7DQ]DQLD 7KH 7DQ]DQLDQ
tender qualifying criteria required previous experience


not only in HRM products, but also with a government
client on a donor funded project – all criteria that were
IXOƄOOHGDVWKHUHVXOWRIWKHH[SHULHQFHLQ6UL/DQND


• $SULYDWH,7ƄUPWKDWLPSOHPHQWHGWKHERUGHUFRQWURO
system for the Department of Immigration and
Emigration of Sri Lanka, well before ICTA started
its projects, was able to use this experience as a
reference to win similar work in Fiji and Mauritius.


• $GRFXPHQWGLJLWL]DWLRQDQGLQGH[LQJƄUPWKDWZDV
DZDUGHG LWV ƄUVW RSSRUWXQLW\\ RQ DQ ,&7$ SURMHFW
and now engages with overseas clients.


Sri Lanka has also used existing local outsourcing
capacities to save costs in the provision of services
while at the same time supporting the development
of a local industry, in this case the ITES industry (see
ER[}


$ZDUHQHVVUDLVLQJDQGFDSDFLW\\GHYHORSPHQWIRU
ORFDOƄUPVDQGSXEOLFVHFWRURIƄFLDOV


ICTA has conducted training workshops for local bid-
GHUV RQ:RUOG%DQN WHQGHU JXLGHOLQHV WR DGGUHVV WKH
fact that many non-compliant bids were being submitted
WR:RUOG%DQNWHQGHUVWKHQRQFRPSOLDQFHZDVRIWHQ
due to small technicalities). The activity was considered
to be very useful by the local private sector, and ICTA has
experienced a reduction in non-compliant bids.


:KLOHWKHUH LVQRIRUPDOFDSDFLW\\GHYHORSPHQWVWUDW-
HJ\\IRUSXEOLFVHFWRURIƄFLDOVVRPHLQIRUPDOFDSDFLW\\
development/knowledge transfer (on good practices)
WDNHVSODFHDV,&7$RIƄFLDOVSDUWLFLSDWHLQWKHHYDOXD-
WLRQFRPPLWWHHVRIRWKHUJRYHUQPHQWRUJDQL]DWLRQV


7DEOH} GHVFULEHV KRZ WKH VHYHQ EURDG VWUDWHJLHV
have been applied in Sri Lanka and the impacts of
such practices.




57ANNEX 1 : CASE STUDIES


+DVWKHVWUDWHJ\\EHHQDSSOLHGLQ6UL/DQND" ,PSDFWVFRPPHQWV


(VWDEOLVKLQJWKHEDVLFV


3XEOLFSURFXUHPHQWDVSDUWRI
,7VHFWRUSURPRWLRQVWUDWHJLHV


Yes. The public procurement linked to the
e-Sri Lanka Initiative has enabled participation
RIORFDOƂUPV7KH,QLWLDWLYHLQFOXGHVD
Private Sector Development Program (PSDP).


PSPD focuses on promoting export oriented software.
Nonetheless, public ICT procurement has enabled
VLJQLƂFDQWSDUWLFLSDWLRQRIORFDOƂUPVVHH7DEOH}


&ULWLFDOPDVVRI,7UHODWHG
SURFXUHPHQW


Yes. Over $32 million in e-government projects
implemented by ICTA. Many other projects
implemented by other public entities.


International donors play an important role in
ƂQDQFLQJHJRYHUQPHQWSURMHFWV


8QGHUVWDQGLQJWKHFXUUHQW
VWDWHRIWKHORFDO,7VHUYLFHV
LQGXVWU\\


Yes. The public sector has formal and informal
interactions with multiple industry associations.


Surveys and publications available on the sector
and its workforce.


The largest industry association is the Software
Exporters Association. However, the most relevant
association to support the development of smaller
ORFDO,7ƂUPVLV),7,6DQXPEUHOODRUJDQL]DWLRQ
UHSUHVHQWLQJWKHLQWHUHVWVRIPRUHORFDO,&7ƂUPV


6WUHQJWKHQLQJWKHLQVWLWXWLRQDOIUDPHZRUN


&RRUGLQDWLRQDFURVVWKHSXEOLF
VHFWRUDQGWKHLQGXVWU\\


0RGHUDWHO\\ Yes, in theory, but limited in practice. 7KH%XGJHWVSHFLƂHGWKDWDOO,&7SURFXUHPHQWV
would go through ICTA but in reality this does not
always happen.


$JHQF\\GHSDUWPHQW
VSHDUKHDGVSXEOLF
SURFXUHPHQWIRUORFDO,7
VHFWRUGHYHORSPHQW


Yes. ICTA, established in 2003, has a lead role. Handling a large volume of e-government projects
and its organizational mandate has enabled ICTA
to take a visible and leading role. ICTA employs
technically skilled staff


3URPRWLQJJRRGSURFXUHPHQWSUDFWLFHV


,PSOHPHQWLQJWUDQVSDUHQW
DQGRSHQWHQGHUSURFHGXUHV


0RGHUDWHO\\
Yes for ICTA tenders.


Clear differentiation among interviewees about the
transparency and quality of ICTA-run tenders.
Not all public tenders are seen as transparent.


'HSOR\\LQJHSURFXUHPHQW
V\\VWHPV


1R No e-procurement tools or strategies have been
utilized so far.


/LPLWLQJPDUNHWHQWU\\IRUIRUHLJQELGGHUV


([FOXVLRQRIIRUHLJQELGGHUV /LPLWHG In a few very low value contracts,
the invitation to tender has been issued only to
VHOHFWHGORFDOƂUPV


$OORFDWLRQRISUHIHUHQWLDO
PDUNVIRUORFDOH[SHULHQFH
ORFDOODQJXDJHDQGORFDO
SUHVHQFH


Yes. Eight out of 13 procurements done by
ICTA had some component of domestic
preference in the evaluation criteria
(up to 15% of total marks).


A Circular from the Ministry of Finance mandates
“50% local value addition” on government ICT
purchases.


Successful strategy in encouraging partnerships.
Many tenders won by joint ventures with local
partners.


Most interviewees were unaware of the 50% value
addition rule. All agreed that it is not implemented.


0LWLJDWLQJWKHHIIHFWVRILQIRUPDWLRQDV\\PPHWULHVLQSURFXUHPHQW


&RQFHVVLRQVRQELGDQG
SHUIRUPDQFHJXDUDQWHH
UHTXLUHPHQWV


1R Some private sector interviewees view the guarantee
requirements as barrier to entry, while a few do not
share this sentiment.


$FFHSWLQJSURRIRITXDOLW\\
RWKHUWKDQSUHYLRXVZRUN


Yes.7HQGHUVDVNƂUPVWRVWDWHZKHWKHURUQRWWKH\\
KDYHREWDLQHGVSHFLƂFTXDOLW\\FHUWLƂFDWLRQV


&HUWLƂFDWLRQVDUHLQFUHDVLQJO\\FRPPRQDPRQJƂUPV
WKHPDMRULW\\RI,&7H[SRUWLQJƂUPVKDYHVRPHTXDOLW\\
FHUWLƂFDWLRQ


7DEOH 3URFXUHPHQWVWUDWHJLHVDGRSWHGLQ6UL/DQND




58 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


6RIWZDUHGHVLJQWKDWIDFLOLWDWHVORFDOƂUPVpSDUWLFLSDWLRQ


3URPRWLQJLQWHURSHUDELOLW\\
DQGRSHQVWDQGDUGV


Yes. Incremental deployment of interoperability
standards.


ICTA has a reasonable amount of authority to set
policy on technical matters


0RGXODUGHVLJQRI,7V\\VWHPV
LQWKHSXEOLFVHFWRU


Yes. Overall government architecture design based
on these principles.


Quick wins and proof of concept made possible due
to design.


3URPRWLQJ)266 1R1RRIƂFLDOSROLF\\H[LVWVtHYHQWKRXJKWKHUH
is strong support within ICTA and an active FOSS
community in the country


,QWHUYLHZHHVFLWHGVLJQLƂFDQWOREE\\LQJE\\SURSULHWDU\\
ƂUPVDVDUHDVRQZK\\DSXEOLFVHFWRU)266SROLF\\KDV
not been adopted


$ZDUHQHVVUDLVLQJDQGFDSDFLW\\GHYHORSPHQWIRUORFDOƂUPVDQGSXEOLFVHFWRURIƂFLDOV


$ZDUHQHVVUDLVLQJDQG
FDSDFLW\\GHYHORSPHQWIRU
ORFDOƂUPVDQGSXEOLFVHFWRU
RIƂFLDOV


0RGHUDWHO\\:RUNVKRSVFRQGXFWHGIRUORFDOƂUPV
by ICTA procurement advisors.


No formal capacity development for public sector
RIƂFLDOV


Industry claims that the workshops have been
H[WUHPHO\\XVHIXO3XEOLFRIƂFLDOVKDYHDOVRQRWHGD
reduction in non-compliant bids after each training
session.


Some informal capacity development/ knowledge
transfer (on good practices) takes place as ICTA
RIƂFLDOVSDUWLFLSDWHLQWKHHYDOXDWLRQFRPPLWWHHVRI
other government organizations.


7DEOH 3URFXUHPHQWVWUDWHJLHVDGRSWHGLQ6UL/DQND(continued)


6RXUFHUNCTAD and BMZ.




ANNEX 2.


LIST OF PEOPLE


INTERVIEWED




60 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


KENYA
1DPH ,QVWLWXWLRQ
Dr. Khaterine Getao ICT Secretary, Directorate of E-government


Mr. Muriuki Mureithi CEO, Summit Strategies


Mrs. Eunice Kariuki Deputy CEO, Kenya ICT Board


0U'DQLHO.LPDOL &(2:$'$.,2
Mr. Henock Kirugu Director of Research and Policy, Public Procurement Oversight Authority


Mr. Gilbert Saggia CEO, East Africa, CISCO Systems


Mr. Anthony Mwai CEO, East Africa, IBM


0U%HUQDUG:DKRPH &(2%URDGFRP.HQ\\D
Mr. John Kamau Sales Manager, Broadcom Kenya


Mr. Joseph Ogachi Executive Director, Kenya Institute of Supplies Management


Mr. Jeremiah Ogola Director of Training, Kenya Institute of Supplies Management


Mr. Mathias Muehle Component Leader Public Procurement, GIZ, Kenya


SENEGAL
1DPH ,QVWLWXWLRQ
Mr. Pierre Lucante GIZ


Ms. Anja Kiefer GIZ


Dr. Olivier Sagna OSIRIS/CODESRIA


Dr. Alex Corenthin UCAD


SRI LANKA
1DPH ,QVWLWXWLRQ
Mr. Mano Sekaram CEO and Founder, 99x Technology (formerly called Eurocenter).


Director and General Secretary, SLASSCOM (industry association)


Mr. Dinesh Saparamadu CEO, hSenid
Chairman Emeritus, SLASSCOM


Ms. Manori Unambuwa Formerly Head of e-government Sales at Just In Time Technologies (JIT).


Mr. Jayantha De Silva Director and Vice Chairman, IFS
Managing Director, Sri Lanka, IFS


0U1LUPDO3HLULV &R0DQDJLQJ'LUHFWRUH:LV
0U'LOVKDQ6LOYD 3URMHFW0DQDJHUH:LV
0U:DVDQWKD'HVKDSUL\\D 3URJUDP'LUHFWRUH*RYHUQPHQW,&7$JHQF\\RI6UL/DQND,&7$
Mr. Kanishka Goonesekara Senior Manager, Informatics International


Mr. Kanchana Thudugala Program Head, e-Services, ICTA


Mr. D. C. Dissanayake Senior Program Head – Re-engineering Government & Administration
and Operations, ICTA


Mr. Gamini Karunaratne Senior Procurement Manager, ICTA


0V6KDKDQL0DUNXV:HHUDZDQVD )RUPHU&KLHI7HFKQRORJ\\2IƄFHU,&7$FXUUHQWO\\DWWKH8QLYHUVLW\\
of Moratuwa)


Mr. Frederick Abeyratne Team Leader, Poverty & MDG Cluster, UNDP, Sri Lanka


Mr. Dinuka Perera Former Head of Re-engineering Government , ICTA


Mr. Damith Hettihewa CEO, FITIS (Federation of IT-industry associations in Sri Lanka)




61


BIBLIOGRAPHY


$'%3URMHFW$GPLQLVWUDWLRQ ,QVWUXFWLRQV'RPHVWLF3UHIHUHQFH6FKHPH$VLDQ'HYHORSPHQW%DQN3$,
3.06, January 2010.


AHTI (2011). Honduran IT Industry Barometer 2011.


$UR]DPHQD/DQG:HLQVFKHOEDXP) &RPSUDV3×EOLFDV$VSHFWRVFRQFHSWXDOHV\\EXHQDVSU¾FWLFDV
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%KDWQDJDU67RPLQDJD-0DGRQ6DQG%KDWLD',PSDFW$VVHVVPHQW6WXG\\RI&RPSXWHUL]HG6HUYLFHV
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Bikshapathi K, RamaRaju P et Bhatnagar S (2006). E-Procurement in Government of Andhra Pradesh, India.
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EXTINFORMATIONANDCOMMUNICATIONANDTECHNOLOGIES/EXTEGOVERNMENT/0,,contentMD
.aPHQX3.aSDJH3.aSL3.aWKH6LWH3.KWPO


BMZ (2011,76HFWRU3URPRWLRQLQ'HYHORSLQJDQG(PHUJLQJ&RXQWULHV0DQXDO7RROER[ Federal Ministry for
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&DSJHPLQL HW DO 'LJLWL]LQJ 3XEOLF 6HUYLFHV LQ (XURSH 3XWWLQJ DPELWLRQ LQWR DFWLRQ} WK %HQFKPDUN
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&LERUUD&DQG1DYDUUD'*RRG*RYHUQDQFH'HYHORSPHQW7KHRU\\DQG$LG3ROLF\\5LVNVDQG&KDOOHQJHV
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Civil Service College (CSC) Singapore (2010). Value for Money in Singapore’s Government Procurement Regime.
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&RDVH5+7KHQDWXUHRIWKHƄUP(FRQRPLFD, New Series, Volume 4, Issue 16, 386–405.


El-Shenawy N (2011). 6WDWLVWLFDOFRPSLODWLRQRIWKH,&7VHFWRUDQGSROLF\\DQDO\\VLVLQ(J\\SW. Orbicom. Montreal.


Europe Economics (2012) Guidelines for Public Procurement of ICT goods and services SMART 2011/0044.
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(XURSHDQ&RPPLVVLRQ0RGHUQL]DWLRQRI(83XEOLFSURFXUHPHQWSROLF\\3URSRVDOVRIWKH&RPPLVVLRQ
Directive on public procurement (replacing directives 2004/18/EC and 2004/17/EC).


BIBLIOGRAPHY




62 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


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GIZ/OPTIC (2012). Cartographie du secteur des Technologies de l’Information et de la Communication au Sénégal.
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PME/PMF).


Gottschalk P (2009). Maturity levels for interoperability in digital government. *RYHUQPHQWLQIRUPDWLRQTXDUWHUO\\
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Green Eco Consultants (2010). Open Source Software Procurement in the Public Sector Report (Jan.2008-
Sep.2010). Study conducted by Green Eco Consultants ltd. Nairobi.


Hass J (undated). Modular programming, About.com Guide.


Heeks R (1999). Development Informatics Software Strategies in Developing Countries.


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6HQHJDO&RXQWU\\6WXG\\. June 2008.


,QWHUQHW5HVHDUFK )266 DQG6RIWZDUH ([SHQGLWXUH LQ:HVW $IULFD )LQDO 5HSRUW 3UHSDUHG IRU )266
$GYRFDF\\LQ:HVW$IULFDDQG%H\\RQG)266:$<*KDQD0D\\


Klein B, Crawford R A and Alchian A A (1978). Vertical Integration, Appropriable Rents, and the Competitive
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.RUHD,77LPHV.RUHDpVH*RYHUQPHQW'HYHORSPHQWDPD]HVWKH:RUOG LQ:LQQLQJ81H*RYHUQPHQW
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Malik P and Mundhe R (2011). Statistical Compilation of the ICT Sector and Policy Analysis in India. Orbicom.
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MASIT (2011). Macedonian Information Technology Industry Barometer 2011.


MIC (2006). Kenya National Information and Communication Technologies Policy. Ministry of Information and
Communications. January 2006.


1]ÆSD21HWDO6WDWLVWLFDO&RPSLODWLRQRIWKH,&76HFWRUDQG3ROLF\\$QDO\\VLVLQ&DPHURRQ. Orbicom.
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OECD (2005). )LJKWLQJ&RUUXSWLRQDQG3URPRWLQJ,QWHJULW\\LQ3XEOLF3URFXUHPHQW. OECD Publishing.


OECD (2007). Information Economy – Sector Definitions Based on the International Standard Industry
&ODVVLƄFDWLRQ,6,&0DUFK:RUNLQJ3DUW\\RQ,QGLFDWRUVIRUWKH,QIRUPDWLRQ6RFLHW\\'LUHFWRUDWH
for Science, Technology & Industry. DSTI/ICCP/IIS(2006)11/FINAL, Paris.


OECD (2008). 2(&'5HYLHZV RI ,QQRYDWLRQ3ROLF\\&KLQD2UJDQL]DWLRQ IRU (FRQRPLF&RRSHUDWLRQ DQG
Development, Paris.


OECD (2009). OECD Principles for Integrity in Public Procurement.


2(&'(IƄFDFLWÆGHOpDLGH3URJUÅVDFFRPSOLVGDQVODPLVHHQzXYUHGHODGÆFODUDWLRQGH3DULVt
9ROXPH,,&KDSLWUHVSD\\VSénégal.


Pardo TA and Tayi GK (2007). ,QWHURUJDQL]DWLRQDO,QIRUPDWLRQ,QWHJUDWLRQ$NH\\HQDEOHUIRUGLJLWDOJRYHUQPHQW.
*RYHUQPHQW,QIRUPDWLRQ4XDUWHUO\\ 24(4), 691–715.




63


Porcaro RM and Jorge MF (2011). 6WDWLVWLFDO &RPSLODWLRQ RI WKH ,&7 6HFWRU DQG 3ROLF\\ $QDO\\VLV LQ %UD]LO
Orbicom. Montreal.


3ULHU(0F&XH&DQG%HKDUD57KHYDOXHRIFHUWLƄFDWLRQLQSXEOLFSURFXUHPHQWWKHELUWKRIDSURIHVVLRQ"
-RXUQDORI3XEOLF3URFXUHPHQW9ROXPH,VVXHt:LQWHU


3:& ,&7([SRUW9DOXH6XUYH\\t ,7,7(6([SRUW6HFWRU, Sri Lanka Export Development Board,
Sri Lanka.


Ramasamy R and Ponnudurai V (2011). Statistical Compilation of the ICT Sector and Policy Analysis in Malaysia.
Orbicom. Montreal.


5L]N1DQG(O.DVVDV67KH6RIWZDUH,QGXVWU\\ LQ(J\\SW:KDW5ROHIRU2SHQ6RXUFH",Q5L]N1DQG
Saber L, eds. $FFHVVWR.QRZOHGJHLQ(J\\SW1HZ5HVHDUFKRQ,QWHOOHFWXDO3URSHUW\\,QQRYDWLRQDQG
'HYHORSPHQW%ORRPVEXU\\86$t


6LQJK $ &RPSHWLWLRQ DQG&RPSHWLWLRQ 3ROLF\\ LQ (PHUJLQJ0DUNHWV ,QWHUQDWLRQDO DQG'HYHORSPHQWDO
Dimensions. G-24 Discussion Paper Series No 18. United Nations, New York and Geneva.


Singher M, Konstantinidis G, Roubik E and Beffermann E (2009). 'RHVH3URFXUHPHQWVDYHWKHVWDWHPRQH\\"
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6PLWK3DQG+REEV$60(VDQGSXEOLFVHFWRUSURFXUHPHQWUHVHDUFKUHSRUWSUHSDUHGIRU6PDOO%XVLQHVV
Service. January 2001.


SOFEX (2011). Guatemalan IT Industry Barometer 2011.


6XQ0LFURV\\VWHPV7KH%HQHƄWVRI0RGXODU3URJUDPPLQJ&KDSWHU


The Central Bank of Sri Lanka (2007). $QQXDO5HSRUW$YDLODEOHIURPwww.cbsl.gov.lk/pics_n_docs/10_
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81&7$'E)UHHDQG2SHQ6RXUFH6RIWZDUH3ROLF\\DQG'HYHORSPHQW,PSOLFDWLRQV%DFNJURXQGSDSHU
by the UNCTAD secretariat, TD/B/COM.3/EM.21/2, 17 August 2004, United Nations.


UNCTAD (2009). ,QIRUPDWLRQ(FRQRP\\5HSRUW7UHQGVDQG2XWORRN LQ7XUEXOHQW7LPHVUnited Nations
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UNCTAD (2010). ,QIRUPDWLRQ(FRQRP\\5HSRUW,&7V(QWHUSULVHVDQG3RYHUW\\$OOHYLDWLRQUnited Nations
publication. Sales no. E.10.II.D.17. New York and Geneva. October.


UNCTAD (2011a). ,&73ROLF\\5HYLHZRI(J\\SW. United Nations Publication. New York and Geneva.


UNCTAD (2011b). ,QIRUPDWLRQ(FRQRP\\5HSRUW,&7VDVDQ(QDEOHUIRU3ULYDWH6HFWRU'HYHORSPHQW. United
Nations publication. Sales no. E.11.II.D.6. New York and Geneva.


UNCTAD (2011c). 6FLHQFH7HFKQRORJ\\DQG,QQRYDWLRQ3ROLF\\5HYLHZRI(O6DOYDGRU. United Nations Publication.
New York and Geneva.


UNCTAD (2011d). 6FLHQFH 7HFKQRORJ\\ DQG ,QQRYDWLRQ 3ROLF\\ 5HYLHZ RI 3HUX. United Nations Publication.
New York and Geneva.


UNCTAD (2012a). ,QIRUPDWLRQ (FRQRP\\ 5HSRUW 7KH 6RIWZDUH ,QGXVWU\\ DQG 'HYHORSLQJ &RXQWULHV
United Nations Publication. New York and Geneva.


BIBLIOGRAPHY




64 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


UNCTAD (2012b). 0RELOH0RQH\\ IRU%XVLQHVV'HYHORSPHQW LQ WKH (DVW $IULFDQ&RPPXQLW\\. A Comparative
Study of Existing Platforms and Regulations.


81'(6$(SURFXUHPHQW7RZDUGV7UDQVSDUHQF\\DQG(IƄFLHQF\\LQ3XEOLF6HUYLFH'HOLYHU\\5HSRUWRIWKH
Expert Group Meeting. 4–5 October 2011. Department of Economic and Social Affairs. United Nations.
New York.


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9DLG\\D.6DMHHY$60DQG&DOOHQGHU* &ULWLFDO IDFWRUV WKDW LQƅXHQFH HSURFXUHPHQW LPSOHPHQWDWLRQ
success in the public sector. -RXUQDORI3XEOLF3URFXUHPHQW, Volume 6, Issues 1 & 3, 70–99.


:DHPD7$GH\\D&DQG1\\DPEXUD1GXQJpX0.HQ\\D,&76HFWRU3HUIRUPDQFH5HYLHZ


:DQJ+'RRQJ+DQG/LQ) :DQJ+'RRQJ+DQG/LQ) o'HWHUPLQDQWVRI(*RYHUQPHQW
6HUYLFH $GRSWLRQ $Q ,QQRYDWLRQ 'LIIXVLRQ 3HUVSHFWLYHp 3URFHHGLQJ RI WKH:LUHOHVV &RPPXQLFDWLRQV
1HWZRUNLQJDQG0RELOH&RPSXWLQJ:L&RP,QWHUQDWLRQDO&RQIHUHQFH6KDQJKDLt6HSWHPEHU


:LOOLDPVRQ2(7UDQVDFWLRQFRVWHFRQRPLFV7KHJRYHUQDQFHRIFRQWUDFWXDOUHODWLRQV-RXUQDORI/DZDQG
(FRQRPLFVt


:,76$ %HVW 3UDFWLFHV LQ *RYHUQPHQW ,7 3URFXUHPHQW :RUOG ,QIRUPDWLRQ 7HFKQRORJ\\ DQG 6HUYLFHV
Alliance.


:RUOG%DQN5HYLVHG*XLGHOLQHV6HOHFWLRQDQG(PSOR\\PHQWRI&RQVXOWDQWVE\\:RUOG%DQN%RUURZHUV
0D\\:RUOG%DQN


:RUOG%DQN*XLGHOLQHV3URFXUHPHQWRI*RRGV:RUNVDQG1RQ&RQVXOWLQJ6HUYLFHVXQGHU,%5'/RDQV
DQG,'$&UHGLWV*UDQWVE\\:RUOG%DQN%RUURZHUV-DQXDU\\




65


ENDNOTES


1 Accra Agenda for Action. Accra, 4 September 2008. 3rd High-level forum on aid effectiveness.


2 ,7(6 UHIHUV WR D EURDG FDWHJRU\\ RI VHUYLFHV WKDW FRYHU IURQW RIƄFH VHUYLFHV LH FDOO FHQWUHV EDFN RIƄFH
VHUYLFHVVXFKDVGDWDHQWU\\KXPDQUHVRXUFHVDQGNQRZOHGJHSURFHVVRXWVRXUFLQJVHUYLFHVHJƄQDQFLDODQDO\\VLV
servicers). ITES includes business processes outsourcing (BPO).


3 $EURDGO\\DGRSWHGGHƄQLWLRQEDVHGRQ,6,&5HYXQVWDWVXQRUJXQVGFUUHJLVWU\\LVLFDVS


4 There is an additional group of related activities that cover ICT retail activities (ISIC 4741 Retail sale of computers,
peripheral units, software and telecommunication equipment in special stores) but which is not included in the
2(&'GHƄQLWLRQRIWKH,&7VHFWRU


5 7KHGLJLWL]DWLRQRISXEOLFSURFXUHPHQWSURFHVVHV


6 The promotion of more transparent, effective and accountable governments.


7 %DVHGRQGDWDSURYLGHGE\\:,76$WKH:RUOG,QIRUPDWLRQ7HFKQRORJ\\DQG6HUYLFHV$OOLDQFH


8 As a consequence, the domestic market alone is often not able to absorb innovative software solutions and does
QRWSURYLGHVXIƄFLHQWGHPDQGWRLQGXFHJURZWKHIIHFWV


9 See for example UNCTAD (2011c and 2011d) and BMZ (2011)


10 The report addresses public procurement in general.


11 The report was prepared by an alliance of IT associations in which large enterprises competing at the international
OHYHOKDYHDQDFWLYHUROH,WGRHVQRWQHFHVVDULO\\DGGUHVVWKHVSHFLƄFQHHGVRIORFDO60(V)RULQVWDQFHLWUHFRPPHQGV
“>6HOHFWLRQ@FULWHULDPXVWWUHDWIRUHLJQƄUPVWKHVDPHDVQDWLRQDOFRPSDQLHVr.


12 This applies at least to some of the transactions. Often, only tenders and awards are made public while the steps
in between are accessible only to registered bidders.


13 6HHIRUH[DPSOH81&7$'IRUDGLVFXVVLRQRIWKHSRWHQWLDOFRVWVDQGEHQHƄWVRIHSURFXUHPHQW


14 Agreement on Government Procurement done at Marrakech on 15 April 1994, which entered into force on 1 February
:72ZHESDJHKWWSZZZZWRRUJ/DVWUHIHUHQFHG$SULO


15 )RUH[DPSOH}SHUFHQWRIORFDOYDOXHDGGLWLRQLVWKHOLPLWIRUSURMHFWVIXQGHGE\\WKH$VLDQ'HYHORSPHQW%DQN
See ADB (2010).


16 6HHKWWSZZZJQXRUJSKLORVRSK\\IUHHVZKWPO


17 6HH,QIRUPDWLRQ(FRQRP\\GDWDLQ81&7$'VWDWKWWSXQFWDGVWDWXQFWDGRUJ


18 Based on interviews and KWWSLFWGEORJZRUGSUHVVFRPLFWDQGHFRQRPLFJURZWKHYLGHQFHIURPNHQ\\D


19 8VKDKLGL LVDQRQSURƄWƄUPWKDWGHYHORSVIUHHDQGRSHQVRXUFHVRIWZDUHIRULQIRUPDWLRQFROOHFWLRQYLVXDOL]DWLRQ
and interactive mapping. Its SMS based crowd-sourcing platform, initially developed to map reports of violence in
Kenya after the post-election fallout at the beginning of 2008, has been adopted in Haiti, Australia, and the United
States in emergency situations to inform stakeholders


20 Pamoja is a digital marketing company that provides (among other services) mobile application development ser-
vices and web platform deployments to the African market.


21 :RUOG %DQN .HQ\\D 7UDQVSDUHQF\\ DQG &RPPXQLFDWLRQV ,QIUDVWUXFWXUH 3URJUDP KWWSZZZZRUOGEDQNRUJ
SURMHFWV3NHQ\\DNWFLSDGGLWLRQDOƄQDQFLQJUFLS"ODQJ HQ


22 .HQ\\DZDVRQHRIWKHƄUVWGHYHORSLQJFRXQWULHVWRKDYHDQRSHQJRYHUQPHQWGDWDSRUWDOKWWSVRSHQGDWDJRNH


23 6HHIRUH[DPSOH:DHPDHWDORU%R[WDEOH


ENDNOTES




66 PROMOTING LOCAL IT SECTOR DEVELOPMENT THROUGH PUBLIC PROCUREMENT


24 See www.ict.go.ke


25 Based on interviews


26 :RUOG %DQN .HQ\\D 7UDQVSDUHQF\\ DQG &RPPXQLFDWLRQ ,QIUDVWUXFWXUH 3URMHFW KWWSZZZZGVZRUOGEDQNRUJ
H[WHUQDOGHIDXOW:'6&RQWHQW6HUYHU:'63,%B5HQGHUHG3')
0v20KE0IDA1R2007100551113.pdf


27 Based on the interviews carried out with key stakeholders


28 .HQ\\D,QVWLWXWHRI6XSSOLHV0DQDJHPHQW3URFXUHPHQWDQG6XSSOLHVLQ.HQ\\D7KH0DUNHWRI6PDOODQG0HGLXP
Enterprises, www.fsdkenya.org/pdf_documents/07.08.FSD_Procurement_Supply_Kenya.pdf.


29 *RYHUQPHQW RI .HQ\\D 3XEOLF 3URFXUHPHQW DQG 'LVSRVDO $FW ZZZSSRDJRNHLQGH[SKS"RSWLRQ FRPB
MGRZQORDGV,WHPLG WDVN YLHZGRZQORDGFDWLG FLG


30 Government of Kenya, Supplies Practitioners Management Act 2007, www.kism.or.ke/images/stories/downloads/
Supply_Practitioners_Mgt_Act_2007.pdf


31 Article 34 of PPDA


32 Kenya ICT Sector Policy Guidelines 2006, www.cck.go.ke/regulations/downloads/national_ict_policy.pdf


33 Kenya ICT Sector Policy Guidelines 2006, www.cck.go.ke/regulations/downloads/national_ict_policy.pdf


34 See Green Eco Consultants (2010)


35 KWWSZZZEXVLQHVVGDLO\\DIULFDFRP'HYHORSHUVOLQHGXSIRUKXJHJDLQVLQVRIWZDUHVKLIW
-/kp7oeu/-/index.html


36 Judging from the levels of mobile penetration and Internet use per inhabitant (ITU statistics)


37 *OREDO2EVHUYHU 6HQHJDO&RPPXQLFDWLRQ3URƄOH KWWSZZZJOREVHUYHUFRPHQVHQHJDOFRPPXQLFDWLRQ
communication


38 Programme Sénégalo-allemand d’Appui à la Compétitivité et à la Croissance des PME et à la Performance du
6HFWHXUGHOD0LFURƄQDQFH3$&&30(30)


39 Most of this subchapter, if not noted otherwise, is based on the GIZ study by Volker Brunsiek and Hannes Restel
on the promotion of the interoperability of ICT systems in the public sector and the reinforcement of ICT SMEs
in Senegal.


40 See OECD (2011)


41 &,2 6HQHJDO 7XUQV WR 2SHQ 6RXUFH 6RIWZDUH KWWSZZZFLRFRPDUWLFOH6HQHJDOB7XUQVBWRB2SHQB
Source_Software


42 6HHIRUH[DPSOHWKHUHJLRQDOVWXG\\RQ)266DQGVRIWZDUHH[SHQGLWXUHLQ:HVW$IULFD,QWHUQHW5HVHDUFK


43 Based on information provided by the Ministry of Economy and Finance of Senegal.


44 EIU and BSA IT Industry Competitiveness Ranking 2011. Rankings are available at KWWSJOREDOLQGH[EVDRUJ
country-table/. Kenya and Senegal do not feature in these rankings.


45 Fiscal Policy Circular No. 3/2005. 18th October 2005. Department of Fiscal Policy, General Treasury. Signed by
P B Jayasundara, Secretary to the Treasury. Obtained via email correspondence with Mr. Christy Pereira of the
ICT Agency of Sri Lanka


46 6XFKDVWKHRSHQVRXUFH%XJ]LOODZKLFKKHOSVPDQDJHVRIWZDUHGHYHORSPHQW


47 Agile software development, based on the premise that it may not be possible/desirable to establish all technical
requirements up-front, follows an incremental approach where software development plans are continuously
revised and adapted. This approach is generally incompatible with traditional procurement processes, which
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U N I T E D N AT I O N S C O N F E R E N C E O N T R A D E A N D D E V E L O P M E N T


Printed at United Nations, Geneva – GE.12-52066 – February 2013 – 1,349 – UNCTAD/DTL/STICT/2012/5




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