Delays are always damnable, but never more than when buying a computer.
Like currencies in an inflationary spiral, today’s computers must be used immediately, before their value and utility are obliterated by new technology. This vexing aspect of the information age can be devastating in large organizations that make equipment purchases through a central office bound by complicated and time-consuming procurement rules.
Consider the experience of the Education Secretariat in the state of Paraná, Brazil. In 1995, SEED, as the secretariat is known locally, bought computers for 1,300 state schools through a centralized procurement process. For a variety of procedural and bureaucratic reasons, the machines did not arrive at schools until 1997.
That experience strengthened the hand of Paraná state and SEED officials who had been arguing in favor of decentralizing many aspects of public administration. Some officials even suggested that if individual schools had the funds and the authority to buy their own computers, they might do a better job of finding the right equipment and quickly getting it into classrooms. Others urged that schoolchildren’s parents also be a part of the purchasing process.
“The feeling was that if the schools and the parent–teacher associations were more involved, they would have more of a sense of ownership of the equipment and take better care of it,” says Richard Pelczar, who was an IDB social development specialist in Brazil at the time.
In the summer of 1998, SEED officials got a chance to test their theory. As part of an IDB-funded program to improve Paraná’s public secondary school system through stronger management at the local, regional and state levels, SEED was preparing to buy $12 million worth of computers and accessories for use by school administrators. Instead of placing a single order with a procurement office at the state level, SEED officials decided to divide up the money and give each school a proportionate share.
But that solved only part of the problem. The schools are scattered over a huge geographical area, and most of them are in villages or towns that do not have a single computer vendor, let alone price competition. Moreover, there was little incentive for vendors to travel to individual schools that were each planning to make a one-time purchase of only a few thousand dollars.
Computer fair. To overcome these obstacles, SEED officials decided to put representatives from schools and vendors under one roof at one time. Schools would have the benefit of competition and more choices, while vendors would reach a large market from a single location. Education officials in the Brazilian state of Minas Gerais had used this “computer fair” concept with great success, letting individual schools purchase more than $20 million worth of equipment at rock-bottom prices as part of a project funded by the World Bank. According to the IDB’s Pelczar, SEED officials hired consultants from Minas Gerais to help adapt the computer fair concept to Paraná. SEED also adapted a procurement manual developed in Minas Gerais that contained detailed instructions for school administrators on how to participate in the fair and document their purchases.
SEED officials then solicited proposals from computer vendors who wished to showcase their wares at the fair. Eleven companies responded, and eight were finally selected. State officials then published the amount that each school would receive and scheduled two three-day fairs.
The results exceeded everyone’s expectations, according to Pelczar. More than 1,800 people participated. School representatives spent half their time shopping and the rest in informatics training workshops. “They were very pleased with the workshops, which enabled them to make more informed purchases and to bargain for upgrades,” he said.
Aggressive bargaining became one of the hallmarks of the fair. “At first each school shopped individually,” says Pelczar, “but they soon discovered that by grouping together they could bargain for better prices.” By the end of the fair, “cartels” of 30 to 40 schools each were pooling their orders to extract better prices or upgrades from vendors. The bottom line: while officials had estimated that the $12.3 million budg-et would be enough to purchase a total of 6,300 computers and related accessories, the schools succeeded in buying 7,708 computers and some 200 additional printers and scanners with that amount.
Despite the schools’ determination to buy for less, the vendors who participated at the computer fair did not go away disappointed. The high sales volume compensated for the lower prices they received for the equipment. “They also liked the fact that the fair is much more transparent than a centralized procurement,” said Pelczar.
Alcyone Saliba, a World Bank official who worked on the Minas Gerais computer fair, said transparency and fairness were consistently cited by vendors as one of its principal benefits. “If you are a computer company bidding for a single $21 million contract, you could argue that it makes sense to pay a large bribe, so the risk of corruption is that much greater.” Saliba said. “But if you are trying to sell to one school or to a small group of schools, in an open fair where everyone is exchanging information continually, it’s going to be much harder to bribe. So this is how decentralized procurement can reduce the risk of corruption—by spreading it out among a lot of participants.”
Saliba and Pelczar said that there are also risks in delegating financial authority to school administrators who have never had such responsibilities. To protect against abuses, both the Minas Gerais and Paraná programs required officials from each school to read and comply with the guidelines contained in the procurement manuals. The program also hired independent firms to conduct audits during and after the fair to ensure that people had purchased what they were supposed to purchase and that all funds were accounted for, according to Saliba.
So far, no irregularities have been uncovered in the Paraná program. On the contrary, the program appears to have fostered a better relationship between local communities and the schools that serve them. The decentralized computer procurement allowed local school personnel and PTA representatives to exercise leader- ship and produce an immediate return and advantages for the community, Pelczar said. “It encouraged pedagogic, financial and administrative autonomy at the school level, all of which tends to make school administrators more accountable to their local communities.”