Asian Development Bank Paper Touts Blockchain in Government Procurement

A new paper authored by World Bank Group-linked experts proposes development of a blockchain network to boost efficiency across government procurement systems worldwide.

Authored by Dr. Ramanathan Somasundaram and S. M. Quamrul Hasan, both researchers specializing in government procurement, the consultation report was published Thursday, touting blockchain tech in a technological proposal for the Asian Development Bank.

Currently, there are between 200 and 250 different e-government procurement (e-GP) systems installed around the world, the authors say. While these systems have potential to enhance government transparency, the siloed nature of the systems hinders their further advancement.

Providing detailed technical explanations, the authors propose the development of a blockchain system which can be deployed across worldwide governments' systems, with each participating as network nodes to access supplier databases in different jurisdictions.

The paper argues that this method can potentially eliminate current problems, including vendors having to file multiple times for entry on different procurement databases, and as a benefit would give each government real-time visibility of a vendor's actual workload.

The authors write:

"Often, a bidder which is already overloaded with contracts pending completion is awarded additional contracts primarily due to lack of knowledge about the pending work-in-hand."

Additionally, building a distributed network across governments and supporting banks could ensure that the procure-to-pay (P2P) cycle is automated and completed digitally.

"The e-GP Blockchain network should be extended to enable Banks located anywhere in the world to seamlessly submit authenticated Electronic Performance Bank Guarantees on behalf of a Supplier in any of the networked e-GP systems," the authors go on to say.

While the paper was published as a technical proposal, it indicates interest from the Asian Development Bank in exploring the use of blockchain technology to improve government operations, especially in the Asian economies.

The paper's authors suggest that a realistic step forward would be to prepare well-defined funding requirements for the proposed network and to select at least "three neighboring countries with active international bidder participation" to participate in a pilot test.

"As the system stabilizes, more e-GP systems can be on-boarded into the network in a phased manner," they conclude.

Asian Development Bank image via Wikipedia/alfonsoereve