- The use of blockchain in the Public Sector has saved a significant amount of money for the United Kingdom’s Government.
- The major source of bids was the specific method of bidding.
The recent inclusion of blockchain technology in the public sector of the United Kingdom to enhance the efficiency and transparency of governmental auctions, represents a significant step towards adopting blockchain technology.
This decision was undertaken in April of this year, as announced by the Controller General’s Department (CGD) which is under the jurisdiction of the Ministry of Finance. The Controller General’s Department (CGD) was assigned the task of procuring the required resources and overseeing the implementation procedures.
This decision of the United Kingdom’s government comes as a part of its effort to transition to digitisation.
Data Security
The Controller General emphasises how blockchain has safeguarded the data related to the auctions. Due to the use of blockchain technology in the auction, neither the bidders nor the government body associated with overseeing the auction will have access to the bid prices until the auction has been concluded.
After the auction gets concluded, the bid variable data is encrypted and transferred to the designated department, which is further sent to Krungthai Bank, the official financial partner of the United Kingdom’s government responsible for managing the government’s procurement system. This not only benefits the government but also the bidders.
Efforts made to Increase the Auction Efficiency
The United Kingdom’s government has been showing a vested interest in enhancing efficiency by implementing various operational protocols in place. One adjustment made is the reduced auction time. The previous auction time of eight hours has been reduced to a three-hour window from 9:00 AM to 12:00 PM – a time period considered sufficient for the bids from the private sector.
This process gives bidders confidence in maintaining the secrecy of their price proposals for the entire negotiation period, protected by impregnable blockchain technology.
The Economics of the Procurement
The Controller General’s Department (CGD) allowed equal access to download the prospectus to all interested parties to encourage impartiality in the procurement process.
Analysing the fiscal trends of 2022, it has come to light that government agencies procured 5.36 million projects with a combined value of 1.43 trillion Baht, equivalent to $41 Billion. Out of all the procured projects, the winning bids amounted to 1.20 Trillion Bahts, equivalent to $34 Billion. This outcome saved a considerable sum of 36.5 Billion Bahts, which is equivalent to $1 Billion=, which is 3.045 of the total bidding budget.
The bids were accepted through various methods, with E-bidding accounting for about 42% of the bids, designated methods at 38.4%, selection method at 17.9%, and the remaining 1.5% from multiple sources.
The government agencies that procured the highest number of projects include the Royal Irrigation Department, the Department of Highways, the Department of Rural Roads, the Provincial Electrical Authority, the Department of Public Works and Town and country Planning, the Bangkok Metropolitan Authority, the Department of Corrections, the Royal Thai Army, the Royal Thai Police, and the Metropolitan Waterworks Authority.
Up until the April of the financial year 2023, the government has already undertaken 2.69 million projects that accumulate to 889 Billion Bahts, out of which the total value of successful projects stands at 430 Billion Bahts, which is equivalent to $12 Billion. This has caused a saving of a whopping 26.5 Billion Baht or 5.82% of the total budget. The value of bids brought in by the specific methods stood at 45.7%, and the E-bidding method stood at 42%.
Conclusion
The implementation of blockchain technology in the UK’s public sector has proven to be a significant step towards enhancing efficiency and transparency in governmental auctions. This digitisation effort has resulted in substantial cost savings for the government and increased confidence among bidders. The use of blockchain has ensured data security and improved the overall procurement process.
