Digitalization in Public Procurement: Friend or Foe?

Insights from the 10th International Research Study on Public Procurement (IRSPP10)

January 29, 2025

Digitalization is frequently cited as a transformative force in public procurement, expected to enhance transparency, efficiency, and sustainability. Yet, the findings from the 10th International Research Study on Public Procurement (IRSPP10) suggest a more nuanced reality. While digital tools offer new capabilities, they also introduce challenges—ranging from implementation barriers to concerns about inclusivity and oversight.

Where Are We Now? The State of Digital Procurement

IRSPP10 brought together senior procurement executives and researchers from ten countries to examine how emerging technologies are reshaping procurement. The study identified several key digital tools currently in use:

E-procurement platforms aimed at improving transparency and efficiency.
AI-based tools for supplier evaluation, bid monitoring, and fraud detection.
Business intelligence solutions that support policy adjustments through data analytics.
Social media and digital communication channels to increase engagement and oversight.
Blockchain and smart contracts, though their adoption remains limited.

Despite the widespread adoption of digital tools, there is a disconnect between availability and effective use. Many public agencies have implemented e-procurement systems, but their ability to generate meaningful insights or drive strategic decision-making remains underdeveloped.

Overall, we noticed a gap between "promise and practice" that we can elaborate around 4 different areas.

1. Transparency vs. Complexity

Digital procurement platforms are often presented as a mechanism to increase transparency, yet findings from IRSPP10 suggest that their effectiveness varies by context. Transparency is contingent on data quality, user competence, and system integration.

A striking example comes from AI-driven procurement monitoring. While AI can flag irregularities in bid submissions, procurement officers remain uncertain about how to interpret and act on AI-generated insights. Similarly, public-facing e-procurement platforms allow for greater scrutiny, but they often require advanced technical literacy, excluding key stakeholders—including SMEs and civil society groups—from meaningful participation.

Are we overstating the transparency benefits of digital procurement? Should we instead focus on building institutional capacity to interpret and act upon digital insights rather than assuming digitalization alone will ensure accountability?

2. Digitalization and Inclusivity: Who Gets Left Behind?

One of the strongest critiques emerging from IRSPP10 is that digital procurement reforms—intended to level the playing field—may unintentionally exclude smaller suppliers.

Many SMEs lack the technical expertise to navigate complex e-procurement portals.
High compliance costs discourage smaller firms from participating in digitalized procurement systems.
Automation may prioritize large, well-resourced suppliers that can optimize their bids through advanced analytics.

If digitalization exacerbates existing disparities, should public procurement agencies be mandating capacity-building initiatives to ensure equitable access? Or is it unrealistic to expect SMEs to adapt at the same pace as large corporations?

3. AI, Ethics, and Procurement Governance

AI emerged as both an opportunity and a concern in IRSPP10. Governments are beginning to deploy AI for bid evaluations, contract monitoring, and supplier risk assessments, but several governance challenges remain:

AI models are only as unbiased as the data they are trained on. If past procurement decisions have reflected biases (e.g., favoring larger firms or certain geographies), AI risks reinforcing rather than correcting these biases
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Procurement officials raised concerns over algorithmic opacity—if AI flags a bid as “high risk,” what recourse do suppliers have?
Some governments have introduced AI disclosure clauses in procurement contracts, requiring vendors to explain how AI is used in bid preparation. Is this a meaningful safeguard, or is it simply regulatory posturing?

Would greater transparency in AI decision-making actually improve trust in procurement, or would it simply introduce new layers of bureaucracy?

Strategic Takeaways from IRSPP10

Despite the challenges, digitalization remains an essential lever for procurement modernization. The study outlines several strategies for governments seeking to navigate the risks while maximizing benefits.

Invest in Digital Literacy and Capacity Building

Procurement officials and suppliers need training to effectively engage with AI-driven tools.
SMEs should receive technical support to level the playing field in digital procurement.

Design Digital Procurement for Inclusivity

Simplify e-procurement platforms to reduce barriers to entry for smaller suppliers.
Ensure that transparency initiatives do not inadvertently exclude stakeholders with lower digital fluency.

Adopt a Governance-First Approach to AI

AI-driven procurement tools must come with explainability requirements—suppliers and officials should understand how decisions are made.
Governments should explore independent audits of AI-driven procurement processes.

Align Digital Procurement with Broader Public Policy Goals

Digital tools should enhance—not replace—strategic procurement decision-making.
Emerging technologies should be evaluated on their ability to drive societal outcomes, not just cost efficiencies.

So, Friend or Foe? The Role of Digitalization in Public Procurement

The IRSPP10 findings highlight that digitalization is neither inherently beneficial nor detrimental—its impact depends on how well governments manage the trade-offs between efficiency, transparency, and inclusivity.

A key question remains: Are governments investing enough in the human capabilities needed to make digital procurement truly effective? If procurement officials are not equipped to interpret AI-generated insights or challenge algorithmic decisions, is digitalization simply shifting procurement power to technology providers rather than improving public sector capabilities?

Your thoughts? What strategies do you see as most effective in balancing the benefits and risks of digital procurement? You can also find more insights in our official IRSPP report provided below!