UK public sector adopts blockchain for transparent government auctions

The UK public sector made a groundbreaking leap towards improving transparency and fairness in governmental auctions, by adopting the use of blockchain technology. Giving credence to this, the Controller General’s Department (CGD) confirmed the measures they’ve started to undertake since April this year.

The CGD, an authority under the Finance Ministry, is renowned for its role in managing procurement processes. The adoption of blockchain technology in government auctions was initiated by this authority simultaneously with the digitisation drive by the government.

According to the controller-general, blockchain technology provided a safeguard, where neither the bidders nor the government agency associated with the auction would have access to the bid price before the auction’s closure. Furthermore, the bid variable data would be encrypted and transferred to the concerned department and then passed over to Krungthai Bank, the financial establishment entrusted with oversight of the government procurement system.

Adjustments in operational protocols like shortening the total duration of auctions from eight hours to just three hours from 9am to 12pm – a length deemed sufficient for the private sector to participate in bidding. This revolutionised process also reassures the bidders about the confidentiality of the price proposal information throughout the negotiating period. This is even though the blockchain stands impregnable to any form of hacking.

The CGD extended an offer to download the relevant auction prospectus freely, enabling fair and equal access to all interested parties.

Reflecting upon the fiscal trends of 2022, government agencies procured 5.36 million projects equalling a total value of 1.43 trillion baht (US$41 billion). Among these, up to 5.21 million projects had winning bids that accounted for a sum of 1.20 trillion baht (US$34 billion). In terms of savings, there was a budget saving of 36.5 billion baht (US$1 billion), depicting 3.04% of the total bidding budget.

The winning bids could be categorised based on the methods they used: e-bidding method (42%), price proposal through a specific method (38.4%), selection method (17.9%), or other methods (1.50%).

The top ten government agencies that held the highest procurement value included: the Royal Irrigation Department, the Department of Highways, the Department of Rural Roads, the Provincial Electricity Authority, the Department of Public Works and Town & Country Planning, the Bangkok Metropolitan Authority, the Department of Corrections, the Royal Thai Army, the Royal Thai Police, and the Metropolitan Waterworks Authority.

Coming to the financial year of 2023, until April, government agencies procured 2.69 million projects ending up with a total valuation of 889 billion baht. Among these projects, winning bids totalled 430 billion baht (US$12 billion), that in turn resulted in a budget saving of 26.5 billion baht, or 5.82% of the bidding budget.

These bids were calculated mostly for specific methods accounting for 45.7% of the total auction value, followed by the e-bidding method which stood at 42%.