OCDE - Digital transformation of public procurement Good practice report

Digital transformation of public procurement Good practice report OECD Public Governance Policy Papers| 1

DIGITAL TRANSFORMATION OF PUBLIC PROCUREMENT © OECD 2025

OECD Public Governance Policy Papers

Digital Transformation of Public Procurement Good practice report

PUBE2 |

DIGITAL TRANSFORMATION OF PUBLIC PROCUREMENT © OECD 2025

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Abstract Digital technologies have profoundly transformed public procurement, evolving from basic digital tools to fully integrated, data-driven systems. This policy paper examines the digital transformation of procurement across OECD and non-OECD countries, highlighting three pillars: lifecycle integration, adoption of emerging technologies, and robust data capabilities. It identifies key challenges such as fragmented governance, limited digital skills, and outdated infrastructure. The policy paper offers strategic recommendations to overcome these barriers, including fostering leadership, enhancing data governance, investing in digital infrastructure, and promoting user-centric approaches. These measures aim to build adaptive, future-ready procurement ecosystems that are transparent, efficient, and resilient.4 |

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Acknowledgement This policy paper is published by the Public Governance Directorate (GOV) of the OECD under the leadership of Elsa Pilichowski, Director for Public Governance, and overall supervision of János Bertók, Deputy Director for Public Governance, and Paulo Magina, Acting Head of the Infrastructure and Public

Acknowledgement This policy paper is published by the Public Governance Directorate (GOV) of the OECD under the leadership of Elsa Pilichowski, Director for Public Governance, and overall supervision of János Bertók, Deputy Director for Public Governance, and Paulo Magina, Acting Head of the Infrastructure and Public Procurement Division (IPP) in GOV. In addition, the paper was prepared under the aegis of the OECD Public Governance Committee (PGC) and its Working Party of the Leading Practitioners on Public Procurement (LPP). The paper was coordinated by Erika Bozzay, Acting Deputy Head of Division, and András Hlács, policy analyst (IPP). It was drafted by Giulia Morando and András Hlács, with contributions provided by Kenza Khachani and Simon Cox in IPP. The paper benefitted from the comments of colle agues from the AntiCorruption and Integrity in Government Division (Maria Eugenia Heyaca), the Innovative, Digital, and Open Government Division (Felipe González -Zapata and Julian Olsen), and the SIGMA Programme (Marian Lemke and Aleksandra Melesko) in GOV, as well as the Digital Connectivity, Economics and Society Division (Molly Lesher) and the Artificial Intelligence and Emerging Digital Technologies Division (Celine Caira), coordinated by Gallia Daor ( Digital Policy Coordination) in the OECD Directorate for Science, Technology, and Innovation. In -house coordination was provided by Matthieu Cahen, while editorial assistance was received from Andrea Uhrhammer and Dovilė Bogušytė. The OECD expresses its gratitude to all the OECD member and non-member countries that responded to the 2024 Survey on the OECD Recommendation on Public Procurement and shared contributions and insights into the digital transformation of their procurement systems as part of discussions within the LPP.| 5

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Table of contents Abstract 2 Acknowledgement 4 Executive summary 7 1 Digital technology and public procurement 9

insights into the digital transformation of their procurement systems as part of discussions within the LPP.| 5

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Table of contents Abstract 2 Acknowledgement 4 Executive summary 7 1 Digital technology and public procurement 9 1.1. From analogue to digital: The evolution of digital public procurement 9 1.2. Reimagining public procurement: Digital transformation for strategic impact 12 2 Promoting end-to-end approaches to the public procurement cycle through digital transformation 16 2.1. Unlocking the potential of digital transformation: Reimagining public procurement from an end-to-end perspective 16 2.2. Rethinking public procurement from an end-to-end perspective through digital transformation: Potential challenges 19 2.3. The digital transformation of public procurement: A cornerstone of public sector digital transformation 22 3 Applying emerging technologies to public procurement 24 3.1. Emerging technologies in public procurement: Applications and benefits 24 3.2. Integrating emerging technologies into public procurement processes: Potential challenges and associated risks 30 4 Harnessing data governance and use for the digital transformation of public procurement 35 4.1. Data and the digital transformation of public procurement 35 4.2. Ensuring robust data governance to support the digital transformation of public procurement 38 4.3. Fostering the collection, use, and exchange of quality data in public procurement: Potential challenges 40 5 Towards a framework for the digital transformation of public procurement 43 5.1. Governance 43 5.2. Enabling environment 456 |

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References 48 Notes 54

FIGURES Figure 1.1. OECD 2023 Digital Government Index, composite results by country 10 Figure 1.2. From digitisation to digital transformation 13 Figure 1.3. The digital evolution of public procurement: The journey so far 14

References 48 Notes 54

FIGURES Figure 1.1. OECD 2023 Digital Government Index, composite results by country 10 Figure 1.2. From digitisation to digital transformation 13 Figure 1.3. The digital evolution of public procurement: The journey so far 14 Figure 1.4. The digital transformation of public procurement: Key elements 15 Figure 2.1. End-to-end public procurement lifecycle 16 Figure 3.1. Types of emerging technologies used to support procurement activities, 2024 24 Figure 3.2. Emerging technologies are mostly used to enhance transparency, control and oversight, and administrative efficiency in public procurement 25 TABLES Table 2.1. Benefits of end-to-end approaches to public procurement promoted by digital transformation 19 Table 3.1. Examples of emerging technologies used in public procurement 26| 7

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Executive summary Digital technologies have radically reshaped public procurement over the past few decades from the early adoption of digital tools in the late 1970s to the widespread application of eprocurement solutions in the mid-2000s. Today, digital transformation involves rethinking the entire public procurement lifecycle, integrating digital technologies into every phase, and embedding a digital -first mindset across public institutions. This paper explores this transformati on in detail, drawing on best practices from OECD and non-OECD countries and offering practical recommendations to advance the digital transformation of public procurement. At its core, the digital transformation of public procurement rests on three main pillars. First, the public procurement lifecycle had evolved from a series of isolated steps to a seamless, integrated process. that requires optimising existing workflows, developing new value-added services, and redesigning processes from pretender market engagement to post -award contract management. It also breaks down operational silos, enabling seamless coordination among all stakeholders – including contracting authorities, central purchasing bodies, suppliers, and economic operators – and fostering a user-centric approach that prioritises their needs. However, several challenges may prevent public

breaks down operational silos, enabling seamless coordination among all stakeholders – including contracting authorities, central purchasing bodies, suppliers, and economic operators – and fostering a user-centric approach that prioritises their needs. However, several challenges may prevent public procurement ecosystems from taking full advantage of the potential of digital transformation. A lack of a clear strategic vision and robust governance arrangements for digital transformation often leads to fragmented implementation across government bodies. Institutional and operational siloes, coupled with limited understanding of users’ needs, further slow progress toward more integrated and efficient procurement cycles. Resistance to change presents another major challenge, making it difficult to transition to more collaborative, user -centric approaches and adopt emerging technologies. Additionally, stringent data privacy and sharing requirements, while essential for safeguarding privacy, integrity, and security, can further complicate endto-end data and system integration and interoperability within public procurement ecosystems. Second, digital transformation incorporates innovative and emerging technologies – such as artificial intelligence (AI), machine learning (ML), blockchain, robotic process automation (RPA), and the Internet of Things (IoT) – to optimise workflows, drive efficiency, and enable adaptive, data-driven decision making. OECD data reveal that data analytics, AI and ML, and RPA are the most widely used emerging technologies to support public procurement activities. These technologies are being increasingly harnessed to improve transparency, control, oversight, and administrative efficiency. Yet, integrating them into public procurement processes comes with challenges. Limited digital skills and expertise among procurement professionals can hinder widespread adoption. In addition, concerns over digital security, data reliability, and trustworthiness, coupled with resistance to change, can further delay implementation. Certain technologies, particularly AI, also raise concerns around accountability and risks of bias, w hich require careful regulation. Furthermore, outdated legacy infrastructure, lack of standards, and interoperability issues present additional technical barriers. Third, the digital transformation of public procurement requires significant investment in robust data capabilities, including the collection, storage, management, and exchange of highquality, standardised data that inform every aspect of procurement. Indeed, the ability to harness high -quality data effectively8 |

interoperability issues present additional technical barriers. Third, the digital transformation of public procurement requires significant investment in robust data capabilities, including the collection, storage, management, and exchange of highquality, standardised data that inform every aspect of procurement. Indeed, the ability to harness high -quality data effectively8 |

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lies at the core of digital transformation. As one of the most valuable assets in this digital age, data underpin informed decision-making and drives efficiencies across government. In public procurement, data, when accurate and reliable, can help guide procurement operations, shape buyers’ strategies, foster competition, and support the measurement of outcomes while promoting transparency and accountability. Emerging technologies also depend on accurate, timely, and reliable data to provide meaningful insi ghts into decision-making. Despite their relevance, several challenges hinder the effective use of data to support the digital transformation of procurement. Procurement data are often fragmented, stored across multiple systems, and not always available in machinereadable formats, limiting interoperability and integration. Legacy IT infrastructure and capacity constraints exacerbate these issues, making it difficult to build comprehensive and interoperable procurement systems. Furthermore, as data collecti on and sharing increase, concerns around privacy, trustworthiness and accountability, and security demand robust data governance measures. To address these challenges and unlock the full potential of digital transformation in public procurement, this paper makes the following recommendations: • Establish a clear vision and ambition for the digital transformation of public procurement, underpinned by whole-of-government strategies that ensure alignment and set clear , measurable objectives and milestones to support digital transformation. • Ensure robust institutional leadership and co -ordination among all relevant stakeholders to promote implementation. • Ensure that legal and regulatory frameworks enable digital transformation and are regularly updated to address technological advancements and emerging challenges while safeguarding data privacy and security. • Ensure continuous improvement of policies governing digital and data-driven activities, with a focus on data governance, data availability, and data quality across technologies. • Establish the building blocks needed to take advantage of innovative and emerging

updated to address technological advancements and emerging challenges while safeguarding data privacy and security. • Ensure continuous improvement of policies governing digital and data-driven activities, with a focus on data governance, data availability, and data quality across technologies. • Establish the building blocks needed to take advantage of innovative and emerging technologies, including developing a coordinated approach to deploying them and identifying requirements, guidelines, and governance frameworks to ensure their responsible application. • Build digital and data culture and capacities by investing in training and upskilling, developing internal capacity, and ensuring that procurement professionals are equipped with the skills needed to use digital tools effectively. • Develop tools and solutions to digitalise the full public procurement lifecycle , such as centralised and/or interoperable tools and platforms. • Invest in robust digital infrastructure and data architecture to foster a seamless transition to more advanced digital systems and support the standardisation, exchange, and analysis of procurement data. • Promote digital-by-design and user-centric approaches to public procurement that prioritise the needs of contracting authorities, CPBs, suppliers, and economic operators in the design and implementation of digital solutions. These steps help build a governance framework to support the digital transformation of public procurement as well as adaptive digital procurement ecosystems that not only meet current demands but are also wellprepared for future challenges.| 9

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1.1. From analogue to digital: The evolution of digital public procurement Digital technologies have radically changed public procurement operations over the past few decades, driving greater efficiency, transparency, and accountability. To align with these advancements, the OECD Recommendation on Public Procurement underscores the critical role of digital tools and solutions in fostering competition, streamlining processes, and integrating procurement activities with public financial management systems (OECD, 2015[1]), as explained in Box 1.1. Advanced digital solutions also prioritise data security, privacy, and usability, ensuring accessibility for small and medium enterprises (SMEs) while driving innovation. At the same time, they enable data-driven insights, helping governments to inform policy

management systems (OECD, 2015[1]), as explained in Box 1.1. Advanced digital solutions also prioritise data security, privacy, and usability, ensuring accessibility for small and medium enterprises (SMEs) while driving innovation. At the same time, they enable data-driven insights, helping governments to inform policy development, improve risk management, optimise spending, and strengthen public trust in procurement processes and results. Box 1.1. Harnessing the use of digital technologies to support procurement innovation: The OECD Recommendation on Public Procurement Acknowledging the potential of digital technologies to enhance efficiency and transparency, the OECD Recommendation on Public Procurement promotes the modernisation of procurement practices across the entire procurement lifecycle through digital innovation. Notably, the e-procurement principle, which represents one of the Recommendation’s key integrated principles (transparency, integrity, access, balance, participation, efficiency, eprocurement, capacity, evaluation, risk manage ment, accountability, and integration), calls on Adherents to adopt integrated eprocurement solutions covering the entire procurement cycle to ensure transparency, increase competition, simplify processes, and drive cost savings. Adherents are also encouraged to use state -of-the-art, modular, flexible, and secure eprocurement tools that protect privacy and data integrity, ensure fair treatment, and support business continuity. These tools should be user -friendly, fit for purpose, and harmonised across procurement agencies to avoid unnecessary complexity and reduce barriers for SMEs.

Source: (OECD, 2015[1]).

The use of digital tools in public procurement happens in the context of the broader digital transformation of the public sector. Strategic leadership and governance, as outlined in the OECD Recommendation on Digital Government Strategies (OECD, 2014 [2]), are essential to maximise the benefits of this transformation (Box 1.2). 1 Digital technology and public procurement10 |

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Box 1.2. The OECD Recommendation on Digital Government Strategies Adopted by the OECD Council in 2014, the OECD Recommendation on Digital Government Strategies

1 Digital technology and public procurement10 |

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Box 1.2. The OECD Recommendation on Digital Government Strategies Adopted by the OECD Council in 2014, the OECD Recommendation on Digital Government Strategies is the first international legal instrument on digital government and offers guidance on how best to keep pace with technological change and make the most of digital opportunities. The Recommendation encourages governing and using digital tools and data for humancentred and datadriven service design and delivery and policymaking across different policy areas, including public procurement, by: • defining strategic instruments that guide digital government reforms, fostering alignment across different sectors and promoting wide stakeholder participation and engagement; • securing leadership and political commitment that promote a coherent use of digital technologies and establish effective organisational and governance frameworks to co-ordinate implementation; • establishing policy instruments and mechanisms that support a coherent and strategic decision making, implementation and monitoring of investments in digital technologies across the public sector.

Source: (OECD, 2014[2]).

OECD countries are advancing towards strengthening their digital foundations to enable a wholeofgovernment digital transformation of public institutions and sectors, including public procurement. The results of the OECD Digital Government Index (Figure 1.1) illustrate that countries have devoted larger efforts to consolidate digital government strategies and key digital public infrastructure, but more can be done to secure that policy sectors fully embrace digital tools to transform how they operate and deliv er services (OECD, 2024[3]). By focusing on purposeful digital transformation, governments can ensure that public procurement contributes to both operational efficiency and societal progress. Figure 1.1. OECD 2023 Digital Government Index, composite results by country

Note: The data collection period for this edition of the DGI is from 1 January 2020 to 31 October 2022. Data for Germany, Greece, Slovakia, Switzerland, and the United States are not included.

Source: (OECD, 2024[4]).| 11

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Switzerland, and the United States are not included.

Source: (OECD, 2024[4]).| 11

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Public procurement was among the first areas of public governance to adopt digital tools (OECD, 2024[5]), with this shift emerging already in the late 1970s. The digitisation of public procurement – converting analogue or manual procurement processes into digital formats – historically started with the advent of digital tools and technologies t o support effective procurement performance . For example, in 1978, the United States (US) launched the Federal Procurement Data System (FPDS) to collect and track procurement data (FDPS, 2004[6]). This corresponded to the introduction and populari sation of personal computers (PCs). The release of the Apple II in 1977 – featuring VisiCalc (“visible calculator”), the first spreadsheet computer programme for personal computers – and the IBM PC in 1981 marked the beginning of a shift toward widespread access to computing capabilities. This evolution had profound implications across various sectors, including public procurement. In addition, in the 1980s and 1990s, governments in Canada, the United Kingdom (UK), and the US started using electronic platforms to improve procurement performance and promote automation and standardisation, moving away from paper -based processes to reduce the time needed to complete tasks and the probability of human error (OECD, 2016 [7]). Likewise, the European Union (EU) began promoting the use of digital procurement platforms in the 1990s, introducing the European e -notification portal TED (Tenders Electronic Daily). In summary, these early digital initiatives laid the ground for the sophisticated e-procurement systems that exist today. Going a step further than digitisation, public procurement digitalisation involves a more comprehensive adoption of digital technologies to streamline and optimise procurement workflows. It includes automated processes, real-time data tracking, and integration of digital tools across procurement stages. One of the first genuine ly revolutionary changes occurred in the mid2000s, with the widespread introduction and

adoption of digital technologies to streamline and optimise procurement workflows. It includes automated processes, real-time data tracking, and integration of digital tools across procurement stages. One of the first genuine ly revolutionary changes occurred in the mid2000s, with the widespread introduction and uptake of e-procurement solutions focused mainly on the tendering (pre-award) phase. Korea led the way among OECD countries through its pioneering national eprocurement system. Notably, Korea’s 1997 accession to the World Trade Organization (WTO), that mandated Member States to liberali se their procurement markets, induced the Korean government to reform its Public Procurement Service (PPS) (Kyeyoung, 2021 [8]). After successfully conducting some pilot projects, the PPS introduced the Korea Online E-Procurement System (KONEPS) in 2002 as part of its broader e-government agenda (OECD, 2016[7]), as explained in Box 1.3. By 2014, all OECD countries had adopted eprocurement platforms to publish procurement opportunities and provide tender documents, with most making their use mandatory by law (OECD, 2016[7]). Non-OECD countries have also made strides in this area. For instance, Brazil’s ComprasNet platform, serving as a central platform for managing public sector purchasing, stands out as a good practice example, particularly for its use of electronic reverse auctions and its role in increasing transparency and efficiency in government purchasing , automating supplier registration and contract management , and reducing administrative burdens. In the EU, the public procurement directives have similarly mandated e lectronic procurement platforms (eProcurement) across Member States, enabling digital submission, evaluation, and awarding of contracts.12 |

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Box 1.3. Promoting digital public procurement: KONEPS The Korean ON-line E-Procurement System (KONEPS) is a comprehensive, integrated e-procurement platform covering the whole public procurement process in Korea. It was launched in 2002 to prevent corruption between public institutions and suppliers and to reduce unnecessary costs associated with

The Korean ON-line E-Procurement System (KONEPS) is a comprehensive, integrated e-procurement platform covering the whole public procurement process in Korea. It was launched in 2002 to prevent corruption between public institutions and suppliers and to reduce unnecessary costs associated with paper contracts during the procurement procedure. KONEPS stands out as one of the most advanced e-procurement platforms within the OECD in terms of scope and coverage, significantly enhancing the efficiency, effectiveness, and integrity of public procurement in Korea. As of January 2025, KONEPS is interconnected with 227 external systems from both the public and private sectors, including the Ministry of the Interior and Safety, various financial institutions, business associations, and the DBrain system of the Korea Fiscal Information Service. Through this integration, the system enables the automatic retrieval and sharing of essential documents and certifications required during the bidding and contracting process, such as business registration certificates, tax payment certificates (both municipal and national), letters of guarantee, qualification screening documents, and certified copies of corporate registers. This linkage significantly reduces the administrative burden on companies and enhances overall efficiency and data reliability. Since its launch, KONEPS has continuously evolved to expand its functionalities and integrate entities previously operating outside its reach. The Next-generation KONEPS, launched in March 2025, unifies four additional data systems and integrates 25 other procurement platforms into KONEPS. Importantly, integration of procurement data with taxation records and other government databases further simplifies procurement processes and procedures for the procurement authorities and bidders. Contracting authorities can benefit from data-driven planning tools, product recommendations based on purchasing history, and AI -supported operational insights. The Next -Generation KONEPS also enhances user convenience by facilitating tender registration, securing document sharing, and customising services tailored to specific tasks and user types. Leveraging AI and Big Data, the Next-generation KONEPS aims to support small and mediumsized enterprises (SMEs) by predicting bidding congestion, monitoring procurement operations, and recommending products.

convenience by facilitating tender registration, securing document sharing, and customising services tailored to specific tasks and user types. Leveraging AI and Big Data, the Next-generation KONEPS aims to support small and mediumsized enterprises (SMEs) by predicting bidding congestion, monitoring procurement operations, and recommending products.

Source: (OECD, 2019[9]); information provided by the government of Korea in 2024 and 2025. 1.2. Reimagining public procurement: Digital transformation for strategic impact Requiring a fundamental rethinking of procurement strategies, structures, and operations, the digital transformation of public procurement goes beyond digitisation of records and digitalisation of systems and processes. It represents a holistic change where technology fundamentally reshapes procurement practices, enabling innovation and adaptive strategies. At the same time, it entails a comprehensive shift that affects entire organisatio