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How can blockchain help in government procurement?

October 27, 2020

In the so-called industrial revolution, various technologies appear as paradigms that modify current business models, offer agility and simplify intermediate processess and thus lower the decision-making costs.

In this environment of technological disruptions, one of them stands out: blockchain, which with its potential requires changes to automated decision-making systems. Blockchain is an innovative technology for automating processes with multiple applications in the public sector, especially in the field of public procurement.

Public procurement is one of the sectors where a large part of the world’s countries are choosing technological tools as a strategy for an efficient and responsible process. However, it is no secret that this is the sector where the struggle over the lack of control over public spending, fraud and corruption is getting stronger every day, despite the rigor with which some countries regulate this process.

How can blockchain help in government procurement?
How can blockchain help in government procurement?

In this context, Blockchain is an alternative that makes it possible to improve the verifiability and transparency of administrative activities and to ensure the efficiency and immutability of the procedures. However, this also gives citizens the opportunity to decide which level of protection should be granted for their information.

Blockchain acts as a tool to solve the interoperability problems that exist between different units or administrative authorities, so that the simultaneous or successive participation of the procedure between the different units of the administration as well as the interested parties and third parties is possible. that is rightly an interest.

About these effectsBlockchain can be of great importance in administrative procedures in which different administrations intervene in the exercise of simultaneous powers. To become a useful tool in developing state decentralization processes, or at least in promoting an increase in administrations at different levels in the exercise of public powers.

Generally speaking, it can now be pointed out that the operation of this technology is that each transaction is automatically entered in a block of information. As the number of transactions increases, the blockchain grows.

The main novelty of the blockchain compared to other technologies on which traditional platforms are based is this The information stored in this database is encrypted in blocks that are available to all members who are the only ones responsible for checking the registered transactions without the need for a central control body to participate.

This technology works like a transaction record. At the same time, it enables the programming of distributed applications via so-called smart contracts or smart contracts, software programs that are based on the blockchain and that automatically check whether certain conditions have been met. They are subject to the formula “if X, Y occurs”, that is, their function would be “to do so when the other is true” without intermediaries participating in the decision-making process.

In this way, the blockchain could be more than a registry, and smart contracts are a very useful tool in processes like product traceability systems, document issuance and even to configure automated administrative actions in procedures of tenders and public contracts, among others.

use cases

The use of blockchain in the public sector is already a reality in some countries, such as the UK, which is leveraging the use of this technology to pay and monitor research grants in Australia for government communications, cybersecurity, logistics and correct use of funds for local government. For its part, Estonia has implemented this technology with greater intensity, using a digital identity system that allows access to a large amount of medical, legislative, legal, commercial and security data, as well as public services and control over one’s own information.

In the framework of the European Union, the EU Blockchain Observatory and Forum was set up by the European Commission and with the support of the European Parliament, which promotes the use of blockchain in public administrations, including the Spanish state has the use of the blockchain in the register of Contractors supported in public tenders. The government of Aragon is using the blockchain for public purchasing by creating a decentralized register of offers for smart contracts.

Argentina also has ongoing projects and cases of blockchain implementation by the national government. that of the Official Gazette of the Republic of Argentina to certify its digital editions and the signature of the SAS digital books. The Argentine federal blockchain has also been created, made up of civil society, academia, and the state, represented by the Argentine Internet Chamber, university liaison networks, and the national executive through the NIC.AR, which will enable the use of applications for contracts and industries Transactions.

On the other hand, the municipality of Córdoba has integrated this technology into its Open Government platform in order to protect existing information and improve the efficiency of its administrative processes through Bitcoin and Etherum, among other things.

The blockchain is a technology that has proven itself. Its creation is an unprecedented milestone for the security, objectivity and efficiency of electronic communication. It is true that it is a technology that is still in development, but the impetus for what is being done in several countries and which are already beginning to crystallize in some projects or proofs of concept in public administration , lead us to think that we are facing a technology the use of which in the activity will be generalized in the future.