DIGIWHIST is looking for public procurement legislation experts

The European Research Centre for Anti-Corruption and State-Building via the EU funded DIGIWHIST project is looking for freelance experts in public procurement legislation. They're looking specifically for experts on Denmark, Georgia, Latvia, Lithuania, Netherlands, Norway, Portugal and Slovenia.

More details can be found here.



New Portuguese multi-author blog on public procurement

My dear colleagues from the Instituto de Ciencias Juridicas e Politicas from the University of Lisbon decided to set up a multiauthor blog in public procurement: contratospublicos.net. It is in Portuguese only but the content already there is excellent and with a good deal of discussion in the comments.

I could not resist Miguel Raimundo's kind invitation and have joined up as an author. It's the first time in more than 10 years that I am writing work related pieces in Portuguese. Although rusty, it is nice for a change from my usual English writing.

My first entry on direct awards and request for proposals is already up and a second on lots is coming later today.

Closet protectionism in UK Government's balanced scorecard for large projects?

The UK Government published recently a "balanced scorecard" for works, infrastructure and capital investment contracts valued above £10 million. Here's a snapshot from the press release:

The new scorecard system has been designed to help ensure that major government procurements have a positive impact on economic growth, as well as achieving best value for the taxpayer.

The guidance, developed by the Crown Commercial Service, introduces a balanced scorecard approach, which government departments should use in designing major works, infrastructure and capital investment procurements where the value is more than £10 million.

The scorecard helps procurers to consider the project requirements and needs, with criteria such as cost balanced against social, economic and environmental considerations.

By using this method, government departments can clearly set out how priority policy themes such as workforce skills development, small business engagement and sustainability may be integrated into their procurement activities.

Albert has already put the finger where it hurts: it appears to be designed as a protectionist tool or at the very least with protectionist consequences. I would add that this approach increases procurement complexity (and cost) for both contracting authorities and economic operators but as we are talking about large projects probably the expectation is that such cost will be diluted in the grand scheme of things.  

Having been on the record for the last few years saying social considerations can be easily manipulated for protectionist purposes, I cannot be surprised by yet another protectionist Trojan Horse having been found out in the wild. At this rate we might as well call it a day and just give up on the idea of a single market for public procurement.

As Brexit nears I expect a reduced influence of EU law and the CJEUs effectiveness as a deterrent in terms of compliance with key tenets of EU Law in the UK - and not only in procurement. This is just the clearest example so far.




Episode #25 of the PPP with Ana Cristina Calderon Ramirez

Episode #25 of the Public Procurement Podcast is out. This time with Ana Cristina Calderon Ramirez from the Maastricht Graduate School of Governance.

We talked about Ana's research in the field of public procurement regulatory and monitoring entities in Latin America and the Caribbean with an emphasis on her (joint) paper entitled 'Elements of public procurement reform and their effect on the public sector in Latin America and the Caribbean', which was one of best at the IPPC 7 conference earlier this year.

Speaking of the PPP, we're apparently the 34th best procurement and logistics podcast, according to this CamCode list.

Open consultation Supplier standard for digital and technology service providers

Programmes like ‘Government as a Platform’ mean we’re moving away from long-term, large-scale contracts towards more flexible, digital, agile and transparent interactions focused on joint delivery.

The supplier standard for digital and technology service providers describes our expectations of, and commitments to, the technology companies we’ll need to work with to make this approach successful.

The six guiding principles of this proposed new approach are:

  1. User needs first.
  2. Data is a public asset.
  3. Services built on open standards and reusable components.
  4. Simple, clear, fast transactions.
  5. Ongoing engagement.
  6. Transparent contracting.

Personally I am in favour of these guiding principles as a pathway to improve public procurement although I am cagey on the ongoing engagement as it will be an easy way fr supplier with preferential access to influence the procurement decision making outside of a formal procedure.

Is China building a road to ruin?

Very interesting paper by Ansar, Flyvberg et all:

Abstract: China’s three-decade infrastructure investment boom shows few signs of abating. Is China’s eco- nomic growth a consequence of its purposeful investment? Is China a prodigy in delivering infrastructure from which rich democracies could learn? The prevalent view in economics literature and policies derived from it is that a high level of infrastructure investment is a precursor to economic growth. China is espe- cially held up as a model to emulate. Politicians in rich democracies display awe and envy of the scale of infrastructure Chinese leaders are able to build. Based on the largest dataset of its kind, this paper punctures the twin myths that (i) infrastructure creates economic value, and that (ii) China has a distinct advantage in its delivery. Far from being an engine of economic growth, the typical infrastructure investment fails to deliver a positive risk-adjusted return. Moreover, China’s track record in delivering infrastructure is no bet- ter than that of rich democracies. Investing in unproductive projects results initially in a boom, as long as construction is ongoing, followed by a bust, when forecasted benefits fail to materialize and projects there- fore become a drag on the economy. Where investments are debt-financed, overinvesting in unproductive projects results in the build-up of debt, monetary expansion, instability in financial markets, and economic fragility, exactly as we see in China today. We conclude that poorly managed infrastructure investments are a main explanation of surfacing economic and financial problems in China. We predict that, unless China shifts to a lower level of higher-quality infrastructure investments, the country is headed for an infra- structure-led national financial and economic crisis, which is likely also to be a crisis for the international economy. China’s infrastructure investment model is not one to follow for other countries but one to avoid.
— https://arxiv.org/ftp/arxiv/papers/1609/1609.00415.pdf

A more general piece can be found in the Wall Street Journal.

Some further thoughts on Brexit and its impact on procurement

This time from Lorand Bartels (Cambridge University), who argues that the UK will succeed to the EU on the Government Procurement Agreement:

It is the EU alone, and not the UK, that is the relevant party to this agreement.
Accordingly, it is at present the EU that is solely responsible for its obligations under the
agreement, including in respect of the actions of government authorities that are organs of
its Member States. It is submitted that on leaving the EU, the UK will succeed to the GPA in
its own right, in accordance with rules of customary international law on the succession of
states to treaties, and practice under the GATT 1947, which ‘guides’ the WTO.

Although I am not entirely persuaded by the arguments (at least not yet) there is at least a reasonable case to be made for the UK to stay inside the GPA after Brexit.


Some comments to Arrowsmith's Brexit whitepaper

Prof. Sue Arrowsmith put out a whitepaper on the implications of Brexit for the UK's procurement rules. Albert has already provided a general comment on some important issues raised by the paper, such as the feasibility of a completely new procurement legal regime and what could be the transitional arrangements. 

There is not much to add to the first part of the paper - the EEA option is pretty much 'business as usual.' I suspect that EEA or no EEA option, not much will change at regulatory level for the next few years - there are too many sunken costs on the current system to warrant a wholesale change just for the sake of change. As such I will focus my commentary in other topics instead.


1. The GPA option 

While I agree with the view that the UK would find itself out of the GPA the possibility of speedy re-entry into the agreement is certainly possible as argued by Arrowsmith, it is by no means a given. In a scenario where the UK is negotiating multiple trade deals at the same time any other State will use whatever leverage it can over the UK to achieve concessions elsewhere. Access to the procurement markets within the GPA may well be thrown into the mix of the negotiations, if only because it devalues the commitments made by a UK-less EU. At this stage we should not take for granted that re-joining the GPA will be a 'walk in the park' and to that end I would recommend the sage commentary by Jean Heilman Grier on this topic. As she mentions, the UK would have to negotiate first with the EU the terms of its arrangement and only then the GPA's accession. This could leave the UK with a potentially long GPA-less transitional period.


2. Transition period

Arrowsmith suggests that for a transition period '[a] sensible and likely interim solution would, therefore, be to retain the award procedures of the regulations in place, but without provision for enforcement by non-domestic suppliers, pending eventual confirmation, modification/replacement or total repeal of the regulations [...].' I agree with the overall view that the UK must have a tat-for-tat approach to the negotiations (as do the other Member States) to protect its own interests. In this I disagree with Albert's view as restricting access to procurement markets if temporarily is a way to gain some negotiation leverage which I accept is a price to pay in that period.

Having said that I am not entirely sure about the actual suggestion made: i) is it EU/EEA economic operators are entitled to take part in procurement procedures but cannot enforce the rules - as it currently happens with foreign economic operators; or ii) is it that they simply are barred from taking part in procurement procedures? I can understand the second (although retribution would be certain) but cannot understand the first. What would be the point of having economic operators taking part in the procedure only for them not to be able to enforce the rules? Plus, if awarded the contract would they also be barred from enforcing the contract terms under English contract law?


3. The Freedom option

In addition, Arrowsmith suggests that '[...]Brexit would see the UK throw off the shackles of EU procurement law, leaving it free to design its own system.' In other words, the UK could finally design its own procurement legal system as it sees fit. While Arrowmsith's preference for a more simpler, single system based off the Utilities Directive are not new, as is a preference for higher thresholds, but describing current EU rules as shackles that need to be thrown off appears to be. Especially if we agree with Arrowsmith's view that Member States have a wide range of discretion in transposing Directives into their national legal systems. As other Member States have used such discretion (sometimes to the point beyond discretion in my view) why has the UK not done so?

After all it is the UK's Government approach to transpose Directives (in general) with a copy out approach and with as few options as possible, thus leaving scope for national/regional rules to be created. The responsibility such national/regional rules are not created in the first place can only be attributed to the respective Government(s). If Portugal, Spain, Italy, Denmark have detailed rules crafted for their own realities, why doesn't the UK do the same? I am not positing those are great legal systems, but at least in those countries lawmakers have made use of their powers in transposition to adapt Directives to the national setting. In short: it can be done.

So, even with a (possible) wide discretion, the UK Government has not opted to implement its own national rules, with the exception of the baby steps taken with contracts below thresholds - where it could regulate them at will as it would not be transposing any Directive. On the other hand, as recognised by Arrowsmith the Scottish Government has taken the opportunity to create its own 'regional' procurement regime in addition to the narrow transposition of the appropriate Directives. However, as correctly pointed out by Arrowsmith, the downside of this freedom to legislate at regional level is an increase in 'regional differences'. These, in my view and based on my own experience, will amount to protectionist measures designed to keep out 'foreign' economic operators, ie those based in another UK region. Therefore, I fear it is much more likely we would end up with a patchwork of regional systems than with the simpler, more efficient system Arrowsmith would like to have.

Finally, as for the simpler, more efficient system that could be designed outside of the EU shackles (setting aside the fact it can be designed inside/below them) it would seem our starting positions are on polar opposites. Arrowsmith appears to prefer a system with more discretion given to the contracting authority and fewer rules, so they can design whatever procedure they might want in compliance with a set of limited principles. I am the first to recognise the current rules limit truly great procurement, but they do so as a trade off - not to shackle the top 1% of contracting authorities (or procurement officers) but as a way to provide enough detail so that all contracting authorities can use them. That does not mean they cannot be improved, but it is important to recognise this trade off. And I will take a set of detailed rules that avoid really bad procurement (or try to) for most people, most of the time over ones which only suit the top 1%. 

There are other downsides to a simpler, less prescriptive system. For example, compliance costs would go up for the economic operators - instead of learning one set of rules/procedures, they would have to analyse the specific rules of every single procurement procedure as even within each contracting authority different departments/officers may prefer to do those things differently. Again, I prefer standardisation as a means to reduce transaction costs overall than the discretion to tweak each procedure to suit the contracting authority.    

In addition, if we look at the contracts below-thresholds, where such simpler approach would make more sense and where currently there are no legal restrictions, why are we currently not seeing great practice being developed? Other than the pilots I ran in Wales a few years ago and the excellent work being done by the Government Digital Service and the Digital Marketplace, are there any other examples we should be looking at? Is it not surprising that the most common practice below thresholds for a long time was a preference by contracting authorities to either just use the restricted procedure with all the transaction costs it entailed or going for non-transparent request for quotes - as those were the reality overworked procurement officers knew. Sticking to the tried and tested approach is always the default even if a careful consideration would say otherwise when there is no time or incentive to carry out such consideration. In essence, these default approaches explain why Central Government contracting authorities are under the obligation of advertising contracts above £10,000 and the baby steps to regulate contracts below-thresholds in the Public Contracts Regulations 2015.

In conclusion, even if possible, I fear a simplified, looser regulatory system would leave most stakeholders (contracting authorities, economic operators) worse off most of the time. While it could (theoretically) facilitate great practice in some instances, my experience in practice leads me to a bearish view on the overall merits of such a regime.  


4. Remedies

A final short word on remedies.  Arrowsmith is of the opinion that the current remedies system is 'burdensome.' As such, a freedom option should also consider a review of the current remedies system '[...] that offers a better balance between the costs and benefits of legal enforcement [...].' This point is particularly interesting as on p.13 Arrowsmith correctly highlights one of the problems of the current remedies system to be the UK's preference for the High Court. This is very true but, once more, it is not really the EU legal system fault's for the UK's design of its remedies system. Even within the EU legal framework it is possible to think different.

If we look at Sweden we see a competition authority with strong powers in this are. Denmark also has its own competition authority and the Procurement Boards which deal specifically with procurement matters. After a couple of run ins with the Court of Justice Spain has today a fast, efficient and cheap (for the time being) system of procurement tribunals. In Portugal, as the administrative courts are clogged up with procurement disputes the draft Public Contracts Code explictly accepts the parties may recur to arbitration instead. 

Outside the EU we can find another system which I find very appealing and would probably fit within the current rules: Canada and its Procurement Ombudsman.  Here's an interview with the then Ombudsman Frank Brunetta about his office's work. It is not hard to conceive a scenario where the current Mystery Shopper Service would be transformed into a true Ombudsman-type service with stronger powers than today. Again, this would be perfectly possible within the current rules.


5. Conclusion

In conclusion, I agree with Albert's view that most of the debate we can have at the moment is theoretical. Nonetheless, there is a value in having these discussions as they can influence decisions taken down the line. Having said that, I would like to see the same interest and energy in debating how we can improve practice (and national/regional rules) within the current legal framework. It is likely it will stay mostly unchanged for a good while and there is the odd chance they will actually not change at all. 







Brexit implications on the UK's GPA participation

Some food for thought raised by Jean Heilman Grier on the impact Brexit will have on UK's participation on the GPA:

The UK’s negotiations to rejoin the GPA would involve the procurement that it would cover and the conformity of its laws with the GPA. As for its covered procurement, the UK would not be able to simply rollover its current coverage as part of the EU because elements of that coverage are tied into EU procurement directives. For example, its sub-central coverage includes contracting authorities, which are bodies governed by public law as defined by the EU procurement directive. Similarly, the UK covers contracting entities whose procurement is covered by the EU utilities directive.

More here.


Links I Liked [Public Procurement]

1. Lessons from cities trying to be better buyers.

2. Some data from the European Construction Sector Observatory.

3.  Clean contracting: safeguarding EU funds in Europe.

4.  Public procurement — the next frontier for tax justice campaigning? I hope not. The economic operators' tax situation is covered (and well covered) on Article 57 of Directive 2014/24/EU and it is connected with the intrinsic situation of the economic operator - not the contract at hand. If contracting authorities (and Member States) do not use the possibilities provided by Article 57 is another matter. Let's not forget that Art 57 allows for the exclusion to happen at any time during the procedure. That does not justify however increasing the complexity of the process by shoehorning tax issues to award criteria.

5.  Brexit' decision raises questions over adoption of Europe's electronic procurement document. It shouldn't as the UK is a fully fledged Member of the EU until the exit actually happens (if it it happens at atll). However, the mere fact we are entertaining this option illustrates one of my fears with the current Brexit limbo - the more time passes, the more likely it is EU law will be disregarded as the threat of enforcement recedes. This is just one of the first examples.


Links I Liked [Public Procurement]

1. Belgian Govt. approves procurement of software to track down terrorists. Gosh I would love to see the tender specifications for this one. Was it an output/outcomes based spec? Or did Belgium just accidentally acquired Twitter?

2. Albert kickstarts a big thinking discussion about what procurement should look like. I have a couple of ideas on this as well. As I said last year at the Global Revolution conference in Nottingham, our current system was designed on (and for) an analog world. It has aged as well as BladeRunner's imagination of 2015.

3. House of Commons Library publishes its view on Brexit implications for public procurement.

4. UK Government has a 6 point plan to open up the market for suppliers of all sizes. I for one, welcome any measure which lowers transaction costs for all participants in public procurement. I am worried however about 'continuing engagement.' In any case, the Guidance document is here and the public consultation open for the next three months. 

5. Michael Bowsher mentioned earlier this week at the Catolica Summer School, the recent case of EnergySolutions vs Nuclear Decommission Authority, where the contracting authority took conscious steps to render its decision-making process non-auditable. It is a very long judgment, but a great read.

New episode of the Public Procurement Podcast is up

I have just uploaded episode #24 of the Public Procurement Podcast. The interviewee this time is Warren Smith, Director of Warren Smith, Director, Digital Marketplace part of the Government Digital Service.

We talked at length about the changes in digital procurement the UK Government is curently undertaking, some that already happened and others which will be happening in the future like the adoption of the Open Contracting Data Standard.

You can subscribe to the PPP directly on iTunes.