On the importance of designing public contracts well

Very interesting piece on Wired about how Barcelona is dealing with smart city surveillance, even if I do not buy the whole political worldview.* On the procurement side, this bit at the start caught my eye:

“Now we have a big contract with Vodafone, and every month Vodafone has to give machine readable data to city hall. Before, that didn’t happen. They just took all the data and used it for their own benefit”

I will take this at face value, but even so it shows the importance of understanding where value (and risk) lies. By giving Vodafone free reign on using the data generated in that contract the City Council was effectively paying them twice for the same service: first, in cash. Then, in data Vodafone could use as well for its own purposes. That the current City Council understands that the value generated by its contract is valuable (and also a key reason why incumbents usually have a built in advantage IMHO) is a welcome development.

In general I am in favour of more, not less transparency even though it is not exactly risk free in some markets due to the collusion opportunity it offers. But my experience in public procurement tells me that more detailed data provided to tenderers helps them reduce uncertainty and provide more detailed bids based on that data (it just so happens it might as well help collusion).

There is another important point to think about here as well and that is the potential State aid implications. If usage data has value for the incumbent and it is already being paid to deliver the contract then it is arguable the intrinsic data value goes beyond the market rate and that might constitute a case of implicit (?) State Aid. 

The fact the data is controlled by the City Council and (hopefully) made available to tenderers in the following tender allows to level the ground between the incumbents and challengers, negates part of their inbuilt advantage and the value the data has for the first.

*The idea behind Barcelona as a smart city predates 2015 and the current preoccupation with data ownership as well. 

Links I Liked [Public Procurement]

1. World Bank starts MOOC on PPPs (French only). Older English version here. I sincerely hope they cover also the downsides of PPPs.

2. 18F publishes beta website with US Government spending. Now if only we would do the same in Europe...

3. Night bus service in Barcelona to be re-tendered (Spanish only). Never understood why the night bus service in Barcelona uses different buses from the day ones. All that capacity sitting idle during the day? Makes no sense.

4. Just Another Paperclip? Rethinking the Market for Complex Public Services. Good report by Gary Sturgess.

5. An Exercise in Underachievement–The UK’s Half-Hearted Half-Measures To Exclude Corrupt Bidders from Public Procurement. Talk is cheap.

Links I Liked [Public Procurement]

1. Some worrying signs about care services procurement in the UK. To those in the know, last week's revelations on BBC's Panorama were not exactly news.

2. The 30-second guide to government spending. All that is true can be found on Reddit.

3. Barcelona and other sign statement calling for sustainable public procurement. No mention however of whom should pay for it.

4. The role of public procurement in boosting clean vehicle demand. "...or equivalient" is missing throughout the article. It is not for public procurement to make winners by mandating a specific technology in detriment of any other in the market.

5. EU Commission publishes feasibility study on joint cross-border procurement.

Links I Liked [Public Procurement]

1. Barcelona is a wired city. Excellent Forbes article. Not strictly procurement but relevant for the field nonetheless as an indication of what extra technology and sensors can do to influence the running of a city. One of the examples provided in the article is about procurement though: the savings achieved by putting down fibreoptic when the innovation district @22 was being replumbed. Back in 2012 we had Ramon Sagarra talking about this on Procurement Week

2. Speaking of Barcelona...TMB fails to put up performance bond for Porto's metro concession (Portuguese only). In Portugal if you win a contract, particularly public works or concessions you have to provide up front a performance bond to guarantee you will perform the contract. TMB did not cough up the €20M required for the Porto metro concession which it had won and the award has been annulled.

3. TTIP is being negotiated in the dark (as it should)There are plenty of people complaining that the TTIP is being negotiated in the dark and that peoples concerns (ie, lobbying) is not being taken into account. Said people probably do not negotiate their contracts in the open either but would prefer the EU to divulge its negotiation position to the world to see, including the americans. This podcast from Planet Money explains why trade deals not be done in secret. Yes, it's because of the lobbying.

As for the TTIP itself, as highlighted by Piotr Bogdanowciz on our PPP interview, it is more relevant than we think for procurement and we should be discussing it more.

4. Portuguese Government greenlights €400M worth of contracts for 2016-2019 (Portuguese only). Portugal will have general elections in less than two months and some media reported (complaining) that the outgoing Government has authorised expenditure up to the tune of €400M for the 2016-2019. Note, no contract has been awarded or signed, only the first step of authorising procedures to be carried out was done. It will take ages until they reach their conclusion, even if they are launched sooner rather than later. As for the people who cannot understand why an outgoing Government is doing this, just imagine the uproar if the services were disrupted otherwise.  

5. Basque country wants to help local SMEs to win contracts...internationally (Spanish only). As I said many times before, contracting authorities can do a lot to help their supplier base as long as they comply with state aid principles (Article 107 TFEU) and do not use their procurement spend as a piggy bank to feed those suppliers. The Basque country will help supplier which are successful winning contracts abroad, which ensure that they are not mixing their support with procurement activities. However, the support is only available for economic operators who win tenders. If that is the case, why do they need public sector support? It makes more sense to help struggling SMEs to become successful (within reason and only sometimes), not to throw money to the ones which do not need the support. Weird.