Links I Liked [Public Procurement]

1. Government outlines 'smartphone state', via Uber and blockchain. Great Wired interview with Matt Hancock (UK Government). I am ever so more bullish on the potential of the blockchain to be used in public procurement, particularly as a distributed contract ledger and "reputation repository".

2. Spanish Government takes ham fisted approach to slow payments in public procurement supply chains (Spanish). This is a tough nut to crack and I keep going in circles if the State  should interfere with purely private relationships, even though the problem of slow payments to sub-contractors is indeed real. But the Spanish state idea of awarding points for prompt payment seems way too far fetched too me. There has to be a better way.

3. More blockchain & banks. 

4. Announcing the Agile BPA awards: A conversation about the process. Very interesting initiative by 18F, the USA equivalent to the UK Digital Service.

5. What if citizens (and economic operators) could rate public authorities? Speculative but the more I think about the issue of reputation in public procurement cuts both ways. There is no reason why economic operators should not factor that piece of information in their go/no go decisions.

Links I Liked [Public Procurement]

1. Italian MOD moves from Microsoft Office to LibreOffice. Very interesting move, particularly taking into account we are talking about a Ministry of Defense. After a few (maybe one) success story with Munich, LibreOffice has not really been able to get a foothold in the public sector.

2. Banks love the blockchain. Maybe I should get cracking with a research project looking into how we can use the blockchain in public procurement. Any takers?

3. Could the public sector keep its services but save millions by using smaller consultancies? Speculative, but good point made by the authors about what 18F in the US has done with CALC. The more price transparency exists in public procurement, the more difficult it will be for companies to profit from arbitrage.

4. Sally Collier goes on the record that she wants Government to move away from frameworks. I think these are excellent news. Let's hope the CCS delivers on this.

5. Denmark and Smart Cities. As always, I am sucker for these stories...

Links I Liked [Public Procurement]

Busy week for procurement news/tidbits it seems:

1. Abby Semple replied to my entry about life cycle costing. She has a paper on the subject-matter link between award criteria and environmental considerations (ungated copy here).

2. Public procurement needs a higher profile. Fully agreed.

3. Will more public services in the UK be outsourced, sorry "spun out"?

4. Spain could not care less about its transparency portal (in Spanish). It covers more than just procurement, but the need to use an electronic ID card (which based on my previous run ins with Spanish bureaucracy means only the Spanish ones will do) as an identification mechanism makes as much sense as a drug dealer asking a buyer to provide ID.

5. Further blockchain developments could help my crazy idea of using something similar in procurement.

Links I Liked [Public Procurement]

1. Getting rid of PQQs has unintended consequences as same questions are now asked in full tender. I was about to file this on the "hogwash & bullshit" file as ConstructionLine has a vested interest here, but changed my mind after thinking about it . As I have argued before the UK's pathological love affair with PQQs is a symptom (high barriers at the start to weed out potential suppliers, controlling the suppliers going forward and reducing workload) and not the cause. The problem is cultural and of capacity, but it can be solved as evidenced here. Central Government tackled the PQQ symptom instead of the cultural cause.

2. Apparently I am big in Poland. Thank you Witold for the interview!

3. New York City is looking for innovations in public procurement (fibre optics it seems). I am sucker for competitions like this but always wonder about IP rights...

4. More info about the blockchain, particularly in finance.

5. Episode #2 of the Public Procurement Podcast is out. Excellent talk with Claire Methven O'Brien from the Danish Institute of Human Rights.

Slovakia, public procurement and transparency

Transparency International put out a detailed report about the experience in Slovakia of mandatory advertising of contract award information. I am a huge fan of contract award transparency and am always on the lookout for things like this report which is full of interesting findings.

Apparently Slovakian contracting authorities have to publish the contract award information since 2011 and covers contracts both above and below the EU thresholds. The result is that a plethora of contract information is now available online and Slovaks are making good use of it: apparently the database website gets 54,000 visits...every month. That is a lot of people for such a small country. I wonder how many are from citizens and how many from suppliers trying to figure out how the market is working and what prices are being paid (I do not see this as negative, but Albert probably objects).

What about the effects of this radical transparency? On the one hand...

On the plus side the report claims the accountability brought by the interest citizens show on the information, plus the media is reporting more and more cases. This can be a double edged sword as Gustavo Piga told me: more information in the hands of good journalists is great, in the hands of bad journalists it's a nightmare. I can totally relate to that. As a lawyer one of the cases I was involved in was plastered all over the press. Obviously, the "journalist(s)" only presented one side of the story and had no interest in the actual truth. The authors also mention this as an issue.

Another positive finding claimed by the authors is that the radical transparency led to higher participation in tenders. There may be some correlation between transparency and more participation and perhaps suppliers are more confident that the increased transparency leads to reduced foulplay, but I saw no evidence of causation. In my view, the increased participation rate is probably due to a combination of factors wider than just transparency. Moving procurement online (cradle to grave e-procurement) seems to me as a bigger reason and one that can be married to the more difficult economic times which lead to suppliers having to compete more fiercely for business.

Increased transparency reduces the incentive to use non-transparent procedures as the benefit of the non-transparent procedure disappears if at the end you need to make the end result public. The authors mention the reduction in non-transparent procedures but make no claim about the connection to the transparency reform.

Another positive finding is a lower perception of corruption. I agree that putting all the information online can contribute to dispel foulplay myths surrounding many contracts, thus contributing to a reduction on corruption perception levels. Furthermore it apparently also led to a reduction in queries from the public (makes sense as well), thus reducing the burden on contracting authorities to provide that information time and time again with each request.

On the other hand...

The authors looked into costs and concluded that apart from startup costs (ie, systems and moving everything online) the marginal cost of uploading the information of each contract to the database is quite limited. Although it seems the data came from empirical research with only 4 authorities and it would have been preferable to test it wider, this seems a reasonable finding. I would add that we can reduce the marginal cost to zero with proper e-procurement software (ie, getting software to do it automatically). That is a hint for platform providers as other countries (such as parts of the UK) want to move in a similar direction.

I am less convinced however by the dismissal of collusion and cartels. The authors state that "As for fear of collusion in tenders or loss of interest of companies in dealings with the state, we find little evidence of their existence." Little evidence is one thing, lack of evidence another. I suspect they meant the latter. It is a well known fact that identifying cartels is difficult without whistle-blowing so the absence of evidence is not the evidence of absence. I am not sure the authors dug deep enough to reach the latter (Am I channeling Albert here?) and have made similar comments about Portugal in the psat. The contrarian argument made by the authors is that even with the added transparency, average tender participation numbers have crept up. In my view, it indicates that i) suppliers are discounting the fact the contract will be published; ii) in general, competition appears to have improved even with the added transparency. Additionally, as I mentioned here before more information tends to make markets better (by reducing arbitrage) not worse, except for the cases where there are underlying conditions for cartel formation. More information makes life difficult for the insiders who benefited from access to the decision-makers.

Issues

The authors highlight the lack of compliance monitoring as one of the current issues in the system. Compliance is still not 100%, contracts miss vital information and there are reports of contracts "disappearing" from the register. This will always be a problem with centralised systems, or any system that uses human intervention for that matter. I will take the bait and plug again my idea of a blockchain type of interface to deal with contract information and feedback.

 

Links I Liked [Public Procurement]

1. Blockchain can be used for supply chain tracking. It seems my idea last week of using some sort of blockchain technology to solve the reputation issue in public procurement and a decentralised contract repository/database is not as crazy as I originally thought.

2. Canada wakes up to open contracting. 

3. We need more challenges in public procurement (or at least avenues to solve disputes). I do not disagree with overall view. I am huge fan of the Canadian Procurement Ombudsman system.

4. Public procurement award data can be used to catch corrupt officials. Incredible story from Costa Rica, beautifully reported. A textbook example of the benefits of making contract data available in some way or form. My view is that the easier it is, the better. Bonus points for sending 2 (two!) former Presidents to jail for the snaffu.

5. The poor state of defence procurement in the UK. Self-explanatory. Sometimes I think the security exception for defence procurement is none other than a red herring to allow scope for poor procurement practices. But I'm a cynic.