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. Israel's Competition Authority finds a cartel operating in Auschwitz tour operators. It seems that the government tendered a contract to take Israeli kids on tours to Auschwitz to 5-6 companies. I assume Israel set up something akin to a framework agreement as each individual school was supposed to negotiate with the companies. Nothing like a stable market with few economic operators to "help" competition.

2. Speaking of competition, the Competition and Markets Authority and the Crown Commercial Service launch a e-learning programme to help spotting bid rigging. It is free as far as I can tell, but you need to register. It would have been better to just put it out in the open in my view.

3. All you wanted to know about Korean e-procurement, courtesy of the OECD. Good report.

4. Indian government lowers bar for startups in public procurement. In general, I am in favour of transaction cost reducing measures, but this is the wrong way to go about it. By giving a preferential treatment to startups what will happen is that the market will adapt and all tenderers will become "startups" in the future (although I am assuming it is easy to set up companies in India...).

5. Sascha Haselmayer pushes for more innovation in cities. I agree with him and under the right conditions the innovation partnership could help here in Europe. But not as the Azores regional government transposed it!

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...