New paper available

This article analyses the conceptual link between law and compliance, exploring the different theories and types of compliance (corporate, state and regulatory) and how they can be found today within the EU legal public procurement framework.

The analytical focus is on Directive 2014/24/EU and within it how sustainable requirements have increased the level of compliance required, particularly regulatory compliance. Compliance was already present in previous EU public procurement frameworks, but its extent on Directive 2014/24/EU leads the authors to consider the current legal framework as subject to substantial regulatory compliance obligations external to the process of procurement. In short, procurement has been transformed in a way to enforce regulatory obligations that are not intrinsic to the process of buying.

This leads to the conclusion that questions such as the cost and trade offs from imposing compliance obligations to public and private bodies warrant further research, particularly at the legal, economic and political science intersection.

The paper was published on a special edition of the EPPPL co-edited by Marta Andrecka from the University of Copenhagen.

Unintended consequences of using procurement as a compliance tool

About 10 days ago I gave a presentation at the CEVIA conference in Copenhagen (slides here)on how public procurement in the EU was slowly but surely being transformed into a compliance tool or enforcement system for policy objectives. 

As it happens I have also just published a paper on the ESPD* and how it internalises in the contracting authority the compliance cost which until now had been pushed out to the market via the requirement of presenting documentary evidence. Collecting all those documents and information, turns out, is not free as perhaps contracting authorities would have thought.

Today, Hansel - the Finnish Central Purchasing Body - published a blogpost aptly entitled Sometimes I feel like I am Sherlock, which included the following section:

Where it was assured that the ESPD would reduce the amount of attachments, it also included a brand-new requirement derived from the directive. As a part of the mandatory exclusion grounds set for the tenderers, they must ensure that the tendering business or any person who is a member of its administrative, management or supervisory body or has powers of representation, decision or control therein been the subject of a conviction on crimes such as corruption, fraud, terrorism and child labor etc. The contracting authority must also check the criminal records of such people from the tenderer which has been selected as a supplier. At this stage I wanted to cry a bit.

Are we becoming the procurement police?

I understand that this is an important feature. It would be nasty if the public sector would fund criminal operations through procurements. But what I don’t understand is why is checking these things the responsibility of the contracting authorities? How does making procurement units Sherlocks help the EU to reduce the black market? Do we not have any other means to prevent criminals from operating businesses’ in general?

I have completed many tender processes now where the ESPD and its requirements have been in use. The checking of the criminal records requires skills in Finland. The process consumes resources from both the private and public sector operators. The businesses’ must first ask permission in writing to retrieve the records from all the people involved. The records cannot be copied or sent via regular email. The contracting authorities can only check the records, but they can’t restore them anywhere. The records should be either destroyed, or returned to the sender. Due to the complex nature of this process, the tenderers are starting to prefer a visit the contracting authority to show the original records physically instead of exploiting the benefits of digitalization.

The rest of the entry is self-recommended but touches rightly on the nerve of the unintended consequences arising from making procurement a bona fides enforcement proxy and lack of consideration for transaction costs. We, the procurement police.


*Will give out SSRN link as soon as paper is up on there.