Court of Auditors is unhappy with public procurement in EU funded projects

Widespread problems persist in the way public authorities across the EU contract out work, according to a new report from the European Court of Auditors. Even though the European Commission and the Member States have started to address the problem, there is still a long way to go, say the Auditors. If the situation has not improved by the end of next year, 2016, they recommend that 2014-20 payments to the Member States concerned should be suspended. 

The Court of Auditors put out a report after analysing the procurement practice in projects carried out in the Czech Republic, Italy, Spain and the United Kingdom funded with EU money. The Court found a litany of mistakes and bad procurement with errors detected in 40% of procurement procedures which affected competition and transparency. Apparently some contracts were awarded not to the best "bidders". Surely this was a slip up by whomever wrote the press release as one is supposed to award the contract based on the quality of the bid, not the bidder...

While I cannot say I am surprised by the results, there are quite a few caveats to be made here based on my own experience in EU funded projects:

1. Requirements are more demanding than either the Directives, Public Contracts Regulations or internal organisation. You are usually requested to go out to tender at values much lower than the EU thresholds and while I am in favour of a wholesale reduction of thresholds, this is a reminder of the pitfalls arising from a piece meal approach.

2. Practice may be poorer than normal (is it really?!) as usually the people doing the procurement have limited procurement experience and certainly limited procurement experience with "EU-level" procedures. That tells us as well of the importance to design low friction procedures with reduced transaction and opportunity costs for lower contracts. Like these ones.

3. It does not help each funder has its own specific procurement guidelines. How many times can you re-invent the wheel? But it tells millions that procurers whinge and whine against having to follow different procurement guidelines imposed by different funders but see no problem in having their "own" procurement guidelines/practice different from all other contracting authorities. In one case it is called "ad hoc procurement", in the other "flexible or bespoke procurement".

4. Data is bad everywhere in procurement and is not limited to EU-funded projects. I am glad to see the Court of Auditors banging the same drum on this.

5. If auditors want to find problems, they will find problems. I have seen some really **** (sorry, picky) auditors which were effectively looking for problems where there were none. I suspect if all are that thorough then they will indeed spot problems in many situations. That 40% number is incredible.

PS: Here's the actual report.

 

 

Improving public procurement is not rocket science

I have had this opinion for a number of years. As we move to procurement systems where new features target "advanced" users (innovation partnership & competitive procedure with negotiation, I am looking at you) we forget how much low hanging fruit still exists in public procurement waiting to be picked.

Allow me to illustrate the point. 4 years ago I set out to improve public procurement practice for contracts with a value below-thresholds. Low value, low risk contracts, constituting the bread and butter of procurement as we know it. If you're so inclined, you can find all the outputs here (non-academic publications tab).

What crazy ideas did I come up with?

  • A one page summary with key information for a supplier to go/no go decision
  • Getting rid of the selection stage, replacing it with a self-declaration
  • Vetting and Getting rid of all unnecessary questions
  • Simplifying remaining questions
  • Imposing word limits
  • Tight(er) deadlines & turnaround
  • Using e-procurement

Really small and incremental changes, hardly the stuff of science fiction. Furthermore, I cannot really claim that anything in this list is entirely new. I am sure other people have done variations of the theme in other settings. What I had was time to think about improvements to procurement procedures as well as a mandate to push them through in a couple of pilots in Wales. There was another fundamental difference, one of emphasis: I was starting with the "job to be done" objective in mind. What is procurement supposed to achieve? What is the end result we want to have after the contract is performed? Contrary to what some of my colleagues may think, procurement (like lawyering) is not an end in itself, but simply a tool to achieve an end. With that frameset in mind, ending up with those ideas was obvious. That they all constituted low hanging fruit was a welcome bonus.

It surprised me back in 2012/13 when the pilots were being run was seeing procurement officers (and ancillary functions) really happy with the end results. They were spending less time per procedure than the alternatives and focused on the stuff that really mattered. Turns out that getting rid of the cruft made their work easier too. That level of buy in was not expected.

Fast forward a few years and yesterday I came across these new ideas by the Government Digital Service on Creating simpler, clearer contracts for the Digital Services framework:

  • Making contracts simpler
  • Top level summaries
  • Open and transparent contracts
  • More digital, less documentation

In a different guise, we are both aiming for the same kind of changes albeit with a much bigger potential impact this time around. If rolled out, these small changes to procurement practice, can have a much bigger impact in making procurement more accessible for SMEs/third sector suppliers than centrally mandated objectives or even regulation. Regular readers know how seldom I prefer guidance/practice info over cold, hard legal regulations. But here it just makes sense.

I have not been shy criticising the Government for failing to come up with real simple ways for contracts below-thresholds to be awarded. The Government did not fully understand the "job to be done" PQQs had for contracting authorities (barrier to procurement) nor was able to communicate effectively how to procure differently. Credit where its due, this time around they are on the right track.

Furthermore, they're doing it in a way that is very close to my heart. Using a multidisciplinary team approach really helps this kind of work. This is a (well) informed guess: without a whiteboard and the hard work of Carmarthenshire County Council's procurement team (Alan, Gemma, Claire et all) those ideas would have never gone into the whiteboard at all. Nor would the pilots have been successful.

PS: The downside of improving practice bit by bit (instead of regulation) is that some more entrepreneurial spirits will ride your coattails and butcher the methodology, keeping with the previous practice while claiming to fully support the new ideas. Not fun.

EDIT: What was done in Wales is such low hanging fruit that the Aragon Government created a similar simplified open procedure in 2011 which has been included in the draft national legislation transposing Directive 2014/24/EU.