Reflecting on the new nature of procurement as a system in the Public Procurement Act proposal

I have long described the architecture of procurement rules within the EU as a system designed not to enable great procurement but instead for impede really bad procurement. In essence it is a painting by numbers or a 'follow the recipe' approach that allows people with limited knowledge to undertake purchases (and hopefully bid for contracts). This means that what people usually mistake by complexity is actually standardisation that simplifies the day-to-day operations. It is the operating system for public procurement and one which underlying complexity is designed to reduce the needs for procurers to undertake decisions except for the fundamental ones. The fewer decisions need to be taken, the more complexity is abstracted away as things need to be done in one specific way and one only.

The Public Procurement Act proposal turns this in its head and goes in the other direction. What has been called with simplification (ie, reducing the total number of rules) is not real day-to-day simplification. It is instead flexibility built around fewer guard rails that public procurers can rely upon. We were told as such when we met up with the Commission back in July. It was a conscious decision by the Commission to increase the scope of discretion during procurement with enhanced ex-post accountability. There is a belief this approach will improve procurement practice, allowing for great procurement finally to occur.*

I remain skeptical such transformation can happen quickly as changing laws is the always the easier bit. Yes, you need to start there but what this reform will show is how woefully underprepared and lacking resources the public sector is to do great procurement. That costs time, training and yes, money. I don't know of a single member State where public procurement is financed well enough to ensure the resources are there to take up on the opportunity presented. I think we can look at this as the Commission calling the bluff on member States by saying "oh the rules are the problem are they? Sure, here's all the flexibility you kept saying you needed. Go on, use it." Will member States put said resources into procurement though?

If we look at the UK (well, England, Wales and Northern Ireland) as an example, the Procurement Act 2023 has introduced a lot of flexibility and one year after coming into force fewer than 20% of all procedures launched used the competitive flexible procedure. The remaining 80% stuck to the boring, tried and tested open procedure. I am expecting the coming years to the Pareto split to change somewhat, but not for the situation to be reversed.

What does this means for us though? I remain cautiously optimistic that taking the training wheels out of the procurement system will force everyone to up their game. If this is to happen, it would mirror the GDPR impact on data protection a decade ago. Ironically, the substantive rules are not particularly different from those of the 90s Directive it replaced. What changed was the incentives from being a Regulation, the fines and the enforcement. Suddenly, the stakes became high. Oh, and let's not forget that the GDPR is applicable to the public sector who had to adapt as the private sector did. Ten years on, would we want to go back to a Directive to protect data protection just because the public sector was not prepared to comply with a Regulation? What if we never had the GDPR because public sector wasn't ready for a Regulation? If it wasn't ready in 2016, would it be ready in 2026? Truth is, no one is ready until they absolutely have to be, especially when it requires allocation of resources. Y2K bug anyone?

The Public Procurement Act proposal is offering us a different approach to view public procurement as a system. One where procurement is more strategic and with more decision-making involved. This would imply that perhaps the time has come for procurement to move from being seen as subset of a finance function and instead having a seat at the top table of public bodies. But again, this requires a step change on how the procurement function is organised within the public sector and a recognition it needs to be treated independently from finance.

This also means that going forward, the people responsible for public procurement must develop a different risk appetite ("no one was ever fired for buying IBM", right?) and accept the uncertainty and lack of security that comes from decisions which imply tradeoffs and, yes, legal challenges. This is the price to pay for having the flexibility to take decisions.

And lets not mix flexibility up with simplification. The Public Procurement Act proposal is more flexible but it ain't simpler. This will become more evident as its gaps become more visible and require filling somewhat, perhaps through multiple delegated acts.

*existing rules already have a lot of flexibility built in as we saw with the take up of the competitive procedure with negotiation. If only said flexibility was used but, alas, that means taking decisions and taking risks.