Public Sector Procurement

I have been reading the draft of the new Procurement Directive. I had previously dipped into it but have now read all 360-odd pages in sequence. There is a lot in the draft Directive of value, particularly about sustainability, but I found myself musing on the concept of “Abnormally Low Tenders”. The explanatory notes in the draft are quite clear what the concern is: (44a) Tenders that appear abnormally low in relation to the works, supplies or services might be based on technically, economically or legally unsound assumptions or practices. Where the tenderer cannot provide a sufficient explanation, the contracting authority should be entitled to reject the tender. Rejection should be mandatory in cases where the contracting authority has established that the abnormally low price or costs proposed results from non-compliance with mandatory Union legislation or national law compatible with it in the fields of social, labour or environmental law or international labour law provisions”.

A couple of months ago I was looking at a pre-qualification questionnaire (PQQ) issued by a London Borough. It contained something that I had not seen before – a mandatory requirement for two references to be sent directly to the authority, by the referees, as part of the PQQ  submission. Failure to persuade a customer to do this meant automatic exclusion for the potential supplier from any further participation. I assumed that the buyer had experienced a brainstorm but then it happened again with a different local authority from a different part of the country.

Governments in many countries are considering how best to capitalize on the opportunities that electronic invoices present. Some countries like Brazil and Mexico have used the force of law to insist on the use of electronic invoices - other countries have mandated that suppliers to public sector use e-invoices. But some of the biggest economies in the world, notably Germany, the UK and the United States seem hesitant. Perhaps they don't want to interfere too closely in commerce. Maybe it's the fear of the bureaucracy of new legislation that puts them off. It could be lack of political will. But by providing no encouragement or leadership, these governments are depriving their economies of literally $billions in efficiency and liquidity and as a stakeholder in this, I'd like to propose a three point plan to persuade businesses to use electronic invoices.

UK Government procurement reform is being “stifled by departments” being tardy in moving to new central contracts based on large-scale aggregation of demand. Because of a lack of enforcement of the use of centralized purchasing of goods and services maximum savings are not being achieved. No doubt a disbelieving nation will swoon in horror at this dispatch from no man’s land, brought to us by the UK’s National Audit Office in a new report. The conclusions of the report beg a sackful of questions, the most pressing being whether centralized purchasing and contracting actually represents best procurement practice in government. Also, is the large scale aggregation of demand really compatible with one of the strategic targets of the reform programme - ensuring that SMEs receive around 25% of government business, albeit that target is somewhat cynically wrapped around with the proviso that it includes the use of SMEs as subcontractors.

Ever since I read Hell’s Angels by Hunter S Thompson, I’ve always found the image of bikers compellingly attractive. And so I’ve not spared any cash when it comes to getting my own image right. When I’m wearing my black Rukka Merlin jacket with matching water-proof Gore-Tex, armored leather jeans and my Schuberth C3 Pro helmet with built in antennae, even though I say it myself, I look the business. All I need now is a bike. I remember from my teenage years, as I suspect will many others, the sad soul with the helmet and no bike. Pursuing the biker dream with not enough money for the full package, he missed the point. Having a helmet doesn’t make you a little bit of a biker. It makes you a little bit of an idiot. Making only a partial investment isn’t always an incremental step towards a complete solution. Often it’s a waste of money. And that’s what e-procurement is if it’s implemented in isolation – a complete waste of money.

The European Commission has declared some ambitious targets for e-procurement. They reckon that €2 trillion can be saved and they intend to get government organisations using purchase to pay best practice to deliver these savings by 2016. These targets are of course way too ambitious. What’s more, the Commission is going about it in completely the wrong way. They may be ambitious and their methods may not be perfect but I’m impressed and delighted at what they're doing.