Smart Public Procurement: More flexible, more transparent, and more cost effective

A full house at the Westin Hotel

 

PAI Director Don Bergin welcomed a full house at the Westin on Wednesday, 30 September 2015. The theme of this year’s annual public procurement conference was “Smart Procurement”. According to Mr Bergin, this means a “more flexible, intelligent way to adopt public procurement” practices.

 

Minister of State at the Department of Public Expenditure and Reform, with special responsibility for Public Procurement, Simon Harris TD, was first to the podium. Governmental priorities were his topic of conversation.

Minister Harris addresses the crowd

 

He noted that the remit of the state was two-fold: it has to make sustainable savings, while still using its “immense purchasing power” to encourage SMEs. The OGP, in cooperation with the Department, released data recently which shows that in recent years, 93% of spending stayed within the State, and 66% of this went to SMEs.

His office have accelerated some of the new EC directives to bring themselves up-to-date. This includes moving into an online sphere, and breaking larger contracts down in to lots.

Of particular interest to the Minister was a targeted social clause framework, “a massive tool whereby one can achieve social good”. The Devolved School Building Programme was one example of this type of community benefit clause, a programme where the public and private sector work together to reach a mutually beneficial and successful outcome.

 

Minister Harris was followed by Claudio Romanini. Mr Romanini, of the European Commission, aimed to outline the forthcoming new directives. They are what he dubbed “a series of compromises”.

“What we did was try to favour smart procurement by structuring the directive as a toolbox: having provisions for the different procedures, making it obligatory for member states to put them all in place. Authorities then have the ability to choose the particular procedure for the type of procurement they intend to do.”

At the end of the day, he said, it is important to remember that these provisions are not “one size fits all”, and flexibility was key when drafting them.

They also make procedures much simpler, more concise. The introduction of online systems, featuring, for example, the European Single Procurement document, will make the application process much simpler for sellers. This is expected to be in place by December. To be smart about the new system, you must really analyse your need, and organise your contract before you go to tender. “Most of the effort will be made before launching,” said Romanini. Paul Quinn later commented that “lowering the burden on bidders to the minimum is welcome”.

“The new directives will bring about a cultural revolution”, wherein all parties are less burdened by strict legislation and bureaucracy.

 

Paul Quinn, of the Office of Government Procurement, gave a brief history of the OGP: set up during the recession, its main aim was lowering costs and getting better value for money. This is something that “has not gone away, even though we are coming into better times”. The savings they make, per annum, equates to 2,000 frontline jobs. Whereas when they were set up, one in every four euro was going outside the state, now less than 7% does. Ultimately, the aim of the OGP is bringing transparency to public expenditure. For the first time, according to Mr Quinn, the OGP’s spend analyses will “try to give a sense of how and why the money was spent”.

 

Hugh Cummins, senior associate with Philip Lee, closed the first session with a discussion of systems and strategies for smart procurement.

The main system that can be used for smarter procurement, according to Mr Cummins, is competitive dialogue. This is a way to come up with creative solutions for your problem. You can take the information you learn from the dialogue process, distill it down and come up with a solution to your problem. Then, you can put out a contract for the supply of that solution. “At the start, you don’t know how you’ll solve your problem; now you do, through competitive dialogue.”

He also lauded the introduction of the electronic options, which he dubbed a “reverse eBay”. His final advice was to “look at the procedure front-to-back, back-to-front, be ready for stumbling blocks. Preparation is key.”

 

Discussion was lively throughout the morning

 

After a short break, Kerri Crossen, a partner at Philip Lee, took to the podium to discuss possibly remedies for disputes.

She noted that in the past there may have been reluctance to bring about challenges to contracts, as there was a lot of sway held in interpersonal relationships where marketplaces were small. However, in the last eighteen months, “the area of procurement litigation has become very active. Litigation in high courts increased by large amounts in the last few years.”

She spoke at length about the new remedies regulations which have come in of late. These remedy regulations were greatly changed by OCS v Dublin Airport Authority (Supreme Court July 2014). They also have retrospective effect.

On the new regulations, Ms Crossen said we will need to see how they are tested in the High Court. “While the new legislation beds down, watch this space”.

 

Patricia Callan of the Small Firms Association was next up, with an examination of the contribution made by small firms to procurement—which she said was notable. “We are a nation of small businesses”, with 84% of our SMEs being micro, and 97% small.

She, respectfully, refuted the OGP’s claim that 66% of government procurement went to small firms. Instead, it went to SMEs. The distinction, she said, is that we only have 500 large companies in Ireland. What is medium to the EU is a large company here. This definition of SME distorts the accurate view of where business is going.

She urged buyers to consider implications of their decisions in procurement, not just from a financial standpoint. “How many people have lost their jobs because of your decisions?

[It’s] not just about saving money. You do need to look at it in a bigger, macro-micro picture.”

Her main piece of advice was, “rather than reinvent policy, [we should] just implement the rules we do have”.

 

Catherine Carmody of Kerry County Council said that smart procurement practices is at the heart of what her office do. They, like the OGP, have moved on from simply trying to make savings. Their number-one priority is to be compliant and transparent.

She favoured a move towards a Most Economically Advantageous Tender (MEAT) Framework, which not only looks at the immediate monetary cost of the tender, but of the cost through its whole life-cycle. It forces buyers to be more careful about how they tender. She noted that there has been times when her office has been under pressure to publish a tender before it was “ready”. Ms Carmody said, “we can’t. If we run with them, then we realise they’re not ready, we may have to collapse them. This takes longer,” as well as costing additional money.

Ultimately, she said, with inflation, costs are increasing and it’s very hard to prove there are savings there. The main savings are savings in efficiencies.

 

Throughout the morning, a number of points were reiterated throughout the presentations. Firstly, that the new directives will bring about plenty of savings in efficiencies. The less time spent on the process, the better. The less of an encumbrance the process is to buyers and bidders, the better.

Secondly, as with all undertakings of the government, procurement should be a transparent process. The new directives aim to increase both transparency and accountability.

Smart procurement, according to many of our speakers, does not only entail selecting the lowest-price tender. There are many costs to consider, which are not monetary.

Finally, a strong theme of the morning was that we have, of late, made headway towards a more flexible, broadly-advantageous, smart system of procurement, but there is still a ways to go.

 

This conference was kindly sponsored by Philip Lee

 

 

Speakers (in running order)

Don Bergin, Director at Public Affairs Ireland (First session chairperson)

Simon Harris TD, Minister of State at the Department of Public Expenditure and Reform with special responsibility for Public Procurement

Claudio Romanini, European Commission

Paul Quinn, Government Chief Procurement Officer

Hugh Cummins, Senior Associate, Philip Lee

Thomas Hunter McGowan, CEO, Intertrade Ireland (Second session chairperson)

Kerri Crossen, Partner, Philip Lee Solicitors

Patricia Callan, Director, Small Firms Association

Catherine Carmody, Procurement Manager, Kerry County Council

2018-03-16T12:05:17+00:00October 2nd, 2015|News|Comments Off on Smart Public Procurement: More flexible, more transparent, and more cost effective

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