Public Procurement Practices

[Doretta Castoe]

Publicsector organizations are run by a higher government entity. Everything that they do must be easily visible to the public eye. There must be a distinct audit trail, with all information clear and accessible.

Information such as a contract opportunity, contract award, pricing, and timing are all included in reports made at regular intervals. There must be an equal opportunity provided by the government to each entity wishing to do business with them that meets the requirements. Bid openings are, therefore, public events.

Private sector transparency is not as clear cut. While private entities do have complete visibility requirements placed upon them, private entities do not need to provide equal opportunities, and will often withhold information that is not necessary to the bidding suppliers. They do not reach out to every company, and they do not need to publish their contract awards in the same way that public entities do.

Because public entities are owned by the government, their main funding comes from tax revenue, fines, tariffs, etc. Funding is generated by the public, and their main concern is allocating money properly to public interests.

Other common delays in the process include the use of background checks on potential suppliers, stricter contract negotiation practices, and various other investigations and research, which add a minimum of 30 days to the procurement process.

On top of all of this, public organizations may belong to multiple jurisdictions, and their procurement practices must be approved by multiple governmental entities (e.g. city and state, state and federal, etc.).

Backdrop contracts are also a common way of saving time and money. A backdrop contract is a pre-negotiated contract or one being renewed. This occurs often in the same context as a preferred supplier would be utilized.

Private organizations draw their revenue from sales, investments, and other business-related areas. Their money is more centralized, which speeds the procurement process along. Privately owned businesses can seek out different suppliers to find the best deal because they have more time and resources to do so. Their focus is more on saving the most money and getting things done quickly.

Private organizations will still often use preferred vendors, for similar reasons to those utilized by the public organizations. While private entities do not take nearly as much time in research, they do a thorough job of understanding their suppliers before signing a contract (by conducting simple reference and credit checks, site visits, and sample reviews, for example). Using preferred vendors and simply renewing contracts is an easy way to decrease the time spent in the procurement process.

For both private and public organizations, managing the procurement process well is critical for success. Automation and streamlining can help optimize the process even with many steps along the way. A contract lifecycle management platform will help procurement holistically manage the process end-to-end to ensure faster turnaround times for both the private and public sectors.

To create a level playing field for businesses across Europe, EU law sets out minimum harmonised public procurement rules. These rules govern the way public authorities and certain public utility operators purchase goods, works and services. They are transposed into national legislation and apply to tenders whose monetary value exceeds a certain amount. For tenders of lower value, national rules apply. Nevertheless, these national rules also have to respect the general principles of EU law.

This website provides information on European public procurement policies. A general introduction to public procurement is available on Your Europe. If you are looking for business opportunities in any EU country, please visit Tenders Electronic Daily. For information on grants and procurement carried out by EU institutions, please visit the Funding and Tenders Portal.

If you want to collaborate with peers in the EU, visit the Public Buyers Community Platform, a comprehensive and secure platform aimed at strengthening collaboration between public authorities, suppliers, and the European Commission in public procurement.

The public sector can use procurement to boost jobs, growth and investment, and to create an economy that is more innovative, resource and energy efficient, and socially-inclusive. High quality public services depend on modern, well-managed and efficient procurement.

Under EU public procurement rules, contracting authorities may take multiple aspects into account when purchasing works, goods or services. Examples include protecting the environment, supporting social considerations and fostering innovation. However, 55% of procurement procedures use lowest price as the only award criterion for public contracts. This indicates that public buyers are probably not paying enough attention to quality, sustainability and innovation.

To support the further uptake of strategic procurement, the European Commission will update and issue new guidance documents on the use of innovative, green and social criteria. The Commission will also promote the exchange of good practice, including in strategic sectors, such as healthcare, IT and construction.

Professionalisation policies at national level are essential to ensure buyers have the necessary skills, knowledge and integrity. They need to address training and career management of public procurement practitioners, and to provide tools to make the procurement process more efficient (e.g. e-procurement tools, guidelines, templates).

In October 2017, the European Commission adopted a 'recommendation on the professionalisation of public procurement' to encourage EU countries to take steps to increase the professionalism of contracting authorities.

The EU advocates open international public procurement markets and has committed itself to granting market access to its own public procurement markets. The section on international public procurement provides information on the Agreement on Government Procurement (GPA) and free trade agreement (FTA) negotiations with various countries, the International Procurement Instrument, and cooperation with enlargement and neighbourhood countries.

The Remedies Directives set minimum national review standards to ensure that rapid and effective means of redress are available in all EU countries when an economic operator with an interest in a public procurement procedure believes that it has been run in violation of the EU's public procurement directives and their corresponding national rules. In 2017 the Network of First Instance Review Bodies on Public Procurement was created to strengthen the remedies system and cooperation between national review bodies in the EU.

Improved and more accessible data on public procurement will make it possible to better assess the performance of procurement policies, optimise the interaction between public procurement systems, and shape future strategic decisions. The European Commission advocates for the set-up of publicly accessible contract registers, which publish awarded contracts and their amendments. Enabling the reporting of corruption by setting up effective reporting mechanisms and protecting whistleblowers against retaliation can also contribute to improving transparency and saving public money.

Public procurement notice data from Tenders Electronic Daily is available on the EU Open Data Portal. The Publications Office provides all notices in extensible mark-up language (XML) format, while the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs provides a smaller subset of this data (covering just some years, countries, and types of notices) as comma-separated values (CSV).

eProcurement refers to the use of electronic communications by public sector organisations when buying supplies and services or tendering public works. Increasing the use of eProcurement in Europe can generate significant savings for taxpayers. These savings would maximise the efficiency of public spending in the current context of fiscal constraints. eProcurement can also provide a new source of economic growth and jobs, including through the facilitation of access to public procurement contracts by small and medium-sized enterprises (SMEs).

Contracting authorities are rarely buying together with only 11% of procedures in the EU carried out through cooperative procurement. This is a missed opportunity as buying in bulk can result in better prices and higher quality goods and services. It can also help contracting authorities exchange public procurement know-how.

The European Commission aims to promote joint cross-border public procurement and support training on SME friendly policies. This will help buyers work together, learn from each other, and ensure better value for money.

The Big Buyers Initiative is a European Commission platform for promoting collaboration between big public buyers in implementing strategic public procurement. Public procurement can be a key tool in driving the development of innovative goods and services on the European market. By working together, and pooling their resources, cities, central purchasing bodies, and other major public procurers can maximise their market power and impact.

Green Public Procurement (GPP) is defined in the Communication (COM -2008- 400) "Public procurement for a better environment" as "a process whereby public authorities seek to procure goods, services and works with a reduced environmental impact throughout their life cycle when compared to goods, services and works with the same primary function that would otherwise be procured."

While GPP is a voluntary instruments and Members States are able to determine the extent to which policies or criteria are applied, it plays a key role in the EU's efforts to boosting a resource-efficient economy.

GPP is within the framework of Strategic Public Procurement, together with Socially Responsible Public Procurement (SRPP) and Innovation Procurement. The basic concept of GPP relies on having clear, verifiable, justifiable, and ambitious environmental criteria for products and services, based on a life-cycle approach and scientific evidence base.

3a8082e126