When IT Meets Politics

Mar 28 2011   11:20AM GMT

The EU Procurement Directives should focus on Value for Money

Philip Virgo Profile: Philip Virgo

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Eurim

The EU Procurement Directives are unfairly blamed for much that is down to British bureaucracy and lack of clear guidance as to what is good practice. But the consultation over their reform gives a unique opportunity to improve matters. The consultation paper comes straight out of the pages of “Yes Minister”, designed to give the image of high level enthusiasm while killing it with irrelevent detail. That should not be allowed to prevent the use of a unique political opportunity to force real reform: all the governments of Europe are under pressure to get better value for money in order to reduce the unpopular cuts they will otherwise have to make.  

On March 22nd March the EURIM Public Service Delivery Group reviewed possible answers the questions in the European Commission Green Paper on the “Modernisation of Procurement Policy , in order to have our own consultation before the response deadline of i8th April:  
 
A report of the meeting, with the draft responses to the questions, will be circulated shortly to the members of EURIM but the meeting homed in on a handful of key recommendations of our own, on which it would be helpful to have early feedback from as wide an audience as possible: 
 
1) The Directive should be about good practice in procurement – other objectives (e.g. Green Agenda, Innovation, support for Small Firms, promotion of competition) should be addressed elsewhere, not bundled into any changed procurement directive . 
 
2) The priorities should be clear and explicit, beginning with value for money, followed by efficiency, choice, clarity and simplicity . 
 
3) The focus should be on the cost of the procurement process as a percentage of the expected value of the contract, rather than the level at which the directives apply or the methods used. Thus the combined cost of advertising, adjudication on the part of the purchasing organisation and of tendering on the part of the bidders should be no more than X% of the value of the business on offer.  
 
The implication would be that if X =10%, the estimated value of the business on offer is around £1 million and the expectation is to evaluate six bids, then the bidding and adjudication process proposed should cost no more than about £20,000, with expected costs to each bidder of no more than about £10,000.  
 
Does such an approach seem attractive/desirable and, if so, what should be the value of “X” for different types of IT procurement.
 
Should it ever be reasonable for “X” to be above 30% ? 
 
I will not go into thinking behind the recommendations. Read the Green Paper first. The read some of the evidence to the current PASC enquiry. Then work it out for yourselves. 
 
Please post your comments to this web-site so that others can see them or e-mail me c/o eurim@eurim.org .
 
P.S. Comments to this blog or e-mails to me are no substitute for making your own response to the consultation.  

2  Comments on this Post

 
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  • Dave Henshall
    Philip,

    The public sector has received vast amounts of training in best practices such as category management, strategic sourcing and supplier relationship management. The problem is in the execution. Structure, culture, the OJEU and skills are all in need of radical change.

    Even then there needs to be clear strategic intent. Without this nobody knows what best value actually is.

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  • Tendering
    Philip

    Interesting analysis and I like the suggestions you make. I recall a survey being conducted not long after the new EU directives were released which showed 2/3rds of the people surveyed believed the changes made resulted in less efficient procurement practices.

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