Initial thoughts towards “reimagining public procurement regulation”
By Dr Albert Sanchez-Graells, Senior Lecturer in Law, University of Bristol Law School
I have been thinking for a while about “Reimagining Public Procurement”. This research project may well be too ambitious (even as an abstract endeavour), but I would like to start shaping it so that I can dedicate my future research efforts to its completion and engage with the concrete implementation of my ideas and proposals. The purpose of this post is to structure some of my own thoughts, as well as to spur discussion and seek feedback from you, dear reader.
The broad idea would be to structure the project along three interconnected issues. Briefly, they would be as follows:
First, to identify the main reasons why public procurement rules are criticised and possibly fail to create a practical and administrable system that ensures that the public sector can acquire the goods, services and works it needs in order to carry out its public interest missions in the best possible conditions, while ensuring the probity and efficiency of the expenditure of public funds.
Second, to identify the main constraints that regulatory reform and policy implementation face in this area, and which imply that, despite significant efforts to enhance public procurement regulation and practice over the last 20 years, the resulting improvements are at best marginally incremental and the underlying problems remain fundamentally unaddressed.
Third, to formulate an alternative view for public procurement regulation and practice that has a good chance of overcoming the defects of current rules and avoiding the constraints of past reform processes, to achieve a better system. Needless to say, this alternative view will have to integrate a sophisticated technological dimension to a much more essential level than previous efforts.
Of these three intertwined issues, I have been concentrating mostly on the second. So far, I have given thought to what constraints have affected the reform of public procurement rules in recent years. The regulatory reform experience that I know best is that of the 2011-2014 review of the EU public procurement rules [on which I have co-edited the book Reformation or Deformation of the EU Public Procurement Rules (Edward Elgar, 2016, forthc), with Grith S Ølykke], and this directly informs my thinking. However, I would hope that some of these ideas will resonate beyond the EU.
In a brief account, which does not aim to be exhaustive at this preliminary stage, I would suggest that the following are some of the main constraints that have prevented a fundamental transformation of public procurement rules and practice until now, and which a reimagination of public procurement regulation needs to factor in:
- The assumption that changing the procurement rules changes the underlying practice—or viewing (procurement) law as a deus ex machina. With this, I mainly refer to the assumption that good procurement outcomes can be mandated and that they necessarily derive from process-based regulation. Most of the efforts to improve procurement (as an activity) have been focusing on revising the regulatory framework in which procurement takes place, hoping that legal reform would carry better results. This same strategy has been adopted repeatedly despite the fact that it has never actually delivered the expected results. Professor Schooner has been saying for a long time that procurement (regulation and practice) needs to move its focus from process to outcomes and I could not agree more. Any useful reimagination of procurement regulation needs to respect the premise that the rules need to be adaptive to the desired outcomes, rather than the opposite assumption that proper outcomes will result from tightly/neatly regulated procedures.
- Excessive legicentrism and marginalisation of other types of expertise/input. In short, lawyers have been (almost) exclusively leading public procurement reform and the insights (and experience) from other groups of professionals/experts tend to be marginalised when reforms are discussed –often left to ‘public consultations’ that rarely inform reform decisions in a meaningful way. A reimagination of public procurement needs to incorporate the insights from a wider range of fields of expertise, clearly including economics, management, political science, as well as healthcare and engineering–for, ultimately, big infrastructure and healthcare systems are two of the largest expenditure items in non-defence markets. I have come to realise that lawyers talk about issues such as technical specifications or award criteria as if they were solid realities. However, they are not. The feeling of achievement derived from the creation of concepts such as ‘functional specifications’ or ‘technologically-neutral award criteria’ (both of which I have used enthusiastically in my research to date) falls apart once they are confronted with the (technical) difficulties of their implementation in practice. Ultimately, then, maybe the constraint is that regulation is based on concepts while practice is based on functions, and a reimagination of public procurement regulation will then have to be function-oriented rather than built around highly abstract concepts or categories. Therefore, discussions and exchanges across disciplines and between academics and practitioners are crucial to move forward this project of reimagining procurement regulation.
- The assumption that regulatory perfection or completeness is achievable–particularly in a context of multi-layered regulation, multi-layered policy and multi-layered enforcement. The constraint to which I refer here consists in the difficulty of applying a set of complex rules in a way that allows for no margin of tolerance – differentiation across sectors, public bodies, needs, projects etc. This constraint has two sources. First, the complexity of procurement rules that are EU-hybrids and, consequently, have two built-in layers: an EU harmonised layer and a domestic layer–which not always interact smoothly, particularly where the EU layer has encapsulated legal irritants (think about self-cleaning, which is a very foreign concept if a number of jurisdictions) or where the domestic layer is somehow insulated from EU pressure by virtue of the split of competences between the EU and Member States. This has over time created pressure on the EU rules to expand (in their degree of technically as much as in their coverage), so as to minimise the diversity of approaches in different Member States, while at the same time this has exacerbated the difficulties of coordinating the enforcement of European provisions across EU Member States (and the strong resistance of their public law systems against EU-made requirements). The second source of constraints derives from the rigidity of the remedies system, which does not have much of a margin of tolerance for substantive but not formal compliance with the EU rules, as well as not much of a margin of tolerance for substantial but not perfect compliance (see also 6 below). Overall, the mix of over-prescriptive but incomplete EU-hybrid rules and a strict (and too rigid) remedies system still falls short of regulatory perfection or completeness–which is simply unachievable. This creates several issues, such as the unspoken (or rather unspeakable) high level of non-(absolute) compliance with the EU rules, or the existence of instances where potentially good procurement outcomes are killed in the cross-fire of ensuring regulatory (EU) compliance. Ultimately, then, reimagining public procurement regulation should aim to create more room for substantial substantive compliance, and lessen the focus on prescriptiveness and strict enforcement of formality.
- Inertia and resistance against technological changes. So far, public procurement reform has simply side-stepped a true assessment of how technology can change the procurement function and its oversight—that is, how the public sector sources goods, services and works it needs, and how this ‘purchasing’ or ‘contracting’ function is subjected to effective checks and balances. Electronic procurement still remains an ideal based on doing by electronic means things we used to do on paper. However, this probably falls rather short from exploiting all the possibilities created by technology. There are unexplored issues, such as the automation of the procurement of some types of standard goods, or the use of electronic marketplaces similar to the ones readily available in the private sector. Certainly much more provocative and potentially revolutionary options must be out there. However, once more, lawyers are not the best equipped to assess this potential and adapt procurement regulation in a way that enables technological substitution and the incorporation of innovative technologies and processes. Reimagining public procurement should at least assess what current technology can do to reduce the burden of procuring goods, services and works and be open to further technological changes as far as possible.
- Wilful ignorance of the investment required to deliver an effective and efficient procurement system. Procurement regulation has so far developed with no consideration for the costs that the system creates, particularly in terms of the need to invest heavily in human capital. Complex and sophisticated rules are useless without a body of public sector professionals able to apply them and maximise their possibilities. Regulatory reform has not taken into account the difficulties of training large bodies of professionals and task forces that struggle to cope with the speed at which reforms are introduced. Reimagining public procurement needs to take this constraint into account. It is not sufficient to incorporate claims for more professionalisation or for the State to dedicate more resources to the procurement function. It seems necessary to find ways to really simplify procurement regulation and make it user friendly, particularly for less complex procurement activities. Technology can support this in a flexible way.
- Renunciation of the idea that public oversight and public enforcement can protect the public interest–or the reverse assumption that procurement is for the masses. A final constraint derives from the fact that enforcement of public procurement, at least in the EU, has become the primary field of private challenges to procurement decisions. Public enforcement through audit and oversight bodies has significantly deteriorated, to the point that procurement litigation is the only meaningful check on the system in many a jurisdiction. This has impacted the development of procurement regulation in various ways. It has especially put pressure on the move from a regulatory framework based on diffuse (and potentially systematic) oversight in the public interest, towards one based on individually judiciable rights and increasing incentives to private litigation (and all but systematic). This has also led to the assumption that transparency in itself (that is, the mere exposition of the entirety of the procurement process to society) will bring additional (private) oversight, on the assumption that private citizens have the ability and an actual interest in sifting through great volumes of information (but not necessarily big data) in order to keep the public sector in check–while at the same time domestic procedural rules may all but really facilitate these “individual challenges” (for instance, by imposing significant fees or restricting active standing to bring proceedings). The major defeat of the proposal for the creation of national public oversight bodies in the recent reform of the EU rules is a testament to this trend and a worrying warning shot. Reimagining public procurement needs to relocate procurement oversight squarely in the public sector and create mechanisms that enable oversight bodies to carry out their functions in the public interest and in real time. It also needs to aim to de-judicialise procurement disputes to a large extent, particularly when they are from a technical nature, for which the courts are not the best situated decision-makers. The development of flanking alternative dispute mechanisms (ADR), including online dispute mechanisms (ODR), could be a way forward, if not for all, certainly for a large number of common types of procurement dispute.
If these constraints are real, then, a reimagined formulation of public procurement regulation and practice would include some of the following main features:
- Focused on outcomes and their facilitation rather than on procedures.
- Built upon functions rather than abstract concepts.
- Aimed at ensuring substantial substantive compliance with incomplete rules (or principles) rather than strict and formal adherence to overly prescriptive requirements.
- Adapted to existing technologies and adaptive/responsive to further technological change.
- Simplified and with the objective of minimising professionalisation and training costs.
- Overseen and enforced by the public sector itself, while including dispute resolution mechanisms of a technical nature that reduce the pressure on judicial bodies.
I would be very interested to discuss these ideas with you, either in this blog, or at firstname.lastname@example.org.
Dr Albert Sanchez-Graells,
Senior Lecturer in Law, University of Bristol Law School
(Suggested citation: A Sanchez-Graells, “Initial thoughts towards “reimagining public procurement regulation”, available at https://wordpress.com/post/europeancommonwealth.org/270)