Public Enemies

Not at first sight the most exciting of topics – although its inability to excite belies its potential importance – public procurement was the topic of a seminar at the British embassy in Warsaw this morning. Representatives from the International Cooperation and Legal Departments of Polish Public Procurement Office gave us a glimpse of forthcoming changes to EU and Polish Public Procurement Law and a view of UK experience was provided by the Deputy Director in the Rail Commercial Contracts and Procurement Division of the Department for Transport. For me, the most interesting part of the seminar was not the changes, but an issue which has been a running theme my recent pieces – trust (and The Crisis, City Hall).

The legislative changes are too detailed to be sensibly summarised here but suffice it to say that the guiding principle seems to be making certain of the procedures simpler and more flexible, making the procedures more compatible with achieving other social policy goals – for example encouraging greater participation by SMEs and companies employing disabled employees, environmental considerations, improving transparency, and improving access to the EU procurement market from outside the EU.

All very well, you might think, but the problem in Poland is that existing legislation is not really being applied in a manner that encourages contractors to be involved. This was brought home by the presentation from the representative from Atkins who identified – from a contractor’s point of view – four main problem areas: first, the inability of the buyer (that is the public sector body) to choose the “right” company; second, the lowest price wins; third, burdensome documentary requirements; and fourth, unrealistic risk allocation. Taking these areas in turn, the typical Polish procurer seems to have forgotten that object of the exercise should be select the right company – in other words the most economically advantageous to the awarding body – and not to protect the procurer. This leads to the second problem where too often the choice is made on the basis of the lowest tender price without due consideration of, amongst others, price v. quality issues, project life cycle costs, project delivery schedules, maintenance and technical support. In any procurement more complex that a basic supply agreement, the lowest price is unlikely to offer the best result. In Polish procurement, the paper burden is also taken to extreme lengths with the management boards of tendering companies having to provide certificates that they do not have criminal records, that the company has no outstanding tax or social security contributions and so on. In other words, there is a complete lack of trust on the part of the public body, seeing the contractor as an enemy rather than a partner in a mutually beneficial project. In addition, the expectations of the public body regarding the assumption of risk by the contractor are often commercially unrealistic, with requirements of unlimited liability, no compensation if the project is delayed by the employing authority, and so on. All of which serves to put off potential contractors because the cost of bidding and the often unrealistic time tables preclude the careful preparation of bids with robust design and project management elements which serves only to deprive the public sector of the best solution.

Will the proposed changes help? To take one example: it is proposed that instead of companies having to supply voluminous corporate documents at the outset they could simply provide statements of the relevant matters with documentary evidence being supplied once the tender had been won. Certainly this would cut down on the cost and inconvenience of bidding. However, as you might have expected, the view of the Public Procurement Office was that Polish public bodies would have difficulty in accepting statements that could not be verified – in other words the potential contractor cannot be trusted to provide accurate information about itself. Until there is a change in attitude and the ability of procuring bodies to evaluate bids to obtain the most commercially advantageous result for the public sector and an increased trust of potential contractors, no amount of legislative change is going to improve the rather jaundiced view most reputable contractors have of public procurement in Poland leading many of the simply not to take part with Poland being the loser. In short, contractors are not the enemies of the public but the outdated attitudes and lack of knowledge and skill on the part of far too many public officials certainly are.

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