Public Procurement

International Cases and Commentary

Louise Knight, Christine Harland, Jan Telgen, Khi V. Thai, Guy Callender, Katy McKen, Louise Knight, Christine Harland, Jan Telgen, Khi V. Thai, Guy Callender, Katy McKen

• Publisher: Routledge
• Year: 2012
• ISBN:
  9781136713798
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

In many countries and sectors, public procurement is developing from a functional orientation to an effective socio-economic policy lever. There is a great interest among managers and academics to learn from other countries' and other sectors' change initiatives and how they dealt with the challenges they encountered. This text provides such learning opportunities, presenting case studies of public procurement, covering diverse nations, sectors and issues.

The cases are combined with editorial commentary and contextualizing chapters to assist the student reader in understanding this complex topic. The text combines descriptions of cases of public procurement with cross case analysis to draw out the key dimensions to enable further examination of the central themes. Each case study concludes with three questions to aid its use as a teaching and training text.

Edited by a team of internationally recognised experts in the field this innovative text illustrates the strategies and innovations within public procurement on a global scale and highlights common problems that all countries encounter. Public Procurement is vital reading for anyone with an interest in this topical area.

1 Public procurement

An introduction

Louise Knight, Christine Harland, Jan Telgen and Nigel Caldwell

Introduction

The public sector represents about 40 to 45 per cent of many economies in the developed world in terms of spend on providing services and procuring from the private sector. Internationally there are outliers, such as Singapore, where it is only about 18 per cent of the economy, and some of the African nations where, as nationalized industries are still prevalent, it can be as much as 80 per cent. Imagine how much might be saved and reinvested in public service provision if the spending bill was reduced by just 1 per cent in any nation. However, it is astonishing for such a vital, significant part of all nations’ economies that so little research has been conducted on public procurement across nations and even within nations to improve procurement to deliver these benefits.

More broadly, the area of research of procurement, or strategic purchasing and supply, or supply chain management, or whatever term we favour locally, has only relatively recently featured within world leading universities and other research organizations. Moreover, much of this research has focused on the private sector, in particular the automotive and aerospace sectors. But how applicable is knowledge from the private sector to public sector settings? To what extent are lessons learnt in one country transferable to another? Should procurement to supply healthcare services be performed in largely similar ways to education or defence? Answering these questions is not possible without first understanding more about public procurement practice.

Public procurement is often in the media headlines around the world for negative reasons – fraud and corruption dominate in some countries. Nations where process reform has largely eradicated such crimes are dogged by reports of other failures – another major public sector IT project is late, over budget and not delivering to specified performance levels; inequalities exist in healthcare provision as priorities vary demographically; government spending discriminates against poorer, rural areas. It is unsurprising therefore that public procurement has risen up the political agenda in most countries and major reform programmes are planned and being implemented. Reflecting the importance of these developments, the calls for research to investigate, analyse, understand and produce guidance for practice have increased significantly in the past decade. This research study is one response to those calls.

While some research in public procurement has been conducted within particular national, regional or local jurisdictions, initial investigation indicated a dearth of international comparisons to enable learning across nations. But international comparative research is difficult. Funding is scarce – most funding agencies are more interested in what goes on within national boundaries – and costs are high. In addition, language and cultural barriers present significant challenges to researchers trying to work abroad, or to coordinate with colleagues across national boundaries.

The origins of this book date back to 2002 when two of its editors – Christine Harland and Jan Telgen – and a senior UK government procurement practitioner (Roxanne Sutton) met in Holland and created an idea for an international comparative research study of public procurement. The idea was simple. Rather than have individual researchers attempt to conduct their own international research, a network of established researchers and senior practitioners from around the world would be formed; members would conduct specific research in their own countries and we would all come together to share, debate, compare and contrast findings. The International Research Study of Public Procurement (IRSPP) was born at this point. Two major phases of research – IRSPP1 and IRSPP2 – have been performed since, and IRSPP3 is being planned currently.

This book contains the findings from IRSPP1; thirteen nations participated and provided fifteen case studies of major public procurement reforms in their countries. These were shared in advance of the network members’ meeting at a two-and-a-half-day workshop in Budapest in 2003. In addition to the case studies, the research conducted during and after that workshop is provided here. This book tells not only the IRSPP story to date, but also draws on a broader learning of the process through an additional nine chapters.

The rest of this chapter introduces the key themes that are covered throughout the book, explains how the book is organized and how it may be used, provides a synopsis of each IRSPP case and describes the research process adopted for the first IRSPP study.

Context, findings and key themes

Study context

The public procurement literature was searched to identify features of public procurement that could provide a common structure for examining public procurement reform internationally. These features and the underpinning literature are summarized in Table 1.1.

Key themes from the first IRSPP workshop

The first IRSPP workshop adopted an exploratory approach to a comparative investigation of public procurement. There was a general line of inquiry, but no specific research questions. The organizers provided case authors with an outline structure (see Table 1.4) to improve the prospects for detailed cross-case comparison, but other than this they were keen to create a setting in which the findings would emerge from the cases and their subsequent discussion by colleagues. This section provides a brief summary of the principal insights from the Budapest workshop (Knight et al. 2004).

Macro-environment

Two political factors were highly evident among the cases: first, the prevalence of the ‘new public economy ideologies’, including ‘modernization’ of the public sector, and second, the relative power of the national/federal level vs. the state/region. In economic terms, there is wide variation between the cases in net spending by the public sector.

Table 1.1 Features of public procurement and underpinning literature

Features of public procurement	Underpinning literature
Presence of any national agency	• Enabler of establishment of strategic relationships with suppliers (Gershon 1999) • Provision of ‘bridging ties’ (Warner 2001) • Strategic alignment of sub-agencies’ strategies (Franklin 2001a) • Success should be pursued at the level of individual agencies rather than from the centre (Thompson 2000)
Regulation/legislation constraining public procurement	• Compulsory competitive tendering constrains public procurement from forming good-practice longer-term relationships with suppliers (Steane and Walker 2000) • EU directives constrain public procurement practitioners (Erridge and Greer 2002) • Regulations constrain partnerships between public sector and private providers to be ‘partnerships within competition’ (Erridge and Nondi 1994) • EU directives drive illegal behaviour (Telgen and de Boer 1997) • But also: EU directives as a lever for professionalization of procurement (de Boer and Telgen 1998; Telgen 1998)
Influence of key stakeholder groups on public procurement decisions	• Consultation of international and external stakeholders is required by law in the productions of the three main US public procurement strategy documents (Long and Franklin 2004) • Increased likelihood of success of strategic initiatives in government arising from stakeholder involvement (Nutt and Backoff 1992; Long and Franklin 2004) • Stakeholder involvement is a means of democratic control of public decision making (de Leon 1995) • Some difficulties in assessing relative importance of stakeholder views (Franklin 2001b) • Inadequate civic involvement historically (Ingram and Smith 1993) • Skills, knowledge and resources of potential stakeholder participants must be assessed (Klijn 1996; Agranoff and McGuire 1999) • Selective activation of stakeholder participants required (McGuire 2002) • Type of stakeholder involvement impacts on likely success of a policy (Ripley and Franklin 1982)
Position of public procurement in government organization structure	• Encouragement of government departments to work together on procurement decisions (HM Treasury 1995; PIA 2001)
Nature of major reform	• Cooperation and collaboration are key themes of major reform (HM Treasury/Cabinet Office 1998; PIA 2001)
Barriers and constraints to major reform occurring	• Operating framework and culture of public sector can hinder adoption of good practices used in the private sector (Erridge and Greer 2000)

Source: Harland et al. (2006)

The attention paid by government to the needs of disadvantaged groups, and the extent to which this featured in public procurement, was a key factor which spans the political, social and economic categories.

With the exception of electronic commerce, technological factors featured very little in the written cases and discussion. The importance of geographical factors became evident in discussions comparing cases such as Australia and Canada – very large nations with isolated communities – and small, densely populated countries such as Singapore.

Focal public services

Two cases were about health services in a nation and one case was an international comparative analysis of higher education cooperative purchasing. Most cases, however, covered a mix of services, with the case boundaries determined primarily by the level of analysis (e.g. a national perspective versus a regional one).

The level of detail provided about the relevant services necessarily varied a great deal between cases. IRSPP1 participants have extensive public sector experience and an appreciation of its complexity. Despite this, many found that, together, the cases provided striking evidence of the sheer scale and complexity of public services and public procurement.

Public procurement

See Table 1.2.

Themes for this book

Drawing on the cases and these findings, the editorial team for this book decided that five themes should be examined in detail: governance; purchasing process; e-commerce and information; people in public procurement; and cooperative purchasing. These are the subjects of the linking chapters, as explained in the following section.

Organization of the book

In between the two introductory and the closing chapters, this book has sixteen case studies and five linking chapters. Chapter 2, ‘Public procurement in perspective’, sets the scene with observations on the complex character of public procurement, driven by the need to meet the often divergent interests of its many stakeholders. This is followed by seven cases from seven nations – Australia, the United Kingdom, the Netherlands, Belgium, the United States (federal/national government procurement), Germany and Singapore.

In Chapter 10, ‘Public procurement: a pillar of good governance?’, the authors take up themes introduced in Chapter 2 and discuss changing expectations of governance, notably increased stakeholder participation, transparency and accountability. Drawing...