We’ve discussed previously the importance of competition to the whole procurement process, and the need for specifications to encourage that rather than restrict it in the case of EU tenders. For instance, in this article on the defence sector, we looked at how restricting specs can even be a sign of corruption or fraud.
Another spend category that is susceptible to some of the same issues is IT (information technology). Too often, public organisations still specify brands or manufacturers of equipment or software. Now we can all understand how this is sometimes unavoidable or at least very difficult to avoid. If you have a full SAP or Microsoft installed product base, then it is difficult to break out from that into real competition. Yet you only have to look at the profit margins of some of the software firms to see that buyers are not best served when there is this sort of market power, restricting true open competition and working against real competition.
Open Forum Europe (OFE) is a not-for-profit industry organisation, originally launched in 2002 to accelerate and broaden the use of Open Source Software among businesses, consumers and governments. OFE’s primary role now is to promote the use of open standards in ICT as a means of achieving full openness and interoperability of computer systems throughout Europe.
In their recent report released in July 2014 (OFE Procurement Monitoring Report 2013 – 2nd Snapshot), the organisation says that 22% of all tender notices in the Computer Software Packages and Information Systems sector issued across the EU contained an explicit reference to specific brands and trademarks. Disappointingly, that is an increase of 5% since previous report published in October 2013.
“Europe has thousands of small IT firms that in many instances are simply excluded from competing in the public procurement process by restrictions such as the naming of trademarks in calls for tender,” said Graham Taylor, chief executive officer of OFE. “Whenever possible, technical specifications should be worded in terms of functional requirements and reference open standards, so as to ensure technological neutrality and fair competition.”
EU procurement laws (Directives 2004/18/EC and 2014/24/EU) try to ensure that public procurement gives equal treatment to potential bidders and doesn’t discriminate in favour of one or another supplier. Indeed, that is a basic treaty principle. Naming trademarks in tenders is viewed as discriminatory, and is usually against EU procurement laws, except under specific and exceptional circumstances.
And of course, commercially, by specifying one preferred supplier, public bodies are inadvertently helping dominant firms maintain their stronghold on markets to the detriment of smaller competitors. In addition, the lack of competition often leads to greater cost, resulting in a waste of EU’s taxpayers money.
If you are interested in the topic from any angle, Maël Brunet from Open Forum Europe is running a short webinar tomorrow (Tuesday October 28th) at 4pm CET (3pm in UK, Portugal). He “will share with the audience insights of EU Member States’ practice of referring to specific trademarks when procuring for Computer Software Packages and Information Systems.”
Mael is OFE’s Director in charge of European Policy & Government Relations in their Brussels office. He works on a diversity of topics including data protection, cybersecurity, standardisation, public procurement, Internet regulation, copyright and patent-related issues.
It has to be said, the joining instruction for the webinar are not the clearest I’ve ever seen! You can try emailing this address – email@example.com , including your name, surname, country of residence and company/organization.
Or go to this page and I assume the “TBD” under the joining instructions will give more information later today or tomorrow… but really, it is not difficult to have a simple webinar service these days, so OFE might want to look at a simpler process in future!