Regulaton & Policy
Procurement Week Wales – Pedro Telles Wants to Re-Engineer EU Procurement Regulations

The second edition of the Brochure for the Procurement Week Wales is out now, and as well as laying out details for the event, it features a number of articles from people involved in the week. I’ve written a piece asking whether large outsourcing firms such as Serco are making too much money out of their government clients – or not enough money!

Tania Seary gives the clearest explanation I’ve seen yet of what her social media firm Procurious is all about, and Pedro Telles, who is an academic with the Institute of Competition and Procurement studies at Bangor University (the organisers of the event) writes an interesting piece about EU regulations titled somewhat obscurely, ”The Map Of The Problematique In EU Public Procurement.” The heart of his argument is this.

“We should be applying detailed rules to low-value contracts while taking a more principles based approach to bigger contracts.”

Telles argues that public procurement exists not to “enable great procurement” but to stop really bad procurement – to put a floor under how bad procurement can get. But, he says, this is misaligned with reality. He thinks that tight regulations are needed for lower value contracts, on the grounds that they may well be awarded by less experienced people who need the guidance and the rules to make sure they act in the right way. As he says:

“By definition, people working on a day-to-day basis with low-value, low-risk contracts have less expertise than the ones working at the other end of the scale.”

But then he says that for higher-value contracts, the contracting authorities should be allowed more flexibility and freedom, because these procurement exercises are more likely to carried out by people who know what they are doing.

It is an interesting argument and I understand his thinking, but we could construct an entirely opposite viewpoint! Low-value contracts aren’t really that important, on most occasions, both in terms of the goods or services being bought or the need to achieve the best value for money for the taxpayer and the public purse. No-one really cares if contracting authority X does not get the very best supplier for a €10,000 contract. Equally, whilst corruption and fraud is never good, at this level it is perhaps not such a mission-critical problem.

However, for larger contracts, the importance of carrying out robust, effective and thoughtful procurement is much greater. And whilst no doubt many organisations would do a good job without the regulations to guide them, some would not. There is no evidence that large procurements show routinely better performance, I would argue, thinking about West-Coast Rail, prisoner tagging and many other examples!

Maybe through incompetence, maybe through fraud and corruption, the end result would not always be a good one. And the corruption concern is very real. If the regulations were relaxed, which contract do you think the crooked politicians, chief executives, even senior procurement people, would target? The €10,000 value contract or the €10,000,000?

Now we can see both sides of the argument here. My belief though is that we need a set of regulations that do allow flexibility, at all spend levels, but are still very concerned with those basic EU treaty principles around fairness, openness and transparency – the real protections against fraud. We have to strive continuously to get the balance between governance / control and freedom / commercial flexibility.

We look at other parts of the world and think how lucky we are in Europe that corruption in public procurement is not endemic. But that will not necessarily be the case forever. The new Directives allow some relaxation, which should increase commercial flexibility (good) but may make it easier for the corrupt to benefit (not so good). We need to be careful of the slippery slope!