AMPR lec 5-8

Question 1

definition of public procurement

Answer 1

acquisition of works, supplies or services by government or public organizations from the market or other outside bodies, while simultaneously creating and safeguarding public value from the perspective of their own organization

Question 2

definition of contracting, tendering and purchasing

Answer 2

contracting: specific part of the procurement process where the contract is drafted and signed

tendering: specific method for procurement

purchasing: buying by businesses

Question 3

how much money is spent annually on public procurement?

Answer 3

In EU -> 250000 public organizations spend about 14% of GDP

Outside EU -> about 12% of GDP

Question 4

Who are the main actors in public procurement?

Answer 4

The buyer (the contracting authority): this is a body governed by public law, meaning that:
- It’s established for specific purpose of meeting needs in the general interest, not having an industrial or commercial character
- it has legal personality
- it meets at least one of these criteria:
1. it is financed by the State, regional or local authorities or by another body governed by public law
2. it has administrative, managerial, supervisory board more than half of whose members are appointed by the State, regional or local authorities or another body governed by public law

The supplier: any entity that offers a good or service on the market, regardless of whether it has a profit to make

Question 5

Public procurement VS private purchasing - public contracting authorities have additional external requirements to deal with:

Answer 5

1. transparency - how much money do we spend on what and who do we give it to -> means that almost everything is public
2. integrity and role model - the government has to be a role model from an integrity perspective
3. budget is decisive - no more and no less -> difficult to increase the budget once it’s been discussed
4. accountability - accountable to multiple and different stakeholders
5. political wishes / goals - politicians may say what they want to make something happen but this is not always aligned with what is possible
6. diversity in sometimes conflicting internal goals - quality, efficiency and costs -> what is more important: better quality or faster or cheaper production?
7. diversity in sometimes conflicting roles - e.g. policymaker, inspector, legislator, controller etc.
8. different laws and regulations - legal frameworks

Question 6

Regulations below the threshold (in procurement):

Answer 6

Not allowed to:
1. treat companies from other EU member states differently
2. refer to specific brands, features or patents
3. refuse supporting documents (certificates/diplomas) because they were issued in another member state

Question 7

What is the difference between open and restricted procedures in awarding a contract?

Answer 7

Open procedures - anyone can submit a tender

Restricted procedures - tender chosen after pre-qualification (so one more round before)

Question 8

What is the 3P model of public procurement?

Answer 8

Prepare, Purchase, Perform

prepare: explore, initiate
purchase: tender, assess
perform: implement, execute, expand

Question 9

Zooming in on the procurement process, there are 2 main steps, namely:

Answer 9

1. specifying the demand
2. selecting and awarding contract

Question 10

How did public procurement develop? In which steps?

Answer 10

1. only fulfilling a need of the organization
2. compliance with legislation & regulation
3. efficiency
4. accountability
5. value creation for the organization
6. value creation for society
7. collaborative value creation

Question 11

Definition of sustainable procurement

Answer 11

Procurement with attention to the impact of production and consumption

Question 12

Definition of circular procurement

Answer 12

Procurement focused at closing the loop and preventing trash

Question 13

What is procurement policy and what types are there?

Answer 13

Procurement policy guides the way an organization procures works, supplies or services and creates optimal value for the organization and in case of public organization for society.

Descriptive policies: describe the allocation of responsibilities regarding certain matters

Regulatory policies: describe the rights and obligations that should be taken into consideration when procuring

Stimulating policies: driving specific goals (e.g. sustainability)

Question 14

Implementing procurement policy table

Answer 14

low ambiguity + low conflict = administrative implementation (resources)

low ambiguity + high conflict = political implementation (power)

high ambiguity + low conflict = experimental implementation (contextual conditions)

high ambiguity + high conlfict = symbolic implementation (coalition strength)

Question 15

Four important questions in drafting procurement policies:

Answer 15

1. can it work? - effectiveness and efficiency of policy in solving the problem
2. is it allowed? - does it comply with legal rules?
3. is is applicable? - can it actually be implemented or will it cause problems with stakeholders?
4. is it appropriate? - legitimacy of government and trust of citizens in governments

Question 16

What are the four procurement strategies?

Answer 16

1. bottleneck strategies
2. routine strategies
3. leverage strategies
4. strategic strategies

Question 17

What are three conditions for the accountor and accountee?

Answer 17

1. accountor feels obligation to explain and justify
2. accountee interrogates and questions adequacy
3. accountee passes judgement

Question 18

What is independent verification and certification?

Answer 18

This refers to that an external, outside, unbiased body checks how to organization is doing (processes, outcomes etc.) and if its meeting its targets and then later certificates the organization.

Question 19

Who is the accountee? Problem of many eyes:

Answer 19

1. organizational accountability -> superiors
2. political accountability -> elected representatives and political parties
3. legal accountability -> courts
4. administrative accountability -> auditors, inspectors, controllers etc.
5. professional accountability -> professional peers

Question 20

Who is the accountor? Problem of many hands:

Answer 20

1. corporate accountability -> organization
2. hierarchical accountability -> one for all
3. collective accountability -> all for one
4. individual accountability -> each for himself

Question 21

What are the accountability gaps and explain them?

Answer 21

1. inconsistent reporting
2. lacking types of financial information
3. extrabudgetary spending

Question 22

Why do private companies want to look back rather than forward?

Answer 22

• Annual report shows how much profit was made last year -> for shareholders of the company this means financial benefit
• As employees it is also interesting  for example: Singapore airlines generated more profit than anticipated and they paid their employees eight months more of salary from this extra profit

Question 23

What is the accountability paradox and what are explanations?

Answer 23

The accountability paradox is that when government accountability increases, trust in government decreases

Possible explanations:
o Negativity bias in media and politics
o Accountability industry changed public attitudes towards government
o ‘politics is destined to disappoint’ even in democracies

Question 24

According to Moore on public value management -> public resources should be employed towards:

Answer 24

• creating substantive added value for society (public value creation)
• with legitimacy and support from the authorizing environment
• within all organizational and operational boundaries (goals are attainable)

Question 25

Key criticisms on Public Value Management (PVM):

Answer 25

1. empirical or normative, descriptive or prescriptive theory? 2. what exactly is public value? Who decides that, how and based on what? - added value suggests that outcomes are more important than processes - so that would mean performance values (efficiency and effectiveness) are more important than procedural values (transparency, lawfulness, equity)

Question 26

What are the most common value conflicts in PVM:

Answer 26

- efficiency vs political effectiveness - lawfulness vs political effectiveness - transparency vs political effectiveness - transparency vs efficiency

Question 27

What are the moral dilemmas in public procurement?

Answer 27

1. the accountability/responsibility dilemma: develop flexible procurement systems while maintaining accountability and control 2. the fraud/redtape dilemma: limiting opportunities for fraud and mismanagement while reducing operational constraints 3. the principal/agent dilemma: identifying the best value in the presence of competing goals and common agency 4. the short-term benefit/long-term costs dilemma: short term economic efficiency vs long term monitoring costs 5. the cost of empowerment dilemma: ensuring responsiveness to the end user through decentralization while increasing training and evaluation costs

Question 28

What are rational and other value conflict coping strategies in PVM:

Answer 28

rational coping strategies: - Cycling: across the policy making, decision-making, implementation and evaluation stages the attention to different values goes up and down (more common) - Firewalls: the (responsibility for) safeguarding of different public values is attributed to different departments or institutions (e.g. inspection agencies) - Casuistry: public values are prioritized and weighed on a case-by-case basis (often in budgeting) other strategies: - Incrementalism: conflicts are lessened / softened as policies develop through incremental steps (more common) - Bias: dominant discourse favors specific values over others for longer periods of time (fraud policies and the child allowance affair) - Hybridization: policies and practices emerge from different values, but co-exist alongside each other (e.g. climate change policies while also expanding highways)

Question 28

Definition of transformational budgeting

Answer 28

An additional budgetary technique that has a goal of using the budget process to support implementation of transformational agendas adopted by the government

Question 29

Three features of transformational budgeting:

Answer 29

1. Purpose of the agenda is transformational for society 2. Agenda is super-imposed on all public policies, which ought to detail their contribution to that specific agenda 3. Clearer link betweens strategic planning / long-term transformational agendas and program- and budget policies

Question 30

In transformational budgeting explain qualitative and quantitative tagging

Answer 30

Qualitative tagging: Each expense in the budget is tagged with the impact it has on crosscutting issues A tag is an indication of the expected impact on the issue and can be favourable, unfavourable or mixed Quantitative tagging: Tagging expenses for their impact on crosscutting issues with a weighing system (e.g. RIO markers or climate coefficient)

Question 31

What is some criticism on tagging (in transformational budgeting)?

Answer 31

1. it is analytically difficult -> ambiguous results 2. generally focuses more on inputs, not results 2. it is just about the supply side of information -> the world does not get better from generating more information alone (only if it is used to achieve something)

Question 32

What does Corporate Sustainability Reporting Directive (CSRD) entail?

Answer 32

As of 2023 EU directive requires large companies and listed companies to publish regular reports on their social and environmental risks and the impact of their activities on people and the environment. Large means: companies that meet two of the following three criteria: - Turnover > €50 million per year - A balance sheet total of > €25 million - > 250 employees (averaged over a year) public organizations do not fall under the CSRD

Question 33

What are trends and developments in public procurement?

Answer 33

1. Efficiency and cost-based thinking -> value-based and sustainable - lowest price is still the norm in many countries and situations - perception that sustainable or innovate is more expensive, but this is not necessarily true - the EU law is moving towards making sustainable and social procurement the new standard 2. Administrative and operational -> digitalization and smart - Digitalization and technological innovations are vastly changing public procurement - Digitalization also affects the power balance between buyer and supplier (increase information assymetry) - Technological development therefore requires consideration of data ownership, data management and data sharing and about how to deal with data-driven intellectual property and security aspects 3. Front-end practical purchasing -> life cycle engagement - it should become routine to: + not automatically replace something when the lifecycle ends + not procure something new when a need arises + to look for alternatives such as reusing, extending the lifecycle and buying as a service - But this requires a lifecycle perspective which affects how procurement and contract management are organized 4. Dyadic chain supply relationship - The law, but also policies and internal procedures assume a dyadic relationship: 1 buyer and 1 supplier - Turbulent times require adaptivity to dynamics of society's need for values rather than traditional contracts

Question 34

Implications for the future:

Answer 34

1. Need for more adaptive and flexible ways of governing buyer-supplier relationships 2. Integration of procurement values in all parts of the public organization 3. Need for different competences and capabilities of procurers 4. Rebalancing the multiple perspectives on public procurement