Public Procurement Advisory Services for Enterprises – examples from the European Union

For the many procuring entities and enterprises in Ukraine presently struggling with the application of the public procurement regulations, it is somehow a comfort to know that they are not alone with their problems. In fact, since the introduction of the EU public procurement rules, they have required considerable advisory activities. Over the years an entire service industry focused on public procurement has evolved; covering legal as well as commercial aspects and involving not just private consultants but also business organisations.

The first EU Public Procurement Directives were adopted and implemented in the EU in the 1970’s but had very little market impact, at the time, due to their vagueness. It was only during the late 1980’s and early 1990’s, following major reform of the directives, that public procurement became firmly placed on the political agenda of the EU and its Member States. Advisory activities to support the implementation of the public procurement rules developed from that point onwards in most Member States and this was partially prompted by various EU support programmes for smaller enterprises.

To promote further discussion about the potential to develop such services further, this article will focus on the kind of services that are traditionally being provided in EU Member States; and especially the ones aimed at helping smaller enterprises  to access public procurement markets.

Much of the advisory activities concerning public procurement are directed at small and medium-sized enterprises (or SMEs). This is in contrast to an earlier view that SMEs had a very limited role in public procurement, especially in regard to bigger contracts. The discussion today, however, has moved forward in the sense that it is now not a question of whether but rather how SMEs should be involved in public procurement. The recent reform of the EU Public Procurement Directives, completed in 2014, confirms this development by including provisions aimed at reinforcing the position of SMEs as direct bidders and as sub-contractors.

Organisational structures

Organisationally, the various free or non-profit advisory services are provided by networks in the respective countries; typically chambers of commerce but also regional business development and technology centres aimed at servicing business[1]. Municipalities may also choose to establish local EU Information offices which, to varying degrees, provide services related to public procurement. Various business organisations may provide advisory services on public procurement and these are occasionally limited to their members.

In addition, the EU manages an advisory network – The European Enterprise Network (EEN). This network replaces the previous network of Euro Info Centres (EICs) and is also typically based in national chambers of commerce, development agencies and universities[2].  Usually, these various structures provide other EU information besides that concerning public procurement. Other common topics include EU R&D financing programmes, policy guidance on trade barriers and business co-operation schemes.

These different networks in EU Member States are generally open to requests from businesses, civil society organisations and procuring entities. The services are frequently free of charge or they can be obtained at relatively low prices in the case of non-profit organisations. In the case of very complex questions, these will typically be referred to a relevant professional e.g. solicitors, accountants or other specialists [3].

Without looking deeply at financial arrangements for such services, it is clear that the development of these services within the EU has benefitted from ample funding from both EU and EU Member State budgets. Undoubtedly, the possibilities for similar funding are more limited in a Ukrainian context.

The main types of public procurement services and advisory activities that are available within most EU Member States are reviewed below on the basis that they may offer inspiration for the further development of public procurement advisory services in Ukraine.

Types of services and advisory activities

There is great variation between organisations offering advisory services as to the extent of their involvement in public procurement and their available resources for providing more individualised services and advice. However, in EU Member States there will at least be access to the following types of services and advice from some organisation.

Help desks and hot lines

Help desks and hot linesby telephone and emailare normally made available and are intended primarily to handle factual questions and requests for  informative material. There will also be cases of more complex questions and it depends on the facilities whether such questions can be resolved in-house or must be referred elsewhere. Possession of “know-where“ to refer enterprises to the right sources is an alternative to “know-kow“ and is in itself important for any business advisor. Quite often the advisor will also need to ask a range of questions to help the enterprises to identify the information that they actually need. For this reason, the the experience of many EU advisory centres suggests that the running of helpdesks requires considerable skills development and co-ordination.

It is generally not helpful for enterprises to be handed out legal texts; and especially not the texts of the EU Public Procurement Directives. While, under each EU reform, the directives are launched under the banner of “simplification“, they have, nonetheless, become increasingly difficult to read.  Some organisations have chosen to make brochures and similar standard information material concerning public procurement available for the use of enterprises and the EU itself has been quite prolific in issuing a range of such material.

However, experience also indicates that such material has very little impact. This is beacuse such material is of its nature general and because the needs and questions of enterprises are mostly quite concrete and oriented towards immediate problem-solving. For example, an enterprise will typically not be interested in statistics as to public sector savings due to public procurement or for that matter why such rules exist.

Concrete advice

Concrete advice to enterprises as regards, for example, the analysis of tender documentation and the preparation of bids fulfils important needs and are provided by advisory services to a varying degree. Such advisory services are often time-consuming and are, as pointed out earlier and as a safe option, often referred to specialists. More well established entities, such as business associations and other interest organisations will often have sufficient in-house expertise and professional insurance coverage to handle more complex advisory tasks. This may be reserved as a special service for members (for example through restricted parts of the website of the organisation) or opened up for others, typically in return for an agreed fee.  In addition, and for the purpose of such concrete tasks, many organisations have developed specific checklists and templates to assist enterprises in preparing bids.  The  use of checklists can help to avoid elementary errors and omissions that might otherwise lead to the rejection of  bids.

Tender search services

Tender search services for enterprises are often provided as the main public procurement service. This type of service, in its most simple form, is based on the EU electronic database: Tenders Electronic Daily (TED) and the identification of interesting tender opportunities based on the EU classification of types of supplies, services and works (the Common Procurement Vocabulary or CPV). The service can be more advanced and include  tenders published not just at the EU level but also in other international fora (including UN and World Bank tenders) or exclusively on the national level in the case of low-value contracts of particular relevance for smaller enterprises.

It may in fact be a stategic option for smaller enterprises in border regions to pursue low-value contracts in municipalities which are nearby on the other side of the border. For such contracts, the publication of notices and procedures may differ between EU Member States. This is because such smaller contracts are not in fact covered by the common rules of the EU Public Procurement Directives.

To help enterprises overcome such problems, an initiative was taken in the 1990‘s for the benefit of municipalities around the Danish/German border. A manual was published for the use of enterprises in the region with information about the media where tender publication takes place and advice was provided on how to obtain information about contracts which were not required to be published. The manual also included a description of the tender procedures in Denmark and Germany for small contracts as well as useful addresses where information could be obtained in the municipalities involved.

Today, such a manual would be issued as a web facility but, otherwise, the idea remains relevant. Similar facilities were over time developed in other EU Member States; not least as cross-border cooperaton is obviously an important policy objective of the EU. In this regard, the facilitation of regional cooperation across borders may turn out to be an advangtageous strategy for Ukraine, which geograpically shares borders with many countries.

It is possible to establish quite sophisticated tender search services, allowing for very specific searches based on detailed specifications from enterprises as to the type of contracts that they are interested in. There are also examples of individual business consultancy firms that offer subscriptions to very extensive services which offer early warning on upcoming tenders. In this connection, it is sometimes rather provocatively stated that, once the procurement notice has been published,  it is already too late and the competitors are already working on their bids. This type of service, in any event, is based not on published notices but on decisions from municipal meetings where the documentation is obtained by exercising the citizen’s normal right of access to public files. Such services obviously rely on the existence of such access, which is indeed subject to certain minimum rules within the EU.

Seminars and workshops on public procurement

Seminars and workshops on public procurement are frequently  offered to enterprises.  A review of what is available in EU Member States shows two trends. One trend involves fairly general presentations of key public procurement regulatory information combined, for example, with a presentation of typical errors in bids and allowing plenty of time for answering concrete questions from participants.  The aim here is to cater for enterprises with different levels of knowledge. However, the success of such events depends, in particular, on the possibilities for enterprises to have their questions thoroughly discussed, including, for example, by allowing the submission of specific questions in advance of the event.

A second trend is towards more specialised events, often aimed at enterprises within certain sectors. One example would be seminars on IT procurement with a focus on categories of technical specifications for IT that procuring entities could be expected to use.

Issuing of pre-qualification certificates for enterprises

This is a service supplied, for example, by the chamber of commerce network in Germany which, in addition, manages a datebase for all enterprises certified as pre-qualified.  The certificate  replaces the various documentation concerning the personal and professional standing of the enterprise (criminal record, tax certificate, declaration concerning the absence of bankrupcy etc.). In the German case, the enterprises with such certificates only need to renew the documentation once a year.

This type of service is found similarly in other EU Member States and removes a lot of the bureaucracy that is burdensome in public tendering, especially for smaller enterprises. This service will now need to be established in all EU Member States as a result of the recent reform of the EU Public Procurement Directives. The reform requires the establishment of the common EU certificate (European Single Procurement Document, ESPD) and the common EU database (e-Certis) that are provided for in the recent revision of the public procurement direcctives.

Partner search services for SMEs

Partner search services for SMEs interested in cooperating with enterprises on foreign markets are frequently offered at various levels of sophistication. The service may be based on the interested enterprise filling out a search form which is then processed in an enterprise database for the purpose of pairing the request with suitable already registered enterprises. The search can typically be focused on specific countries and sectors and some service providers allow for even further fine-tuning of searches down to individual product categories.

Cooperation with other enterprises and with enterprises in other countries can be advantageous for various purposes, including the pooling of resources for innovation and product development or to strengthen market position. At the same time, the experience of enterprises and cooperation initiatives over the years demonstrates that the establishment of such cooperation is a long process. First, the conditions for cooperation must be carefully negotiated to arrive at a win-win position for everyone involved. Moreover, the eventual outcome generally depends very much on quite subjective factors such as “chemistry“ between the firms involved and establishing an atmosphere of trust.

The cooperation strategy is particularly relevant for SMEs. The development of SME cooperation has, for many years, also been seen as a strategy in relation to the public procurement market. Very often, public procurement contracts are too large and complex for smaller enterprises. This may still be the case even after the recent reform of the EU Public Procurement Directives and the new rules set out to facilitate SME participation. The idea is that small enterprises should  join forces with other enterprises in order to fulfil requirements as regards financial and technical capacity and to create sufficient capability to fulfil the requirements related to quality and quantity. Because business cooperation takes time, it is typically not a feasible way forward to look for partners for specific tenders in the future. Rather, such initiatives should be part of a broader, long term strategy that might include other business activities than public procurement.

It has been the general experience among advisors and procuring entities in the cooperation process that many smaller enterprises do not promote themselves very well. They do not clearly explain or highlight their commercial strengths.  In this context, performance references from previous work can be crucial. Some business advisors even claim that references should be seen as part of the capital of smaller enterprises.

On the whole, it is the dilemma of smaller enterprises that they are weak as regards strategy and planning and that it is exactly these activities that require resources that they do not have. Smaller enterprise will therefore often need to rely on outside advice on these issues and it is here that competent business advisors fulfil an important function.

The advisors operating in the field of business cooperation will often make smaller enterprises aware of alternative ways to enter the public procurement market. After all, being part of a consortium is only one approach and joining a bid as a sub-contractor may be a first step in getting to know the procurement markets better. The role as sub-contractor may indeed be a safer option compared to the liabilities arising from being a consortium member. The disadvantage, on the other hand, is that the sub-contractor will, of course, have no direct share of any generated profits.

These are some of the main types of advisory activities presently found within the EU. It is clear that these activities go well beyond mere advice on how to understand the law. The numerous activities also demonstrate that enterprises in most countries require assistance for successfully participating in the market for public contracts. The increased participation in public procurement and the improved quality of bids resulting from advisory activities ultimately benefit the public purchaser and the efficiency of the public procurement system as a whole.

[1] Germany is, to some degree, a special case. This is partially because public procurement rules had already existed there for many years. Public procurement advisory offices have existed in Germany since the early 1950’s and constitute today a network of 16 regional offices (“Auftragberatungsstellen”) linked to the chambers of commerce.

[2] Ukraine is a member of EEN, together with other EU associated countries, see http://een.ec.europa.eu.

[3] This is not just for the sake of limiting any risk of liability but also to avoid accusations of unfair competition.   In fact, experience shows that the free or non-profit services often work to the advantage of lawyers, accountants and other advisers because their involvement helps to clarify the specific tasks where these advisers should be involved.

Author: Steen Bruun-Nielsen, Senior Public Procurement Expert

The views expressed here are those of the author and are not to be understood as in any way reflecting an official opinion of the European Union or any of its constituent or connected organisations.

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