Public Procurement Management, the 4 Pillars 12th Public - - PowerPoint PPT Presentation

Public Procurement Management, the 4 Pillars 12th Public Procurement Knowledge Exchange Forum Astana, May 18th 2016

• Prof. Gustavo Piga

Director of the International Master in Public Procurement Management University of Rome Tor Vergata www.masterprocurement.eu

… the EC is developing a policy to promote professionalization of public buyers. The policy will include inter alia professionalisation plans, promotion of defined training schemes, capacity building and exchange of best

• practice. Market intelligence, business skills and a focus on

skills must become the heart of public purchasing. In short, public procurement needs to become a business skill - rather than an inefficient (at best)

• r

corrupt (at worse) administrative endeavour. Joachim Nunes de Almeida, EC EU Investing in Procurement Professionalism

“In times when we can’t borrow anymore, we see procurement as the best revenue stream” “Investing in the function tasked with delivering these (efficiency) targets is a clear spend to save business case”

OGC (UK) presentation, Rome, September 2009

Spend to Save in the EU

WORLDWIDE PHENOMENON How much waste in purchases could be eliminated by bringing “the worse at the level of the best” (Italian case)? “If all public bodies were to pay the same prices as the one at the 10th percentile, sample expenditure would fall by 21% . . . Since public purchases of goods and services are 8% of GDP, if sample purchases were representative of all public purchases of goods and services, savings would be between 1.6% and 2.1% of GDP!”

How Much Public Money Is Wasted, and Why? Evidence from a Change in Procurement Law - Oriana Bandiera, Andrea Prat, Tommaso Valletti, American Economic Review

How much waste?

How much of this waste is passive (inefficiency)

• vs. active (corruption)?

How Much Public Money Is Wasted, and Why? Evidence from a Change in Procurement Law - Oriana Bandiera, Andrea Prat, Tommaso Valletti, American Economic Review

“On average, at least 82% of estimated waste is passive and that passive waste accounts for the majority of waste in at least 83% of our sample public bodies.”

Why waste?

Pioneers: Professionalism in procurement-UK 1997

• “Procurement professionals will see many inconsistencies as

they look at their job market. Poorly designed or non existent career paths and progression opportunities sit alongside a wide range of often confusing titles and job

• classifications. GPS research identified 147 unique job titles

for just over 1000 respondents”

• “Staff turnover is unacceptably high … Vacancies stood at

10% of the work force … with an increase of contingent labour”.

• “Allowances for professional qualifications and specialist

skills are inconsistently applied.”

… the EC is developing a policy to promote professionalization of public buyers. The policy will include inter alia professionalisation plans, promotion of defined training schemes, capacity building and exchange of best

• practice. Market intelligence, business skills and a focus on

skills must become the heart of public purchasing. In short, public procurement needs to become a business skill - rather than an inefficient (at best)

• r

corrupt (at worse) administrative endeavour. Joachim Nunes de Almeida, EC EU Investing in Procurement Professionalism

The Market for Competences

Demand Supply

Law Law and …

Law

2000

Law and …

2015

• IMPPM is borne out of the experience of the Master in

Procurement taught in Italian for 10 years. A Master with 3 core specializations: private, public and defense procurement.

• Then times became mature, for the procurement group
• f the University of Rome Tor Vergata, to find prestigious

partnerships for extending internationally the successful experience of the Italian Master Program: EBRD, CEI and MEF were the right partners who strongly believed in this initiative. IPPM’s history

About our Students and Alumni

I Edition II Edition III Edition IV Edition Number of Students 30 33 28 28 EBRD Scholarships 9 15 20 22 MAE Scholarships 19 16 AfDB Scholarship

• 2

AISCAT

• 1

Private Payers 2 2 8 3 Countries involved Albania, Armenia, Egypt, Italy, Lebanon, Libya, Moldova, Montenegro, Romania, Serbia, Tunisia Albania, Armenia, Bosnia and Herzegovina, Bulgaria, Italy, Jordan, Lebanon, Moldova, Serbia, United Arab Emirates Albania, Bosnia and Herzegovina, Bulgaria, Gambia, Georgia, Germany, Italy, Kyrgyzstan, Latvia, Moldova, Montenegro, Serbia, Taiwan, Tunisia Albania, Bosnia and Herzegovina, Croatia, Gambia, Georgia, Hungary Italy, Jordan, Kazakhstan, Macedonia, Morocco, Namibia Republic of Belarus, Serbia, Slovakia, Tunisia, Ukraine

Relevant Figures

• 119 students coming from 31 countries and more than 82 institutions;
• Lecturers teaching over the past academic years coming from more than 30 countries

and more than 20 institutions.

• Ratio of non-Italian lecturers per edition: I Edition 12/35; II Edition 12/34; III Edition

16/28; IV Edition 20/36.

Interdisciplinarity…

Since 2005

Module 1 Negotiation and Team Building Module 2 Economics of Procurement Module 3 Legal Background Module 4 Organisation and Strategy Module 5 Economic Analysis of the Market Module 6 Contract Complaints and Disputes Module 7 Quality Management and Green Procurement Module 8 Integrity and Anticorruption in Public Procurement Module 9 Strategic Procurement Module 10 Law and Economics of Public and Private Partnership Module 11 IFI's Procurement Procedures Module 12 E-procurement Offered by the Schools of: Economics, Engineering, Law

Intersector

In the Master: private and public procurers together. Why learning what is forbidden? The rationale: discretionality (more in private) can be good! ?

The Paradox of Trust

The EU Directive: 1 law for all EU MS? Italy and the UK: the role of trust The «Good» and «Bad» Discretionality

Pre-conditions

Professionalization, Experience and Rewards: necessary pre-conditions for virtuous discretionality. Procurers like diplomats and judges?

Is Professionalism Enough?

Capacity Building is much more than training and includes the following: Human resource development, the process of equipping individuals with the understanding, skills and access to information, knowledge and training that enables them to perform effectively. Organizational development, the elaboration of management structures, processes and procedures, not only within organizations but also the management of relationships between the different organizations and sectors (public, private and community). Institutional and legal framework development, making legal and regulatory changes to enable organizations, institutions and agencies at all levels and in all sectors to enhance their capacities. The Urban Capacity Building Network

Procurement Revolution UK 2009

Recommendations: “Attract, Reward, Retain and Develop”.

Talent Management Issues in Procurement Organizations

Is your organization structured to attract talented people? How to attract them? How to make them grow within the organization? How (and if) to retain them? From Private to Public Sector

Public Procurement Management - 3 Pillars

Competences- Career Discretionality Interdisciplinarity

Types of Skills Talent Management

Sufficient Conditions?

Switch to discretionality to be exercised properly requires: a) new additional skills b) new forms of transparency c) new forms of accountability.

Discretionality in the new EU Directive

More discretionality allowing to negotiate more frequently (except for standardized goods)

• Negotiation can help because:

a) in the case of complex operations, it has the potential to improve the fine-tuning of contracts by helping the public party to express its needs and by identifying unforeseen competitive and potentially innovative solutions; b) at the selection stage it reduces the likelihood of the contract being renegotiated at a later date, without necessarily increasing prices; c) contractors are required to justify the various components of their bids at the negotiation stage, which reduces the risk of collusion and cover bids; But there are risks: favoritism, raising price anticipating ex-post negotiations, improving (and copying)

• ne’s rival technical offer.

NEW SKILLS, NEW TRANSPARENCY, NEW ACCOUNTABILITY

Saussier-Tirole: make mandatory (and public) 2 reports, analysing all

• ffers before and after negotiation.

http://www.cae-eco.fr/IMG/pdf/cae-note022-env2.pdf

Discretionality in the new EU Directive

Greater space for renegotiation (with upper limits based on share of value)

• Renegotiation can help: unforeseen events, new advantages

But: Renegotiation can reduce the benefits of competition: he who wins is the best renegotiator (with a very low, renegotiable, price) rather than the best quality provider. Saussier-Tirole: mandatory publication of notice or large renegotiations, with short standstill period for intersted parties to oppose it.

Big Data rather than Rules

Accountability without Performance Measurement? Performance without Data? Data centralization and analysis is essential. (Competent Observatory in the New Governance?)

Public Procurement Management

Competences- Career Discretionality Interdisciplinarity

Types of Skills Talent Management Types of Transparency- E-searchable data bases

Transparency, Data and Accountability

OECD Public Governance Reviews, The Korean Public Procurement Service - Innovating for Effectiveness, 2016.

Accountability – Korea’s KONEPS e-proc system

Public Procurement Management

Competences- Career Discretionality Accountability Interdisciplinarity

Types of Skills Talent Management Types of Transparency

Foster Organizational Change Toward Performance

• Use Data for Internal Improvement
• Use Data for Setting Targets, Motivations,

Rewards

• Use Data that are oriented toward output-based

measurement of performance

• Organize Institution Around Self-Improvement.
• The Philippines example stands out as a potential

benchmark:

The Philippines

• The results should not be used to compare the

agency’s score against that of other agencies but to provide a benchmark against which it will measure its

• wn subsequent performance. The assessors shall then

identify areas of strength (sub-indicators receiving a satisfactory or Very Satisfactory score) where it can continue to improve and weaknesses (sub-indicators rated poor or acceptable) where it needs to develop a specific plan of action.

• A Plan of Action to Improve Procurement Capacity will

then be developed …

Public Procurement Management – The 4 Pillars

Competences- Career Discretionality Accountability Interdisciplinarity

Types of Skills Talent Management Types of Transparency Types of Incentives

Public Procurement Management

?

Competences- Career Discretionality Accountability Interdisciplinarity

Types of Skills Talent Management Types of Transparency Types of Incentives

Public Procurement Management

Goal?

Competences- Career Discretionality Accountability Interdisciplinarity

Types of Skills Talent Management Types of Transparency Types of Incentives

Public Procurement Management Industrial Policy

Competences- Career Discretionality Accountability Interdisciplinarity

Types of Skills Talent Management Types of Transparency Types of Incentives

Public Procurement Management: an Example

SME

Competences- Career Discretionality Accountability Interdisciplinarity

Types of Skills Talent Management Types of Transparency Types of Incentives PS: the more so the larger the buyer that you are

Effectiveness

• Use Professionalization coherent with SMEs

needs (SME Ambassador in USA SBA)

• Use Data for Setting Targets for SMEs

participation and victory rates

• Use Transparency having SMEs in mind (careful

about cartels by large firms)

• Use Interdisciplinary knowledge to impact on

SMEs (analyze carefully set asides impact).

Public Procurement Management - Long- Term Growth!

Competences- Career Discretionality Accountability Interdisciplinarity

Types of Skills Talent Management Types of Transparency Types of Incentives

Procurement 2.0 Revolution for the Country

“Attract, Reward, Retain and Develop”. 15-20% of GDP The Country will Too.