Recent statistics show that in over 45% of all tenders in Poland there is only one bidder. What is the real influence of an introduced on 18th October 2014 change to the Public Procurement Law?
To start with, I would like to share a personal flashback. With one of my blog posts (end of March), I commented the early consequences of the changes to the Polish Procurement Act of 18 October 2014 implementing the provision that the price may be the sole criterion of contract evaluation only if the subject matter of the contract is generally available and has established quality standards. Based on the data from the Public Procurement Office (price as the sole evaluation criterion still refers to 69% of contracts, while 92% of contracts contain no more than 2 criteria) I claimed that the great quality change to public procurement would, unfortunately, still remain just “wishful thinking”.
Today, the latest report of Stefan Batory Foundation confirms my concerns. The analyses show that in over 45% of all contracts in Poland there is only one tenderer. It is the worst result in the entire European Union; even worse than in Estonia, Cyprus and Slovakia which are countries with no particular transparency in public procurement.
What is the relation between the price as the sole selection criterion and the minimal number of participants? In my opinion, it is significant. In the end, many potential suppliers who are not willing or prepared to compete in the lowest price “contest” decide not to participate in such a procedure at all.
In theory, applying non-price criteria should change the situation. Why is it only the theory? It would probably work, if in general entities used such quality criteria of selection as experience, references, technology, attestation, manner of performance, perspectives for further cooperation. However, it is time-related criteria that are most frequently used: delivery time, guarantee period, payment deadline. Not surprisingly, with such criteria not many suppliers are encouraged to participate in the procedure. Additionally, suppliers who invest in development, research or new technologies have little chances of winning the competition for the lowest price and delivery time. There is no doubt that the final price of the product needs to represent the outlays, and it is not in any way related to the margin.
The main reason given for this situation of inactive attitude towards public procurement is “so-called safe attitude of officials”. In many cases, I can often understand the thinking “why risk to employ immeasurable criteria and face the threat of being flooded with different kinds of controllers”. This is obviously an excuse, but perhaps, it is just a disguise for the inability to analyse TCO or, what is even worse, for the unwillingness to analyse the market a bit deeper. In fact, it is not prohibited to research the market of suppliers using available tools such as electronic requests for proposals or e-mail in the form of a request for information. Requests for information may be used not only to select suppliers under close procedures, but also to gain more data about the technology, performance standards or the influence of expected functionalities on the unit price of a product or service.