Improving value and certainty in defence procurement

Defence procurement is notoriously complex and risky. This article analyses the factors which are unique to defence and those which are general to the public sector. It proposes some practical improvements for UK defence procurement (and overseas equivalents), across its value chains and suppliers, and also within the public sector.     

Debate: Academia can tax one's patience

Public procurement processes have been extensively studied, but previous research has not sought to explain public procurement in terms of cognitive heuristics. This paper examines the award of a large public sector contract and outlines how the decisions were made. Heuristics were used throughout the process. Three heuristics—EBA, conjunctive, and WADD—were used in combination to reduce the number of bidders for the contract from a somewhat unmanageable 63 down to four. This paper allows the underlying stages to be viewed from this perspective and therefore it explores procurement in a way that sheds new light on the processes involved.     

Fulfilling its promise? Strategic public procurement and the impact of equality considerations on employers’ behaviour in Scotland

ABSTRACT

Public administration is an important force influencing equality in today’s society. Like budgetary choices, public procurement has increasingly gained attention as a means to promote equality. Yet, there are important gaps in knowledge, especially regarding how equality requirements in public procurement affect company behaviour. This paper sheds first light on the impact strategic public procurement has on employers’ behaviour. Based on empirical research, this paper highlights that companies perceive a limited prevalence of equality stipulations in Scottish public procurement practices and raises doubts about the impact of public procurement practices to create a successful business case for equality.     

Multidimensional principal–agent value for money in healthcare project financing

Value for money (VfM) is a key parameter for the public sector in the choice between a public–private partnership (PPP) and traditional procurement, especially for healthcare infrastructure. This paper investigates the differences in what VfM means to the public and private sectors.     

Local preferencing for local suppliers: examining the use of locality in public procurement

The academic literature on the selection of suppliers for public contracts, while vast, lacks attention when examining the use of local suppliers. Benefits of local suppliers have been discussed with respect to local economies, but the actual selection of these suppliers has been largely ignored. This paper examines the choice of local suppliers when there is an explicit desire for public procurement agencies to cater to minority-owned and emerging small businesses. The paper provides important insight into local supplier selection, while opening new avenues of future research into the role these suppliers play in the supply chain.     

How to interact,when and with whom? SMEs and public procurement

Research consistently shows that small and medium enterprises (SMEs) struggle with public procurement processes. The aim of this paper is to extend the research agenda using the lens of supplier development. Dyadic mentoring theory is used to classify three role sets that buyers are willing to use in order to develop small firms. This paper's findings distinguish budget holders from traditional buyers in terms of how and what processes they are willing to use to develop SMEs. Role theory is used in the paper to explain the different mentor behaviours.     

Crucial silences: When accountability met PFI and finance capital

During recent years, a wide spectrum of research has questioned whether public services/infrastructure procurement through private finance, as exemplified by the UK Private Finance Initiative (PFI), meets minimum standards of democratic accountability. While broadly agreeing with some of these arguments, this paper suggests that this debate is flawed on two grounds. Firstly, PFI is not about effective procurement, or even about a pragmatic choice of procurement mechanisms which can potentially compromise public involvement and input; rather it is about a process where the state creates new profit opportunities at a time when the international financial system is increasingly lacking in safe investment opportunities. Secondly, because of its primary function as investment opportunity, PFI, by its very nature, prioritises the risk-return criteria of private finance over the needs of the public sector client and its stakeholders. Using two case studies of recent PFI projects, the paper illustrates some of the mechanisms through which finance capital exercises control over the PFI procurement process. The paper concludes that recent proposals aimed at “reforming” or “democratising” PFI fail to recognise the objective constraints which this type of state-finance capital nexus imposes on political process.     

Designing a public procurement strategy: lessons from local governments

Public sector procurement faces competing priorities, such as cost-efficiency, legal conformity, the advancement of environmental protection and the promotion of innovation. In addition, procurement departments are moving away from being mere organizational servants to having a strategic function. This paper looks at current public procurement strategy research, revealing neglected aspects. The authors propose a new analytical framework and suggest avenues for future research.     

Technologies of government in public sector's networks: In search of cooperation through management control innovations

In recent years, the public sector has been the subject of a thorough reassessment in a significant number of countries. During this process of modernization, issues such as inter-organizational collaboration and managerial innovation have been progressively placed at the forefront of practice and research. In particular, a number of countries have recently re-organized their public sectors around more or less formalized networks or hybrid inter-organizational forms, which are often led by a regulatory body and governed by a cooperation agreement. The literature on inter-organizational relationships in the public sector has evolved alongside the development of such cooperation agreements and innovative forms of organizing. Nevertheless, despite the fact that networks formed by public organizations, not-for-profit organizations, and private firms provide important services to their relevant communities, limited attention has been dedicated to studying the role of management control practices within inter-organizational relationships in public organizations. This is an important gap in the existing literature that this Special Issue intends to address. For this reason, and most importantly because public sector forms of inter-organizational collaborations are likely to differ significantly from those observed in the private sector, in the first part of this Editorial we draw attention to some of the themes that characterize the management and control of inter-organizational relations in the domain of public administration. Next, we introduce the six papers which comprise this Special Issue, and we briefly illustrate how each of them enhances our understanding of the role of control systems within public sector networks. Building on the empirical evidence and theoretical arguments offered by these studies, and after a brief review on the possible alternative ways of conceptualizing the process of adopting new management practices, we point to the further research that needs to be done if we are to understand the role that management control practices play in public sector networks. In particular, we suggest that there is a need to look inside management control practices, to explore what these practices are and, how and why they enable the cooperative “ideal” to become real, as well as to stimulate or hinder opportunities for public sector managerial innovation. It is concluded that there are a number of issues yet to be explored if we are to deepen our understanding of the formal and informal mechanisms of control which are the active elements of the so-called “regulatory hybrids” in the public sector.     

Contracting with private knowledge of signal quality

We characterize the optimal procurement contract in a setting where a supplier has privileged knowledge of the quality of a public signal about his production costs. The optimal contract exhibits important differences with standard contracts in adverse selection settings. For instance, the contract induces output both above and below first‐best levels. Furthermore, the induced output may not vary with the realized public signal unless the signal quality is sufficiently pronounced. In addition, output may increase as expected costs increase.     

Complexities of Productivity Policies in the Finnish Public Sector: Knowing How to Do More with Less?

This paper examines public sector productivity policies as complexities between what is ‘known’ in policy principles and what is ‘done’ in everyday policy practice. Such complexities are explored in two productivity policy cases within Finnish local government: municipal amalgamations, and the low‐threshold concept of healthcare service. Utilising quantitative and qualitative data from Finnish local government the paper demonstrates the tensions between productivity policy principles, interpretations for productivity improvement (‘knowing’) and final outcomes for actually applying (‘doing’) productivity policy. The paper argues in favour of a new understanding for the research and practice of public policy and management.     

New development: Managing and accounting for sustainable development across generations in public services—and call for papers

Social and environmental justice across generations is a fundamental attribute of sustainable development. In this article, which is also a call for papers for a future theme in Public Money & Management (PMM), we develop our case for further research on how governments and public service organizations seek to address sustainable development in their decision-making processes. We believe that accounting for social and environmental aspects is an underdeveloped area of research and practice that is worthy of further critical enquiry. We therefore call on researchers and practitioners to submit their research to a themed issue of PMM on managing and accounting for sustainable development in public services.     

Public‐private partnerships versus traditional procurement: Innovation incentives and information gathering

A government agency wants a facility to be built and managed to provide a public service. Two different modes of provision are considered. In a public‐private partnership, the tasks of building and managing are bundled, whereas under traditional procurement, these tasks are delegated to separate private contractors. The two provision modes differ in their incentives to innovate and to gather private information about future costs to adapt the service provision to changing circumstances. The government agency’s preferred mode of provision depends on the information‐gathering costs, the costs of innovation efforts, and the degree to which effort is contractible.     

The paradox of greater NGO accountability: A case study of Amnesty Ireland

Despite mounting public, governmental and corporate interest in issues of non-governmental organisation (NGO) accountability, there are few academic studies investigating the emergence of accountability mechanisms in specific advocacy NGO settings. Drawing on the theoretical constructs of hierarchical and holistic accountability, this paper addresses this research gap by investigating recent developments in accountability practices at the Irish section of the human rights advocacy NGO Amnesty International. Through analysis of a series of in-depth interviews with managers in Amnesty Ireland, supported by extensive documentary scrutiny, this study examines reasons why Amnesty’s historical reliance on internal forms of accountability has been augmented with a range of ad hoc external accountability mechanisms. The study reveals that while managers favoured the development of holistic accountability mechanisms exhibiting accountability to a wide range of stakeholders, a hierarchical conception of accountability privileging a narrow range of (potentially) powerful stakeholders, has begun to dominate external accountability discourse and practice. It was widely perceived that this trend could, somewhat paradoxically, prove counterproductive to the achievement of Amnesty’s mission. Resolving this paradox will, at a minimum, involve Amnesty Ireland’s leadership becoming more open to and more knowledgeable about a broader, more holistic accountability conception. The paper considers the possible implications of these findings for the development of NGO holistic accountability practice more generally.     

A snapshot of public finance research from immediately prior to the pandemic: IIPF 2020

As the COVID-19 pandemic has shaped public policies and government finances, it has also influenced the topics that public finance economists are researching. Because the 2020 International Institute of Public Finance Congress featured papers that were submitted prior to the start of the pandemic, the Congress allows us to reflect on the state of research prior to the pandemic’s shock to both fiscal policies and our worldview. In this article, the Editors of International Tax and Public Finance reflect on interesting papers that were presented at this internationally representative conference in public economics. The exercise provides insight on where the field of public economics was heading prior to the pandemic and will provide a yardstick to see how the field evolves in the coming years afterward.

     

New development: Procurement and policy outcomes—a bridge too far?

This article furthers the discussion in the March 2015 (Vol. 35, No. 2) issue of Public Money &; Management on ‘Public procurement policy and practice— international lessons and debates’. In particular, it illustrates some of the major difficulties in achieving the required policy outcomes through the procurement processes. The numerous ‘failures’, particularly in the defence acquisitions area, are of ongoing concern both in terms of ‘blow-outs’ in costs and, more unfortunately, in achieving strategic defence capability and overall policy outcomes in required timeframes. Can current public sector reforms and observed better practice provide any encouragement for, discipline on, participants to achieve the required results or is it all just too difficult?     

Exploring Comparative Ratings and Constituent Facets of Public Trust in Risk Regulatory Bodies and Related Stakeholder Groups

This paper reports on two comparative ranking tasks performed by a sample of the British citizens (N = 304). The first was designed to compare levels of relative trust vested in a sample of UK risk regulatory bodies and associated stakeholder groups. The second sought to elicit a ranking of a range of previously identified facets of social trust referenced to their desirability as attributes of a government funded risk regulatory body. The ranking tasks were embedded within a broader programme of research focused on “Evaluating public understandings of and trust in the Health and Safety Executive” (Pidgeon et al., 2003). It is argued that deriving rankings of multi‐faceted phenomena using the method of paired comparisons offers a more robust approach to rating social trust entities than the direct ranking techniques used in previous studies in this area. Results are discussed with reference to qualitative findings from the broader programme of work on public trust in HSE (Pidgeon et al., 2003) and the wider literature on public trust in risk regulation.     

政府采购救济制度设计之理念偏差及其纠正

政府采购救济制度是事关充分有效保障供应商权利、制约采购权及我国加入GPA前国内法律调整的关键问题,其质疑投诉制度过于冗长和救济范围较窄、救济对象欠全面等缺陷也是导致我国政府采购实践质次价高甚至政府采购法制价值虚置的重要原因,对其改造迫在眉睫。理论上看,现行救济制度之弊端并非立法机关的疏漏、立法技术和能力欠缺所致,其根本在于权力导向型制度设计之理念偏差。可见,制度改造不能通过就事论事的具体方面和环节的修补而完成,必须从理念到规则对现行救济制度进行系统检讨,变权力导向型制度设计理念为规则导向型理念,并依新理念统摄政府采购救济制度型构。     

Comparability in IPSASs: Lessons to be Learned for the European Standards

Abstract

In 2013 the European Commission started addressing issues concerning public sector accounting harmonization across EU Member States, embarking on a project to develop European Public Sector Accounting Standards (EPSASs). Although acknowledging the indisputable reference of the existing International Public Sector Accounting Standards (IPSASs), it highlighted that IPSASs, as they were, could not be suitably applied in the EU context (European Commission, 2013a). IPSASs were considered as not covering specific important matters of public sector accounting, not showing enough stability due to the need of constant convergence with IFRSs, and offering several options that compromised comparability.

Comparability of public sector accounts across Member States is one of the main objectives of EPSASs (EUROSTAT, 2016, 2019), clearly established as a qualitative characteristic in the draft EPSAS Conceptual Framework (EUROSTAT, 2018). It is critical for EU economic and fiscal convergence that countries’ accounts allow for substantial comparison and standardized transition to the National Accounts (Jorge et al., 2014).

The IPSAS Conceptual Framework (IPSASB, 2014), meanwhile issued, sustains that adopting these standards would improve comparability of General Purpose Financial Reporting (GPFR), in this way strengthening transparency and accountability of public sector finance.

Given that, despite the above concerns, EPSASs are to be developed on the basis of IPSASs (European Commission, 2019), the purpose of this paper is to show that IPSASs are not an adequate reference for EPSASs in terms of allowing the desired comparability of countries’ accounts in the EU. It relies on evidence gathered from IPSAS-based financial reports prepared by some Agencies of the United Nations System and from audit reports of the UN Board of Auditors.

The research illustrates that IPSASs only allow for de jure comparability of financial reports at a very broad level. Their implementation and interpretation in practice (due to the options permitted and the judgement required) does not allow for de facto comparable GPFR. European standard-setters need to be aware that the comparability EPSASs need to address across EU Member States’ accounts must go beyond the one that is permitted by IPSASs – EPSASs need to stretch IPSASs harmonization to a higher level of standardization.     

Interventionist research in accounting: reflections on the good,the bad and the ugly

Our paper advances understanding of interventionist research (IVR) as a qualitative accounting research approach. It reflects on the potential value, challenges and key issues, as manifested by the good, the bad and the ugly. The reflection contributes towards clarifying the IVR landscape, thereby forging a future path for IVR as a legitimate qualitative methodology, to enthuse qualitative researchers to produce accounting research relevant to theory, practice and society. The primary contribution is synthesising the interventionist theory and practice literature encompassing a view of the good, the bad and the ugly in interventionist accounting research.