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.     

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.     

高校政府采购合同监督管理探析

本文从政府采购合同履行过程中的一些典型案例入手,认为合同签订、合同履行管理的缺位是产生政府采购合同纠纷的深层次原因.文章进一步提出,通过建立合同签订管理、合同履行过程管理、合同变更管理、合同纠纷管理和合同管理制度等一系列措施,强化政府采购管理部门对合同的监督管理作用,进而到达进一步规范合同签订、合同履行等职能管理工作.政府采购活动中引入合同监督管理职能,不但能有效预防或解决上述案例中的一些问题,还对进一步提高政府采购效率有着积极的意义.     

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.     

Debate: Public procurement needs outcome evaluations

This article considers public procurement papers presented at the recent annual conferences of the International Purchasing and Supply Education and Research Association (IPSERA). It reflects on whether the studies presented at IPSERA align with public procurement priorities. It identifies congruence between research and practice, but also areas in which research is leading practice, such studies of sourcing from low-cost countries, service delivery and risk management. Future trends in public procurement research are then discussed.     

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.     

Negotiating contract types and contract clauses in the German construction industry during the Third Reich

This article examines the determinants of contractual form and renegotiations in the German construction industry during the Third Reich. At the beginning of World War II, firms dealt with growing uncertainty by convincing procurement agencies either to use cost‐plus contracts or to include an additional risk premium in fixed‐price contracts. In the later years of the war, procurement agencies initiated renegotiations over contract clauses to reduce the extraordinary profits resulting from information rents and high‐risk premiums. This regulatory course undermined the credibility of the regulatory commitment, thereby weakening the incentives of the fixed‐price contracts still in use.     

Sustainable procurement in health and social care in Northern Ireland

This article reports on a sustainable public procurement project in Northern Ireland. The authors found that limited official guidance was available, especially on equality; nevertheless staff had positive attitudes and sustainability criteria were being embedded in procurement processes. While there is a need to overcome limited knowledge on social aspects and whole life costing, sustainable procurement was found to be compatible with efficiency. Sustainable procurement, if used effectively by confident and well-qualified staff, can achieve not only sustainability goals but also those relating to efficiency and economic recovery.     

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.     

Procurement under public scrutiny: auctions versus negotiations

We compare two commonly used mechanisms in public procurement: auctions and negotiations. The execution of the procurement mechanism is delegated to an agent of the buyer. The agent has private information about the buyer's preferences and may collude with one of the sellers. We provide a general characterization of both mechanisms based on public scrutiny requirements and show—contrary to conventional wisdom—that an intransparent negotiation always yields higher social surplus than a transparent auction. Moreover, there exists a lower bound on the number of sellers such that the negotiation also generates a higher buyer surplus.     

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?     

Subcontracting and competitive bidding on incomplete procurement contracts

This article examines the impact of incomplete contracts on subcontracting and the design of procurement auctions. I estimate the effect of ex post contract revisions on unit costs for both subcontracted and in‐house performed work items on bridge projects procured by the California Department of Transportation. I model a scoring auction showing how ex post revisions skew bidding decisions and estimate unit costs from bid data using the method of sieve estimation. The results highlight the cost implications of incomplete contracting frictions, subcontracting decisions, and bidding distortions. In conclusion, I propose alternative auction mechanisms that could improve outcomes.     

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.     

Fraud Allegations and Government Contracting

This paper examines whether fraud allegations affect firms’ contracting with the government. Using a data set of whistleblower allegations brought under the False Claims Act against firms accused of defrauding the government, we find that federal agencies do not reduce the total dollar volume of contracts with accused firms; however, they substitute approximately 14% of the harder‐to‐monitor cost‐plus contracts for fixed‐price contracts. This effect is concentrated in the procurement of services and explained by contract and service substitution. Finally, we find that after the conclusion of the investigation, the government reduces the contract dollar volume by approximately 15% for cases that resulted in a settlement. Our findings indicate that contract‐design changes are used to mitigate uncertainty in suppliers’ reputation.     

从美国成本会计准则看我国军事采购成本会计准则的构建

美国联邦政府采购成本会计准则建立的根本原因在于美国联邦政府采购中成本类型合同的使用.其与我国军事采购过程中成本类型合同的使用相似.为加强我国军事采购合同成本的管理,有必要构建我国军事采购成本会计准则,而美国联邦政府采购成本会计准则涵盖的内容、豁免条款和范围层次的使用,以及披露报表的编报,对于建立我国军事采购成本会计准则具有积极的借鉴意义.     

The actual evaluation of school PFI bids for value for money in the UK public sector

Much of the literature on value for money (VFM) evaluation of private finance initiative (PFI) contracts has concentrated on the financial methodology of constructing the public sector comparator (PSC) and its limitations. In contrast, this paper focuses on examining how ‘PFI bids’ are actually evaluated for VFM in the case of three secondary school PFI contracts. It is a unique study which presents the Northern Ireland school PFI decision-making processes, within the broader UK context. It is based on the full business cases of three PFI schools and interviews with key actors involved in the PFI processes. This study shows that the methodology used to evaluate and benchmark the design, facilities management, financial and contractual aspects of PFI bids for VFM is subjective and problematic-changes in the assumptions used may easily shift the balance in favour of conventional procurement and/or competing private sector service providers. It further highlights the importance of risk transfer; how non-financial factors are taken into consideration; and the public sector's reliance on consulting firms and ‘accounting measures’ in the PFI decision-making processes.     

Value for money: a broken piñata?

In public management a key driver of effectiveness is value for money (VfM). This paper argues that the VfM concept suffers from conceptual ambiguity, and thus ethical implications arise when VfM is used to legitimize public buying decisions. A conceptual framework, which clarifies properties and boundaries of VfM, is proposed. Empirical data collected from public employees involved in public procurement in Ireland and a perceptual map of subjective meaning and impact of VfM are discussed. While the conceptual framework is broadly supported, it highlights different interpretations of VfM and distinguishes those employees who dent the VfM piñata from those who break it. The implications of the research in this paper include a need for more debate concerning the usefulness of the VfM concept.     

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.     

Broadcasting

Government by contract is replacing government by administrative hierarchy in many fields. There have been some benefits in terms of tighter management and clearer definition of responsibilities but the approach has limitations. This article argues against the view that contracts are the most appropriate means of organizational control in the public sector. Separation of client and contractor can deny public responsibility; contracting out can reduce public accountability to bargaining; and the complex process of governing, involving learning and adapting, cannot be reduced to contracting.     

Modelling Risk Perceptions of Stakeholders in Public–Private Partnership Toll Road Contracts

This paper investigates the risk perceptions of key stakeholder groups typically involved in public–private partnership (PPP) toll roads. Risk perceptions have an important impact on these PPP schemes for investing in public infrastructure. However, the nature and extent of risk associated with the specification of a PPP contract that commits contracting parties to deliver on their obligations remain unclear. In the context of major transport infrastructure, such as a new toll road, the often‐cited key risk to investors is the traffic (and hence demand) risk. There are, however, other risks, including political risk and media risk, the latter often causing untold harm resulting in modifications to the planned infrastructure. This paper develops a method to capture evidence on how public sector and private sector partners involved in previous PPPs perceive the levels of risk associated with each risk attribute, as a way of identifying the ex ante risk setting brought to negotiations in PPP toll road investments. Using a sample of 101 experts with contract experience in 32 countries, we develop a stated choice experiment and estimate a discrete choice model to quantify a risk profile index (RPI) to capture the perceived (relative) influence of each dimension of risk, and then identify sources of systematic differences in the RPI as a way of understanding the influence of personal traits and contextual and contractual factors.