Public procurement proposal is not simple enough

Danish municipalities spend millions on composing EU procurement material. New proposal makes the process easier, but not easy enough both municipalities and MEP says.

By Elise Patricia Rasmussen

The sun is peeping through the office window telling that the spring has arrived. Most people welcome it with open arms, but for Jerrik Park Bisgaard it means more work, that he doesn’t have time to do.

He is landscape engineer at Aalborg Municipality and his job consists among other things in supervising the cultivating in the green areas and contract management, but devising procurements takes time away from these tasks.

11 % of GDP

Outsourcing has been regulated be the EU since the seventies but now more than 30 years later it still doesn’t function in a way that satisfy everyone.

Today the European public market’s total value is about 11 % of the EU countries combined GDP or 5000 billion Danish kroner and this amount is increasing year after year.

The current public procurement directive is very complicated and the main critique is namely that is too bureaucratic, too comprehensive and too difficult to fully understand for the employees.

Room for improvement

In practice the directive means that all public procurements above a certain value are under EU law and not more simple national laws.  In Denmark this leads to very high cost just on producing the procurement proposals and this is even though it almost never results in bids from foreign companies.

The municipalities and regions have complained about these legislations for years and in December 2011 the Commission finally came with a proposal to a new and simpler public procurement procedure.

 

  • Threshold values

    The current threshold values for procurements in municipalities are:

    Products:                                       1.489.820 DKK

    –          Partial agreement:       595.928 DKK

    Services:                                        1.489.820 DKK

    –          Partial agreement:       595.928 DKK

    Constructions:                          37.245.500 DKK

    –          Partial agreement:    7.449.100 DKK

 

But both the municipalities, regions and several Members of the European Parliament are still not satisfied. As MEP Emilie Turunen, vice-chair Group of the Greens puts it:

“There is definitely room for improvement.”

Companies can complain

Back at the sunny office in Aalborg, Jerrik Park Bisgaard sits behind his desk working on the latest procurement on streams and creeks.

“I haven’t done anything but procurements the last three months,” he says and tells that one single procurement easily takes 1000 working hours for him, the lawyers and an extern consultant.

Almost all procurements in his department mount up in more than the threshold values and then he has to follow the EU directive instead of the Danish law.

Jerrik Park Bisgaard spends most working hours behind the desk putting together procurements. Photo: Elise Patricia Rasmussen.

Other than the demand on publishing the procurement to all of EU, the biggest hurdle is a wide range of opportunities for the companies to complain, and this makes the process very complicated, Jerrik thinks.

“Then the EU mill runs and there is 5 billion thinks to keep track on and 5 billion pages up and down with rules.”

No bids from foreigners

At Aalborg Municipality procurement contract function, manager Jan Nielsen, that mostly handles the purchase of products, has the same experience as Jerrik Park Bisgaard. He thinks the threshold values are too low.

 

“When I buy pens or soap to 20.000 employees it quickly adds up to one and a half million.”

Neither Jan Nielsen nor Jerrik Park Bisgaard experiences bids from foreign companies the last years. Jan only remembers one bid on electricity equipment, where no Danish companies had the expertise and they needed bids from outside the borders.

A study from Momentum backs it up. Only 13 % of the Danish municipalities or regions have experienced to sign a contract with a foreign bidder.

Bureaucratic procurement

The same study shows that 94 % of the procurement managers finds the rules too bureaucratic and too resource demanding.

It was the Commission’s goal to simplify the system with the new proposal, but according to a recent Danish hearing it is not the case.

Major organizations such as Danish Regions, KL (National organization for the municipalities), the Finance Council, Danish Construction and Danish Business answered and they all agreed on one thing: The procurement process is not simplified by this new proposal.

No clear yes or no

MEP Emilie Turunen, vice-chair Group of the Greens and member of the Committee on Internal Market and Consumer Protection, IMCO, backs up the municipalities.

“They are being buried in paperwork even in very small procurements and we have to do something about it,” she says and elaborates:

“It needs to be much simpler than what the Commission has suggested and the threshold values could be higher.”

Also MEP Morten Løkkegaard, member of Alde and the IMCO committee, thinks the proposal is far from the simplification everyone had hoped for, and according to his political assistant he will propose some amendments.

Emilie Turunen and Morten Løkkegaard have not decided whether to vote for or against.

The Commission aims that the proposal will pass no later than the exit of 2012.

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