Spending Public Money Wisely

Public procurement has been in the spotlight this month, and for good reason. We like to think our taxes are being well spent. As Jeff Kennett put it:

“If people want to mess up their own money, that’s fine, but when people are spending public money, they have got to be accountable.”

Having achieved savings of 30% under current procurement rules, the EU is now looking for additonal savings through new procurement policies. Even the 5% improvement estimated to be made through e-procurement translates into very large savings, when you consider the numbers involved:

  • Total public sector procurement across the EU15 countries is EUR 1,500 billion
  • Total spend is equivalent to the GDP of France
  • Total spend is more than the annual global sales of the automotive industry

Greater use of competitive tendering has been a big contributor to savings achieved thus far. The number of invitations to tender doubled between 1995 and 2003, and currently stands at 113,000 notices per annum.

One of the new EU proposals likely to cause a stir is the introduction of a standstill period of, say, 10 days, between publication of a contract award and the date of signature. The idea is to give aggrieved parties (ie, losing tenderers) the chance to challenge a decision before it’s actually signed, so there’s a greater chance of finding a pre-contractual remedy. Under the proposal, contracts signed during the standstill period would be wide open to challenge for a period of 6 months.

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