Rethinking the procurement Directives: How many procedures are too many?

Under Directive 2014/24/EU contracting authorities have a suite of procurement procedures to choose from: open and restricted that can be used without any restrictions, competitive dialogue, competitive procedure with negotiation and innovation partnership which require some pre-conditions to be met and the negotiated procedure which is exceptional in nature.

The usage (measured in procedures started) gives us an indication of their absolute and relative popularity for contracting authorities to go about in their procurement function:

It seems to me that it is possible to extract some conclusions from just this basic dataset: while some procedures are more popular than others, it is evident three procedures are struggling to find traction: restricted, competitive dialogue and innovation partnership.

The restricted procedure usage is probably the strangest of the lot. It can be used whenever, but contracting authorities are not using it much. This is in stark comparison with the open procedure which has simply shot up in usage while the numbers for the restricted procedure remain flat. It may be that the changes introduced in 2014 made the open procedure relatively preferable to the restricted procedure and contracting authorities have concluded that having a selection stage to weed out weaker economic operators is not worth the hassle. But I do not think the open procedure by itself can explain this and I am inclined to the theory that the competitive procedure with negotiation has simply assimilated all the potential additional usage of the restricted procedure that could have be done in its absence. It also includes a selection stage and has the added benefit of including negotiations, the mythical concept contracting authorities were dying to use and had been denied for so long. I shall come back to the competitive procedure with negotiation later on.

Moving on to the competitive dialogue, it's usage has stalled in absolute terms and naturally in relative terms as well. It simply is not popular and after 20 years it is obvious it will never be. It is simply the product of a certain moment in time, when some member States wanted a reasonable access to negotiations in public procurement and there was no agreement on this and the minimum common denominator ended up being the competitive dialogue. With the benefit of hindsight, once the competitive procedure with negotiation was introduced with the exact same grounds for use it was evident that contracting authorities would prefer to use it instead of competitive dialogue whose difficulties and challenges on using properly are well known - well, at least for me who wrote my thesis on it.*

Finally, the innovation partnership which hasn't exactly taken the procurement world by storm. On this one I can say that my prediction it wouldn't have much uptake has been proven right. Part of the problem is that it is a "choose your own adventure" kind of procedure that eschews the training wheels of prescriptive details we find on the other ones. No prescriptive rules = decisions to be made = the risk associated with those decisions. Then we also have the - how shall I put it - strange way it was added to the toolkit. As far as I know, the UK put it on the table but that is the end of the story, not the beginning. The beginning I was told in confidence a decade ago this month and it is not the kind of story one can simply blab about. Let's just say it is...interesting. I will give a pointer though: it is the only procedure that can be designed from the beginning to have a single participant in it. Interesting, isn't it?

The presumed connection with innovation is another restriction on the popularity of it. If the contracting authority does not start with conscious initial interest in 'doing innovation' or 'buying innovation' then it won't even consider using the innovation partnership even though it may end up buying innovation in the end. Finally, we also have the 'flywheel effect': usage begets more usage as contracting authorities see their peers using a procedure and being satisfied with the results and their risk aversion assuaged in the process. How do you interpret that a 10 year tool has barely been taken out of the toolbox by your peers? There must be something wrong with it so let's save ourselves the trouble - and risk! - of using it.

What should we do then?

Simplifying a system means chopping things out of it before adding new ones in. Part of the complexity paradox of procurement rules comes that we keep on adding more and more into the procurement system and then be surprised when things aren't simpler. This is a criticism I have made about exclusions and adding objectives to procurement but it is also valid for procedures. We have too many procedures at the moment and that is problematic. It forces contracting authorities to difficult choices, tantamount to splitting hairs: the competitive procedure with negotiation and competitive dialogue are almost interchangeable and what can be pursued with one can for the most part be achieved with the other.

We do not these many procedures and frankly my simplification advice here is to let go of restricted procedure, competitive dialogue and innovation partnership. Self-preservation instincts will surely kick in and those authorities who have used it will say that I am way out of line but it is not me who needs to be convinced about these procedures usefulness: it's their peers.

A system with the open procedure and competitive procedure with negotiation that can be used in alternative will cover the vast majority of needs of contracting authorities and facilitate their decision making process. It will also allow more practice on the latter to develop and it is easier to master competence in three procedures than five. Yes, three.

What about services?

What I propose taking with one hand I give with another. I have believed for a long time that one of the fundamental problems with EU public procurement is that its procedures have been designed for the procurement of works and goods but not services. You just have to look into Directive 92/50/EEC on services and see this original sin: here are the same procedures being used for works and goods but now to be used for services. This was a mistake since services are intrinsically different from works or goods and one that should have been corrected in 2004 or 2014 but better late than never.

We need a specialist procedure for services. The right way to go about designing one would involve doing a needs analysis and sitting a bunch of contracting authorities who purchase services frequently of any kind in the same room and drill them on how they go about doing it, what they struggle with and if the legal framework was not an obstacle how would they do it? Then do the same with service providers but treat that information with extra care.

Sadly I don't see that happening, so as an alternative starting point take the design contest, competitive dialogue and innovation partnership, mash them together and call it the services procedure. We have learned enough especially about competitive dialogue to know where the problems lie to work around them.

As for the design contest specifically, its usage has doubled since 2016 (813 to 1814) and until 2022 it was being exclusively used for services, although in the last couple of years it has been used 47 and 88 times for non-services contracts. It is now twice as popular as competitive dialogue and innovation partnership put together.

  • I was horrified to hear in 2023 that we had exported the competitive dialogue as a procedure to legal systems outside of the EU, well beyond the orbit of accession countries.

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