08-14-2007, 05:04 PM
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Procurementtips Member
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Join Date: Sep 2006
South Africa
Posts: 21
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Public Procurement - Negotiation and Contract Practices
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Public Procurement Policies Erode Value, Results
IACCM members believe that Public Procurement policies and negotiation behaviour in the European Union diminishes value and raises costs by an average 28%. Topping their list of complaints is that public procurement policies frustrate communications and prevent the type of collaboration that is necessary to support complex, high risk relationships.
The IACCM study was conducted in May / June 2007 and attracted input from 20 of the largest international providers of complex IT, software, communications and outsourcing services
All survey participants claim to have entered 'no bid' or to have withdrawn from opportunities due to unreasonable contract terms. But more importantly, they believe that the poor quality of public sector communications results in ill-defined requirements and weak change processes, eroding value and increasing costs and probability of failure.
"Many times, it seems like the procuring agency almost sees failure as inevitable and that the whole process is focused on avoiding accountability or blame," comments one senior executive. Several respondents highlighted the unhelpful role of third parties, especially law firms, that seem to focus only on allocating risks and, since they have no continuing involvement, show little concern about governance or performance management.
The key point that emerges is the weakness of requirements and the absence of high quality governance procedures. These characteristics mean that risks are substantially higher - so the focus on risk-related terms (performance undertakings, onerous payment clauses, unlimited liability etc.) is inevitably confrontational.
"Quite obviously, the procurement agencies have a responsibility to safeguard the public interest. But it often seems to be forgotten that suppliers have no vested interest in failure. The nature of their observations in this research certainly suggests that current policies do not work - at least when it comes to these major, high profile projects," observed Tim Cummins, Executive Director of IACCM.
Survey participants received a full copy of the survey results and will engage in further discussion based on the consolidated findings, which are also being shared with relevant Government agencies
Do these findings reflect your experience with public procurement? To what extent have different geographies been successful in finding better ways to balance the public interest and commercial practices? Send your views to info@iaccm.com.
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