Ethics in publicprocurementTünde Tátrai Corvinus University of Budapest

Moscow

2014.11.17, 19, 21

x „The people who can best describe corruption arethose themselves engaged in corruption.”

Hillman A.. L. (2004): Corruption and public finance: an IMF European Journal of Political Economy.

Purpose

x Not only methodology

x But practical solutions, worst – best practices

x Comparable data, cultural differences, role of regulation

x Adaptation, implementation

Sustainability and accountabilityDoing things better…

SPPDoes an onlydefinitionexist?

x The strategic and transparent integration andachievement of a public sector organizations’ssocial, environmental and economic goals inthe systematic coordination of keyinterorganizational commercial processes forimproving the long-term performance of theorganizaton and the territorial base for which itis democratically accountable for, in line withoverarching public policy priorities (Preuss2009)

SPPAnotheraspect of Fisher

x„Is is all too easy to focus on rules, regulations and legal technicalities; whileobviously essential, they need to be part of a bigger picture about sustainabledevelopment to enable government toachieve better things through sustainablepublic procurement.” (Fisher, 2013)

SPPSustainable PP WorkshopMoscow 2013

x„How to improve SPP, reduce corruption and use SPP as an instrument of economic growth, and how to apply new research results to do so. „

x http://www.hse.ru/en/news/research/96293755.html

Extention of thedefinition Economic

Social

Environmental

Transparency

Strategy

SPP

Culture

Riskmanagement

Accountability

Society forInternational Development– OshaniPerera

x Why governments need to use their purchasing power when they buy goods, services or infrastructure as a tool to promote sustainable development?

x SPP – when governments begin to integrate environment protection and socialcohesion in their purchasing decisions

x That means to look at value for money across procurement lifecycle and a product, services and infrastructure lifecycle.

x Not just in the purchasing price, because the cheapest is not always the most sustainable.

x And the most sustainable – where the value is.

x The buyer is not typically the user.

- Entity 1 buyer, Entity 2 user, Entity 3 manager

x „ Ideally we need to find multi framework budgeting and accounting flexibility for governments to really makesustainable procurement work. „

http://www.youtube.com/watch?v=Eoe5_zg0JOI

Need for data

EuRelatedstatisticsEcoris studyhttp://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/cost-effectiveness_en.pdf

Utility Classic

Share of total (EUR) 17% 83%

Mean contract (millEUR)

5,9 2,8

Median contract (millEUR)

1 0,35

Offers (mean) 4,4 5,5

Offers (median) 3 4

Time to offer 50 48

Time to award 100 81

1 in 5 tenders receive 1 bid

Costs of PPEcorys studyhttp://ec.europa.eu/internal_market/publicprocurement/docs/modernising_rules/cost-effectiveness_en.pdf

0 10 20 30 40 50

Open

Restricted

Negotiated

Authorities

Pre-award Award Post-award Litigation

0 10 20 30 40

Open

Restricted

Negotiated

Business

Pre-award Award Post-award Litigation

Corruption PerceptionIndex of Transparency International(2013)

Source: http://cpi.transparency.org/cpi2013/results/

0

10

20

30

40

50

60

70

80

90

100

Den

mar

k

Finl

and

Swed

en

Net

herla

nds

Luxe

mbo

urg

Ger

man

y

Uni

ted

Kin

gdom

Belg

ium

Irela

nd

Fran

ce

Aus

tria

Esto

nia

Cypr

us

Port

ugal

Pola

nd

Spai

n

Slov

enia

Lith

uani

a

Mal

ta

Hun

gary

Latv

ia

Czec

h R

epub

lic

Croa

tia

Slov

akia

Italy

Rom

ania

Bulg

aria

Gre

ece

1. 3. 3. 8. 11. 12. 14. 15. 21. 22. 26. 28. 31. 33. 38. 40. 43. 43. 45. 47. 49. 57. 57. 61. 69. 69. 77. 80.

CPI2013Score and rank

0

5

10

15

20

25

30

35

40

45

50

Jordan Romania Italy Bosnia andHerzegovina

Serbia Bulgaria Armenia Moldova Albania Lebanon

66 69 69 72 72 77 94 102 116 127

CorruptionOLAF project

x Measuring the costs of corruption

x “Development of an EU Evaluation Mechanism in the area of Anti-Corruption with a particular focus on identifying and reducing the costs of corruption in Public Procurement involving EU Funds”.

x TED 2011/S 186-303435

x http://ec.europa.eu/anti_fraud/documents/anti-fraud-policy/research-and-studies/identifying_reducing_corruption_in_public_procurement_en.pdf

Olaf Conclusions

x The fight against corruption is however not only carried out by formal public institutions, but increasingly so by informal networks, such as NGOs, press and citizens. Such a change in attitude has at least three major consequences.

x Firstly, decision-makers are under increasing pressure to ensure transparency and reinforce, update and coordinate the national and international anti-corruption agendas.

x Secondly, private and civil actors are increasingly detecting corruption and denouncing corrupt behaviour to the competent authorities. This trend is supported by the creation of whistle-blower systems and protection programmes, which represent a real incentive to share and denounce illegal behaviour, both in private companies and in public institutions. It is also supported by political will, free and properly resourced press, and active social media networks.

x Thirdly, these societal trends and in particular the rise of social media networks provides new opportunities for formal investigators as well, who see an increase in the amount of leads and data to be pursued.

DefinitionsEthical PP, Corruption, Self-cleaning

Forms of unethicalconduct

x Connivance of contracting authorities with tenderers in their mutual interest

x Common preparation of the public procurement procedure.x Unlawful actions during the public procurement procedure.x Providing uneven access to information during the public

procurement procedure.x Overlooking secondary obligations in the performance phase, loose

control.

x Tenderers collaborating in their mutual interestx Submitting coordinated tenders.x Tendering or not tendering for moneyx Dividing the market between each other.

x Abusing (market) position, abusing rights.x Blocking the flow of a given procurement procedure.x Limiting the range of tendering.x Evading the entire public procurement procedure.

Terms

x Unethical behaviour = corruption

x Transparency = publishing all the tender documents

x Probity = symbol

7 stages of developmentof the pp function

x 1. Sourcing and delivering goods and services, focused on getting what is required by users in the right quantity at the right time at the right place.

x 2. Compliance with legislation/regulation becomes the main issue to prevent fraud and corruption.

x 3. Efficient use of public funds, the focus shifts towards not spending more than required or getting the most for a fixed amount of money.

x 4.Accountability, the public procurement function’s main issue shifts towards being able to explain (to the legislature, the general public, the press, etc.) that it is doing its job well: required items are acquired at the best value for money, and there was no fraud in the process.

x 5. Value for money: the scope is broader than before. It is not only costs (or costs vs. quality) that is important in public procurement, but also the value the items and services procured contribute to the organization.

x 6. As a policy tool to achieve broader government objectives, the public procurement function is contributing to the goals of the public sector organization. As such it starts to have an external role as well. It is seen as a supporter of change/reform; it is aiding policy delivery. Common issues are job creation and employment, strengthening the industry, SME / regional development, diversity, innovation, and sustainability.

x 7. Delivery of broader government objectives: public procurement is in the lead for economic/social change, and has the full responsibility for delivering the policy objectives .

SPP

1

4

3

2

Based on IRSPP 7-stages model (Harlandet al. 2007)

6

5

7The seven stages of development and national priorities of public procurement – focusing on ethics, transparency, accountability

Original seven stages of development Lower rankingpriorities

Higher rankingpriorities

1. Sourcing and delivering goods and services

2. Compliance with legislation/regulation3. Efficient use of public funds

4. Accountability Ethics Accountability,transparency,probity

5. Value for money

6. Supporter of broader government policyobjectives

7. Deliverer of broader government policyobjectives

Ethical PPNIGP

x “Conflict of Interest

x Public Procurement professionals shall:

x Avoid any private or professional activity that would create a conflict of interest or the appearance of impropriety;

x Avoid engaging in personal business with any supplier representative or similar person;

x Avoid lending money to or borrowing money from any supplier;

x Avoid any and all potential for nepotism;

x Avoid any overlap of duties in the procurement process;

x Safeguard the procurement process from political or outside influence.

x Conduct with Suppliers

x Business dealings with suppliers must be fair and transparent. Procurement shall:

x Refrain from showing favouritism or being influenced by suppliers through the acceptance of gifts, gratuities, loans or favours;

x Safeguard supplier confidentiality;

x Refrain from requiring suppliers to pay to be included on an approved or preferred supplier list;

x Refrain from requesting donations of goods or services to the public entity;

x Select suppliers on the basis of meeting appropriate and fair criteria;

x Discourage the arbitrary or unfair use of purchasing leverage or influence when dealing with suppliers;

x Avoid the exertion of undue influence or abuses of power;

x Treat all suppliers fair and equal.

x Corruption

x Public procurement professionals who become aware of any corrupt activity have a duty to the profession and to their employing organizations to alert their management and/or elected officials. Public procurement shall not tolerate bribery or corruption in any form.”

x The NIGP definitions and content were simplified and shortened.

Self-cleaning

x Clarification of the relevant facts and circumstances: the company has to assist in order to clarify the facts and the responsibility of all persons involved in a comprehensive manner.

x Reparation of the damage caused: it is required to repair the financial damage caused.

x Personnel measures: the company has to ensure that all persons who have been strongly involved in the wrongdoing are dismissed.

x Structural and organizational measures: the company has to verify organisational preventive measures, reviews, guidelines and take care of the future.

x Arrowsmith et al. (2009)x „the firm that might be

excluded from public procurement procedure because of some kind of wrongdoing should be admitted to the self-cleaning process, on the basis that it has taken measures to ensure that the wrongdoing of the past will not occur again in the future”

Role of regulation

CSR and PP (McCrudden, 2006) 1

xPP is not an extraordinary adaptable toolwhich has often been used to meetregulatory need when other methods of regulation are not considered acceptable, available or effective.

xDeveloping CSR – fair trade, reducing theuse of child labour….

x„Integration of social and environmentalconcerns in business operations…”

Why the publicsector? (basedon Preuss)

x The public sector is responsible for providing a range of services many of which have directimplications for sustainability, such aseconomic development, wastedisposal…(Wilson and Game, 2006)

x PP could use on its purchasing power todevelop markets for more sustainable productsthat otherwise might not emerge… (Erdmenger, 2003)

Next step?xKattel, Lember: Public Procurement ad

an Industrial Policy Tool: an option fordeveloping countries (JOPP, 2010)

Why and how? - based onFisher’squestionnes,2013.

x What sustainable development goals does a public authority intend to contribute to and how will these goals be achieved?

x How will sustainable procurement be balancedwith other objectives that enter intoprocurement decisions, including rationalesunderpinning demand for lowest price and those that ensure the integrity of marketsthrough open competition?

x Is it possible to bring together economic, socialand environmental goals without generatingcontradictions?

Fighting courruption

Transparency

Supporting environmental

protection

Easing up the fiscal crisis by slowing

down public procurements

Supporting social considerations

Efficient spending of

public money

Increasingemployment

Supporting SMEs

Decreasing go-round debt

Tátrai T., Nyikos Gy. (2012): Uses and Abuses of Public Procurement in. Albano et al. pp. 34.

The role of regulation in fighting against corruption

2004/08/EC

x Transparency and publication;

x General consideration in the awarding phase of the procedure;

x Communication between participants of the procedure;

x Statistical obligations and monitoring.

x

2014/24/ECx Transparency and

publication;

x Conflict of interest;

x General consideration in the awarding phase of the procedure;

x Communication between participants of the procedure;

x Statistical obligations and monitoring;

x Illicit conduct.

Rolfstam(2012) aboutEU PP

x „problems currently slowing down the adoption of public procurement of innovation practices areexclusively of legal nature.”

x Lack of procurement competence

x Lack of legal competence

x Lack of reasources

x Lack of political support

x Lack of understanding for stakeholders” needs

x Lack of supplier understanding of procurement process

x Risk averseness

x Lawyers’ inadequate interpretation of the possibilitiesgiven by the regulation

BalanceRolfstam(2012)

x „The rules for public procurement must strike a balance between maintaining transparencyand competition in order to save tax-payersmoney, prevent fraud on one hand, and allowfor interaction, negotiation and uncertainty, which is critical for innovation to take place, onthe other hand.” (Rolfstam M. (2012))

Worst and bestpractices

Transparency and Corruption

x „countries that adoptmore „transparentprocurement”, ascalculated by the shareof tender advertisedpublicly, are also theones where corruption is considered more pervasive”.

x Coppier R., Piga G. (2007): Why dotransparent public procurement and corruption go hand in hand? in Piga G., Khi. V.T. (2007): The economics of publicprocurement..

http://www.knowledge4innovation.eu/events/SitePages/Dinner_Debate_Procurement.aspx

Red flegs

xThe procurement process is examined inrelation to three stages of procedure:

x preparation of specifications, x selection of tenderers, and x execution of contracts,

xwithin each of which some specific risks(red flags) are identified.

x Dorn N. et al. (2008) "Do European procurementrules generate or prevent crime?", Journal of Financial Crime, pp.243 - 260

Best Anti-Corruption practices

xThe key principles by Greenwood-Klots(2009) for best anti-corruption practicesin public procurement are

x transparencyx good management and the prevention of

misconductx monitoring compliance, accountability and

enforcementx Greenwood M., Klotz J. M. (2009): The Fight Against Corruption in

Public Procurement: an introduction to best practices in. García R. H. (2009) edt. International Public Procurement.

ReputationsystemPicci L. (2007)

xPicci proposes a governance model of public works that relies on an internet-based „reputation system”.

x„It allows for the routine production of statistics that are useful for monitoring purposes and it provides a coherent framework to limit rent-seeking and corruption.”

Celentani M. et al (2000)

x They computed the equilibrium level of corruption, and they studied the impact on corruption of the competitiveness of the environment, and in particular of:

x an increase in the number of potential suppliers of the goods or services to be procured,

x competitive (rather than collusive) behaviour of procurement agents, and

x an increase of competition in the market for procurement agents.

x They identified the effects that “influence the equilibrium level of corruption and showed that, contrary to conventional wisdom, corruption may well be increasing in competition”

Probity as the main principle of public procurement regulation

„existence of a clearly corrupt and anonymous bureaucracy is commonlyknown, bidders will engage in activebribing…”(Büchner et al. (2006): Bribery and Public Procurement)

McCue (2007)

x“purchasing professionals in the public sector continue to have to balance the inherent tensions between maintaining control of the purchasing function and loosening the bonds of bureaucracy.”

MandatoryCode of EthicsRobert (2010)

x “The heavy focus on compliance with criminal and civil prohibitions tends to obscure the fact that non-criminal or non-civil ethics violations have the ability to severely damage public trust in the integrity of the procurement process.”

Integrity pactTransparencyInternationalhttp://www.transparency.org/whatwedo/tools/integrity_pacts/3/

x TQM, agreement

x Integrity Pacts are a tool for preventing corruption in public contracting. They are essentially an agreement between the government agency offering a contract and the companies bidding for it that they will abstain from bribery, collusion and other corrupt practices for the extent of the contract. To ensure accountability, Integrity Pacts also include a monitoring system typically led by civil society groups (often our chapters).

Comparison of red flag tools

Public

procurement

specific

Focuses on

the entire

procurement

activity

Based on

existing

data

Based on

interviews and

additional data

queries

Focuses on

prevention

Focuses on

subsequent

audits

TI Due

Diligence

tool

x x x

TI Integrity

pact

x x x

World Bank

tool

x x x x

OECD tool x x x

PWC-

Ecorys

x x x

TI Red Flag

tool

x x x

How to keepbureaucrateshonest? Shead (2008)

x “the use of probity audits has flourished in the public sector in recent years.”

x “These guidelines tend to focus on competitive procurement processes and ignore broader factors applying to other processes in which probity audits are also used. Further, as there are no professional standards governing a probity audit, it is important that agencies have a clear understanding of their benefits and limitations and of the skills and experience required of a probity auditor before they commission one.”

ProbityplanningBeth (2006)

Probity planning

x Determine whether a probity auditor and/or adviser is needed □

x Obtain conflict of interest declarations from team members □

x Obtain confidentiality agreements from external participants □

x Finalise the probity plan, if one is being used □

x Consider confidentiality requirements □

x Set up physical security procedures, such as the document register or data room □

x Ensure team members are familiar with all relevant policies and documents □

x Set up procedures so all potential suppliers have access to the same information □

Procurement processx Review probity at the end of the bid

preparation process □x Set up a process for receiving, recording

and acknowledging submissions □x Set up a procedure for opening the bid

box □x Document any changes that occur, and

notify all potential suppliers □x Ensure evaluation of submissions is fair,

consistent and competitive □x Review probity at the end of the

evaluation process □x Notify the successful bidder as soon as

possible □x Notify the unsuccessful bidders as soon as

possible □x Debrief unsuccessful bidders □x Ensure all actions are documented, and

the documents are stored appropriately □x Review probity at the end of the process □

Recommendations

x There is a need to develop an independent monitoring system capable of collecting and comparing data with a unified methodology and logic, and of giving a real picture of the size of the public procurement market.

x Real transparency serves prevention. It is not enough to make electronic public procurement obligatory when monitoring systems are not capable of providing all the documents of a procedure to controlling bodies automatically, and of tracking the main data of concluded contracts in a comparable and controllable way from year to year. The aimless supplying or uploading of data on to different websites is virtual transparency only, and does not serve the interest of public procurement.

x Knowing best practices and incorporating them into regulations are not only playing with words. “Probity” as a principle of public procurement applies to the preparation phase, communication between parties, the evaluation process, the performance control and the amendment of contracts. The purpose is not to hinder corruption by administrative obstacles but to prevent it. Beside traditional regulatory content (mandatory exclusion of economic operators), it is necessary to make “probity auditing” be part of the regulatory background.

Sustainable Public ProcurementMoscow

17-21.11.2014.

Tünde Tátrai

Best value for money

x „A gradual change on how to evaluate successful procurement, in both theprivate and the public sector has occurred in recent years. Indeed, in so far aseconomic efficiency is concerned from a price-only criterion for measuringsuccess, decisions have shifted to a multi-criteria approach where variousdimensions of quality, as well as price, are considered. The most common wayto express such a shift is to say that procurement should deliver "best value formoney" (BVM). That is, to award the contract, both monetary and non-monetary components of an offer are to be considered.” (Dimitri (2013))

x

x Article of the day: Dimitri N. (2013): „Best Value for Money” in Procurement. Journal of Public Procurement, Vol 13, Issue 2. 149-175.

x

x Main questionnes: How to handle the life-cycle perspective in publicprocurement?

x

x Additional question: Sustainable Public Procurement and Single Market – Is there a conflict of interest?

x

x Additional article: European Procurement and Public Private Partnership Law Review 1/2013. pp. 31-40.

PositioningBVM

x „BVM integrated ideas of economy, efficiency and effectivenessinto decision-making” (Fisher, 2013)

x „False choice if often posed between value for money or efficiencyand sustainability…” UK Gov Report. 2006

BVM

x Evaluating successful procurement

x Economic efficiencyx Price-only criterion for measuring successx Multi-criteria approach – where various dimensions of quality, as

well as price consideredx Quality, technical merit, aesthetic and functional characteristics,

environmental characteristics, running costs, cost-effectiveness, after-sales service, technical assistance, delivery date, period of completion.

UNCITRAL Model Law 2011

x Main objectives of pp:x Maximizing economy and efficiency in procurementx Fostering and encouraging participation in procurement

proceedings by suppliers and contractors regardless of nationality, thereby promoting international trade

x Promoting competition among suppliers and contractors for thesupply of the subject matter of the procurement

x Providing fo the fair, equal and equitable treatment of all suppliersand contractors

x Promoting the integrity of, and fairness and public confidence in, theprocurement processes

x Achieving transparency in the procedures relating to procurement

BVM and theEU

x „the public sector developed a gradual change in emphasis forassessing procurement success, from a price only type-of-criterionfor a specified quantity and quality, more towards the so called„best value for money” criterion where the attractiveness of an offer is evaluated considering, jointly, the monetary and non-monetary components of a proposal (Dimitri, Piga, Spagnolo, 2006)

UNOPS

x „BVM is one of its main goals and defines it as „the trade-offbetween price and performance that provides the greatest overall benefit under the specified selection criteria. Application of thebest value for money principle in the procurement process meansselection of the offer which presents the optimum combination of factors such as appropriate quality, service, life-cycle costs and other parameters to best meet the defined needs”

Life-cyclecosting – an example

x http://www.youtube.com/watch?v=VLR9KjPbmLk

Questionnesbefore pp

x Which awarding criterion is best?

x Is it preferable to use an openor a restricted procedure?

x Is it best to negotiate with thepotential suppliers or organizea competitive bidding?

x How should we proceed in caseof comlex projects and, evenmore so, when theprocurement is seekingradically new solutions?

x How should we introduce theappropriate incentive orpenalty schemes to preventcontract breaching and performance failure by thesupplier?

x How should the proposedquality level before awardingthe contract be verified?

x How should we monitor and enforce it while being executed?

x How should we allocaterelevant risks?

x How can we avoid future and inefficient lock-in with a singlesupplier?

Be carefulx „in a multi-criterion decision framework, the relative importance

of the various components of an offer must be carefully screenedsince otherwise misrepresentation of the buyer’s preferencescould seriously hider procurements’ success (McDonald, 2008)

„Carefulprocurement’

x BVM requires careful procurement design and planning, as well asmonitoring, in all three main procurement phases

x Design and planning - Before a procurement contract is awardedx the timex Monitoring - After the contract is awarded

Green

x Main questionnes: Should the procurement procedure be green or theperformance of the contract?

x

x Article of the day: Palmujoki A., Parikka-Alhola K., Ekroos A. (2010): Green Public Procurement: Analysis ont he Use of EnvironmentalCriteria in Contracts. Review of European Community and International Environmental Law 19 (2) 2010.

x

x Additional question: What kind of managerial values do we want toachieve?

x

x Additional article: Coggburn J. D. (): Achieving managerial valuesthrough green procurement? Public Performance and Management Review, Vol 28. Nov. 2. 12.2004.

x

x Labels, label, labels

Definitionagain…

x „Green public procurement is about setting environmental criteriawhile complying with the legal principles of the free movement of goods, transparency and equal treatment of bidders. Important inlegal matters is the objectivity of the award criteria, so that theyare linked to the subject matter of the public contract in question. In some cases this linking needs, however, at least some kind of justification related to requirements and their importance from an environmental point of view. Generally, if a purchaser wishes toaddress detailed environmental issues in contract award criteria, these requirements may also need more precise justification.” (Palmujoki A., Parikka-Alhola K., Ekroos A. (2010))

EUCJ

x Helsinki Bus Casex The environmental requirements shocul be linked to the subject

matter of the contract and should not give the contracting authorityunrestrictd freedom of cho8ice.

x Wienstrom Casex It was acceptable to make use of environmental award criteria, even

if they did not provide an immeidate exonoic benefit to thecontracting authority.

x In the case the bidder had to prove that they would supply at least a minimum amoiunt of electricity per year form renewable energysources wquivalent to the estimated annual consumption of the federalservices.

x It was admissible to establoich an award criterion that was related tothe production methord of the purchased product, if this wasrelevant for the product.

EUCJ

x „All production-process-related criteria (eco-labelling schemes) can be cinsidered as appropriate for defininig a product in atendering procedure provided that the criteria are measurable and verifiable (emission, noise), so as to treat bidders in te same wayand allow effective verification of bids against tender documents, and that the criteria concern the production of the products whichare to be supplied to the purchasing authority.”

Environmentalcriteria

x Technical specifications – material selection, chemical content, characteristic of a product

x (Right to exclude – previously has been found quilty of graveprofessional misconduct – exeptional)

x Minimum requirements - ISO

x Awarding criteria

x Contract clauses, ual obligations – level of execution of environmentalprotection in the performance phase of the goods and services, method of transport, recycles of re-uses any packaging that comeswith the product, environmental management system, reporting, monitoring of environmental data, waste treatment

x Corrective measure, terminating the contract, paying liquidateddamages

x Breach of contract does not exist if it does not have a significant of substantial meaning to the buyer

x Equality and proportionality

Social

x Main question: Does the umbrella term ‘sustainable procurement’ help us to understand the commonalities of social and greenpublic purchasing, or serve only to camouflage their essentialdifferences?

x

x Article of the day: McCrudden C. (2004): Using public procurementto achieve social outcomes. Natural Resources Forum 28 (2004). 257-267.

x

x Additional question: Does gender equality aspect exist in publicprocurement?

x

x Additional article: Medina-Arnáiz T. (2010): Integrating genderequality in public procurement:the Spanish case. Journal of Public Procurement. Vol. 10. Issue 4. 541-563.

x Fair trade, fair trade, fair trade

Definitionagain…

x „There remain tantalising issues concerning how similar ‘green’ procurement is to social procurement, including

x the extent to which these two sets of initiatives complement orcut across each other. This will clearly affect the extent to whichacceptance of international or regional standards in the area ofsocial procurement will be possible in the context of sustainableprocurement. „ (McCrudden C. (2004))

McCrudden(2004)

x How similar green procurement is to social procurement?

x Which social procurement raises different legal and policy issuesregarding their compatibility with international and regional legalframeworks?

x Labour standards and unemployement

x Employement opportunitis of disabled workers

x Racial equality

x Promoting human rights transnationally (ILO)

Genderequality

x Teresa Medina-Arnáiz (2010) – Spanish case

x „the principle of equal treatment between women and men, aswell as the express prohibition of any type of discrimination on thegrounds of gender can be seen as a guiding principle for legalsystems and as such, should be integrated and observed in allpublic action (gender mainstreaming)

x Contractor selection phasex Award criterax Condition for performance of contracts

Socialresponsibilityprocurementin East AsianStates

x David Seth Jones (2011)

x Social responsibilityx Supporting SMEsx Creating opportunities for small or start up venture firmsx Fostering environmental sustainability through green purchasing

and environmentally sustainable constructionx Promoting work safety in site management in public works.

Further preferences

China, Korea – specializing in innovative products

Developing countries – meet global standards of environmentalsustainability and work safety, and earn respect as tradingcountries

Marketing power, pubic image, reputation

Innovative thinking

x Main questions: Good rules of bad rules do we have in publicprocurement? Is it really the question?

x

x Article of the day: Rolfstam M. (2012): Good Rules of Bad Rules inPublic Prourement of Innovation: But is it Really the (Right) Question? Halduskultuur – Administrative Culture 13 (2), 109-129.

x

x Additional queation: Is lean thinking the answer?

x

x Additional article: Schiele J. J., McCue C. P. (2011): Lean thinkingand its implications for public procurement: moving forward withassessment and implementation. Journao of Public Procurement, Vol. 11. Issue 2. 206-239.

x „The rules for public procurement must strike a balance betweenmaintaining transparency and competition in order to save tax-payers money, prevent fraud on one hand, and allow forinteraction, negotiation and uncertainty, which is critical forinnovation to take place, on the other hand.” (Rolfstam M. (2012))

PP and Innovation

x Edler, Georghiou (2007)

x Part of the innovation policy

x Mobilising innovation and at the same time better achievingpublic policy goals and delivering better service to the citizens

Rolfstam(2012) aboutEU PP

x „problems currently slowing down the adoption of publicprocurement of innovation practices are exclusively of legalnature.”

x Lack of procurement competence

x Lack of legal competence

x Lack of reasources

x Lack of political support

x Lack of understanding for stakeholders” needs

x Lack of supplier understanding of procurement process

x Risk averseness

x Lawyers’ inadequate interpretation of the possibilities given bythe regulation

Thank you for yourattention!Tunde.tatrai@uni-corvinus.hu