Public Procurement Regime Research Articles

Innovative bidding law and consortia for the World Cup and Olympic Games in Brazil

The objective of this research was to describe the types of business networks formed to meet the requirements established by the new bidding law, the Differential Public Procurement Regime, the innovations of this bidding system and the effect on the construction supply chain. This is a descriptive study based on a qualitative–quantitative analysis of a case study of road works on BR-381/MG, in Minas Gerais, Brazil. The units of analysis were the bidding documents, respective contracts, and the construction sites. The results showed that 40 companies took part in the bidding process in 13 cooperative consortia, 8 of which were vertical and horizontal networks, and 5 were vertical networks. An incremental innovation related to the project delivery method was identified between the government and construction companies in Brazil by means of integrated design and build procurement, which changed relationships within the construction supply chain by moving the design supplier into the contractor consortium and improved supply chain management. Moreover, inversion of stages by the new bidding law has increased agility in procurement of public works, as prices are analyzed prior to the other documents.

Innovation Partnership in the New Public Procurement Regime A Shift of Focus from Procedural to Contractual Issues?

At the beginning of 2014, the European Parliament and the Council adopted the new directive on public procurement. Inter alia, the new Directive introduces a new procedure called the innovation partnership. The availability of the new provisions maybe valuable particularly from the perspective of complex contracts, which are characterised as mixed contracts.This is because the innovation partnership has a potential to enable a contracting authority to procure complex contracts with more than one type of subject matter regarding development of innovation and its delivery. On the one hand, the innovation partnership has a potential to overcome the primary challenge and uncertainty regarding the usage of a two-stage procedure divided into pre-commercial and commercial procurement, relating to the unfair competition and the conflict of interest that may occur based on cooperation within the pre-commercial phase. On the other hand, the establishment of an innovation partnership may be seen not only as an answer to existing challenges, but also as a new way of realising the objective of a smart, sustainable and inclusive growth that characterises the Europe 2020 strategy. However, at the same time the application of the innovation partnership provisions may pose certain challenges. The aim of this article is to identify and discuss these challenges. To achieve this aim firstly, the scene for the discussion will be set by a presentation of background information. Secondly, three methods of procuring innovation will be discussed: first, the pre-commercial procurement; secondly, delivery of innovation throughout the competitive dialogue procedure; and, finally, the newly introduced innovation partnership. Thirdly, particular attention will be given to the innovation partnership provision in the Directive. Focus will be given to the proposed procedure and structure of the partnership. Fourthly, the article will consider what new solutions the new procedure introduces. Finally, the last section will conclude the discussion.

Institutionalised Public-Private Partnership (IPPP) as a Mixed Contract in the Regime of the New Directive 2014/24/EU.

This article points out that procurement law is likely to have the side effect of hindering the development of IPPP contracts by introducing uncertainties regarding IPPP contracts´ classification for the purpose of its procurement. Keeping in mind the Commission´s policy of promoting IPPP contracts across the EU and the potential of IPPP contracts to deliver better quality, more innovative and on time projects as well as their ability to secure better value for money it is argued that such a state of affairs is unwanted. Therefore, the author claims that the Court of Justice (CJ) and the Commission should recognize IPPP contracts as indivisible mixed contracts and establish requirements that need to be fulfilled for such an indivisibility to be granted. The purpose of this article is to discuss the EU public procurement regime established in Directive 2014/24/EU1 (further: the Directive) as a framework for the award of IPPP contracts and the impact of IPPP contracts´ characteristics on the complexity of the tender process. Even though the new procurement directive introduces a number of simplified rules and procedures, still the questions regarding IPPP contracts´ classification and uncertainties following from recent case law stay present. The fundamental bases for the discussion are the outcomes of the Loutraki case and the Oulun kapunki case.

Firms’ experience of SME-friendly policy and their participation and success in public procurement

Purpose – The purpose of this paper is to test the relationship between firms’ experience of small- and medium-size enterprise (SME)-friendly policy and their participation and success in public procurement. Design/methodology/approach – Hypothesised relationships between SME-friendly policy and three outcome variables – frequency of tendering, success rate in public contract competitions, and commercial orientation towards the public sector – are tested using survey data from 2,755 SME respondents. Findings – SME-friendly policy is found to be significant in explaining success rates and commercial orientation towards the public sector marketplace. It is not significant in explaining frequency of tendering. Research limitations/implications – The context for the study is Ireland. However, given institutional similarities in national public procurement regimes, particularly among EU Member States, the findings have relevance beyond the Irish context. The research design is cross-sectional and so does not allow for any causal claims to be made. Originality/value – This study puts forward and tests an original model of SME-friendly procurement policy and its associated outcomes for firms. It develops a comprehensive 16-item instrument to measure SME-friendly procurement policy. It uses SMEs as research informants instead of public buyers.

Israel's Public Procurement Regime International and Comparative Aspects

English Abstract: This article aims to describe and analyze Israel’s public procurement regime, including its system for judicial review, with a special emphasis on its international and comparative aspects. It discusses the history and origins of Israel’s public procurement law, while showing the central role played by the Israeli Supreme Court in creating and developing this law. It also shows that when regulation moved from general (judge-made) principles to detailed (legislated) rules, the system became too rigid and too legalistically bureaucratic and agencies felt that they were unable to accomplish their objectives. This led to the an attempt to reform the system in 2009, by expanding the arsenal of tendering procedures available to procuring agencies, so that they would be more flexible, and to modernize the procurement system by introducing new technologies including electronic procurement. The article shows how these changes were influenced by foreign legal systems (mainly the EU and the US) and by international instruments, such as the UNCITRAL Model Law and the GPA. The reform also decentralized the exemption authority, granting it to each and every procuring entity. By an original analysis of official statistics, the article shows that the new tendering procedures are seldom used, that the pace of introducing electronic procurement is painfully slow, and that there has been a dangerous surge in the number of exemptions from public tendering, which probably is a result of the decentralization.The chapter also discusses Israel’s international commitments in this field, mainly under the plurilateral GPA, but also under other bilateral international agreements. These commitments are discussed on the background of Israel’s existing domestic preference polices. Finally, the chapter discusses Israel’s bid challenge system, which is performed exclusively by the judiciary, and how it serves to satisfy the obligation under the GPA to provide for an effective and independent bid challenge system. It also presents figures on the actual use of this system and on the average success rate of petitioners. The article concludes with the discussion of a recent case, which implemented GPA rules and dismissed the demand of the local producer to receive preferential treatment.תקציר בעברית: מאמר זה מטרתו לתאר ולנתח את משטר דיני המכרזים הציבוריים של ישראל, לרבות מערך הביקורת השיפוטית שלהם, עם דגש מיוחד על היבטיו הבינלאומיים וההשוואתיים. הוא דן במקורותיו ובתולדותיו של דיני הרכש הציבורי בישראל, ומראה את התפקיד המרכזי ששיחק בית המשפט העליון ביצירתו ובפיתוחו של תחום משפטי זה. המאמר מראה גם שכאשר הרגולציה עברה מעקרונות כלליים, פרי יציר הפסיקה, לכללים פרטניים סטטוטוריים, המערכת הפכה לנוקשה מדי ולבירוקרטית-לגליסטית מדי, באופן שגרם לרשויות לחוש שהן לא מסוגלות להשיג את מטרותיהן באמצעותה. תחושה זו הובילה לניסיון לבצע רפורמה בתחום זה בשנת 2009, באמצעות הרחבת ארסנל שיטות הרכש העומדות לשימוש היחידות הרוכשות. שיטות אלה נועדו לאפשר יתר גמישות ומודרניזציה של משטר הרכש באמצעות הכנסת טכנולוגיות חדשות, לרבות רכש אלקטרוני (מכרז ממוכן). המאמר מראה איך שינויים אלה היו מושפעים משיטות משפט זרות (בעיקר של האיחוד האירופי ושל ארהב) ומקודים בינלאומיים, כגון החוק לדוגמה של האום על רכש ציבורי והסכם הרכישות הממשלתיות של ארגון הסחר העולמי. הרפורמה גם ביזרה את סמכות הפטורים והעבירה חלק גדול ממנה לכל אחד מהגופים הרוכשים. על-ידי ניתוח מקורי של הסטטיסטיקה הרשמית שהתקבלה מהחשב הכללי, המאמר מראה שהשימוש בשיטות הרכש החדשות הוא נדיר ושחלה עליה מדאיגה במספר הפטורים מחובת מכרז (עד כדי 85% מכלל הרכישות!) ככל הנראה כתוצאה מהעברת סמכות הפטור מוועדת הפטורים המרכזית של החשכל אל היחידות הרוכשות.המאמר דן גם בהתחייבויות הבינלאומיות של ישראל בתחום זה, בעיקר תחת הסכם ה-GPA הפלורילטראלי, אך גם תחת הסכמים בילטראליים שונים. התחייבויות אלה נדונות על רקע מדיניות העדפת תוצרת הארץ הנוהגת ברכש הציבורי בישראל. לבסוף, המאמר דן בשיטת התקיפה של החלטות בתחום הרכש הציבורי הנוהגת בישראל אשר מתבצעת כולה במסגרת הרשות השופטת, והאופן שבו היא ממלאת אחר ההתחייבות תחת הסכם ה-GPA להעמיד שיטת ביקורת אפקטיבית ובלתי תלויה. המאמר גם מציג נתונים ביחס למידת השימוש בפועל בשיטה זו ומידת ההצלחה הממוצעת של עותרים. המאמר מסיים בדיון בפסק דין מהתקופה האחרונה אשר יישם את הסכם ה-GPA ודחה דרישה של יצרן מקומי לקבלת יחס מועדף.

The Role of an Intermediary Agent in Technology Integration Within Developing Countries: A Film Industry Perspective

The Bangladesh Film Industry has been attempting to move from traditional analogue film production to digital production during the last decade without much success. One major problem is that the digital technology has to be acquired from international donors in advanced countries and the Government's public procurement policy stipulates that this transfer of technology from the donor to the recipient must be expedited by a local ‘intermediary agent’ (e.g. business entrepreneurs). Our research findings have confirmed that the local film industry (recipient) requires support with installation of technology, film distribution/ exhibition, and maintenance (production level) and some management tasks. All of which is not usually provided because of incompetency on the part of the intermediary agents and because of limitations in the public procurement policy for this industry sector. One policy implication is whether government procurement policy should target more direct B2B contact between the technology recipient and the international donor. This could help upgrade innovation capabilities of local industry. Our empirical research findings are based on direct insights gained from six semi-structured face-to-face interviews with key respondents based in Bangladesh (e.g. Directors and Senior Management staff of the Bangladesh Film & Development Corporation and other key respondents). Note: findings reported here are from a larger study of 40+ interviews on the theme of digital technology integration in Bangladesh film industry. We report that policy makers should direct policy toward the development of technological system, infrastructure and technical training in the long run, rather than mainly focusing on boosting foreign technical assistance, which does not appear to help support manufacturing processes in film making to make a smooth transition from analogue to digital technology use. There should also be a sterner public evaluation body that pre-evaluates and post-evaluates the success or otherwise of the technology integration process.

Using Mahalanobis–Taguchi system, logistic regression, and neural network method to evaluate purchasing audit quality

The feature selection function in data mining facilitates the classification of vast data volumes and reduces attribute variables, enabling the construction of classification prediction models. For binary data, the Mahalanobis–Taguchi system, the logistic regression method, and the neural network method all feature high stability and accuracy. The Mahalanobis–Taguchi system differs from the other two methods in that models are developed through a measurement scale rather than from the learning of analytical data. We analyzed the audit quality of Taipei City Government public procurement from supply chains (hereafter abbreviated as public procurement) and applied the three feature selection methods to determine the items used in public procurement audit quality questionnaires. The results showed that the predictive powers of Mahalanobis–Taguchi system and logistic regression methods for the reduced question items were 93.8% and 92.5%, respectively. Furthermore, the prediction accuracy rate of the neural network method was 100%, showing that the prediction model constructed using the feature selections to reduce the number of attributes can effectively lower the number of questionnaire items while maintaining high prediction accuracy.

The Centrality of Military Procurement: Explaining the Exceptionalist Character of United States Federal Public Procurement Law

This study builds upon prior work that delineates opposing tendencies of exceptionalism and congruence that measure the degree to which a body of public contracts law diverges or adheres to the norms of private contract law. This study has two objectives. First, it seeks to define more precisely, and track the incidence and locus of a phenomenon described as exceptionalism in public procurement law. Exceptionalism enhances the powers or reduces the liabilities of the government with respect to its private contracting partners. The first branch of this study also seeks to distinguish such true exceptionalism from a phenomenon of reverse exceptionalism that imposes duties on the government that private parties engaged in procurement do not share. This study concludes that true exceptionalism is strongly associated with the law governing performance of federal public procurement contracts, while reverse exceptionalism is associated characteristically with the law of federal public contract formation. The second objective of this study concerns the role of military procurement - which historically has been central to the development of the procurement law system in the United States. This feature of the United States public procurement regime distinguishes it from the national law of many other nations, and from the requirements of many transnational public procurement regimes. This study demonstrates the strong causal role played by military procurement, in the emergence of this exceptionalist tendency in the United States law governing performance of federal public procurement contracts. These findings have particular relevance for developing nations and transitional economies emerging from state socialism. Although the common practice of excluding military procurement from the field of newly established competitive procurement regimes in such nations is entirely understandable, this study suggests that this approach fosters the adoption of regime that lacks appropriate flexibility. The experience of the United States should caution other nations to consider the unrecognized costs of broadly excluding military procurement from their procurement regimes at the threshold.

The legal effect of EU Regulations

The EU institutions are increasingly addressing harmonisation by means of regulation rather than the traditional use of directives. This is particularly impacting areas such as data protection, financial services regulation and European standardisation in Information and Communications Technology. More broadly, using directly applicable regulations which may have horizontal and vertical direct effect rather than directives has important administrative and constitutional implications for their application in national law and impacts on Member States' discretion to implement supplementary legislation which falls within the remit of the regulation in question. This is of particular concern where governments implement policies which might be in contravention of these rules. This may be the case in relation to the UK government's public procurement policy which mandates royalty free standards rather than royalty bearing standards with the option for the licence holder to licence royalty free.

The Use of Sealed Bidding and Competitive Negotiation in Brazil and Worldwide

For decades, both public officials and the private sector have faced the challenge of efficiently procuring goods and services to governments. This task is of utmost importance in the infrastructure area of developing countries, considering the investments required and the scarcity of funds. Corruption is always a threat. Governments have issued rules to conduct bidding seeking standardization of procedures and agility. They also encourage competition and transparency. Some rules limit discussions and others encourages them. In the U.S., both methods are equally accepted since 1984. Brazil introduced legislation on a new regime in 2011, called Differential Public Procurement Regime (RDC) and just began initial experience with it. In this context, the questions that arise are: (1) should Brazil make broader use of competitive negotiation for infrastructure and other projects? (2) Are the mechanisms of control prepared for these changes? (3) What is the role of transparency in this process? (4) Is it necessary any change in legislation in order to improve it? (5) What else should be done? Answering to these questions seems to be premature, but efforts to promote transparency, to prevent and fight corruption and impunity are highlighted, once corruption occurs no matter the bidding method applied.

Neoliberalism and the European Public Procurement Regime

Abstract This chapter briefly describes how neoliberalism achieved its current position as the dominating (if contested) ideology of the developed world and explains core neoliberal values and policy prescriptions, as well as the effect that they have had on public procurement. It explores the ideological importance of public procurement regulation from the neoliberal perspective and the features that neoliberal principles might suggest should be built into any international regime of public procurement regulation. It then describes the regulation of public procurement by the EU, which it argues maps closely onto the predicted neoliberal construct. It explains that, although the EU regime operates by extensively curtailing the purchasing discretion of public bodies in the Member States, neoliberal arguments have been advanced, and are currently being advanced, to curtail that discretion further. It analyses the extent to which such arguments have failed before the Court of Justice of the European Union to date and then explains the far-reaching additional arguments that are currently being advanced to neoliberalise the EU public procurement regime. These argue for the application of ‘competition’ (the ‘efficiency’ concept of competition) and the pursuit of ‘value for money’ as dominating norms for the system. This chapter then explains how the adoption of such norms would curtail the ability of public purchasers to pursue horizontal policies (the use of public procurement to achieve collateral policy goals such as environmental or social policy goals). It argues, however, that the suggested efficiency/value for money norms are not legally justified. This is because the concept of ‘competition’ to which EU public procurement regulation refers is not the neoliberal ‘efficiency’ concept, but a concept based upon economic freedom that is concerned with competitive equality and the structure of competition in public contracts markets. It is also because the present author accepts the argument that has been advanced by Sue Arrowsmith that, although the pursuit of ‘value for money’ is the central goal of the domestic regulation of public procurement, the legal bases on which EU public procurement legislation is founded do not permit it to mandate the pursuit of ‘value for money’ as a matter of European obligation. The chapter argues, in any event, that in the public procurement context, ‘value for money’ is a complex, multi-faceted and value-driven concept that does not equate to neoliberal notions of ‘efficiency’. Finally, it identifies an internal tension between two aspects of the neoliberal prescription in the public procurement context, the desire to constrain public purchaser discretion so as to preclude, in particular, the pursuit of horizontal policies on the one hand, and the preference to use ‘market-based’ instruments of policy rather than regulation on the other. It explains how a further neoliberal preoccupation, the constant need to improve international ‘competitiveness’, has provoked the EU to adopt (as part of its core economic strategy) the pursuit of horizontal policies in public procurement, both on a voluntary basis and as mandated by EU sectoral legislation. It concludes that by so doing, the EU has rejected a central tenet of neoliberal ideology as regards public procurement (hostility to the so-called ‘instrumental’ use of public procurement to implement horizontal policies) and that its direction of travel means that the neoliberal argument that public procurement must be regulated predominantly to achieve ‘efficiency’ has implicitly been discarded.

Neoliberalism and the European Public Procurement Regime

AbstractThis chapter briefly describes how neoliberalism achieved its current position as the dominating (if contested) ideology of the developed world and explains core neoliberal values and policy prescriptions, as well as the effect that they have had on public procurement. It explores the ideological importance of public procurement regulation from the neoliberal perspective and the features that neoliberal principles might suggest should be built into any international regime of public procurement regulation. It then describes the regulation of public procurement by the EU, which it argues maps closely onto the predicted neoliberal construct. It explains that, although the EU regime operates by extensively curtailing the purchasing discretion of public bodies in the Member States, neoliberal arguments have been advanced, and are currently being advanced, to curtail that discretion further. It analyses the extent to which such arguments have failed before the Court of Justice of the European Union to date and then explains the far-reaching additional arguments that are currently being advanced to neoliberalise the EU public procurement regime. These argue for the application of ‘competition’ (the ‘efficiency’ concept of competition) and the pursuit of ‘value for money’ as dominating norms for the system. This chapter then explains how the adoption of such norms would curtail the ability of public purchasers to pursue horizontal policies (the use of public procurement to achieve collateral policy goals such as environmental or social policy goals). It argues, however, that the suggested efficiency/value for money norms are not legally justified. This is because the concept of ‘competition’ to which EU public procurement regulation refers is not the neoliberal ‘efficiency’ concept, but a concept based upon economic freedom that is concerned with competitive equality and the structure of competition in public contracts markets. It is also because the present author accepts the argument that has been advanced by Sue Arrowsmith that, although the pursuit of ‘value for money’ is the central goal of the domestic regulation of public procurement, the legal bases on which EU public procurement legislation is founded do not permit it to mandate the pursuit of ‘value for money’ as a matter of European obligation. The chapter argues, in any event, that in the public procurement context, ‘value for money’ is a complex, multi-faceted and value-driven concept that does not equate to neoliberal notions of ‘efficiency’. Finally, it identifies an internal tension between two aspects of the neoliberal prescription in the public procurement context, the desire to constrain public purchaser discretion so as to preclude, in particular, the pursuit of horizontal policies on the one hand, and the preference to use ‘market-based’ instruments of policy rather than regulation on the other. It explains how a further neoliberal preoccupation, the constant need to improve international ‘competitiveness’, has provoked the EU to adopt (as part of its core economic strategy) the pursuit of horizontal policies in public procurement, both on a voluntary basis and as mandated by EU sectoral legislation. It concludes that by so doing, the EU has rejected a central tenet of neoliberal ideology as regards public procurement (hostility to the so-called ‘instrumental’ use of public procurement to implement horizontal policies) and that its direction of travel means that the neoliberal argument that public procurement must be regulated predominantly to achieve ‘efficiency’ has implicitly been discarded.

Policy Diffusion in Public Procurement: The Role of Free Trade Agreements

Abstract This article assesses the factors shaping policy diffusion of effective, liberal public procurement regimes. Policy diffusion and the analysis of policy diffusion is less developed in public procurement than other policy areas such as investment. This is surprising given the potential economic (public procurement accounts for some 8% of GDP) and signaling (transparency, good governance) gains of adopting regimes that promote competition in public procurement markets. The article first provides an introduction to the issue of public procurement and discusses the nature of procurement regimes, the dependent variable. It then assesses the impact of key variables identified in the literature on policy diffusion, such as competition, coercion and norm emulation. It is argued that issue linkage in bilateral free trade agreements (FTA) appears to have brought about common laws – and in some cases – rules for procurement. But this stops short of a genuine diffusion of liberal procurement regimes due to negotiations being framed by reciprocity rather than efficiency considerations, the costs and complexity of implementation, as well as opposition from vested sector interests and politicians at all levels of government favoring the short term political utility of ‘buy local’ policies.

Public procurement in the EU: Jurisprudence and conceptual directions

The present article reviews the emerging conceptual themes from the case law of the European Court of Justice which have triggered the revision of the public procurement Directives, and the alignment of the public procurement acquis with the Europe 2020 Growth Strategy. The Court's jurisprudence has instrumentally influenced the interpretation of public procurement legal concepts such as contracting authorities, the remit of selection and qualification criteria, the parameters for contracting authorities to use environmental and social considerations as award criteria and the principles which underpin the remedies in the award of public contracts. However, the exhaustive harmonization which is inherent in the public procurement directives has caused significant porosity and limitations in the effectiveness of the public procurement acquis. Service concessions, contracts awarded by a contracting authority to another contracting authority on the basis of exclusive rights, public-public partnerships and in-house contractual relations, and contracts which fall below the stipulated value thresholds all reflect upon the forthcoming reforms of the public procurement regime.

EU Enlargement and the Emboldening of Institutional Integrity in Central and Eastern Europe: The ‘Tough Test’ of Public Procurement

AbstractEU enlargement and the incorporation of the acquis communautaire are widely seen as successful and emboldening the integrity of political, administrative and legal institutions in Central and Eastern Europe (CEE). The analysis reported here describes the specific problems associated with affirming institutional integrity in the field of public procurement, which constitutes a ‘tough test’. Public procurement is namely an area where the acquis swiftly gained pre‐eminence in accession states, but whose complex regulations depend on a well‐functioning judiciary, effective administrative supervision and limited corruption. The experience in Poland and Bulgaria, countries that represent different stages of institution building in this area, is compared. The results suggest that an EU‐compatible public procurement regime is being consolidated throughout the CEE region. At the same time, that regime may only work well when boundaries between institutional subjects, as well as between the spheres of law, politics and economics, are upheld in post‐communist countries.

China's Public Procurement Regime — Comparative and Theoretic Insights

Bid rigging conspiracies have long been recognized as significantly inflating public expenditures. Anecdotal evidence suggesting bid rigging offences and a general dissatisfaction about procurement prices and the contracted quality in China is taken as an indication of a lack of competition in public procurement tenders. Because procuring entities are unable to monitor industrial markets effectively, it is submitted that well designed public procurement regimes can help to prevent bid rigging conspiracies. Since structural market determinants are largely beyond reach of public procurement laws, auction theory is used to address cartel formation and cartel stability. Applying this theory to the Chinese public procurement regime identifies concrete actions for procurement entities to undermine cartel formation and stability. The insights gained are compared to the EU public procurement regime in order to examine in how far other legislators have chosen different solutions. It is found that the Chinese legal regime does facilitate both the formation and stabilization of bid rigging cartels and that the European public procurement regime is also subject to criticism in some respects.

ILO Convention No. 94 in the aftermath of the Rüffert case

The purpose of this article is to discuss the ILO’s Labour Clauses (Public Contracts) Convention 1949 (Convention No. 94) and, in particular, the legal situation in the aftermath of the decision on 3 April 2008 of the European Court of Justice (ECJ) in the Rüffert case (Case C-346/06). The authors argue that the labour law concerning social clauses in public contracts is an old and well-established institution that still has an important role to play. They analyse the Rüffert case and argue that there is a conflict or contradiction between the ECJ’s judgment and Convention No. 94. The authors propose how the Posted Workers Directive 96/71/EC and the EU public procurement regime should be clarified in order to resolve this contradiction. This issue should be raised and promoted both by the EU Member States, in the aftermath of the discussions in June 2008 at the ILO Labour Conference in Geneva on Convention No. 94, and by the new Barroso Commission, which took office in spring 2010, as well as the European Parliament.

The Malaysian Public Procurement’s Prevalent System and its Weaknesses

Problem statement: This study examined the public procurement system as prevalent in the Malaysian government system of administration. Various aspects of public procurement are outlined including types and the processes that entail public procurement. This study also highlighted the weaknesses in the manual public procurement processes that are opened to potential abuse and mismanagement resulting in corruption. This study places the Malaysian Government public procurement system under the spotlight zeroing on allegations of abuse, tampering and corrupt practices. The study concluded that the large amount of funds allocated to public procurement coupled with excessive human intervention opportunities opened avenues that increase the risk of system abuse, profiteering and corruption. Case studies on the abuse and corruption of the public procurement system highlight the need for the Malaysian Government to eliminate the loopholes in the system, arrest the rot and implement a transparent, efficient and accountable public procurement system. Approach: Documents from the Ministry of Finance on public procurement including, among others, the Procurement Guideline Book, The Financial Procedures Act 1957, the Treasury Instructions (TI) and the Treasury Circular Letter (TCL) were scrutinized in studying the Malaysian Government public procurement system, its various attributes, types and processes that reflect a diversified approach to public procurement. Three case studies were cited to illustrate the susceptibility of the system to abuse and corruption. Results: Despite claims of openness and transparency of the public procurement system, it was found the current system is replete with the risk of abuse, unethical manipulations and corrupt practices. This research is limited to the analysis of data and processes related to the Malaysian Government public procurement system. The sensitivity of the subject may inhibit the collection of empirical data via surveys or interviews. Records of court cases involving corruption offered clues to areas in the system prone to human intervention. Conclusion: This research helps identify areas of improvement in the Malaysian Government public procurement system and thus raises the possibility of enormous cost savings and the eradication of rampant corruption and abuse. This study shows that, while the public procurement system may be available in the Malaysian Government system of administration, weaknesses in the public procurement processes may open avenues for corruption to take place. Corruption stemming from a procurement system weak on aspects of ‘check and balance’ will cause a major drain on the national budget and can result in a huge loss of public funds. Eventually, the nations credibility in the eyes of the international business community will be severely tainted thus reducing the overall competitiveness of the country.

China's Accession to the WTO Government Procurement Agreement--Challenges and The Way Forward

Government procurement, whilst important for international trade,1 has been largely excluded from the reach of multilateral regulation under the World Trade Organization (WTO).2 In the absence of multilateral rule, China's trade partners have made considerable efforts, before and after China's WTO accession, to persuade China to become party of the plurilateral WTO Agreement on Government Procurement (GPA). After 5 years of intensive discussion, on 28 December 2007, China finally submitted a formal application to become party to the GPA.3 This included an offer of GPA coverage (the so-called ‘Appendix I offer’) and signaled the initiation of China's GPA accession process.4 However, China's initial offer has been regarded as ‘very limited’ and ‘deeply disappointing’ by China's trade partners.5 It is safe to argue that China's GPA accession poses significant challenges for negotiators due to a number of factors. Firstly, the GPA itself, even after its recent revision, is not fully equipped to deal with acceding countries with a large state sector6 and existing GPA Parties have made little progress in extending the coverage commitments following the revision. Secondly, so far as the position of China is concerned, Chinese government structure is complicated and the problem has been aggravated by a new round of central government reorganization completed after the application and the division between the Chinese government and state enterprises is difficult to ascertain, especially with regard to investment, which make coverage negotiations problematic. Furthermore, the legal and institutional frameworks underlying current Chinese public procurement regime remain fragmented and incoherent whilst it is also evident that China has in recent years intensified the use of government procurement as a policy instrument to promote national industrial and environmental policies. These add to the lack of political supports for speeding up the GPA accession and complicate the negotiation and adaptation of domestic legislation. Finally, the structural link between administrative tribunals/judiciary and the local government gives rise to the concern of local protectionism and put the effectiveness of a GPA-compliant supplier review system in question.

EC Procurement Regime

Public procurement regime of the European Union is regulated by two sets of directives. These secondary legislations are intended to be detailed and sufficient regulatory tools in the fields of public procurement in EC in order to [o]pen up public procurement. EC treaty rules on the other hand largely relevant within the pubic procurement. The major freedom of movements rules such as Article 28 EC free movement of goods, Article 43 EC freedom of establishment and Article 49 EC, freedom of services are the building stones of the single market within the European Union. So far as the secondary legislation is designed to open up public procurement in order to eliminate obstacles before the single market, they can be viewed as possible detailed interpretation of the relevant EC treaty rules in the field of EC public procurement. Thus it might be noted that the public procurement directives are designed to carry main principles of European single market into the field of public procurement. One important implication of EC public procurement directives is their ability to impose positive obligations to the contracting authorities in their awarding procedures . That is why while EC member states are bound with negative obligations deriving from the EC treaty; secondary legislations impose positive obligations to render the negative obligations meaningful in the field of public procurement. On the other hand whereas EC treaty rules are applicable to those contracts that fall within the EC public procurement regime, for those contracts or arrangements falling outside the directives, they constitute only a regulatory framework. ECJ’s recent case law established that the contracts excluded from the scope of public procurement directives due to their financial value or nature nevertheless have to comply with the rules of EC treaty. This illustrates a two-tier system of Community procurement law which is supported by four ultimate principles; transparency, equal treatment, mutual recognition and proportionality. This paper will consider four types of contract/arrangement; namely concessions, low value contracts, defence procurement and in-house arrangements. In this paper, the attitude of EC treaty and Public Sector Directive (Hereinafter Directive) toward these contracts or arrangements will be discussed. The paper will conclude with a discussion of the place of those contract/arrangements under the WTO’s Plurilateral Agreement on Government Procurement (Hereinafter GPA).