Accelerated public procurement procedures in the context of the financial crisis

 

 

 

 Accelerated public procurement procedures in the context of the financial crisis

 

Accelerated public procurement procedures establish alternative procedures to operate during times that demand enhanced flexibility, responsiveness and accountability by public organisations. Within this category there are two types of accelerated procurement: emergency procurement and non-emergency accelerated procurement. Emergency procurement is used in contexts where life, property or equipment is immediately at risk or standards of public health, welfare or safety need to be re-establish without delay.

 

Examples include government responses to natural disasters (such as earthquakes, floods and typhoons) and epidemics risks.

 

Non-emergency accelerated public procurement procedures are used in contexts where unforeseen circumstances arise and require an urgent response by public organisations. In comparison to emergency procedures, non-emergency accelerated procurement should be used as an exception and not the norm. Justifying the use of emergency procedures is necessary regardless of the time pressures on public organisations to acquire the necessary goods, services and works.

 

The risk of waste, fraud and corruption in accelerated procurement is higher than regular public procurement for a number of reasons, including:

  • procurement practitioners with high levels of discretion in identifying beneficiary needs;
  • participation of fewer suppliers/bidders in order to execute procurement quickly; and
  • reduced ex ante controls to enable fast-track delivery of goods, services and works.

 

The current economic crisis has also been considered by many governments and international organisations as justifying grounds for accelerating procurement procedures. It is important however, to differentiate between acquisition of goods, services and works within fiscal stimulus programmes and other fiscal policy instruments. A fiscal stimulus may include more than increased funds for government ministries to expand or accelerate existing acquisitions. They also include transfers, tax cuts, grants, loans, guarantees, extra-budgetary entities and central bank fiscal activities. For example, of the major stimulus packages enacted in the United States since 1953 only three out of nine — 1957/58, 1960/61 and 1973/1975 — included increases in public procurement.

 

Large investments in infrastructure are a common part of the stimulus packages in the current financial crisis. In the United States, it includes over EUR 68 billion (more than 3% of GDP) for infrastructure projects that support energy efficiency and long-term environmental sustainability alone. In other OECD member countries, infrastructure spending in stimulus packages equals EUR 23.6 billion in Australia and EUR 18 billion in Germany.

 

In December 2008 the European Commission decided that the severe economic downturn constitutes grounds of urgency and justified the use of accelerated restricted procurement procedures for all major public projects throughout 2009 and 2010. Public Procurement Directive 2004/18/EC allows recourse to accelerated procedures where justified on the grounds of urgency. The accelerated restricted procedure allows procuring authorities to reduce the overall time limit of the procedure from 87 to 30 days. It does this by shortening the time limit for requests to suppliers from 37 to 10 days (if the contract notice was sent by electronic means) and the subsequent time limit for bidders to submit their tenders from 40 to 10 days. However, a standstill period of 10 days remains before the contract can be concluded.


Notes:


A restricted procedure is a two-stage process in which the procuring authority first advertises for suppliers that may be interested in submitting a tender for a specific contract before drawing up a short list of suppliers based on their technical capability, capacity and financial standings. Only the short list of suppliers is invited to submit a bid.

 

The exchange rate for conversion from USD and AUD to EUR: USD1.00=EUR0.68; AUD1.00=0.59

 

Sources:


European Commission (2008), “Public procurement: Commission recognises need for accelerated procurement procedure,” IP/08/2040, Brussels, 19 December 2008, http://europa.eu/rapid/pressReleasesAction.do?reference=IP/08/2040&format=HTML&aged=0&language=EN&guiLanguage=en, accessed 21 August, 2009.