Subnational governments carry out more than 60% of total public procurement in OECD countries. As such, public procurement can offer a powerful tool for cities to boost local growth and advance their strategic priorities, ranging from innovation and inclusion to the transition to a low-carbon economy. Bratislava, the most populated and richest municipality in the Slovak Republic, carried out 39% of its expenditures through public procurement in 2019. The COVID-19 crisis has enhanced both the urgency and the opportunity to improve the city's procurement system and to rethink "what" and "how" to procure. In this context, Bratislava is developing new directives to make its procurement processes more efficient. This report offers recommendations on how Bratislava can use public procurement strategically to identify value-for-money solutions, foster competition, and promote sustainable urban development. The report also includes a concrete case study on Bratislava’s public procurement for street lighting, which provides methodological guidance on the analysis of needs, market engagement, and tender design.
Unlocking the Strategic Use of Public Procurement in Bratislava, Slovak Republic
Abstract
Executive Summary
Public procurement can offer a powerful tool to stimulate innovation, facilitate the transition to a green and circular economy, support small- and medium-sized enterprises (SMEs) and promote ethical behaviour and responsible business conduct. In addition, in many cities, the COVID-19 pandemic further increased pressure on local spending and public procurement procedures. This report aims at supporting the city of Bratislava in its efforts to make procurement a catalyst for change in identifying better value-for-money solutions, fostering competition and ensuring sustainable urban development. The report is particularly timely as the city is currently preparing new directives on public procurement, which represent promising steps to enhance its public procurement system. The report also includes a case study on street lighting to support the city in designing the most adequate procurement strategies for improving the quality and expected outcomes of its future integrated system.
Drivers and barriers to make Bratislava smarter, greener and more inclusive through public procurement
In 2019, while public procurement represented 20.6% of subnational government expenditure in the Slovak Republic, it accounted for 39% (EUR 145 million) of Bratislava’s expenditure.
The COVID-19 crisis called for reinforcing the need to streamline and improve the procurement system of Bratislava to advance its strategic priorities.
Although Bratislava has developed new internal directives to reform its procurement processes, it has not yet exploited the full potential to guide urban policy and use the United Nations’ Sustainable Development Goals (SDGs) as a reference framework. For example, neither the latest city strategy (2010-20) nor the draft of the forthcoming one explicitly address the role of public procurement in achieving the city’s objectives.
Even though public procurement generally involves using taxpayers’ money, consultation of citizens about their needs has remained limited so far in Bratislava. For instance, the city has not implemented any participatory budgeting processes.
Using public procurement strategically in the city of Bratislava
Faced with the urgent need to purchase essential goods in the early stage of the COVID-19 pandemic, Bratislava fast-tracked its procurement process by removing some steps. Nonetheless, the system for approval and workflows remains mainly paper-based and the city does not have a central database for contracts or documents such as market analysis, which would help consolidate the information in one place and accelerate procedures.
Effective needs analysis requires identifying the needs of end users in terms of performance, functionalities, quality and quantity of the necessary solution. On average, only 40% of approved procurement plans in Bratislava have been executed. While the disruption caused by the COVID‑19 pandemic may explain part of this low rate of execution in 2020, other pre-existing barriers relate, for instance, to the lack of capacity to undertake needs analysis.
When undertaking needs analysis, Bratislava’s approach tends to focus on products and services already available on the market rather than solutions and functions.
The public procurement system in Bratislava is mostly decentralised, as the 44 organisations belonging to the city, such as the waste management company and the transport company, conduct their own procurement. Although their needs are sometimes aggregated and presented jointly to the market, there is no clear methodology to inform decisions on the potential aggregation of needs.
Although Bratislava has used preliminary market consultation for a few tenders, no clear guidance is provided to the city officials on the methods to engage the market.
Even though the vast majority of tenders were launched via a competitive process, the most frequently used methodology to assess tenders is still based on the lowest price rather than encompassing a variety of criteria, which would help promote broader objectives such as innovation and sustainability.
Bratislava has started to leverage the benefits of collaborative procurement instruments by implementing eight framework agreements and four dynamic purchasing systems (DPS). However, no comprehensive data is available to assess the amounts spent in each procurement category and identify where collaborative procurement could help further increase efficiency.
SMEs in Bratislava are not reaping the full benefit of public procurement yet. Between April 2016 and May 2020, 69% of procedures were awarded to SMEs but this represented less than half of the total procurement volume (40%).
Bratislava does not undertake any regular evaluation to assess existing procurement processes. However, the city is aiming at implementing relevant key performance indicators (KPIs).
While public procurement data of the city of Bratislava is available from different sources, they do not allow citizens and stakeholders to explore the data in a user-friendly format following the budget cycle.
Several city departments conduct procurement activities but they often lack adequate technical capacity. Indeed, no capacity-building activities on procurement are available to those officials.
Bratislava has no formal risk management assessment on procurement activities to inform its strategies. However, risks may be discussed at the individual procurement level.
To unlock the potential of public procurement to drive more inclusive, smart and sustainable growth, the city of Bratislava could:
Make the strategic role of public procurement explicit in the new city strategy (2021-30).
Leverage procurement as a tool to achieve the SDGs and reflect SDG-related mechanisms in the new internal public procurement directives.
Analyse the relevance of integrating advance payments in the new internal public procurement directives and further promote allotment strategies to support SME development.
Use strategically public procurement to advance the innovation agenda of the city.
Map the stakeholders involved in procurement activities and put in place a more effective cross-cutting organisational structure to co-ordinate procurement processes among city departments.
Make its portal interactive to better understand the needs of citizens and involve them upstream in consultations to shape procurement processes, including in participatory budgeting processes.
Continue its efforts to streamline the procurement processes in the new internal public procurement directives and further digitalise procurement processes.
Develop specific KPIs to monitor and evaluate procurement outcomes. In this regard, the city could consider not only refining its internal system to collect relevant procurement data but also making the data transparent and accessible.
Provide guidance to city departments on the methods to engage the market and collect information, and consider developing a market analysis template.
Analyse the procurement spending plans of each municipal organisation of the city to identify opportunities for aggregating needs or using collaborative procurement instruments, including framework agreements and DPS.
Further use the best price quality ratio (BPQR) criteria to enable contracting authorities to assess bids not only on the basis of price but also on other aspects.
Identify key competencies for city officials involved in procurement operations and develop tailored training programmes on procurement processes and mechanisms.
Enhance the capacity of city officials in different public procurement processes and activities.
Provide procurement stakeholders with data on procurement spending in a harmonised, user‑friendly format.
Put in place a comprehensive risk management strategy for its procurement operations.
Overview of the current street lighting system in Bratislava
Many parts of the current street lighting system in Bratislava are outdated and require urgent investments. Bratislava has therefore started an ambitious project to improve security, achieve energy efficiency, reduce maintenance costs, ensure better data management and generate revenue. The goal is to have public lighting fully covered with smart light-emitting diodes (LEDs) within 5 years (by 2025), with estimated savings of more than 40% in total energy consumption.
Instead of awarding one contract to an economic operator to operate and maintain the street lighting system, the city decided to split the investment into several contracts with several providers. In addition, given the budget constraints and the three-year limitation on Bratislava’s multi-year budgeting, many of the procurement activities necessary to renew the street lighting system cannot be planned yet.
Ways forward on public procurement for street lighting in Bratislava
1. Undertake thorough market analysis for each street lighting component by leveraging pilot projects (such as the public procurement of park lighting) to improve upcoming tender documentation and publish a prior information notice when relevant to positively impact competition.
2. Reinforce citizen engagement in the street lighting project through meetings or by using digital tools.
3. Use a life cycle approach when assessing bids and increase the weight of the qualitative and other non-price criteria to enhance value-for-money outcomes.
4. Further explore the benefits of DPS in the framework of the street lighting project.
