Scientific research

 Towards a coherent and efficient legal framework for public procurement law

The European Union’s ten-year jobs and growth strategy, the EU 2020, launched in 2010 to create the conditions for smart, sustainable and inclusive growth, gives the impression to offer a multitude of options to achieve these objectives. In practice, it has become clear that it can create the opposite effect and thus be a serious impediment to the realization of transformative innovation since it introduced the potential for conflicting objectives: on the one hand the achievement of the EU 2020 objectives (innovation, social inclusion and sustainability); on the other hand, the fulfillment of the existing economic objectives aimed at the completion of the internal market.

Scholars at the Public Procurement Research Centre work on innovative solutions to tackle the inefficiency and undesirable social consequences of a range of regulatory gaps, which can cause a significant impediment for achieving the EU 2020 and thus for solving global societal challenges.

The starting point is the awareness that fundamental aspects of our society that directly or indirectly shape the daily lives of citizens, have to be organized by using public procurement procedures. Public procurement law is not considered simply as a collection of procedural rules, but as a powerful tool for designing a sustainable and just society and – as a consequence – a tool for stimulating and facilitating innovation. In this approach, a public procurement procedure is seen as an instrument to shape and define the needs in society, to make choices between all existing possibilities and then to evaluate those possibilities.

However, new forms of collaboration between economic operators, citizens, governments, other public authorities, for the organization of healthcare, public transport, waste collection and processing, refugee care, etc. can often be considered as a ‘public contract’ and, therefore, fall under the scope of public procurement law, meaning that a tender would be required before bringing these new forms of collaboration into being.
Researchers at the PPRC focus on both, the positive and the possibly undesirable effects of the new forms of cooperation. Public contracts might increasingly be performed by public authorities themselves or in collaboration with other public authorities, thereby excluding third parties, such as social enterprises or civil initiatives, from certain markets.
What is lacking here is clarity with regard to how public authorities take the decision to perform a public contract. That decision should be made on the basis of verifiable and objective criteria and in accordance with the basic principles of law (equal treatment, transparency, proportionality). On top of that there will be many competing aims in the public procurement market, which, in turn, can lead to different approaches, opinions, interpretations and an increasing number of court cases, which in the end can impede the realization of the EU 2020 strategy.
Neither the EU legislature nor the Dutch legislature have ventured into this area, despite the fundamental importance of these choices for the result of a procurement procedure and, thus, for the realization of transformative social innovation. It is essential to create lawful and objective legal frameworks to make the range of options and broad discretionary powers of the contracting authorities subject to objective methods and legal review. With our hub we can contribute to innovative regulation to govern the method(s) that a contracting authority should use to determine the best solution for society.

The second regulatory gap deals with the tensions between the achievement of EU 2020 strategy (innovation, solidarity and sustainability) on the one hand, and the fulfillment of the internal market (economic aims) on the other.
Coming up with sustainable, inclusive and smart solutions is not something that is easy to pull off, and that currently still results in additional costs. A lack of knowledge on the part of public authorities in combination with smaller budgets puts pressure on the EU 2020 aims. Familiar examples of new and not-so-new phenomena in the procurement world where these types of tensions (as found in Europe 2020) emerge in practice include circular procurement, social contracting, societal contracting (maatschappelijk aanbesteden), a type of public procurement in which citizens are given the opportunity to be involved in the performance of the project, the right to challenge (citizens are given priority if they themselves are prepared to perform tasks or services for the community in the area where they live), social return on investments in which the contractor is required to invest a certain percentage of the contract amount in long-term unemployed people or in traineeships or study opportunities, etc.), functional contracting (the contracting authority asks for a certain result to be achieved without prescribing to the contractor how that result must be brought about). In this context PPRC scholars with an economic and business / public administration background (Uenk, Telgen) investigate in close collaboration with the legal scholars (Bouwman) questions concerning the MEAT (most economically advantageous tender), the award method for social procurement and social return. Researchers at PPRC (Manunza, Bouwman and Lohmann) have developed – in the context of a research commissioned by the Ministry of Internal Affairs – a matrix with 14 possibilities for societal contracting without coming in conflict with public procurement, state aid and competition law; see Leaflet Maatschappelijk aanbesteden). Currently, they are investigating methods of performance based contracting, outcome-oriented purchasing, commissioning in the social domain (Dutch Social Support Act, youth care, debt rescheduling) and social return in the social domain (Uenk and Schotanus). Societal challenges to maintain a high quality long term health care system at sustainable expenditure force Dutch local governments to innovate in commissioning and financing care, and to explore and use (new) opportunities in the legal framework concerning health care procurement. Studying the facilitation and stimulation of innovation in care service provision through new ways of commissioning and financing care has become urgent. Collaboration between formal care providers, volunteers, new local civil initiatives and local governments as commissioners is a goal, but also meets the boundaries of the relevant legal framework.
In this regard, legal research is conducted (Bouwman) to a connecting legal framework which adjust to the challenges in the field of social care services and which is open for social innovation in the area. Special attention also here for the principles of equality, transparency and proportionality, as safeguards of the foundations of the public procurement framework.

The third regulatory gap investigated by the PPRC researchers deals with the award methods, the mathematical calculation used to assign points to the various components of a bid. Problems arise when quality aspects must be evaluated alongside price, which is a situation that always arises when governments deal with innovations. Research at the PPRC (Lohmann, Manunza, Telgen) has demonstrated that depending on the selected award method, the price will play a greater de facto role in the evaluation of the bids than the quality, in spite of whatever is stated in the tender documents. This can happen without the contracting authority even being aware of it; in any case it can be a significant detriment to the realization of innovations. All the knowledge from the decision-making sciences, mathematics and the economic sciences about which methods lead to objective, quantifiable results and which other methods lead to random and even absurd outcomes is being completely ignored by the regulation.

The PPRC has extensive expertise of tender procedures and public procurement in relation to social innovation and in relation to the cooperation between entities within the public sector. This Centre has been founded in 2013 by Elisabetta Manunza (full professor of European and International Public Procurement law, Utrecht University, School of law) and Jan Telgen (full professor of applied operations research and public procurement at Twente University; trained as mathematician and economist) and aims to generate academic and practical knowledge and apply this knowledge to improve the innovation, utilization, regulation, promotion and social use of public procurement. An important focus of PPRC research reaches beyond the interaction between EU public procurement law and national law and the consistency and efficiency of public procurement law, namely the question as to how to ensure socially responsible public procurement, public procurement in the social domain, new collaboration forms between public authorities, and the regulation of award criteria and methods.
Janssen’s Phd defense on in-house arrangements and other forms of public cooperation is expected in 2017. Bouwman conducts a PhD research on social innovations and arrangements between governments and citizens.

PPRC research involves constant engagement with the private and public sector and collaboration with lawyers, economists, mathematicians and scholars with a business / public administration background and generates many commissioned interdisciplinary studies.
In recent years PPRC has conducted research for, and provided advice to the Dutch Ministries of Defense, the Interior, Economic affairs, Security and Justice, as well as to the Royal Netherlands Air Force, the National Police of the Netherlands, (combinations of) municipalities and water authorities, the Netherlands Institute for Physical Security (IFV), the National Institute for Public Health and the Environment (RIVM), confederations of constructors in other EU countries, the Netherlands Enterprise Agency (RVO.nl), the Netherlands Gambling Authority (Kansspelautoriteit), the SER and the Stichting van de Arbeid, the municipal ombudsman, Randstad BV.

Societal impact

PPRC research has had a substantial impact in society. It has led to Parliamentary debates (e.g. parliamentary questions on the allegedly illegal cooperation between the Belastingdienst and the Nationaal Archief by Manunza & Janssen), expert hearings and opinions in Parliament (e.g. on the implementation of the new public procurement directives by Manunza), and various influential leaflets, e.g. on “Juridisch leaflet Maatschappelijk Aanbesteden. Juridische mogelijkheden om de kracht van de samenleving te benutten bij aanbestedingen” by Manunza, Lohmann and Bouwman and “Op weg naar maatschappelijke meerwaarde in het sociaal domein. Toepassingen en lessen van maatschappelijk aanbesteden in de gemeentelijke Wmo-aanbestedingen 2015” by Uenk.