Innovative%20Public%20Technology%20Procurement%20

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Innovative Public Technology Procurement
Problems, Issues Recommendations

• Innovative Public Technology Procurement
  Problems,
• Issues Recommendations
• This presentation reports on the results of two
  recent EU projects dealing with best practices
  in innovative public procurement.
• The primary source cited here is a comparative
  analysis of four case studies conducted for one
  of these projects
• Innovative Utilities.
• To validate this analysis, we also refer to
  further cases from the other project
• Innovation and Public Procurement.
• The concluding discussion addresses
  recommendations for best practice and policy
  implications.

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Innovative Utilities Cases

• TeleNors Maritime Radio Project (Norway)
• Developing a Direct Operational Control (DOC)
  communications system for maritime coast radio
  stations.
• Norways Public Safety Radio Project (Pilot)
• Developing a shared digital mobile radio
  network for emergency response and
  preparedness organisations.
• OPUS Project (Belgium, Greece Italy)
• Introducing e-procurement systems at selected
  sites in the
• health-care sector.
• Technical Component of the Innovative Utilities
  Project (International)
• Developing a secure, web-based, anti-fraud
  information system for telecommunications
  operators and other utilities providers.

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Selected Innovation and Public Procurement Cases
New Lighting Systems Hamburg, Germany - state-of-the-art systems to save energy, improve quality and lower costs.
VoIP (Voice over IP) Telecommunication Equipment Heidelberg, Germany - a uniform system to optimise communication and service orientation
Electronic File Management ELAK Government of Austria - inter-ministry electronic file management for e-government
Variable Message Signage Highways Agency, UK - signage with variable messaging based on Rigel display technology
Framework Contracts for Heating Services CONSIP, Italy - performance contracts to save energy in public administrations
Public key Infrastructure ICTU, Netherlands - a public key infrastructure, aiming at comprehensive e-government.
Benefit Card Benefits Agency and Post Office Counters Ltd.), UK - a system to transfer payments to Agency claimants via the Post Office.
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Analysis An Inductive Procedure

• Within-Case Analysis
• - Identifying key problems and solutions in
  each case.
• - Categorising issues in innovative public
  procurement.
• - Applying the combined set of issues to all
  cases.
• Cross-Case Analysis
• - Comparisons across all cases.
• - Comparisons by type of case.

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Issues in Innovative Public Procurement

• Institutional and Regulatory Issues
• Regulatory Restrictions
• General Regulation the EC Procurement
  Directives
• Specific Regulation - sector-specific
  regulatory frameworks
• Governance Arrangements -- inter-governmental
  relations, industrial relations, etc
• Inter-Organisational Issues
• Financial Risk
• Technological Risk
• Organisational (or Intra-Organisational) Issues
• Articulation of Demand
• User-Producer Interaction -- Division of Labour,
  Communication, Specification
• Phasing

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The General Pattern across Cases

• Institutional and Regulatory Issues
• Relatively few problems of this kind arose.
• Problems with the general regulation of
  public procurement were very rare and only
  minor
• Serious problems occurred more frequently
  with respect to both
• specific sectoral regulation
• and
• governance arrangements

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Inter-Organisational Issues

• Problems of this kind occurred in all cases.
• Both financial and technological risk are
  inherent features of innovative public
  procurement.
• Financial risk had a lower profile, overall,
  than did technological risk.
• This is perhaps due to wide adoption of
  standard measures for the first type of
• risk and not the second.

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Organisational (or Intra-Organisational) Issues

• There was a fairly high incidence of major
  problems related to issues in this category.
• This was especially the case with demand
  articulation and phasing.
• For both these kinds of problems, the main
  source of difficulty appeared to be that
  procuring organisations lacked either or both
• relevant organisational capabilities
• and
• managerial or technical competence.

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Variation by Type of Case

• Types of Innovative Public Procurement
• We can distinguish three different types of
  innovative public procurement by referring to
  different categories of societal need
• Cases from the Innovative Utilities project
  represented each of these three types
• Direct Procurement Based on needs intrinsic to
  the procuring organisation.
• - TeleNors Maritime Radio Project
• Cooperative Procurement Based on shared needs,
  congeneric to multiple users.
• - Norways Public Safety Radio Project
  (Pilot)
• - Opus Project (e-procurement in healthcare)
• Catalytic Procurement Based on needs extrinsic
  to the procuring organisation i.e., of other
  users.
• - Technical Component of the Innovative
  Utilities Project

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Relating Issues and Types

• Some specific kinds of issues appeared to be more
  strongly associated with certain types of
  innovative public technology procurement than
  with others.
• These issues were
• Governance Arrangements
• Technological Risk
• and
• Articulation of Demand.

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Governance

• Major governance problems occurred only in cases
  of co-operative procurement
• Norways Public Safety Radio project
• - inter-governmental conflicts
• the OPUS project (introduction of e-procurement
  in health-care)
• - labour relations issues
• Both cases dealt with large scale projects
• in which multiple organisations were involved
  on the demand side
• and which had far-reaching implications for a
  wide range of stakeholder groups.
• Specific findings clearly show
• how sectional interests can affect the
  conduct of innovative public technology
  procurement and shape its outcomes.

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Technological Risk

• Technological risk appeared to have an especially
  high profile in cases of co-operative
  procurement.
• It constituted a major problem in the case of
  Norways Public Safety Radio project.
• It did not in the case of OPUS but mainly due
  to modest technological innovation.
• However, technological risk also posed a serious
  problem in other types of project, suggesting
  that
• technological risk may vary primarily according
  to the degree of technological complexity and
  therefore the uncertainty of the project.
• Nevertheless, additional evidence from the
  Innovation and Public Procurement cases also
  indicated that
• In Cooperative procurement cases, with
  multiple actors on the demand side, it appears
  to be especially likely that responsibilities
  and procedures for managing technological risk
  may be poorly defined.

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Articulation of Demand

• Articulation of demand constituted a serious
  problem only in cases of Cooperative
  Procurement
• Norways Public Safety Radio project
• the OPUS project in healthcare
• and Catalytic Procurement
• the technical component of the Innovative
  Utilities project
• One explanation for this association is the
  greater number of organisations involved on the
  demand side.
• Under such conditions, there is greater
  complexity of demand articulation, as indicated
  by time and co-ordination requirements,
• Both Co-operative Procurement and Catalytic
  Procurement may involve more complex patterns
  of interaction and more complicated processes of
  interactive learning on the demand side than
  does Direct Procurement.

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Recommendations to Procuring Organisations

• Institutional and Regulatory Issues
• General Regulation
• Acquire and mobilise administrative and legal
  expertise in public procurement, including
  thorough knowledge of the regulatory framework
  and how it may be used.
• Specific Regulation
• Form sectoral networks to explore and advance
  possible solutions to regulatory problems.
• Governance Arrangements
• Secure high-level political commitment, to
  ensure effective dispute resolution
• Develop strategies to gain the support and
  cooperation of important stakeholders.
• Define managerial roles and responsibilities
  clearly, to ensure coherence and integrity.

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Inter-Organisational Issues

• Financial Risk
• Adopt appropriate strategies for sharing risks
  with suppliers
• Assess risks properly and accurately.
• Pursue a general strategy to limit risks.
• Technological Risk
• Develop strong technological competence on the
  part of the buyer(s).
• Rely upon highly competent legal and
  administrative expertise.
• Specify and implement roles, responsibilities,
  and procedures to assess and mitigate risks.
• Conduct an extensive search for potential
  suppliers, based on clear and rigorous criteria.
• Engage in extended consultation and negotiation
  procedures with potential suppliers.

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Organisational (or Intra-Organisational) Issues

• Articulation of Demand
• Collaborate with organisations possessing high
  levels of market power.
• Collaborate with organisations possessing
  strong technological and other specialist
  competence.
• Develop technological competence through
  preliminary activities e.g., market
  intelligence.
• Continue competence development through
  coordinated collaboration amongst buyer
  organisations.
• Combine complementary forms of expertise by
  integrating procurement and technical personnel.
• Employ performance standards as a means of
  meeting requirements for technical knowledge.
• Use demand aggregation as a means of amplifying
  the market power of separate public
  organisations.

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User-Producer Interaction

• Develop adequate staff competence and
  organisational capabilities by combining relevant
  varieties of professional expertise within
  effective teams or project organisations.
• Develop effective structures for communication,
  both internally and externally.
• Implement organisational learning through
• utilisation of prior knowledge
• integration of specialised functions
• extended technology selection procedures
• collaboration amongst buyer organisations
• and
• knowledge integration by a central project
  group.
• Use technological standards to provide a
  framework for competence development.

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Phasing

• Adopt a gradual approach where organisational
  capabilities are not initially well developed
• Practice careful timing. Avoid premature
  finalisation of project planning.
• Secure initial sponsorship by an influential
  lead user to ensure initial adoption of, and
  experimentation with, an unproven technology.
• Recognise the need for diverse kinds of
  specialist competence including not only
  technical but also legal, economic, and
  administrative expertise and the requirement
  for effective project organisation.
• Adopt an organisational learning strategy.

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Policy Implications

• Few measures are required to make the EC
  Directives on Public Procurement more conducive
  to innovation.
• However, implementation of the Directives remains
  problematic.
• Factors to be addressed by policy include the
  following
• sectoral regulation that impedes innovation
• external governance arrangements that undermine
  innovative projects
• approaches to financial and technological risk
  that discourage innovation
• and
• the lack of key organisational capabilities and
  managerial and technical competences on the part
  of public sector organisations.