Public procurement is associated with many issues: bureaucracy, minimising risks, weighting the lowest purchase price and fear of the Market Court, just to mention a few examples.
Public procurement also involves a significant development potential. How 35 billion is spent every year affects the well-being of us all and the competitiveness of Finnish companies. By developing procurement, we can improve the quality of public services, increase the productivity of investments, reduce life-cycle costs, comply with the principles of sustainable development and provide companies with the opportunity to develop new and improved solutions.
Is performing procurement in a new way easy? No, it certainly is not. Are there risks involved? No doubt there are, but procurement can also go wrong when using the traditional method. Several examples come to mind from the world of construction, where the lowest tender has proved to be a bad choice due to disputes, delays and the additional work and corrective measures needed.
Alternative ways of performing procurement
It is often impossible to describe the desired end result accurately. How should procurement be performed in such a case and what should the objective of procurement be?
Setting up a design contest is one option. This method has been applied particularly to the construction business, but also to the procurement of services.
Another option is the procurement of characteristics. This option gives companies more freedom in solving the customer's problem, which also enables product development and searching for new kinds of partnerships. Specifying the characteristics (such as temperature, ventilation and lighting) of the different spaces of a new school can be used to encourage the participants in a design contest to search for an optimal design and implementation solution. When the weighting of life-cycle costs is added to the picture, the result will probably be a building with optimal spaces for the project boasting the latest LED lighting technology and perhaps an energy-efficient ventilation solution.
In recent years, these procurement methods have been developed in several of the Tekes Innovations in Public Procurements projects and the experiences from these projects show that it is worth investing in this development.
When procurement is being planned, the customer should have an idea of what kinds of technologies, solutions and services exist, and in many cases, the customer possesses some knowledge on the subject. However, this is not always the case and the customer's level of knowledge may also be insufficient. How could one know what kinds of new products and services are currently being developed by companies?
A solution may also emerge from an entirely different area of business. This is why market dialogue performed with companies before the actual procurement process is important to both customers and the suppliers of solutions. The active involvement of users is also essential so that the actual needs of users can be harnessed to guide procurement. This involvement should take place at a sufficiently early stage and the opinions of users should truly have an impact on the procurement process.
Smart procurement benefits the customer
Systematic investment in the planning phase of procurements pays off. Procurement that is carefully planned can be called smart procurement. Smart procurement benefits the end customer because the customer is listened to during the process and the solution is specified based on actual needs.
The Smart Procurement programme recently launched by Tekes addresses these issues and challenges people to think about procurement in a new way. The aim of the programme is to help customers perform procurement in a smarter manner. The programme will speed up the introduction of innovations while promoting the development of new markets. From a broader perspective, procurements may support the industrial policy of a certain area.
Finland could be used as a test laboratory for new solutions, which will give companies a head start on international competitors.
Smart Procurement Programme Manager