On 30 April, I delivered a webinar on “Challenges and Opportunities for UK Procurement During and After the Pandemic” for the LUPC/SUPC Annual Conference. The slides are available via SlideShare and the recording is available via YouTube (below). Feedback most welcome: a.sanchez-graells@bristol.ac.uk.
More than meets the eye: La Chimia & Trepte (eds), Public Procurement and Aid Effectiveness (2019) [book review]
I have just finished reading Annamaria La Chimia & Peter Trepte (eds), Public Procurement and Aid Effectiveness. A Roadmap under Construction (Oxford, Hart/Bloomsbury, 2019). 416 pages, £86.40, reading time: 20 hours aprox.
Heart in hand, I must admit that I may not have been tempted to pick up the book if it was not edited by two scholars for whom I have great intellectual admiration and with whom I have long-lasting friendships—and if I was not on research leave and thus, having some more reading time than usual... the snazzy book cover certainly also helped. I would have made a big mistake if I had left the book accumulate virtual dust in my (only growing) to read list, though.
So this unofficial book review (remember, I am friends with the editors) seeks to save you from making that mistake yourself. If you are interested in procurement governance, or even on the broader field of international political economy, you should read this book.
I have found the book to be truly excellent and very thought-provoking, not least because it covers much more than procurement as a conduit for the economic effectiveness of foreign/development aid. For sure, this core preoccupation of the aid community (and a fringe of procurement community) is addressed centrally, thoroughly and authoritatively in the book, including interdisciplinary perspectives from political scientists, economists, lawyers and leading practitioners at international institutions. The book is thus a very valuable source of information and analysis for anyone researching the field. However, the book goes well beyond this.
The book is fascinating because it engages with a wicked problem: how to reconcile multiple regulatory layers driven by a multitude of conflicting normative values, how to find a balance between regulatory complexity and effectiveness of practical interventions, and how to do so in a manner that does not perpetuate inequality or result in regulatory imperialism. In other words, the book ultimately engages with the (impossible) challenge of designing a (perfect) procurement system of worldwide application and capable of delivering a multitude of policy goals on top of the ever present value for money.
Not that the book seeks that goal. However, in assessing legal reforms promoted by the international donor community that implicitly sought ways to achieve that nirvana (through harmonisation, alignment and other, sometimes mutually-contradictory, regulatory strategies) or that were understood as prescribing a ‘magic solution’ for such upgrade of country systems (such as the OECD Methodology for Assessing Procurement Systems, MAPS) , the book is a very effective mirror of the ugly side of procurement reform efforts.
As such, and covering such a polyhedric subject-matter, the book can be read at very different levels or from many different angles, and rewards the reader with a large number of insights that are easily transferable to other (ie non-aid) areas of procurement research and, more generally, public governance. The following are my main take aways. When you read it, please feel free to add yours in the comments section.
I found the book tells a fascinating story about hidden drivers for procurement reform and the pernicious effects they can have. Indeed, the book demonstrates how the goal of improving domestic procurement systems (in developing countries) was not set independently or with a strict concern for regulatory quality, but rather as a demand of international institutions seeking to ‘be able to rely’ on domestic systems in order to foster procurement simplification and to achieve goals of country ownership of the relevant projects.
It also demonstrates how the blueprint of what was considered ‘good procurement’ derived either from the own procurement rules of the international institutions (mostly, multilateral development banks, MDBs) or from half-baked (and misunderstood?) attempts at capturing what defines good procurement regulation (notably, the OECD MAPS, now revised). The book shines a light on the failures of such approaches and queries the wisdom of any similar future attempts. This is something that should not go unnoticed (and I am here thinking, in particular, of the World Bank’s renewed Benchmarking Public Procurement, criticised here). The book offers an unequivocal cautionary tale of the negative spillover effects of badly construed and improperly understood and/or applied regulatory benchmarks. To me, this is one of its big contributions.
From a close perspective, the book demonstrates how ‘increasing aid effectiveness’ was used as an excuse or lever to push for much broader regulatory reforms and how, in turn, this affected international discussions beyond the context of aid and of great relevance to ‘ordinary’ procurement. However, it is very difficult to establish or observe a linear influence between ‘general’ and ‘aid-related’ procurement reforms, and both seem to be part of a melting pot that resulted in significant changes of transnational procurement regulation over the first half of this decade (notably, the new WTO GPA, UNCITRAL Model Law, EU Procurement Package and World Bank Procurement Framework). All these changes evidence different speeds of pendular movements, ranging between constraints on discretion and flexibilisation of procurement regulation, as well as between purely economic and broader policy goals.
From a regulatory perspective, finally, the book also shows how an excessive focus (rectius, obsession) with fighting procurement corruption has resulted in both exceedingly rigid approaches and insufficient regulatory responses. The book documents excesses in the way that draconian anti-corruption measures can freeze frontline decision-makers and prevent them from exercising commercial discretion or risk-taking in the public interest, while leaving the real beneficiaries of corruption unaffected. This is framed in terms of an excessive reliance on agency theory for procurement regulation design. Following from that, the book shows how procurement and its tools (eg debarment) cannot be seen as the one and only regulatory tool, but rather need to be coordinated with the broader institutions of a criminal law and public law system. Failures to do so can, in large part, result from the original blueprint adopted for procurement reform (as mentioned above), as eg the MDBs do not have such a broader regulatory context.
Moving to broader themes of global governance, the book also shows the double standards applied to the assessment of country systems, depending on whether a country is a donor or a partner (ie beneficiary of aid). While developed and international organisations’ procurement systems are largely assessed on the basis of their regulation of procurement, the assessment of developing countries’ has focused more clearly on institutional capacity and on issues of professionalisation. Some of the experiences collected in the book, in particular regarding methods for the assessment of procurement systems’ maturity and for the training of a procurement workforce, could be very useful in the context of eg the European Commission’s current procurement strategy and its initiatives on procurement professionalisation. The analysis in the book also stresses the need to focus system evaluation and institutional development on the basis of procurement outcomes (not processes, or inputs), which in my view is a pending task for all procurement systems, not just those of countries receiving development aid.
Talking about double standards, the book also reports on the resurgence of tied aid and aid conditionality as one more incarnation of the surge in procurement protectionism. The discussion offers some interesting parallels with the analysis of offsets in defence procurement markets and, more generally, with the use of procurement as an industrial policy tool. These are not issues left behind, but rather a constant fight for those advocating free trade, including through procurement, to be consistent when they engage in foreign/development aid or in defence-related procurement, as well as more generally. Given the emerging use of procurement as an ‘Industry 4.0 policy tool’, these issues can only gain even further prominence in years to come.
A final thought the book spurred in me is that perhaps we should, within reason, start making ourselves comfortable with a relatively high level of regulatory complexity, in particular because outcomes-oriented procurement that seeks to achieve the sustainable development goals is a difficult endeavour. What international institutions and countries may need to do is stop trying to find easy fixes through nirvana-like regulatory simplification approaches and rather invest (heavily) in the creation of the required level of competence and capacity in their procurement workforce. This may not seem like a very likely prospect, but perhaps its chances increase if policy-makers and practitioners read this book, and if academics continue to push for practically-implementable procurement reform. So get your copy and enjoy the read.
Some thoughts on procurement flexibility and accountability after the 2014 EU Public Procurement Package & recent trends in case law
I had the honour of being invited to deliver a keynote presentation at the annual conference on procurement organised by FCG in Helsinki on 2 June. The organisers invited me to address two topics: first, an overview of the 2014 reform of EU public procurement rules from the perspective of flexibility, discretion and checks and balances. Second, a more focused discussion of recent ECJ case law in three areas of relevance for the Finnish practice after the transposition of the EU rules: the exemption for in-house provision and public-public cooperation, the requirements derived from general principles of procurement law, and the rules on discretionary exclusion and self-cleaning.
These are the two sets of presentations I used, which I hope reflect some of the ideas I presented, and which gave rise to very stimulating debate.
"Ask responsibly": a warning on the hypertrophy of referrals for preliminary rulings
The tendency towards saturation and the risk of a bottleneck in the activities of the Court of Justice of the European Union (CJEU) are one the main concerns that prompted the recent changes in the rules of procedure of this institution (adopted on 25 September, published in the OJ and due to enter into force on the 1st of November).
As the CJEU expressly remarked:
"Faced with a constant rise in the number of cases brought before it, dominated by references for a preliminary ruling, the Court is adapting its rules of procedure to ensure that the particular features of those cases can more readily be taken into consideration, while at the same time strengthening its ability to dispose within a reasonable period of time of all the cases that are brought before it" (see press release here, emphasis added).
Indeed, references for a preliminary ruling account for more than 60% of the CJEU’s caseload and the hypertrophy of this mechanism for the consistent and harmonized interpretation and enforcement of EU Law risks leaving us with a CJEU without time and resources to effectively deal with any of its other duties under the Treaties.
In that regard, the proactive approach adopted by the CJEU in changing its rules of procedure must be welcome, but at the same time it should be stressed that preventing the hypertrophy of the preliminary ruling mechanism is a two way avenue and that referring courts should also make an effort to "ask responsibly" and avoid referring unnecessary questions to the CJEU. However, the open question is whether the current drafting of Article 267 TFEU allows them to do so.
As is well known, according to Article 267 TFEU, the CJEU shall have jurisdiction to give preliminary rulings concerning: (a) the interpretation of the Treaties; and (b) the validity and interpretation of acts of the institutions, bodies, offices or agencies of the Union. And domestic courts are under an asymmetrical duty/possibility to raise such questions before the CJEU. Indeed, where such a question is raised before any court or tribunal of a Member State, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court to give a ruling thereon. However, where any such question is raised in a case pending before a court or tribunal of a Member State against whose decisions there is no judicial remedy under national law, that court or tribunal shall bring the matter before the Court.
In my view, the imposition on the highest courts of the Member States of an absolute duty to refer cases for a preliminary ruling prevents them from exercising the basic degree of judicial discretion required to "ask responsibly" and generates a potentially non-negligible number of unnecessary referrals without the national courts or the CJEU being able to avoid them. Even if those unnecessary referrals can be replied by way of a reasoned order under the new Article 99 of the rules of procedure of the CJEU, that still takes significant time and costs. Therefore, in my view, some flexibility needs to be introduced to prevent such cases from the very beginning.
The recent Judgment of the CJEU of 18 October 2012 in case C-385/10 Elenca Srl v Ministero dell’Interno is an example of an unnecessary referral. The case involved the interpretation of Council Directive 89/106/EEC of 21 December 1988 on the approximation of laws, regulations and administrative provisions of the Member States relating to construction products as amended by Regulation (EC) No 1882/2003, and also the interpretation of the free movement of goods in the TFEU. More specifically, the case involved a mandatory requirement for construction materials used in chimney pipes sold in Italy to bear the CE mark.
Under the applicable Italian rules, all products used to insulate chimneys and make them fire proof had to bear a CE mark that ensured compliance with a given European technical standard. However, the complainant in the case was using innovative materials for which there exists no equivalent European standard and, consequently, cannot bear the CE mark. As put by the complainant, the contested Italian rule infringed Articles 34 TFEU to 37 TFEU because it made the marketing of a product originating from another Member State of the European Union (in this case, Hungary) subject to a technical condition, namely the affixing of the CE marking, a requirement that is impossible to fulfill because there is no corresponding harmonized standard in Hungary, which makes it impossible in practice to import and distribute the product in question.
18 [... Directive 89/106] provides that the Member States are to allow such a product to be placed on the market in their territory if it satisfies national provisions consistent with the Treaty until the European technical specifications provide otherwise [...]19 It follows that a Member State may not require the affixing of CE marking on a construction product not covered by [a harmonized European standard], originating from another Member State, in order for that product to be marketed on its territory. That Member State may subject the placing on the market of that construction product only to national provisions which comply with its obligations under the Treaty, in particular with the principle of the free movement of goods set out in Articles 34 TFEU and 36 TFEU.20 [...] Directive 89/106 must be interpreted as precluding national provisions which automatically make the marketing of construction products, such as those at issue in the main proceedings, originating from another Member State, subject to the affixing of CE marking.
Moreover, the CJEU also dismisses very clearly any possibility to consider such a disproportioned restriction of free movement of goods justified on public interest grounds:
28 Although [...] it is established that, in the absence of harmonising rules, the Member States are free to decide on their intended level of protection of human life and health and on the need to monitor the goods concerned when being used (see, to that effect, Case C-293/94 Brandsma [1996] ECR I-3159, paragraph 11, and C-432/03 Commission v Portugal [2005] ECR I-9665, paragraph 44), it must be observed that legislation which prohibits, absolutely and automatically, the marketing on national territory of products lawfully marketed in other Member States because those products do not have CE marking is not compatible with the requirement of proportionality imposed by European Union law.29 [...] such a strict requirement of CE marking, which prevents at the outset the very application of the principle of mutual recognition of products for which the European legislature has not effected full harmonisation or drawn up European technical approvals, by prohibiting compliance by the products in dispute with the required safety standards on the basis of approval and certification procedures conducted in the Member State of origin, goes beyond what is necessary to attain the safety objective pursued.30 [...] Articles 34 TFEU to 37 TFEU must be interpreted as precluding national provisions which automatically make the marketing of construction products, such as those at issue in the main proceedings, originating from another Member State, subject to the affixing of CE marking.
The outcome of the case seems rather straightforward to anyone acquainted with the case law on free movement of goods and, consequently, it seems that the Italian Council of State (which already indicated its position by sharing the doubts of the complainant) did not need this answer from the CJEU in order to be able to give a judgment consistent with EU Law. Therefore, this is a good example of an unnecessary preliminary ruling that has taken up time and resources of the CJEU (and the Italian Council of State) without facing an actual difficulty of interpretation of EU Law. Therefore, in terms of prioritization in the development of EU Law, such a case ranks very low, and should have been avoided.
In my opinion, this shows that we need to allow all domestic courts, including the highest courts of the Member States against whose decisions there is no judicial remedy under national law to "ask responsibly". Otherwise, the risk of hypertrophy of the preliminary ruling instrument and the suffocation of the European Courts will still be a storm over our heads.