case study on public procurement

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Case studies showcase replicable sustainable, circular, and innovation procurement approaches and strategies. Our resource centre contains over 200 case studies which detail the methods used, the obstacles overcome and successes achieved in implementing sustainable public procurement.  Below is a selection of representative case studies that contain inspiration and guidance on how to implement sustainable, circular, and innovation procurement in relevant sectors.

Mainstreaming SPP

Metropolitan city of rome capital, developing a monitoring system for gpp.

The Metropolitan City of Rome Capital has been monitoring GPP since 2009, and in 2016, it introduced a new monitoring system linked to the public procurement electronic information system. This innovative, digital system makes it possible to require departments to attach relevant environmental criteria to procurement procedures.

City of Barcelona

Sustainable city council programme.

Barcelona City Council has been implementing SPP for almost two decades, and in 2006 it launched the +SCC programme which introduced firm purchasing commitments which are applicable to all council departments. Participatory processes have been central to the development of the +SCC Programme, and were used to develop strategic goals and define compulsory criteria for 12 high priority procurement categories.

Transport & Mobility

Catalunya region, cleaning the air through clean vehicle procurement.

The Catalan Government has multi-pronged approach to encouraging SPP of vehicles, including: provision of Green Vehicle Procurement Guide, development of specific government agreements to encourage procurement of low emission vehicles, supporting the Catalan Ecolabel, and promoting sustainable mobility.

Food & Catering

The city of copenhagen, supplying seasonal and diverse organic fruit and vegetables.

The City of Copenhagen is dedicated to ensuring its food and catering service is healthy, sustainable and appetising. The City has a target to supply 90% organic food across its 900 municipal canteens. In 2014 the municipality ensured that bids for fruit and vegetable contracts would include a variety of different sorts, varieties and types. This was the Procura+ Award winning tender in 2016 for Sustainable Procurement of the Year.

Plavinu Municipality

Testing circular school catering.

Plavinu Municipality wanted to sustain good quality catering in their school for a reasonable price. They also wanted to include circular aspects in the procurement in order to be more sustainable. The catering tender provided the opportunity to test circular economy aims, and is the first example of a circular public procurement supported by the Circular PP project.

Office Supplies & Stationary

Government of flanders, encouraging sustainable choices through an office supply framework (p+ awards winner 2018).

Flanders has set a target that at least 50% of products purchased in its latest office supply framework are sustainable. To achieve this, it used a mix of technical specifications and award criteria to encourage the inclusion of sustainable stationary products in the product inventory. In addition, it used contract performance clauses to ensure that the contractor works with users of the framework to ensure that the amount of sustainable products they are choosing is increasing over the lifetime of the contract.

MINISTRY OF DEFENCE, NETHERLANDS

Procurement of textiles from recycled fibres.

In its procurement of towels and overalls, the Ministry of Defence of the Kingdom of the Netherlands (MODNL) followed a circular policy and explored requirements around recycled fibres. The winning bids creating estimated savings of 233,000,000 litres of water, 69,000 kg CO2 and 23 MJ of energy. This was the Procura+ Award winning tender in 2017 for Innovation Procurement of the Year.

Cleaning Products & Services

Government of catalunya, socially responsible cleaning framework using green products.

The framework agreement for cleaning services, valid between December 2014 and November 2017, had the purpose  to  carry  out  environmentally-friendly  cleaning  services  in  buildings, premises and facilities with an administrative use.

Waste Management

Netherlands, efficient waste water treatment in the netherlands.

A competitive dialogue process was launched by Waterschapsbedrijf Limburg (WBL) for the design, construction, maintenance and operation of a waste water treatment plant (WWTP) in Venlo, with a high production of biogas, and reduced sludge.

City of Helsinki

Renewing the it equipment of the city of helsinki with low-carbon solutions.

This tender represents a model for fast IT renewal processes achieving remarkable energy savings. Estimations are based on approximated volumes for 7,000 basic computers, and 2000 laptops and 2,000 monitors. Calculations show that total lifetime cost savings for electricity are estimated to be 288,000€ and 27,4% CO2 emissions saved.

Construction, Buildings & Infrastructure

Rijkswaterstaat, sustainable reconstruction of the motorway a6.

Rijkswaterstaat (RWS) procured works and services to widen the A6 motorway, aiming for the motorway to be energy neutral after construction. RWS developed instruments to calculate the CO2 emissions, then selected a tender using a combination of price and quality according to the economically most advantageous submission. This was the Procura+ Award winning tender in 2016 for Tender Procedure of the Year.

Hyvinkää Municipality

Procuring the first nordic swan ecolabelled pre-school in finland.

In 2015, Hyvinkää Municipality set an ambition to procure the first ecolabelled pre-school in Finland. By building a pre-school to the standards necessary to achieve the Nordic Swan Ecolabel, Hyvinkää was able to promote a range of sustainability considerations, including promoting energy use and using sustainable building materials and methods. The winning bidder not only built the school, but also managed the ecolabel verification process, which the school successfully achieved in August 2017. This was the Procura+ Award winning tender in 2017 for Sustainable Procurement of the Year.

Public Health Wales

Reuse and remanufacture of office furnishings.

When Public Health Wales (PHW) moved offices in 2016, it wanted the successful bidder to use as much of its existing office equipment, furniture and flooring as possible, as well as supplying remanufactured goods from other sources. The winning consortium of social enterprises supplied over 2,500 items, with only 6% from new stock. The circular approach diverted 41 tonnes of waste from landfill with a CO2 saving of 134 tonnes.  This was the Procura+ Award winning tender in 2017 for Tender Procedure of the Year.

Bio-based products

Region of skåne, disposable bio-based aprons for skåne’s healthcare sector.

Innovation-oriented public procurement to purchase renewable (bio-based) aprons for the health sector in the Swedish region Skåne. The Regional Council decided to change their purchasing approach for protective disposable aprons to one which results in a purchase of a more environmentally-friendly product alternative. Skåne’s healthcare system in fact disposes of five million aprons every year (approximately 100 million for the entire Swedish healthcare sector), which together makes them one of the products with the highest carbon footprint.

Timber & Forestry

City of madrid, responsible timber procurement: from campaigning to implementing.

A case study on Madrid implementation of responsible timber procurement. Madrid is listed in the ‘green’ list of the WWF campaign “Cities Friends of the Forest”, amongst the top scoring in Spain for implementing procurement policies that give preference to suppliers of wood certified with the maximum guarantee of social and environmental criteria.

Transport for London

Innovative lighting procurement for london's underground network.

Best practice case study as part of the European Commission GPP In practice series focusing on TfL's extensive market engagement for the procurement of innovative lighting. TfL introduced a new WLC and performance based process for lighting. The process has been met with such success that it will now be applied to a range of other assets commonly found across London’s transport network.

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Sustainable Procurement Resource Centre

Tools & Guidance

Need some help navigating sustainable procurement? Browse our curated page listing helpful tools and guiding documents. 

How to implement sustainable procurement?

Step-by-step on how to get started on implementation. Joined an interest group? How about monitoring? Or a sustainable procurement strategy? 

Training & Services tailored to your needs

Our training and consultancy programme assists public authorities of any size in starting or further developing sustainable, innovation, and circular public procurement.

Public procurement

Public procurement refers to the purchase by governments and state-owned enterprises of goods, services and works. It is a crucial pillar of services delivery for governments. As it accounts for a large share of the taxpayers’ money, governments are expected to carry it out efficiently and with high standards of integrity to ensure the quality-of-service delivery and safeguard the public interest.   

As a key activity for governments, well governed public procurement can and must play a major role in fostering public sector efficiency, establishing citizens’ trust and contributing to key governmental agenda’s like the digital transformation and green growth.

• Reforming Public Procurement
• OECD Recommendation of the Council on Public Procurement

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Key messages, public procurement strategies, practices and systems directly affect the quality of life and well-being of citizens.

The delivery of any public service relies on public procurement processes from health to environmental protection, public order and economic affairs (comprising infrastructure, transport, communication, energy and R&D). At the same time, the well-being of citizens depends highly on the quantity and quality of public services received.  Existing estimates suggest that some public services account for a significant share of public procurement spending such as health that represents alone around 1/3 of public procurement spending. 

Efficiency in public procurement : ensuring value for money

Large sums of  taxpayers' money are spent on public procurement, requiring not only sound stewardship but also efficiency. In the pursuit of efficiency gains, governments continuously develop, implement and revise their procurement systems and various mechanisms and tools.

Managing risks and ensuring the integrity of the public procurement system are key to ensure good value for money

Public procurement represents a large sum of public spending. To ensure best value for taxpayer’s money, it is key to ensure public procurement systems and tools are efficient.

Public procurement is a high-risk area due to several factors, including the high financial interests at stake, the volume of transactions and the close interaction between public and private sectors, the linkages with complex value chains. 

Public procurement can be impacted by a wide range of risks that can affect the procurement process itself, as well as broader risks to projects or service delivery. Risks do not occur only during the tendering process, but over the life of the contract or the life of the procured asset. Initially focusing on integrity threats, in recent years countries have paid increasing attention to other risks to public procurement outcomes, including information technology (IT), financial, reputational, social and environmental risks. Many of these risks impact the fundamental purpose of procurement, ensuring that goods, services or works are delivered to the right place at the right time.

However, integrity risks remain significant, that’s why countries are putting in place tools, systems, and standards to preserve the integrity of the public procurement system. 

For all categories of risk countries are increasingly using a data driven risk-based approach to better identify and manage risks. 

Public procurement can be used strategically to achieve broader policy goals

By using their purchasing power to procure goods, services and works, governments can achieve other objectives, whether it is sustainability (by choosing goods with lower environmental impact, for instance), innovation (by encouraging innovative solutions) or social responsibility (by incorporating responsible business standards in their purchasing policies), or the promotion of small and medium sized enterprises. Policy objectives like the protection of the environment and ensuring social conditions (gender human rights, labour rights), extend beyond direct suppliers as they can cascade throughout supply chains. This concept is closely linked to the concept of value for money which is increasingly used across the globe. Different terminologies are used to capture the concept of the use of public procurement strategically to achieve broader policy goals such as sustainable public procurement, strategic procurement, responsible public procurement, or ethical procurement.

Governments procure large amounts of goods and services to help them implement policies and deliver public services. 

Public procurement expenditure as a share of GDP increased significantly across the OECD over the last decade, from 11.8% of GDP in 2007 to 12.9% of GDP in 2021. On the other hand, public procurement relative to total government expenditures fell by 1.9 percentage points across OECD countries between 2019 and 2021. This could be explained by the overall increase on spending due to the economic support measures introduced during the COVID-19 pandemic. A large share of OECD countries’ procurement spending remains at the sub-national level (61.2% in 2021).  

Public procurement is used across all spending functions, from health to environmental protection, public order and economic affairs

Sound procurement governance leads to better public services which, in turn, improve living standards. For example, health accounts for the largest share of public procurement spending in most OECD countries. In 2021, it amounted to 31.9% on average across OECD countries, up from 29.3% in 2019. This was followed by economic affairs (16.4%), education (10.7%), defence (9.9%) and social protection (9.8%) with relatively small variations across countries. Health is the only category where spending increased, due to intensive procurement of health products during the COVID-19 pandemic. Public procurement is central to public infrastructure investment, which should reach USD 71trn by 2030. 

Related publications

Implementation assistance

• Public Procurement Toolbox This online resource will guide you in implementing the OECD Recommendation of the Council on Public Procurement. In addition to better familiarising you with the 12 Principles, the Toolbox provides policy tools, specific country examples as well as indicators to measure your public procurement system. Learn more
• MAPS The Methodology for Assessing Procurement Systems (MAPS) is an international standard and the universal tool to evaluate any public procurement system anywhere in the world. Learn more
• Country Projects The OECD supports countries in reforming their procurement systems by assessing them and providing proposals for improvements as well as supporting tools. Learn more

Related policy issues

• Integrity in public procurement Public procurement is the government activity most vulnerable to waste, mismanagement and corruption. The financial interests at stake, the volume of transactions and the close interaction between public and private sectors in the award of public contracts all pose risks to integrity. Learn more
• Public procurement competency Public procurement represents a large share of public spending. Governments can use it to achieve their policy objectives such as a greener economy, stimulating innovation or promoting responsible business conduct. This makes public procurement a complex function requiring a specific skillset for public procurement officials. This is why professionalising the public procurement workforce has become a priority in countries’ public procurement reforms. Learn more
• Public procurement evaluation Large sum of public resources--thus taxpayers' money--spent on public procurement requires not only sound stewardship but also that it be carried out in an efficient way. To this end, governments continuously develop, implement, and revise their procurement systems and various mechanisms and tools. And to assess whether their systems meet their objectives. Learn more
• Strategic public procurement Used strategically, public procurement can contribute to the 2030 Agenda for Sustainable Development by supporting a more resource-efficient economy, stimulating innovation, supporting small and medium-sized enterprises (SMEs) and promoting social values. In recent years, citizens’ expectations have risen, with calls for greater accountability in government purchasing decisions, increasing the need to consider broader outcomes and multi-dimensional risks, including in global supply chains. Learn more

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A Sampling of Successes in Green Public Procurement: Case Studies of Green Public Procurement Implementation in Asia-Pacific Countries

• Published on February 23, 2017

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Programme(s):, share your work on sustainable consumption and production, you might also be interested in.

Instrumentos E Incentivos Para Promover La Participación De Pyme En Las Compras Públicas Sostenibles - Una Recopilación De Prácticas

Consumer information for scp, sustainable public procurement.

Blue Transformation: strategies and actions for more sustainable agrifood systems in the Mediterranean

Sustainable food systems.

Good practice on ecolabels and sustainable public procurement: Sustainable public procurement policies, ecolabels and environmental certifications

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What do case studies tell us about addressing corruption in public procurement?

Joel turkewitz.

Public procurement often features prominently in corruption scandals in developed and developing countries, suggesting that it is vulnerable to particularly resilient corruption. 

There is not much information on how to establish well-functioning procurement systems in the face of opposition by individuals and groups benefiting from existing practices but a recent World Bank report on Enhancing Government Effectiveness and Transparency: The Fight Against Corruption examined three examples of positive reform experiences in public procurement to achieve better outcomes.

In Somalia, initial efforts by the government to introduce a modern procurement system made little headway given the extremely limited capacity and concerted opposition by entrenched groups. Aided by long-term technical support, over a two-year period, the Government succeeded in cancelling an illegitimate sole-sourced contract and signing a competitively tendered one for military rations - the largest single public contract in the nation. The process, which ended in April 2019, demonstrated the government’s ability to organize a fair and transparent tender, reduced costs by over 50%, and saved the government $6.7 million annually. Moreover, this helped pave the way for follow-on reforms to make sure that rations were getting where needed, including the introduction of biometric identification of military personnel in the country.

In Bangladesh, anticorruption efforts were introduced while establishing new mechanisms for public procurement using an electronic Government Procurement (“eGP”) online platform.  Since 2011, officials ensured that procurement was executed via the eGP platform, firms were encouraged and able to bid on a wide range of contracts, communities were actively involved in monitoring contracts, and improvements in procurement outcomes were regularly reported to the public. The results demonstrate that extraordinary progress can be made in growing a public procurement system. The case also highlights how corrupt networks tend to adapt to new circumstances, resulting in corruption being displaced instead of eliminated. 

The 2015 reform efforts in Chile, a well-performing state with a relatively high degree of capacity and integrity, showed that corruption in public procurement was seen as a symptom of the relationship between economic and political power. Wholesale reforms introduced in 2003 had modernized the Chilean government and created the foundation for well-functioning systems. A raft of public scandals in 2014, some of which touched on procurement, demonstrated the need for additional work on establishing systems that operate with integrity and purpose. In response, the Government introduced a larger program of reforms aimed at restructuring the role and transparency of private financing of political parties. In this case, addressing corruption in public procurement was approached primarily by modifying incentives in ways that promoted greater integrity. 

What can we learn from the cases?

Reform in all three cases has been an iterative process, of consecutive reform steps, in which each step sought to address specific concrete challenges. This calls for a sustained effort which takes time and often diverges from best practice models. Constructive initiatives produce visible outcomes that build support for the next step in the reform process and overcome the opposition that threatens to derail change. The willingness of political leaders to align themselves with confronting corruption in procurement is often directly linked to the proven ability of these reforms to yield politically popular outcomes.

Constructive reforms are shaped around two elements – the nature of corruption in procurement and the resources that can be marshalled to confront corrupt practices. The cases reflect a range of entry points, from specific transactions, entire procurement systems, to broader governance arrangements. In each case, reforms build on previous reform efforts. Past reforms furnish the essential building blocks for future efforts. The importance of new leaders and new technologies in reform is well recognized. The importance of learned experience and reform legacies is often overlooked.  

The cases also reveal how anticorruption efforts lever into broader governance reforms. Confronting corruption in public procurement is not exclusively about reducing seepage and improving efficiency in public finance.  It can also be a critical force for realigning institutional relations, as in Somalia, or redrawing the rules and expectations around pubic and political behavior, as in Chile.   

Finally, the cases demonstrate the need for anticorruption reforms in public procurement to be based on careful study of what drives procurement outcomes and procurement markets. Reducing corruption in the vast pool of high volume, low value procurement transactions is primarily a function of standardization of practices and the creation of frictionless markets.  High value procurements relating to capital investment and other complex tasks represents a different challenge relating to building technical competencies among procurement officials, competitive markets, and transparent and effective control, oversight, and monitoring processes, including monitoring contract performance. In contracts at the highest level of complexity, where investment in innovation is essential to achieving the best results, anticorruption efforts need to be fashioned in ways that do not impinge on the trust between public and private sectors even as actions and individuals are monitored to ensure that they are aligned with public purpose.  

The cases show that very different countries, taking different approaches, can make progress in limiting the influence of corruption on public procurement processes and outcomes.   

Editor’s Note: This blog is part of a series that helps unpack our new  global report,  Enhancing Government Effectiveness and Transparency: The Fight Against Corruption .

• Latin America & Caribbean

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Public procurement: international cases and commentary

• Engineering Systems & Supply Chain Management
• College of Engineering and Physical Sciences
• Sustainable Environment Research Group
• Aston Business School

Research output : Book/Report › Book

Other files and links

• http://www.routledge.com/books/details/9780415394055/

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• international cases Social Sciences 100%
• public procurement Social Sciences 91%
• Economic Policy Social Sciences 14%
• manager Social Sciences 10%
• innovation Social Sciences 9%
• expert Social Sciences 9%
• examination Social Sciences 8%
• Teaching Social Sciences 6%

Research output

• 2 Chapter (peer-reviewed)

Research output per year

Challenges facing public procurement

Research output : Chapter in Book/Published conference output › Chapter (peer-reviewed)

Procurement in the English National Health Service

Research output : Chapter in Book/Published conference output › Chapter (peer-reviewed) › peer-review

Public procurement: an introduction

Research output : Chapter in Book/Published conference output › Chapter

T1 - Public procurement

T2 - international cases and commentary

A2 - Knight, Louise

A2 - Harland, Christine

A2 - Telgen, Jan

A2 - Thai, Khi V.

A2 - Callender, Guy

A2 - McKen, Kathy

PY - 2007/6/7

Y1 - 2007/6/7

N2 - In many countries and sectors, public procurement is developing from a functional orientation to an effective socio-economic policy lever. There is a great interest among managers and academics to learn from other countries’ and other sectors’ change initiatives and how they dealt with the challenges they encountered. This text provides such learning opportunities, presenting case studies of public procurement, covering diverse nations, sectors and issues. The cases are combined with editorial commentary and contextualizing chapters to assist the student reader in understanding this complex topic. The text combines descriptions of cases of public procurement with cross case analysis to draw out the key dimensions to enable further examination of the central themes. Each case study concludes with three questions to aid its use as a teaching and training text. Edited by a team of internationally recognised experts in the field this innovative text illustrates the strategies and innovations within public procurement on a global scale and highlights common problems that all countries encounter. Public Procurement is vital reading for anyone with an interest in this topical area.

AB - In many countries and sectors, public procurement is developing from a functional orientation to an effective socio-economic policy lever. There is a great interest among managers and academics to learn from other countries’ and other sectors’ change initiatives and how they dealt with the challenges they encountered. This text provides such learning opportunities, presenting case studies of public procurement, covering diverse nations, sectors and issues. The cases are combined with editorial commentary and contextualizing chapters to assist the student reader in understanding this complex topic. The text combines descriptions of cases of public procurement with cross case analysis to draw out the key dimensions to enable further examination of the central themes. Each case study concludes with three questions to aid its use as a teaching and training text. Edited by a team of internationally recognised experts in the field this innovative text illustrates the strategies and innovations within public procurement on a global scale and highlights common problems that all countries encounter. Public Procurement is vital reading for anyone with an interest in this topical area.

UR - http://www.routledge.com/books/details/9780415394055/

SN - 978-0-415-39405-5

SN - 978-0-415-39404-8

BT - Public procurement

CY - Abingdon (UK)

Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

Procurement Strategy Case Studies — 5 Insightful Examples

Table of content

• InDemand’s co-creation model
• Copenhagen supplies seasonal and diverse organic fruit and vegetables
• Catalonia’s aim to clean air
• The Ministry of Defense of the Kingdom of the Netherlands procuring textiles
• Combining procurement models
• Procurement Expert’s Insights 
• Frequently Asked Questions

Key takeaways

• Procurement strategy case studies are real-life examples of how organizations make purchases, showcasing the challenges and decisions they encounter.
• Successful strategies depend on efficient coordination and collaboration between essential procurement players.
• Knowing the factors affecting procurement strategizing helps build better procurement outcomes for the company.

Setting the appropriate strategy in procurement is the first step to improving control and effectiveness of the procurement and sourcing activities. However, not everyone knows where to start in their strategy. 

In this article, we will check five procurement strategy case studies that can give you insight into strategies they have used to streamline their processes. We will explore the problems that arise and how they have conquered them with their strategy. 

After reading this article, you will gain enough knowledge on tackling the problems in your procurement by formulating your very own strategy. So, I’d like to make your procurement process more effective than before!

But before you read the whole article, I have created a free-to-download editable procurement strategy template. It’s a PowerPoint file you can use to create your own strategy. I even created a video where I’ll explain how you can use this template.

Example 1 — InDemand, Co-creation Model Helping to Procure Innovation in Public Organizations

Actual case:.

InDemand brought together procurers from three different European Regions namely: Murcia, Oulu, and Paris to test a new co-creation model which is said to be a model that is faster, leaner, and requires fewer resources and overheads. Thus, being more suited to everchanging technologies, such as digital solutions. 

InDemand aims to help promote innovation by combining what the clients need (health professionals of the Murician Health Service), and the development of the solutions in the process of co-creation (a collaboration of health professionals together with tech companies). 

The Murician Health Service (EPICO), used the InDemand model to know the challenges of enhancing accessibility for and follow-up epileptic patients. Thus, a call to companies to co-create an innovative solution alongside clinicians commenced. 

After a tender process was launched, Oxiframe (renamed Aircrum IT) was selected to work together with neurologists and patients. After the engagement process, Servicio Murciano de Salud (SMS) prepared an open tender for a solution. Thus, a bigger company named PULSO won the bid and collaborated with Oxiframe to make an innovative solution. 

Final Deal:

The InDemand model has been leveraged to more than 50 procurement innovation projects. It is estimated that more than 200 organizations submitted a bid for the different calls based on the InDemand model from the numerous procurement organizations. 

Additionally, there was a 100% acceptance of the tool which was found to truly help improve communication between doctors and their patients affected by epilepsy. It has heightened patient satisfaction by up to 50% and led to a quality of life improvement for direct communication between doctors and their patients. 

After the success, it was then tested on 54 patients at the Hospital of Cartagena for 2 months and eventually tested on a wider group. Thus, it is a great example of how to use a co-creation model with companies together with clinicians and their patients. 

What Can We Learn From It?

We can learn here that demand-driven co-creation works, at least in the healthcare sector, to address the problems perceived by parties involved in the creation of a solution. 

Together with the clinicians and the patients, the collaboration worked well. The exchange of ideas, needs, solutions, standard practices, and legal limitations has become a valuable component to co-create an innovative solution. 

Example 2 — The City of Copenhagen Supplying Seasonal and Diverse Organic Fruit and Vegetables

Copenhagen, the most populous city of Denmark, has set a target for 90% of the food served in municipal facilities to be organic. It has also ensured that it was buying seasonal produce to support efforts of strengthening biodiversity in agricultural production in both Danish and foreign producers. 

It is important to note that “seasonality” is not meant to be the seasons in Denmark. Rather, it defines the season somewhere in the world helping to ensure fairness and transparency. 

Furthermore, an extensive market engagement was conducted to ensure the requirements were ambitious and also achievable. The bidders were also asked to complete the “seasonal wheels’ to demonstrate the varieties of the typically used products available throughout the year. 

The first contract was issued in January 2014. However, the tender was abandoned due to multiple errors seen in the bids. The contract was reissued in April 2014. Seven tenders were then submitted and only two of those met the requirements. After that, the contract was awarded in July 2014. 

The innovation in the supply and delivery of products, improved relationships with the suppliers, and greater sustainability initiatives in sourcing food were all positive results of the extensive market dialogue. 

Additionally, the organic food market in Denmark has remarkably grown in recent years and the organic food service market increased up to 33% between the years 2013 and 2014. 

We should take note that there is a risk in carrying out the innovation procurement process that is susceptible to being abandoned due to a lack of competition. The extensive market engagement Copenhagen has done can be time-consuming. 

However, by building a strong knowledge of the market, it is achievable to produce realistic yet innovative specifications or requirements to attract necessary competition. 

Example 3 — Catalonia’s Aim to Clean Air through Clean Vehicle Procurement

Catalonia is an autonomous region in Spain. Its government has passed the responsibility for certain legislative and policy areas, including the environment. The Ministry of Territory and Sustainability is the expert body for environmental policies and leads the promotion of Green Public Procurement in Catalonia. 

The Catalonia government uses GPP to support numerous strategic policies such as reducing negative impacts of consumption and production, promoting eco-innovation and transformation, and supporting other policies that pursue sustainable objectives. 

The government of Catalonia focuses on low-carbon vehicles that align with wider environmental priorities within the region. Air pollution is a specific concern within the wider urban area of Barcelona where nitrogen oxide exceeds the annual limit. 

An Air Quality Plan of the Metropolitan Area of Barcelona has brought 40 municipalities together to solve the air pollution problem. Catalonia’s Government approach to combat air pollution is to provide guidelines on the GPP vehicles, government agreements regarding GPP, eco-labeling to identify low-carbon vehicles and the LIVE platform which is a public-private platform promoting sustainable mobility. 

The GPP guidelines laid out clear and simple criteria that public procurers procurement can follow to buy low-emission vehicles, as well as consider the use of vehicle fleets in the delivery of service contracts. It also includes the maximum energy consumption and technical specifications of the award criteria. 

Additionally, the Catalonia government supports the Catalan Ecolabelling. It is a regional voluntary ecolabel awarded to products and services that fulfill specific environmental quality requirements beyond what is compulsory under the current regulations. 

The result of vehicle-related tenders in the Catalonia region has produced positive impacts on the environment. It is estimated that through its procurement strategy, it has produced energy savings of 2,120 Tons of Oil Equivalent (TOE) and a reduction of 7,166.7 tons of carbon emissions compared to benchmark levels. 

Catalonia’s government approach demonstrates that procurement can play a significant role in contributing to wider environmental policies and public health goals. 

Additionally, by aligning the EU national and regional policies, it is achievable to send a clear message to markets and the citizens of Catalonia about the importance of the environment through sustainable activities. 

Example 4 — The Ministry of Defense of the Kingdom of The Netherlands Procuring Textiles Made From Recycled Fibers

The Ministry of Defense of the Kingdom of the Netherlands (MODNL) is a large public sector buyer that employs around 58,000 people across the army, military police, air force, and other supporting roles. 

It is also one of the 45 public sectors and private parties brought together by the Dutch Government’s Circular Procurement Green Deal, tasking participants in carrying out two circular procurement initiatives between the years 2014 and 2016 to increase knowledge and accelerate the transition to a circular economy. 

One of the areas of focus of MODNL was textiles because it needed to equip its large numbers of personnel with uniforms and other textile products. However, textile production is linked with numerous environmental and social problems. Ultimately, the energy to transform raw materials and manufacture new fibers in the production of textiles has great carbon emissions. 

Therefore, the MODNL began exploring the market for recycled textiles in January 2014 by publishing a request for information and conducting an open meeting with the textile suppliers. This market engagement aimed to know if it is possible to require recycled fibers to be used in the production of certain items. 

Through its market research , it identified that manufacturers were able to meet the requirements around the use of recycled content. However, MODNL must focus on the items’ ability to perform their use rather than the technical values such as the tensile strength. 

The contracts awarded in June 2016 are worth approximately $455,000 for towels and washcloths and $1.46 million for overalls. Only six suppliers submitted their bids and only four of them met the tender requirements. 

Now, two Belgian companies supply the MODNL with towels, washcloths, and overalls. The parties will innovate during the four-year term which could result in a higher percentage of recycled materials later on in the execution of the contract.

Subsequently, a separate eight-year contract was also signed for reuse services where a third party was contracted to sort items of clothing for reuse and resale with income being returned to MODNL. Thus, it results in considerable savings for the MODNL.  

Circular procurement needs suppliers to find alternative inputs and new ways of working. Thus, to assist innovation, the market engagement conducted by the MODNL found that functional rather than technical specifications provided suppliers with more space to innovate and find new ways to meet the MODNL’s material needs. 

We can learn here that when asking the market to work with new materials or in an innovative way, it is necessary to give them more lead-in and response time to consider and prepare non-traditional offers. 

Moreover, it is important to take note that you should not introduce price ceilings based on existing prices, and costs, as expected on a pilot test, can constrain the development potential of new areas. 

Example 5 — Combining Procurement Model For Sustainable Buildings

The South Moravian Region has over a million inhabitants and is the fourth-largest region in the Czech Republic. The landscape of the region is distinguished by its highlands as well as the Moravian Karst. The abundance of caves and gorges provides ideal conditions to treat respiratory diseases. 

The regional government aims to build a new treatment facility for respiratory diseases near the town of Ostrov u Macochy. The procurement approach was set up to give the market the chance to show the best they can offer to create the building as aesthetically pleasing, energy-efficient, and a comfortable place for patients. 

The process includes preliminary consultation and market dialogue to test the feasibility of the procedure and to provide a detailed description of the planned procurement process and requirements of the tenders. 

Furthermore, the procurement procedure combined various methods to filter the bids. The tender itself was awarded using a combination of a competitive procedure with negotiation and an architectural design contest. 

The preparation of the tender process started in April 2018 and the procurement commenced in April 2019 with a total contract value of $6 million. 

Seven suppliers submitted their bids which were to be assessed by an expert independent evaluation committee that recommended the exclusion of one supplier due to flaws in its bid. 

The remaining were then evaluated according to set criteria which are based on the reports of the expert examiners who examined in detail the values offered in the quality of technological and energy solution criteria. 

The contract was awarded to the selected contractor in April 2020. Since then, the construction started in June 2021 and is expected to be done by the end of 2022.

The winning bidder offered numerous sustainable solutions including reusable components of the main construction and interior design layout that enables simple layout adjustments that may be done in the future. The successful bidder also committed to achieving a reduction in the annual consumption of non-renewable primary energy. 

We can learn here that preliminary market consultations are crucial when the contracting authority undertakes a new approach to procurement. Additionally, it is important to present the intentions and goals to potential suppliers, get feedback from the market, and find other information significant to prepare the procurement process. 

All parties involved in the preparation of the actual procurement process were sent a request to identify the strengths and weaknesses of the procurement process they utilized. 

Using the BIM method leads to better execution and more efficient operation of the building. Furthermore, as the tender used numerous methods, it is significant to see the effectiveness of the DB approach as it can be an interesting and legitimate way for contractors to implement large-scale projects. 

Procurement Expert’s Insights on Procurement Strategy Case studies

For this article, we asked an experienced procurement expert to share her insights to help answer common questions about case studies regarding procurement strategy.

Nesrin Chabbah Senior Lead Buyer

LinkedIn Profile: linkedin.com/in/nesrin-chabbeh

1. What do most people get wrong about procurement strategy case studies?

“What’s commonly misconceived about procurement strategy, as evident in the given cases, is its potential to profoundly influence organizational objectives beyond mere acquisition efficiency. Procurement transcends simple procurement; it’s a strategic instrument capable of propelling innovation, sustainability, and social advancements. These examples underscore how procurement, when meticulously strategized and implemented, can yield positive effects not just on operational efficiency but also on the environment, public health, and society at large. It involves harmonizing procurement with grander visions and engaging stakeholders for impactful results.”

2. What should people know about procurement strategies if they are planning to start working on this?

“For those embarking on the journey of devising procurement strategies, understanding that it’s not merely about obtaining goods and services is pivotal. Procurement strategy extends to shaping innovation, sustainability, and social responsibility. Effective strategies align with broader organizational goals, incorporating sustainability, ethical sourcing, and fostering supplier relationships. Engaging stakeholders and fostering transparency is vital for success. Moreover, the ability to adapt strategies to emerging technologies and market shifts is essential for staying competitive and achieving long-term success in procurement.”

3. From your experience, what is the most important thing you learned about procurement strategy case studies?

“The core lesson in mastering procurement strategy is understanding its dynamic and multifaceted nature. It extends beyond the efficient acquisition of goods and services; it encompasses supply chain optimization, innovation encouragement, sustainable practices, and fostering strong supplier relationships. Crafting an effective strategy demands comprehensive knowledge of market dynamics, legal considerations, risk mitigation, and emerging technologies. Flexibility and adaptability are paramount, as strategies must evolve in response to evolving business landscapes and shifting consumer demands. Ultimately, a well-crafted procurement strategy profoundly influences an organization’s overall performance and its capacity to meet objectives both effectively and responsibly.”

4. What tips can you give them to be effective in procurement strategies?

“To ensure an effective procurement strategy, it’s crucial to align with organizational objectives and understand needs and goals thoroughly. Employ data-driven decision-making, leveraging insights for optimal choices. Prioritize risk management by identifying and mitigating potential supply chain risks. Cultivate strong, transparent relationships with suppliers, adhering to compliance and ethical standards. Foster a culture of continuous improvement, integrating sustainability practices, and optimizing costs through strategic negotiations. Maintain clear communication channels and invest in team training for skill development. Regularly measure performance and adaptability, embracing change as a part of the process. By following these guidelines, you can enhance your procurement strategy and achieve better outcomes.”

5. Can you give us examples of procurement strategy challenges and how you solved them?

“Monitoring supplier performance and their resilience posed significant challenges. However, implementing Key Performance Indicators (KPIs), conducting monthly meetings, improving communication, and setting clear goals engaged suppliers, fostering responsibility and driving them to deliver their optimal results.”

The five insightful procurement strategy case studies offer valuable lessons for organizations seeking to enhance their procurement processes.

These case studies emphasize the importance of understanding market dynamics, engaging stakeholders, aligning procurement with broader policy objectives, and fostering innovation through collaboration.

By drawing insights from these examples, organizations can tailor their procurement strategies to address specific challenges and achieve more effective and sustainable outcomes.

Frequently asked questions

What is a procurement strategy case study.

A procurement strategy case study is a real-world example of how organizations buy things, showing the challenges and choices they face.

What types of procurement strategies are commonly explored in case studies?

Case studies may cover a range of procurement strategies, including strategic sourcing, supplier relationship management, e-procurement, cost optimization, and sustainability initiatives.

What can organizations learn from mistakes in case studies?

Case studies highlight mistakes made by others, offering useful insights into what went wrong and how to avoid similar issues for better outcomes.

Vehicle Operator Recruitment, Retention, and Performance in ADA Complementary Paratransit Operations (2010)

Chapter: chapter 10 - case studies of procurement and contracting best practices.

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

108 It has been estimated that between 70% and 90% of ADA paratransit programs use one or more contracted operators. Some systems also use contractors to perform reservations and scheduling and sometimes the dispatch function as well; depending on the contractual arrangements and relation- ships, these can be part of a turn-key operation contract or could be a contract for call center management or brokerage management services, with separate contracts for operations. Because the use of contractors for ADA paratransit is so pre- dominant, the ways in which contractors are procured bears examination relative to their impact on the recruitment and retention of operators. Some transit agencies include in their procurement docu- ments (RFP, sample contract) terms and/or requirements that result in effective operator recruitment and a low turnover rate. For example, some transit agencies have developed procure- ment documents that specify a minimum vehicle operator wage rate or “livable wage rate” or even a “competitive wage rate.” Moreover, some transit agencies have asked in their RFP for proposers to provide detailed information about wage rates and the fringe benefits that are available to operators. These agencies have discovered that it is not sufficient to question whether or not a proposer offers health care coverage to its employees, which only tells half the story; a follow-up and more illuminating question asks for the percentage of health care premiums that the employee must contribute. For exam- ple, if the percentage contribution is unrealistically high for an employee, health insurance effectively becomes unattainable. Other transit agencies in their procurement documents have emphasized the importance of operator recruitment and the retention of a stable work force in a more circuitous manner by (1) including evaluation criteria and/or bonuses paid to the contractor for achieving a certain level of operator retention and/or (2) requiring or providing bonuses for 100% pull-out coverage. By including such terms, these transit agencies are working to discourage the submission of proposals that include low operator wages, which are too often a casualty of the compet- itive bidding process. The goal is to generate competitive cost proposals that also accurately reflect competitive vehicle oper- ator wage rates and fringe benefits and result in a more stable vehicle operator workforce. The objective of this portion of the research was to collect best practice examples of procurement documents that directly or indirectly resulted in a fair vehicle operator compensation pack- age and to determine how positively those strategies effected operator recruitment and retention. Approach and Methodology The first step in the research was to identify transit systems who indicated in the national survey that they crafted their pro- curement documents to contain one or more of the following provisions: • Statements that a stable, experienced operator workforce was expected, along with evaluation criteria that put more weight on proposals that include effective vehicle operator recruitment and retention efforts or which otherwise evi- dence how this is to be achieved. • Requirements to provide detailed information about spe- cific operator recruitment and retention activities and the associated level of effort and cost specific to each effort. • Requirements for a minimum operator wage rate or “living wage” or favorable or competitive operator wages rates, along with additional requirements to provide details of the operator wage rates, including training wage rates, starting wage rates, and maximum wage rates per vehicle type if appropriate for each year of the contract. • Requirements to provide detailed cost information or assumptions about the levels of fringe benefits provided and the required employee percentage of contributions for health care insurance for each category of employee (single, married, family, etc.). C H A P T E R 1 0 Case Studies of Procurement and Contracting Best Practices

• Requirements to provide total and average operator wages and fringe, and the assumptions upon which that total cost is based, e.g., number of full-time and part-time operators, average shift lengths, total service hours by operator type and how that was calculated, and total operator pay hours by operator type and how that was calculated. • Requirements to achieve certain standards for operator retainage (or turnover) and/or to maintain a sufficient oper- ator work force or surrogate measure, such as achieving a certain standard for pull-out coverage; as part of this requirement, the specification of bonus payments for achiev- ing these standards or penalties for not achieving these standards. Among the respondents to the national survey, 26 public transit/paratransit agencies indicated that they included such language in their RFPs and contracts, and 14 of these 26 agen- cies indicated that they had had moderate or good success as a result. These 14 systems and the success indicated are shown in Table 10-1. The following summarizes those results: • Eleven agencies reported moderate or good success with conveying that a stable and experienced work force was expected. Of these, ten stated that this was mentioned in the RFP, and seven stated that they included this as an eval- uation criterion in rating the proposals. • Seven agencies indicated moderate or good success with the inclusion of a living or minimum wage standard. • Nine agencies indicated moderate or good success with incentives and penalties related to maintaining an adequate workforce and/or covering runs. Follow-up contact was made with these 14 agencies to obtain more detailed information. Follow-up contact focused on the following: • Determining whether any measurable improvements to service could be traced to the procurement/contractual provisions; • Obtaining procurement/contract documents to get the exact language used (or point systems used in the case of evaluation criteria); and • Discussing their perspectives and experiences with these strategies. An attempt was made to also interview one contractor from each system to get a contractor perspective on the pro- curement process or contract provisions. Thirteen of the 14 agencies responded, and detailed infor- mation was gathered from 12 of these systems. The research team was able to obtain a contractor perspective for 11 of the 12 systems contacted. Information from 11 of the systems contacted is included in the mini case studies below. Lessons Learned The data obtained in this study provided a strong and com- pelling case for the positive effect that certain ADA paratransit contractor procurement and contract provisions have on oper- ator recruitment and retention of the paratransit contractors. The following are lessons learned: • Transit agencies that included clear expectations of a stable, experienced operator workforce in their RFPs often did report lower rates of operator turnover. The language in the RFPs did appear to encourage potential bidders to improve compensation and focus more on efforts to maintain a sta- ble operator workforce. In most cases, performance penal- ties did not have to be imposed because compliance with goals and contract provisions was achieved. • Operator compensation stands out as the key determining factor of operator recruitment and retention. Even in areas without a municipal living wage ordinance, it was found that contractors who paid more per hour than lower-paying companies tended to see a reduction in turnover. Other efforts, implemented along with wage increases were also reported to achieve lower turnover. • Contractors who were able to evidence in their proposals a successful track record of operator retention in their pro- posals claim to encounter minimal challenges in securing contracts and in implementing new contracts. At the same time, those agencies that did not include such expectation or requirement in their RFPs claim to value this experience when selecting a bidder. • The comparative importance of cost versus service quality varied somewhat amongst transit agencies as an evaluation criterion, though it is important to note that the agencies valuing service quality over cost consistently reported high satisfaction with their operating contractor(s). For many procurements, the evaluation process is conducted in two independent phases: first a technical evaluation and then a price evaluation; and in at least one case, the two phases were undertaken by two different evaluation committees. • Decreases in operator turnover rates and increases in ser- vice productivity were reported by agencies that selected contractors which evidenced competitive compensation packages and a commitment to maintaining a well-trained, experienced operator workforce. One agency was able to more than double its number of service hours provided as a result of the contractors’ ability to maintain operators who were capable of meeting an increased level of service demand. Whether expressed in evaluation criteria or contractual requirements, it is evident from the research that transit agen- cies that recognize the benefits of using contractors that can 109

City Transit Agency Living or Minimum Wage Standard in RFP Incentives and/or Penalties for Maintaining Adequate Workforce or Covering Runs Mentioned in RFP Evaluation Criteria Columbus, OH COTA Moderate Moderate Moderate Good Dallas, TX DART Moderate Moderate Good Denver, CO RTD access-a-Ride Good Good Good Good Everett, WA Community Transit Kalamazoo, MI Kalamazoo Metro Transit Good Good Los Angeles, CA Access Services Madison, WI Madison Metro Transit Moderate Good Good Nashville, TN Nashville MTA Moderate Moderate Moderate Orange County, CA OCTA Good Good Good Lake Worth, FL Palm Tran Good Moderate Phoenix, AZ Phoenix Public Transit Moderate Moderate Moderate Moderate Moderate Moderate San Diego, CA San Diego MTS Moderate Moderate San Mateo County, CA Redi-Wheels Good Seattle/King County, WA Access Transportation "Stable, Experienced Workforce" Table 10-1. TCRP project F-13 survey respondents indicating moderate or good success with operator recruitment/retainage as a result of procurement/contractual provisions.

attract and maintain a stable, experienced operator workforce attract contractors who either share this recognition or who modify their practices to achieve this goal. The following case studies summarize the approaches taken by 11 selected systems that were studied. Outcomes and expe- riences, as well as a contractor perspective on the changes, are provided. Case Studies Dallas Area Rapid Transit (DART), Dallas, TX DART is the regional transit authority serving the Dallas metropolitan area, including the city of Dallas and 12 sur- rounding cities. DART has approximately 130 bus routes, 45 miles of light rail transit (DART Rail), 75 freeway miles of high occupancy vehicle (HOV) lanes, and an ADA paratran- sit service. DART and the Fort Worth Transportation Author- ity (the T) jointly operate 35 miles of commuter rail transit (the Trinity Railway Express or TRE), linking downtown Dallas and Fort Worth with stops in the mid-cities and DFW Inter- national Airport. Use of Contractors for ADA Paratransit DART’s ADA paratransit service, called Paratransit, is organized as follows: DART staffs a call center that includes the reservations, scheduling and dispatch function for the entire system. DART also provides staff for contract admin- istration, eligibility certification, and customer service func- tions. Veolia Transportation, under contract to DART, oper- ates the service with a fleet of 186 vehicles supplied by DART. The contract payment structure includes a monthly fixed amount to cover fixed costs, a variable hourly rate for opera- tions, plus reimbursement for tolls. Procurement/Contractual Provisions In the survey, DART reported that it had moderate success with specifying a minimum wage rate in its procurement and contract documents and significant success with liquidated damages for uncovered runs. With respect to the minimum wage requirement, DART staff stated the following: We make it clear that we expect experienced, trained opera- tors; by setting the bar high, we have a better chance securing such a workforce through the contract. As a rule, happy people make contented workers. A contented workforce makes good decisions and they are reliable. Requiring the contractor to pro- vide a minimum or living wage helps to ensure a more contented workforce. Left to themselves, contractors will try to keep wages as low as possible. This low rate will eventually cause personnel to leave. The turnover rate increases and valuable experience and skills are diluted or lost. In DART’s solicitation, the two provisions related to the workforce were the following: Operators Minimum Wage Rates and Incentive Programs All persons employed as operators for performance of this con- tract or any subcontract hereunder shall be paid not less than $10.00 per hour while in training. The minimum wage standard imposed is a minimum and the Contractor is required to employ a systematic evaluation program and benefit package designed to encourage retention of well qualified and good performing oper- ators for the duration of the contract. Toward this end, the Con- tractor shall establish progressive wage increases beyond the train- ing level and offer such increases to employees who successfully graduate from the training program. Operators and mechanics shall also be provided a minimum of three (3) sick days as part of the benefit program. Failure to comply with this provision shall constitute noncompliance with the terms of this contract. Schedule of Liquidated Damages for Uncovered Runs Liquidated damages in the amount of $350 per occurrence shall be assessed for unavailability of operators or vehicles at Contractor scheduled operator report/clock-in time. The Contractor Perspective The Regional Manager for Veolia Transportation and for- mer General Manager for this contract felt that the minimum wage rate/sick day provision has contributed more signifi- cantly to operator retainage than the uncovered run provision. He reported that competitive wage rates and benefits attract a “higher-quality” job applicant which results in less voluntary attrition, whereas the liquidated damages for uncovered runs are more to ensure that operators depart on time. Reported Results The Regional manager reported that voluntary operator attrition totals no more than five or less operators per year since the RFP/contractual provision for minimum wage and sick day benefits was instituted. Denver Regional Transportation District (RTD), Denver, CO The Regional Transportation District (RTD) is the regional transportation agency for the Denver metropolitan area. The RTD has 140 local, express, and regional bus routes and six light rail lines that provide 35 miles of light rail service. The RTD also has three demand-response services: (1) call-n- Ride, a general public dial-a-ride in several neighborhoods that cannot sustain fixed-route bus service; (2) access-a-Ride, its ADA paratransit services; and (3) access-a-Cab, a supple- mental (non-ADA) taxi subsidy program that is available to access-a-Ride customers. 111

Use of Contractors for ADA Paratransit RTD’s ADA paratransit service is organized as follows: RTD contracts with First Transit to operate its paratransit call center. As part of this contract, First Transit provides reser- vations, scheduling, and dispatching services for access-a- Ride, and reservations for access-a-Cab. RTD has separate contracts with four different carriers to operate access-a-Ride services in Denver: Global Transportation, MV Transporta- tion, Special Transit, and Coach USA. Special Transit is also contracted for service in Boulder, CO. The call center con- tractor develops the daily schedules and transmits daily run manifests to each of the contractors. Procurement/Contractual Provisions In the survey, RTD reported that it had had significant suc- cess with (1) specific evaluation criteria for a stable experi- enced workforce; (2) requiring proposers to provide wage scales, and (3) specifying liquidated damages for uncovered runs. With respect to these strategies, the RTD access-a-Ride service manager attached the following note: Points are assigned via the evaluation process for a range of issues such as understanding and approach to the RFP, firm and staff experience and costs. While we do not mandate specific wages, we do identify current wage scales. Liquidated damages and incentives are designed to motivate contractors to perform within acceptable service standards. The relevant provisions in RTD’s paratransit RFP are: • Proposal Evaluation Criteria for Wage Rates. Proposers who state that they will maintain (or increase) the current wage scales are given points accordingly. Proposers who state that their wage scales are below the current ones are marked down. The purpose of this is to maintain a consis- tency in the wage scale from one contract to the next. RTD views this evaluation criterion as a significant contributor to this goal, which in turn has contributed to low operator attrition rates. • Contract incentives and/or penalties related to maintain- ing an adequate vehicle operator workforce or covering all runs assigned. As a contract provision, RTD assesses a $500 fine for each uncovered run, whether it is a result of not enough operators and/or not enough vehicles. On days when there are an unexpected and large number of operator call-outs, a carrier may not be able to cover all of the runs. In this circumstance, RTD allows a carrier to re-distribute trips from light runs to other runs where these trips might fit. However, in some cases, this may not be possible, and the carrier has no other choice but to give back the run. In this case, a $500 fine is assessed per “give-back.” This provision is thus an inducement for a carrier to size an extra board correctly and for the carrier to have a back-up plan for call- ing in operators willing to work overtime. The Contractor Perspective The Executive Director of Special Transit had a slightly dif- ferent take on the provisions in the RTD’s procurement/ contractual document, indicating that the provisions had per- haps less significant impact on vehicle operator recruitment in actual practice but also acknowledging that the liquidated damages for uncovered runs did provide an impetus for Spe- cial Transit’s maintaining a sufficient roster of operators. She stated that the challenge for Special Transit is to balance the potential for liquidated damages against the cost of having excess operators, since the Call Center contractor (First Tran- sit) can cut runs at any time. She added that RTD’s practice of providing transit passes to contractor operators (at no cost to the operators) had a positive impact on Special Transit’s ability to recruit and retain operators. Reported Results Special Transit reported an annualized operator turnover rate of about 35% for its access-a-Ride service in Denver. Interestingly, the Executive Director also reports a 0% turn- over rate for its access-a-Ride operators in Boulder. She attributed this dramatic difference to the fact that the Denver operators are unionized, and the Boulder operators are not (Special Transit inherited a union shop when it took over the entire regional service in 2000 on an emergency basis for RTD). She further explained that the seniority-based shift- bid process (which is required by the union agreement) results in the newer operators getting the worst shifts (nights, week- ends, etc.), and that the operator turnover in Denver is most acute among the newer operators. In contrast, Special Tran- sit has more flexibility in matching individual operators’ needs with shift requirements in the Boulder operation. Attrition Rate. RTD reported that its contractors have experienced operator attrition rates ranging from 20% to 35%. Run Coverage. RTD indicated that since the run coverage provision was instituted, the average number of “give-backs” have been reduced from 5 per week to perhaps 1 per month. Community Transit, Everett, WA Community Transit is a special-purpose municipal corpo- ration providing public transportation services in Snohomish County, WA. Community Transit’s services include fixed-route transit, vanpool, ride-matching, and paratransit (DART). In 2004, over 8 million passenger trips were made on the system, and Community Transit carried 57% of all Snohomish County- 112

Seattle commuters to work and back. The entire bus fleet is wheelchair accessible, either by low-floor ramped vehicles or buses equipped with wheelchair lifts. Dial-a-Ride Transportation (DART) is Community Transit’s ADA paratransit service. With an existing fleet of 53 vehicles, the service operates 7 days a week, covers 1,400 square miles, and provides an average of 800 one-way trips per weekday. Use of Contractors for ADA Paratransit DART service is operated by Senior Services of Snohomish County (SSSC), a private non-profit organization, through a contract with Community Transit since 1981. Although the contractor manages all day-to-day operations, the hardware and software, including an automated client file, reservation, mapping, scheduling, and dispatch system, is provided by Community Transit. Vehicles are also provided by Commu- nity Transit, but maintenance is provided by the contractor. SSSC manages the day-to-day operations of the service. The organization’s responsibilities include customer eligibility screening, customer service, scheduling, reservations, routing, dispatching, supervision, fare collection, and operations. Procurement/Contractual Provisions Community Transit places a high value on service quality when selecting contractors, recognizing operator pay as an indicator of that quality. The agency’s Contracted Services Coordinator stated the following: We make it clear in our RFPs that we expect experienced, trained operators; by setting the bar high, we have a better chance of securing such a workforce through the contract. While the expectation of paying operators well and valuing employment longevity is not explicitly indicated in the RFPs, it acts as a strong determinant in selecting winning proposals. For example, Community Transit’s most recent contractor was chosen largely because its proposal touted high wages for operators and extremely low turnover. Community Transit’s RFPs also include a detailed set of serv- ice standards, incentives, and liquidated damages, although Community Transit reported that the incentives do not have a significant impact on service. One of the liquidated dam- ages provisions relates to run coverage. The following is an example: Contract incentives and/or penalties related to maintaining an adequate vehicle operator workforce or covering all runs assigned The Contractor shall provide adequate staffing to ensure that staff or manpower shortages are compensated for with qualified personnel in a manner which does not detract from staffing lev- els in other areas of this project. The RFP includes the following language regarding penal- ties for poor performance by the Contractor: One hundred dollars ($100.00) for each occasion that the Contractor does not have the number of vehicles available for revenue service as specified by Community Transit in operating service. The Contractor Perspective The General Manager of Senior Services of Snohomish County stated that the high expectations for experienced operators and high wages are “definitely a draw” when recruit- ing operators. He explained that before hiring operators, they go through intensive training, and 60% “make it out.” The agency looks for vehicle operators that have the following: “good driving records, good people skills, and want to assist people. Those are the ones that stick around a long time.” The agency reported the turnover rate for operators is about 20–30%, depending on the month. The General Manager reported that Senior Services meets the goals set forth by Community Transit. The 91% on-time performance standards are always met, and the general man- ager stated that they “never miss a trip.” He explained: “We meet all goals. We don’t turn anybody down. We really don’t have financial disincentives happen.” Although he is aware that the financial disincentives exist in the contract, the main motivation for Senior Services is to be a good service provider. Reported Results Turnover has not been a problem for Community Transit since they began contracting with Senior Services of Sno- homish County, the contractor who proposed to provide high operator wage rates and to maximize operator retention to the extent possible. It was noted that Senior Services only loses one or two operators a month out of about 70 operators. Community Transit believes that the combination of RFP language requiring a stable, experienced operator workforce and the contractor’s natural desire to treat operators well and provide them with sufficient training has contributed to a paratransit system that provides high quality, on-time ser- vice, and satisfied and experienced operators. Access Services, Inc. (ASI), Los Angeles, CA Access Services (ASI) is a local public agency organized as a public benefit corporation that operates ADA complemen- tary paratransit service. ADA paratransit service is provided for the Los Angeles County Metropolitan Transit Authority (LACMTA) and 40 other fixed-route transit operators in Los Angeles County pursuant to the Los Angeles County Coordi- nated Paratransit Plan. In addition to operating the ADA 113

complementary paratransit service, known as Access Para- transit, ASI acts as the Los Angeles County Consolidated Transportation Service Agency (CTSA). It is governed by a nine-member board appointed by the Los Angeles County municipal fixed-route operators, the Los Angeles County local fixed-route operators, the City of Los Angeles, the County of Los Angeles, the Transportation Corridor Representatives of the Los Angeles branch of the League of Cities, the Los Angeles County Commission on Disabilities, and the Coalition of Independent Living Centers. Use of Contractors for ADA Paratransit Service is provided by six principal contractors in six regions as shown in Table 10-2. Requests for service are auto- matically routed to the appropriate carrier based on the cus- tomer’s telephone number. Each of the contractors provides turn-key services in their region. Each provider except for MVT in the Southern region is responsible for taking reservations, verifying customer eli- gibility, scheduling rides onto vehicles, and providing service using ASI-certified vehicles and operators. GPI accepts all reservations for the West/Central and Southern regions and passes on a portion of the reservations for the Southern region to MVT. Each provider is responsible for all trips originating in its region regardless of whether the destination is in the region or another one within the Los Angeles Basin. Trips between the Basin, Santa Clarita, and the Antelope Valley require a transfer. Service is provided using a mix of ASI-owned vehicles, provider-owned vehicles dedicated to Access service, and taxi- cabs certified for Access Paratransit service. ASI manages the system, providing contractor oversight and monitoring, and also directly provides customer service functions, fleet management functions (for its own vehicles), community outreach functions, and all administrative and planning functions. Procurement/Contractual Provisions Access Services reported in the survey that it had moderate success with the inclusion of “living wage” and benefit infor- mation in the RFP. Evaluation criteria are used to evaluate proposals, and points are earned on a sliding scale. Criteria are based on the following: • Comparability of pay (to other carriers); • Quality of the heath care plan (e.g., the percentage split of premiums between the company and the operator); • Inclusion of medical, dental and vision benefits versus medical only • Family package; • Number of vacation, sick and PTO days; • Educational reimbursement; and • 401K/retirement plan. In its paratransit solicitations, Access Services supplies wage information by position for the current contractor; this includes the starting hourly rate, the top hourly rate, and any qualifying notes, such as whether there are annual or merit increases. The two most relevant provisions in the solicitations are as follows: Expectations for Operator Wages / Retention The selected Proposed shall establish and maintain an employee pay and benefit structure, which will serve to attract and retain high-quality employees for all positions required to successfully perform the work. Proposer must submit rates and graduated rate increases along with timelines for the increases. Proposal Evaluation Criteria Access Services will substantially downgrade proposals that do not incorporate appropriate wage and benefit packages that will facilitate successful recruitment and retention of qualified employees. Access Services will also downgrade proposals that do not provide for reasonable medical benefits for all full time employees. Proposer should carefully consider adequate and comparable rates of compensation, public sector and private sec- tor, which exist for similar positions within Los Angeles County. Proposals are evaluated with both qualitative and quanti- tative measures. The quantitative measures are as follows: Quality of Technical Approach 30% Paratransit Operating Experience 20% Cost/Price Proposal 20% Employee Pay and Benefits 15% Qualifications and Availability of Proposed Staff 15% 114 Region Contact Providers San Fernando Valley (Northern) MV Transportation (MVT) Eastern San Gabriel Transit (SGT) West/Central Global Paratransit Inc. (GPI) Southern Global Paratransit Inc., and MV Transportation Santa Clarita Santa Clarita Transit Authority Antelope Valley Antelope Valley Transit Authority (AVTA) Table 10-2. ASI service regions and contractors.

The Contractor Perspective MV Transportation’s General Manager reported that wage scales have had a positive impact on vehicle operator retention, but he said that because of the competitiveness of the procure- ment process, the company is unable to increase hourly wages. However, operator retention is encouraged through increasing wage scales at 6 month and yearly increments. In addition, the company offers incentive programs for retention, such as a financial retention bonus, paid at multiple stages up to an operator’s first 6 months of work. He also reported that the company’s employee referral program has been extremely successful. If an operator refers a new applicant, and if the new hire works for at least 90 days, both receive bonuses. The general manager said that this program also “encourages the experienced operators to be mentors for the new hire referrals.” Despite retention programs, there is about a 45% turnover rate. As far as the evaluation criteria, the general manager sug- gested that “it is a good concept, although the current con- tract was renegotiated due to the current budget crisis.” Reported Results ASI’s Executive Director noted that ASI purposely did not quote a minimum wage rate in their RFP because in Califor- nia, that would constitute ASI being an “implied” employer. However, in the past, ASI has encouraged contractors to set a vehicle operator wage above the minimum ($8.50), but in many cases, the wages came in at the figure. She said that ASI is exploring how to actually set the wage without becoming the implied employer of the operators. The Executive Director also was quick to point out though that operator wage rates alone do not tell the entire story, reporting that the contractor with highest operator wage rates in the system was one of the poorest performers, and the con- tractor with the lowest wage rates was one of their best per- formers. In the survey, ASI noted that many contractors are still focused on submitting the “lowest bid” since operator wages make up the majority of the overall cost. She also men- tioned that some of her contractors include a benefits pack- age that provides English-as-a-second-language benefits, an operator recognition program, and “stepping stone” career programs and internships that pave the way for operators to advance to senior/management positions. Madison Metro Transit, Madison, WI Madison Metro Transit is the municipal transit provider for the city of Madison, WI, covering an area of 60 square miles. With more than 450 full-time employees, Madison Metro Transit serves an average of over 54,000 daily passenger trips during the school year. The service has 56 fixed-routes and operates a fleet of 204 buses. Its ADA paratransit service, Metro Plus, provides nearly 300,000 annual trips to 1,774 clients. Metro also operates Group Access Service (GAS) for Madison, Middleton, and Monona adults who live in their own homes and apartments, are over 60 years old, and have a physical or sensory disability. GAS is a scheduled, routed, group service to meal sites, farmers’ markets, pharmacies, libraries, and grocery stores. Use of Contractors for ADA Paratransit Beginning in 2009, nearly a quarter of Metro Transit’s paratransit operations are in-house, with the remainder of the work contracted to Transit Solutions, Badger Cab Com- pany, and Badger Bus. All customers call Metro Transit, and transit agency staff either serves the customer themselves or delegates the work to one of the three contractors. Transit Solutions operates about 20% of the ADA service on week- days only, with no weekends or holidays; Badger Bus handles about 30% of the requests on weekdays, nights, and week- ends; and Badger Cab provides ambulatory services and takes over leftover ADA paratransit runs, about 23%. Procurement/Contractual Provisions There is a municipal and county-wide living wage ordi- nance that is articulated in Madison Metro’s RFPs. It states: LIVING WAGE (Applicable to contracts exceeding $5,000). CONTRACTOR agrees to pay all employees employed by CONTRACTOR in the performance of this contract, whether on a full-time or part-time basis, a base wage of not less than CITY minimum hourly wage as required by Section 4.20, Madison General Ordinances. One of the contractors, Transit Solutions, adds to this liv- able wage by providing benefits and an incentive plan that pays operators for safety and attendance. Madison Metro has also established standards in its con- tracts with penalties on a per-trip basis. Since 2006, this sys- tem of collecting performance data from contractors and then generating a percentage of compliance has been used to calculate this per-trip penalty fee: It is the responsibility of CONTRACTOR to make every effort to comply with all service standards established by CITY. CITY has established a service standard of passenger pick up no later than twenty (20) minutes after the scheduled time. For each instance in which a passenger is picked up outside of this service standard, the following reimbursement will be applied: On-Time Performance Reimbursement 94% On-Time 100% of the reimbursement rate 90–93% On-Time 98% of the reimbursement rate Less than 90% On-Time 90% the reimbursement rate 115

While the CITY pays the lesser of the cost of the ride or $3.00 for each “no show” a passenger has when service is provided by the CONTRACTOR on a per trip basis, this cost must be absorbed by the contractor if they are over twenty minutes late. The Contractor Perspective The owner of Transit Solutions commented that the “liv- ing wage” outlined in the contract is “great because it gives people a higher starting wage.” Transit Solutions also has benefits for employees like health insurance, retirement pack- ages, and paid holidays, which all help to maintain a steady workforce. In addition to the incentive plan in the contract, the owner noted that Transit Solutions has an incentive plan for vehicle operators that: “pays people for safety and atten- dance . . . all of those things play into recruitment and reten- tion.” The company uses the financial incentives in the con- tract with Metro Transit in a similar fashion with its other employees. The owner stated, “Overall, I think the system they [Metro Transit] have is reasonable and it works.” Reported Results Contractors are almost always within the 94% to 100% on- time rate. Madison Metro Transit’s Paratransit Program Man- ager reported that rarely, if ever, is the 10% reduction penalty enacted. Contractors work hard to meet the 94% compliance rate and have found that the only time they fall short is dur- ing bad weather (in which case the penalty is waived by the City). In March 2009, Transit Solutions achieved a 98% on- time performance rate. It was noted that paying a living wage has definitely helped to retain vehicle operators. The Paratransit Program Manager said she believes this higher pay has also contributed to higher quality driving and service. She stated, “Operators stay when there is better pay, and they drive better, too.” Vehicle operator turnover at Transit Solutions is extremely low. In 11 years of business, over half of Transit Solutions’ orig- inal operators remain. The owner attributes this to a combi- nation of good wages, benefits, and hands-on management; he and his partner are present and available each day, and they make an effort to treat people well and with respect. They even maintain a special account for employee pay advances which are paid back via paycheck deduction at no interest. The owner stated: “We do things to help our work- ers and make it easier and more enjoyable to work here. And it really works.” Orange County Transportation Authority (OCTA), Orange County, CA The Orange County Transportation Authority (OCTA) serves Orange County through bus, commuter rail, Express Lanes, and paratransit service. OCTA operates approximately 80 bus routes, covering every city in Orange County and sev- eral cities in Los Angeles County. OCTA also operates express service to Los Angeles and to San Bernardino and Riverside counties. OCTA’s ADA paratransit service is called ACCESS. Most recently, in 2007, OCTA initiated a Vanpool Program to provide assistance to commuters who work in Orange County and live in neighboring counties. Use of Contractors for ADA Paratransit Until July 2009, OCTA’s fixed-route, express bus, and ADA paratransit service were operated by Veolia Transporta- tion. After July 2009, Veolia Transportation began running only the ADA paratransit service, ACCESS, utilizing a fleet of 350 vehicles. Veolia provides a turn-key operation, providing all day-to-day operations and vehicle maintenance on OCTA provided vehicles. OCTA has a managerial role and has close oversight on all service provided by Veolia. Procurement/Contractual Provisions In the survey, OCTA reported that it had significant suc- cess with specifying a minimum or “living wage” rate in its procurement and contract documents, as well as including language regarding an experienced workforce and incentives or penalties in the contract related to maintaining an ade- quate vehicle operator workforce. OCTA also reported that they include strict and specific evaluation criteria in the RFP. OCTA includes the following language to indicate its expec- tations for vehicle operator wages/retention: AUTHORITY recognizes the expense and negative effect of employee turnover. Therefore, the CONTRACTOR must demon- strate they have an acceptable recruitment and hiring program that is intended to minimize employee turnover and retain a high quality work force. Several service performance standards, incentive payments, and penalties are also included, as shown in the Table 10-3. The Contractor Perspective The Project Director for Veolia reported a low turnover rate of 7%. He reported that there is a dedicated commitment to training which has paid off, as evidenced by the high retention rate. He said that with better training the company sees better results. He noted that another reason for the high retention is the benefits package provided to employees, including good health care, a living wage, and help with flexibility on travel to work, which is an issue in and around the Los Angeles area. The Project Director reported that the incentives outlined in the scope of work are hard to achieve. He said: “In 36 months, 116

we’ve received only one performance incentive. They are chal- lenging incentives to meet.” He explained that the complaint standard is the toughest and perhaps the strongest in the coun- try, so the company has never met it. Veolia is striving to meet it and is establishing a new program with increased training for better results. Reported Results OCTA’s Field Administrator commented that the contrac- tor performs well according to obligations outlined in the scope of work. He reports that good communication between the contractor and the agency is the best way to have a shared understanding of expectations, since language in a contract can be tricky and interpreted in more than one way. He said that since April 2007, Veolia has maintained an on-time per- formance level average of 93%. Palm Tran CONNECTION, Lake Worth, FL Palm Tran, Palm Beach County’s public transportation service, provides fixed-route public bus transportation and coordinated paratransit service. Fixed-route bus service is provided on over 30 routes, serving nearly all destinations in the county. Buses generally operate weekdays with 30-minute headways during peak rush hours and 60-minute headways during mid-day and on the weekends. Palm Tran CONNECTION is the county’s shared ride, door- to-door transportation specialized service. CONNECTION schedules all trips, prepares vehicle manifests, handles cus- tomer concerns, determines eligibility, and monitors the per- formance of transportation providers. Veolia runs a turn-key operation, performing all ADA paratransit functions. Use of Contractors for ADA Paratransit Palm Tran contracts with MV Transportation, Palm Beach Metro Transportation, and Two Wheels Transportation. The contractors operate 190 vans, providing door-to-door service for senior citizens, persons with disabilities, and persons with low-income. The service provides an average of 4,025 sched- uled passenger trips each weekday. Veolia runs a turn-key operation and performs all ADA paratransit functions. Procurement/Contractual Provisions Palm Tran includes language in RFPs indicating that a stable, experienced vehicle operator workforce is expected. Under- standing that a great deal of operator retention is determined by compensation, Palm Tran gives preference to respondents with the highest operator pay rates. Palm Tran also includes a specific liquidated damage fee in contracts to offset the cost of uncovered runs. While this fee has provided an effective incentive for contractors to cover runs, there have not been many problems, and the fee penalty has been scarcely implemented. The Contractor Perspective The General Manager of MV Transportation believes that factors such as benefits, work atmosphere, and communica- tion are key ingredients in maintaining a stable and experi- enced workforce. MV Transportation takes extra care in mak- ing the company an enjoyable place to work by providing full-benefits, substantial vacation time, and an open door pol- icy with all managers. The general manager reported that the company no longer has to spend significant time and money 117 Category Standard Incentive Penalty ACCESS On Time Performance 95% or above $5,000 for each percentage point above 96% on time $5,000 for each percentage point below 94% on time Service Delivery Failure All qualified requests must be served. None $1,000 per occurrence Call Center Hold Time Average of 90 seconds or less None $1,000 deduction if monthly average exceeds 90 seconds Call Center Valid Complaints No more than 1 valid complaint per 1,000 passengers each month None $100 for each valid complaint over 1 per 1,000 passengers Accident Report Report all within 24 hours, verbal and written. None $5,000 per accident not reported. Table 10-3. OCTA service standards, incentives and penalties.

recruiting employees because the pay is higher than other companies. MV Transportation increased hourly pay for the Palm Tran contract, and the general manager reported that this has helped to retain operators. The general manager also reported that she aims to main- tain a stable operator workforce and works towards adhering to contract requirements. She uses the liquidated damages clauses set forth in contracts as incentives to provide good service. Reported Results Palm Tran CONNECTION’s Fiscal Analyst reported that, generally, contractors perform well and meet their contractual requirements. There are rarely, if ever, any uncovered runs. Turnover has become less of a problem not only because of the RFP provisions, but as unemployment rates have increased, operators tend to hold onto to their jobs for longer periods of time. City of Phoenix Public Transit Department, Phoenix, AZ The City of Phoenix Public Transit Department is responsi- ble for the overall supervision of the City of Phoenix Transit System. The City manages local buses, Phoenix Dial-a-Ride paratransit, Reserve-a-Ride senior service, RAPID and Express commuter services, and several neighborhood circulators. The City’s paratransit service is called Dial-a-Ride. The service operates seven days a week in almost all areas within Phoenix city limits. Dial-A-Ride serves individuals who are ADA paratransit eligible as well as seniors. ADA paratransit customers are encouraged to call at least one day in advance for service; where possible, same day demand service is also available after reservation requests have been scheduled. The City also manages Reserve-a-Ride, a specialized, door- to-door transportation service for senior citizens over 60 years old and certified persons with disabilities. Reserve-a-Ride pro- vides transportation to senior centers, medical appointments, social service agencies, and shopping. The primary responsi- bility of the service is to provide transportation to and from senior centers, and other trip requests are accommodated wher- ever possible. These two services, Dial-a-Ride and Reserve-a- Ride, are operated by the same contractor with the same fleet of vehicles. Use of Contractors for ADA Paratransit MV Transportation has been the City’s paratransit contrac- tor since 2001. MV Transportation manages all day-to-day operations, including maintenance on over 100 vehicles and scheduling service for both advance and same-day service requests. Out of the 300 or so MV Transportation employees, about 215 of them are vehicle operators. Procurement/Contractual Provisions In the survey, Phoenix reported that it had moderate success when specifying that a stable, experienced vehicle operator workforce was expected, and also moderate success when including a “livable wage” requirement in its procurement and contract documents. While there is no living wage ordinance in Phoenix, the City understands that a livable wage scale is sig- nificant for job retention and stability. The City’s RFP requests a detailed plan with specific strate- gies for maintaining a stable workforce. The City encourages proposers to be creative in their approach to operator reten- tion, stating that preference will be given to proposers who can successfully demonstrate to City their ability to retain quality operators. In addition to requiring the proposer to outline hir- ing, training, and retraining programs for operators, Section VII of the RFP asks proposers to respond to the following: Discuss the PROPOSER’S philosophy on providing a “livable wage” given the current state of the economy and how the pro- posed employee wage and benefit package and other innovative programs ensure that they meet that standard. Describe in detail the methods to be taken in order to attract and retain the appropriate staffing levels. Include any incentive and/or merit programs to award outstanding employees. Describe in detail the type and level of employment benefits provided or available to employees addressing vacation, sick and other leaves, health and welfare benefits, wage and salary classi- fications and progressions, and employer contributions for all programs for all job categories. When evaluating RFP responses, a points system is utilized. The Director of Transportation Contract Services explained, “Our approach is that we want to make sure the company we hire is going to fulfill our needs as far as service—we take an approach of service over price.” The evaluation criteria out- lined in the RFP are the following: Qualifications 50 points Professional References 50 points Management 150 points Maintenance and Operations Experience 100 points Understanding of Scope 400 points Price 250 points The RFP also provides a system of incentives and sanctions to reward exemplary performance and ensure adherence to performance standards, but the survey indicated that these incentives and/or penalties did not have even a moderate impact on contractor performance. 118

The Contractor Perspective The General Manager for MV Transportation reported that the success it has had working with the City of Phoenix is due to a “successful, true partnership” between the two organiza- tions. He gave credit for the positive working relationship to the City’s understanding of the operation, saying: “[The Director of Transportation Contract Services] knows how our system works—he understands the nuts and the bolts.” The current average wage for an operator is $14.45, which is adequate according to the terms outlined in the RFP. In addition to a reasonable wage, though, the general manager said it is important to look for individuals who are customer- service oriented. He also indicated that a good work environ- ment and other non-monetary rewards have measurable pos- itive effects on turnover. He noted that these methods were helpful in MV Transportation’s response to the City’s RFP requirement of a description of “methods to be taken in order to attract and retain” employees. Annually, MV Transporta- tion in Phoenix sees about a 21% turnover rate. It was noted that 83 of MV’s 180–200 paratransit vehicle operators have over 8 years of experience. Both the City staff and MV General Manager reported that the financial incentives or penalties were not a motivator to provide good service. MV Transportation does adhere to goals outlined by the City, and they have “monitors all over the place,” indicating current levels of on-time performance, aver- age hold time for a customer on the phone, etc. This keeps all personnel informed of the current situation and helps to strive for the best customer service possible. Regardless of whether the motivation for good service is the contract with the city or just good business practice, MV Transportation receives more financial rewards than penalties. The MV General Manager also commented that RFPs and contracts should be specific: “The more specific the agency can be when putting the proposal together and creating the vision that they want, then the end result will be more successful.” Reported Results The contractor for paratransit service has a relatively low turnover rate for a private contracted operation (reported to be 21%). A third of operators have been employed with the contractor for over 8 years. City of Phoenix transportation staff also reported that “this has improved service and produc- tivity by volumes.” The Director of Transportation Contract Services commented, “It definitely improves productivity and service quality when you treat your employees well.” On the books, the City and contractor have yet to experience a day with high numbers of closed runs. Budgeted hours from the most recent contract indicate that the contractor is always able to meet allotted hours, whereas before contractors in pre- vious periods fell short of the requirements due to lack of oper- ators, which caused the City to over-budget. For the past five or so years, the City has been able to maintain its budget pre- cisely. Important to note, immediately prior to the most recent contract with MV Transportation, the City approved a sales tax measure that allocated more money to transit. In just a 2-year period, the City was able to double its number of service hours provided, and the contractor was able to provide an adequate workforce to meet this new induced demand. According to City staff, the greatest challenge when nego- tiating contracts is trying to convince bidders to change their mindset or approach when developing their proposals. He said that most bidders are accustomed to winning a contract based almost entirely on price rather than service. He noted that in the Phoenix process, when reviewing proposals, the price for each bidder was not revealed to the evaluation com- mittee. As a result, the committee was only able to evaluate based on the merits of the proposals. A City staffer expressed: “I feel that we had a successful procurement in that the suc- cessful proposer is still with us and doing a very good job, which was our objective to have them competing on the qual- ity of service, rather than the price. By the way, the successful proposer was not the lowest bidder.” San Diego Metropolitan Transit System, San Diego, CA San Diego Metropolitan Transit System (MTS) is the public transit agency that provides bus and rail services directly or by contract with public or private operators. MTS manages the scheduling, frequency of service, and hours of operation for its existing services covering approximately 570 miles in and around San Diego. Existing passenger services include 82 bus routes, three trolley lines, and ADA paratransit service that together serve over 3 million residents. ADA paratransit service is called MTS Access. Use of Contractors for ADA Paratransit First Transit is the contractor for MTS Access. The contrac- tor is 100% turn-key and handles all operations functions. Vehicles are owned by MTS. Procurement/Contractual Provisions In the survey, MTS reported that it had moderate success including (1) language that a stable, experienced operator workforce was expected; (2) requirements for proposers to provide wage scales, and (3) specific incentives and/or penal- ties for uncovered runs. RFPs include wage standards, which are set to increase or decrease according to the market, thus creating a level playing 119

field for new bidders which allows operators to keep up with the cost of living and retain employees. New contractors must maintain existing operators at current seniority levels. MTS mandates in its contracts that a certain percentage of each invoice is allocated to operators’ benefits. For example, for fiscal year 2011, the minimum wage is $10.14/hour for train- ing, $10.71/hour after training, and $11.27/hour base wage after a probationary period. The contractor is required to con- tribute 5%, or $2.10, from the base wage towards employee benefits. There is also a requirement that all operators who work more than 20 hours per week should have full medical coverage. MTS provides a 10% preference to contractors who are able to prove in proposals that they are able to retain their operator workforce and who agree to retain their current staff upon contract. The evaluation criteria are as follows: Corporate Capacity/Qualifications 10 points of the Firm Corporate Experience 30 points Key Personnel 50 points Facility Plan 20 points Safety and Training Plan 10 points Start-up Plan 20 points Customer Services 20 points Cost and Price 70 points 10% Bidding Preference 23 points MTS also sets performance standards, financial incentives, and liquid damages. These are shown in the Table 10-4. The Contractor Perspective The District Manager at First Transit reported that the livable wages clause included in the RFP helped to drive the company to meet the high standards for wages. The responsible wage requirement “helps maintain a level of wages that are competi- tive” and, in turn, helps to prevent a high turnover rate. The District Manager also commented on the incentives and disincentives included in the RFP. “We have met the highest level of incentive thresholds for productivity for the past four years,” he explains. He said that the incentives and disincen- tives were set “at a level where the dollar level wasn’t significant enough.” He noted that instead of financial motivation, cus- tomer service and good business practice are instead drivers for service. The District Manager noted that the responsible wage requirement only applies to vehicle operators that are not cov- ered by a collective bargaining agreement. First Transit oper- ates under labor contracts now and it is expected that when the company responds to the June 2009 RFP, the responsible wage requirement will not be applicable. Reported Results Despite the focus in the procurement on workforce stability, it was reported that turnover has continued to be a problem over the past few years running at “upwards of 100%” according to the First Transit District manager. With the economic down- turn, the turnover rate has decreased and has been running at about 40% for the past year. San Mateo County Transit District (SamTrans), San Mateo, CA The San Mateo County Transit District is the administrative body for the principal public transit and transportation pro- grams in San Mateo County: SamTrans bus service, Redi- Wheels paratransit service, Caltrain commuter rail, and the 120 Performance Measure Incentive LiquidatedDamages Contractor shall achieve a monthly no- show rate of under 5% $2,000 per each month no-show rate is below 5% Any month in which no-shows are greater than 7.5% may carry a damage of $1,000, and $2,000 in which no- shows are greater than 10% Contractor shall ensure that all trips arrive within the established MTS On-Time Performance Window $5,000 per month may be paid Contractor for each month that 90% or more of trips arrive in the MTS established On-Time Window none Contractor shall ensure that hold times don’t exceed an average of two (2) minutes None $5,000 for each month where average hold times exceed two minutes Table 10-4. MTS performance standards, incentives, and liquidated damages.

San Mateo County Transportation Authority. Caltrain and the Transportation Authority have contracted with the District to serve as their managing agency, under the direction of their appointed boards. The SamTrans fixed-route bus system con- sists of 54 routes (44 operated by the District and 10 contracted to MV Transportation), which carry nearly 50,000 passengers on an average weekday. The District’s paratransit service, Redi- Wheels, transports approximately 1,000 customers every day on 83 buses, vans, and sedans, with some additional taxi ser- vice. RediCoast operates nine vehicles on the coastside and provides about 100 rides each day. Use of Contractors for ADA Paratransit Redi-Wheels, RediCoast, and a portion of fixed-route service are contracted to MV Transportation. For Redi-Wheels service, SamTrans performs ADA eligibility and marketing and owns, maintains, and fuels 59 vehicles. MV Transportation manages the remaining day-to-day operations. MV Transportation provides 15 vehicles, all sedans. MV has about 110 vehicle operators. Procurement/Contractual Provisions In the survey, SamTrans reported that it had significant suc- cess with specifying a minimum wage rate and incentives and disincentives relating to an adequate workforce in its procure- ment and contracting documents. SamTrans emphasizes the importance of an experienced workforce in both the pre-bid meeting and in the RFP, stating specifically that operators must be fairly compensated with competitive wages and ben- efits. While SamTrans legally cannot require a specific pay scale, the transit district consistently places strong emphasis on a stable workforce, and staff monitors the contractor to ensure a competitive wage is provided. The most recent RFP contained a specific section on Para- transit Operator Longevity, which is closely monitored by SamTrans throughout the duration of the contract: It is of paramount importance to the District and in the best interest of its customers that Paratransit Operators are not only properly trained, but gain hands-on experience in their craft. It has been the District’s experience that a high turnover rate among Paratransit Operators reduces overall service quality through lack of efficiency and familiarity with the areas in which they operate. In order to indicate a high level of commitment, a Contractor must encourage and promote longevity of its Paratransit Opera- tors. Proposers are required to complete and submit Appendix D, “Staffing Plan Summary” and Appendix E, “Wage and Benefits Summary,” and disclose a plan to accomplish this end with its Proposal. Proposers should disclose information such as award programs and other incentives offered to their Paratransit. There is also a monetary penalty if the contractor is not able to meet the daily demand or maintain at least a 90% on- time performance level. If the contractor fails to provide an adequate number of vehicle operators to meet the required level of service as defined in the contract, a $1,500 fine is insti- tuted. The contract also clearly states that no trips shall be missed or dropped due to unavailability of operators, and the contractor is fined $500 for each missed trip. The Contractor Perspective The General Manager for MV Transportation reported that “We have a low turnover rate at Redi-Wheels, mainly because we have a very good pay rate and fringe benefits.” Employees receive 100% full health benefits, paid by MV Transportation, which equates to about $10 per hour for health benefits on top of their hourly wage. As a result, the general manager esti- mated that the annual turnover rate is about 10% which he felt was “incredible in our industry.” He also comments on the current economic climate, which has dramatically changed operator recruitment: “Before, it was difficult to find opera- tors in the Bay area because there is so much competition for jobs in other sectors. Now, I’m finding 10–20 people a month looking for employment.” As for financial incentives outlined in the contract, the gen- eral manager reported that bonuses and disincentives in the contract have worked “substantially.” He said that four of the standards, productivity, on-time performance, accidents/ safety, and wait time on the phone, have huge bonuses and repercussions for MV Transportation if the company does not meet the standards. He reported that these financial repercus- sions influence his business decisions, saying “It is cheaper for me to add a person to the reservations taking function than to exceed the standards for wait time on the phone.” Currently, MV Transportation meets Redi-Wheels’ 90% on-time per- formance standard. The general manager said that the com- pany has been at this 90% level for a long time, and he is trying to figure out how to improve it, but so far has been unsuccess- ful. As for productivity, he reported that the service operated at about 1.5 to 1.6 trips per revenue-hour. Reported Results The SamTrans Accessibility Coordinator reported the paratransit contractor experiences extremely low turnover rates, especially in comparison to others in the region. She noted that by paying just $1 to $2 more per hour, operator turnover was reduced significantly, making a clear case that paying a higher wage dramatically reduces turnover. She also noted that she believes the more experienced operators tend to be safer and more efficient, which is both a financial and a community benefit. It was noted that while the monetary penalties have acted as an incentive for on-time performance, they have yet to be leveraged with the current contractor, who has consistently been able to meet the 90% on-time performance rate. 121

SamTrans also recognizes good performance by individu- als and reinforces good behavior by making both the transit district and contractor employees eligible for the “I Made a Difference” award. The award, generally an honor rather than a monetary award, is usually presented by a supervisor to an operator while mid-route. The award has created a good atmosphere and appreciation in the workplace, which was felt by managers to contribute to maintaining a stable vehicle operator workforce. King County Metro Transit (Metro), Seattle/King County, WA King County Metro Transit (Metro) is a public transit agency serving more than 1.7 million residents in King County, Washington. Metro operates a fleet of about 1,300 vehicles, including standard and articulated coaches, electric trolleys, dual-powered buses and hybrid diesel-electric buses that serve an annual ridership of 100 million in a 2,134 square mile area. In addition, Metro operates the largest publicly owned vanpool program in the country, with more than 600 vans providing transportation to 5,000 people every day. Metro also manages Access paratransit service, its ADA paratransit service. The program provides next-day, shared rides within three-quarters of a mile on either side of non- commuter fixed-route bus service during the hours and days of operation those routes are in service. In 2007, Access ser- vice provided over 1.1 million rides with a fleet of 300 vans. Use of Contractors for ADA Paratransit Metro contracts its Access paratransit service call center to First Transit, who manages scheduling, reservations, and dis- patching. Two other private companies are then under con- tract to Metro to provide vehicle operation and maintenance. The service provider contractors are Veolia Transportation, which operates about 70% of the runs, and Solid Ground, a local non-profit organization that operates about 30% of the service. Procurement/Contractual Provisions In the survey, Metro reported that it had moderate suc- cess with including language in the solicitation indicating that a stable, experienced vehicle operator workforce was expected. Metro Transit also noted a specific points system used in the evaluation of prospective contractor proposals. The following language is included in the 5-year service provider contracts: The Contractor shall ensure that sufficient staff are hired and retained to meet this Contract’s service requirements. The County reserves the right to reduce the Contractor’s monthly invoice appropriately for any management or supervisory position such as Project, Operations, Information Service or Maintenance Manager, left vacant for more than sixty (60) Days. The Contractor’s provision of qualified, capable and experi- enced personnel is essential to the performance of its contractual obligations herein. As such, failure to provide suitable personnel consistent with the County’s contractual expectations as set forth herein shall be deemed a material breach of contract and subjects the Contract to immediate termination at the County’s option. The Contractor shall ensure that its employees are qualified, capable and suitable to perform the requirements of this Con- tract and the County reserves the right to provide input to the Contractor in determining the suitability of any employee to con- tinue performing the work pursuant to this Contract. The Con- tractor shall provide all pertinent employee records regarding incidents/accidents, passenger complaints, etc., to King County as soon as possible upon request. The County recognizes that the strength of its transportation program is built upon the strength of its operators. Proposers are asked to consider how they will hire and retain an excellent workforce. Metro assigns points when evaluating RFPs to best analyze the proposed services. Typically, vehicle operator recruitment and retention comprise 18–20% of the total score. Table 10-5, 122 Criteria Points Percent of Total Training program 25 2.5% Plan to recruit, train staff and perform the work 50 5.0% Evaluation of proposed team and key persons 45 4.5% Proven ability to collaborate with contractor’s staff 20 2.0% Plan to transition staff who are currently employed with another operator so that service is not disrupted 75 7.5% Record keeping and retention plan 25 2.5% Customer service plan 75 7.5% Pricing 200 20.0% Other (specifics in contract) 515 51.5% Table 10-5. King County Metro proposal evaluation criteria and points.

adapted from a recent RFP, shows the evaluation criteria and points. Metro also includes a liquidated damage for runs that are dropped due to a lack of vehicles or operators. The relevant section reads as follows: The Contractor acknowledges that the provision of services pursuant to this Contract entails providing specialized, public transportation services, and that it is essential that safe, reliable, and efficient service is provided at all times. Liquidated damages may be assessed, at the option of the County, in the circum- stances detailed in the table set forth below. Reported Results Metro indicated that it is difficult to determine the impacts of these procurement strategies at this point because the con- tracts have just been awarded. A previous contract contained only minimum wage standards, which seemed to raise issues as several of the contract providers have had union repre- sented operators. In addition to increasing wage require- ments in the latest RFP, Metro removed the incentives related to run coverage that were included in past contracts. They indicated that the incentives in prior contracts related to run coverage didn’t seem to affect contractor behavior, so they replaced them this time around with liquidated damages. It was noted that vehicle operator turnover is a significant problem for King County. A commonly cited issue in retain- ing paratransit operators is that they often leave the industry for higher paying industrial jobs since they are required to also maintain commercial drivers’ licenses. Metro is considering eliminating the CDL requirement, but still requiring the train- ing to address the same content as in the CDL training. It was noted that operator retention has been better at Solid Ground. Metro indicated that this appeared to be partly due to the more extensive fringe benefits provided by this contractor. Metro managers noted that they have recently established a new bid model with flexible start times which can vary within 1–2 hours per day. Operators will receive notification the day prior to service as to when they will begin work the following day. More and more operators have been sent home before a shift’s end when late cancellations have allowed routes to be closed early and rides to be moved. 123 Item Requirement Liquidated Damage - Cost 1 Route dropped or reassigned due to unavailable vehicle or operator Perform all routes VSHs as assigned $1.5 times cost for replacement service per VSH

TRB’s Transit Cooperative Research Program (TCRP) Report 142: Vehicle Operator Recruitment, Retention, and Performance in ADA Complementary Paratransit Operations provides guidance for understanding the relationships that influence and enhance operator recruitment, retention, and performance in Americans with Disabilities Act (ADA) complementary paratransit services.

Appendixes to TCRP Report 142 were published electronically as TCRP Web-Only Document 50 : Survey Instrument, Productivity Charts, and Interview Protocol for Case Studies for TCRP Report 142.

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Policy-led public procurement: does strategic procurement deliver?

Journal of Public Procurement

ISSN : 1535-0118

Article publication date: 30 November 2021

Issue publication date: 30 November 2021

Harland, C.M. , Eßig, M. , Lynch, J. and Patrucco, A. (2021), "Policy-led public procurement: does strategic procurement deliver?", Journal of Public Procurement , Vol. 21 No. 3, pp. 221-228. https://doi.org/10.1108/JOPP-09-2021-089

Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

1. Policy-led public procurement

Public procurement can be leveraged to impact on business, the economy and society to support and can even lead broader government policy implementation ( Harland et al. , 2019 ; Glas et al. , 2017 ). Examples of this include stimulating innovation ( Wesseling and Edquist, 2018 ) and encouraging small-business entrepreneurship ( Glas and Eßig, 2018 ; Di Mauro et al. , 2020 ). Public procurement can be a mechanism for delivering better social outcomes ( Grandia and Meehan, 2017 ; Uenk and Telgen, 2019 ), wider sustainability issues ( Adjei-Bamfo et al. , 2019 ; Sönnichsen and Clement, 2020 ) and can play a role in encouraging social responsibility in private sector organisations ( Flammer, 2018 ; Ma et al. , 2020 ). Targeted public procurement can impact on employment ( Flynn, 2018 ; Wontner et al. , 2020 ). In several countries, public procurement has been shown to improve quality of local public services and economic development ( Vecchiato and Roveda, 2014 ; Uyarra et al. , 2020 ). Use of domestic suppliers in public contracts impacts national economies ( Uyarra et al. , 2014 ). If used strategically, public procurement can promote competition in supply markets ( Patrucco et al. , 2017 ).

Last but not least, the recent Covid-19 pandemic has shown how public procurement becomes instrumental in mitigating effects of emergencies ( Handfield et al. , 2020 ). In emergencies, governments have powers to intervene and override normal procurement arrangements ( Atkinson et al. , 2020 ), and they can lead a coordinated response to minimise the impact of disruption of supply of critical goods and services ( Vecchi et al. , 2020 ). We term all these goals and achievements as policy-led public procurement .

2. Policy goals, regulation and value for money

Although there is not an agreed single definition of public procurement, there is a clear understanding that it is interrelated with legal authority and regulation ( Graells, 2015 ). In recent years, this regulation has been used explicitly as a strategic policy instrument, for example, as stated in the European regulation Directive 2014/24/EU:

Public procurement plays a key role in the Europe 2020 strategy […] for smart, sustainable and inclusive growth […], as one of the market-based instruments to be used to achieve smart, sustainable and inclusive growth while ensuring the most efficient use of public funds.

This quote illuminates a potential conflict between addressing strategic goals and the efficient use of public funds. Regulation enshrines awarding procedures and criteria as instruments to influence public buying behaviour. According to the regulation above, awarding should focus on the “most economically advantageous tender” (MEAT) criteria, another term for best value for money. As a result, public procurement is a complex system with different, and sometimes competing, managerial dimensions. Schapper et al. (2006) developed a triangular shaped framework consisting of strategic management, performance management and process management for public supply. For this special issue in the Journal of Public Procurement , we discuss the role of public procurement as a government policy lever by adapting this triangle framework where policy goals are featured at the top ( Figure 1 ).

First, regulation is often seen as a dominant issue in public procurement practice ( Decarolis and Giorgiantonio, 2015 ). It is argued that both procurement instruments (e.g. framework agreements; Petersen et al. , 2020 ) as well as policy goals are put into action through introduction of new regulation.

Second, some authors define “value for money” beyond mere cost savings, as the most important driver of public procurement ( Loader, 2007 ; Dimitri, 2013 ). They argue that policy goals, as well as regulatory guidelines, are part of the desired outcome; this suggests a wider impact of value ( Snider and Rendon, 2008 ).

Third, other authors highlight operational implementation problems in balancing trade-offs between efficiency and effectiveness ( Keränen, 2017 ; Keulemans and Van de Walle, 2017 ; Tkachenko et al. , 2018 ; Plaček et al. , 2019 ; Wang et al. , 2020 ; Patrucco et al. , 2020 ). Implementation of policy goals in public procurement requires instruments and appropriate performance measures which may be absent ( Patrucco et al. , 2016 ; Flynn, 2018 ).

This special issue titled “Public procurement as a government policy lever” explores the positioning of policy goals, relative to other goals of procurement. However, thanks to the received contributions, it informs not only which policy goals should be included in public procurement practice, but also how public procurement might evolve to contribute strategically to government policymaking.

In the following, we provide a short overview of the papers included in this special issue and discuss how they inform policy-led procurement. This allows us to draw initial conclusions on how they contribute to further develop the triangle framework.

3. Articles within this special issue

The articles included in the Special Issue provide complementary perspectives on several policy-led public procurement themes including small business innovation, gender equity in public contracting, inclusion of minorities, and promotion of sustainability.

In his study, Selviaridis ( Paper 1 ) focuses attention on the role that pre-commercial procurement (PCP) plays in influencing activities, capabilities and behaviours of actors participating in the public innovation process. While prior PCP research is underpinned by theoretical frameworks of market failure ( Suhonen et al. , 2019 ), this article examines the role and capacity of PCP in addressing systemic failures impeding the process of innovation. The author finds that, thanks to public funding initiatives (i.e. the UK Small Business Research Initiative – SBRI), it is possible to stimulate and improve connectivity and research and development (R&D) related interactions and cooperation. This brings greater opportunities for small firms to access relevant innovation ecosystems, building up their knowledge and capabilities to explore possible routes to market. Selviaridis ( Paper 1 ) identifies several challenge areas that policymakers should address to improve future implementation of innovation-led procurement policies ( Uyarra et al. , 2020 ).

Orser ( Paper 2 ) explores the extent to which women-owned enterprises are under-represented among SMEs as suppliers to Canadian Government. Specifically, she examines barriers to public procurement – as perceived by small business owners – and whether this varies between genders. Gender-based analysis of public expenditures, purchases and gender-responsive PP are new to many governments that seek to support United Nations Sustainable Development Group (UNSDG) objectives. Outside Canada, sector-specific outreach strategies are designed to increase participation of women-owned businesses in federal contracting. This recommendation is consistent with the American Women-Owned Small Business (WOSB) Federal Contracting Program ( Dilger, 2021 ).

Based on a study in Nigeria, Ausuquo ( Paper 3 ) deals with a long-debated public procurement topic – the impact of governance quality on public infrastructure procurement. Good governance is crucial for ensuring effective and efficient provision of infrastructure, as it promotes accountability, reduces corruption, minimises resource wastage through inefficiency and ensures that resource allocations reflect national development priorities ( Burger and Hawkesworth, 2011 ; Hueskes et al. , 2017 ). However, studies of the impact of governance quality on public infrastructure financing are limited. Through this study, the author seeks to determine the impact of public sector corruption on public infrastructure expenditure. Accepting limitations of the time- period covered and that a single country perspective is taken, the study concludes that corruption, which is an indicator of governance quality, plays a significant role in determining public resource allocation to infrastructure procurement in Nigeria. It also confirms that infrastructure procurement is particularly prone to corruption and poor governance, perhaps more so than other categories of spend.

The article by Allen ( Paper 4 ) contributes to extant literature on public procurement by empirically addressing the evolution of procurement as a government policy lever in New Zealand, demonstrating how policy pragmatism can ensure a shift without a complete overhaul of a complex system. New Zealand has significant equity issues, especially related to its indigenous Maori population, and procurement is being used increasingly as a lever to improve equity. This article examines how New Zealand embeds policy in public procurement to pursue “public value” as a lever for delivering social and other economic outcomes ( Grandia and Meehan, 2017 ). Consequently, a more strategic form of public procurement emerges. Using secondary data, Allen proposes that policy pragmatism or “bricolage” has enabled New Zealand to move reasonably smoothly from a “purist” approach to procurement policy to one that is more open to other forms of policy instrument, namely, social procurement and green or sustainable procurement. From a practical standpoint, there are indications here that it is not impossible to shift procurement policy direction while retaining strong procurement frameworks.

Finally, Schotanus ( Paper 5 ) focuses on how short-term government procurement policies contribute to reach sustainability objectives (sustainable public procurement – SPP; Sönnichsen and Clement, 2020 ) through the design of environmental-friendly tenders. The author compares tenders from six months before and after the release of a report on inclusion of environmental concerns from the Dutch Central Government and evaluates the impact on the type of environmental features requested. The findings contribute to the academic debate on the value and effective implementation of SPP policies ( Grandia and Kruyen, 2020 ), based on policy theory. In addition, while previous studies have largely focused on barriers and drivers of SPP ( DelMonico et al. , 2018 ), this study is able to offer a unique quantitative analysis at state level on the actual short-term effects on tenders of a policy aimed at altering the state’s procurement procedures.

4. Reshaping the policy “triangle”

Policy goals are primary levers for strategic development of public procurement. However, all the articles included in this issue demonstrate that policy goals need to be implemented effectively for them to have any impact.

The articles by Allen and Orser focus on broader government policies (i.e. minority inclusion and gender representation), discussing how procurement policies should incentivise implementation of government policy instruments that subsequently contribute to the realisation of public procurement strategies at government level. Ausquo focuses more on regulatory aspects, looking at how the implementation of policies within procurement processes contributes to better monitoring of compliance to regulation (i.e. reduction of corruption). Selviaridis and Schotanaus’ work focus on public procurement strategy implementation, examining how specific public procurement goals (i.e. innovation and sustainability) can be achieved through introduction of policies that push suppliers to deliver performance in strategic areas.

Prior strategic and public management research demonstrates that policy initiatives need to address the strategy implementation process ( Klijn and Koppenjan, 2000 ). Implementation can be through financially-oriented mechanisms to influence resource capability, and information-oriented mechanisms to influence behaviour ( Harland et al. , 2019 ).

From the contributed papers and ensuing debate, we now suggest an adaptation of the Schapper et al. (2006) triangle framework (represented in Figure 2 ). Policy-led public procurement is not only the formulation of new goals, such as enhanced green and social sustainability, or promotion of innovation through suppliers, it is also the management of these issues within the public procurement system including planning, realising and measuring success i.e. performance management ( Grandia and Meehan, 2017 ; Patrucco et al. , 2020 ). As a result, the contract awarding process is an instrument which executes and delivers the outputs and outcomes of these policy initiatives. To illustrate what this looks like in practice, Figure 2 also maps how the five papers included in the Special Issue are positioned in this adapted framework.

5. Conclusions and implications for future research

This special issue provides international perspectives of how public procurement research is addressing policy-led procurement. Understanding procurement as a strategic lever has been considered in the private sector for some time ( Brandon-Jones and Knoppen, 2018 ), and it has now become a government priority as well, especially in the COVID-19 era ( Guarnieri and Gomes, 2019 ). The articles included in this issue offer a clear direction for future research to investigate public policy, policy implementation and the role of public procurement as a lever of policy implementation. Policy goals, their formulation and implementation are public duties ( Snider and Rendon, 2008 ). More interdisciplinary research (e.g. with political and social sciences, and public administration) is required to understand how public procurement can be developed further as a policy lever.

Instead of arguing that regulation is the “only” way to implement policy goals in contract awarding procedures, a systematic approach is required to embrace public supplier performance management, including broader aspects of public procurement, such as supply market knowledge, collaborative relationships and long-term orientation ( Loader, 2007 ; Keränen, 2017 ; Suhonen et al. , 2019 ; Wesseling and Edquist, 2018 ; Uenk and Telgen, 2019 ). The articles in this special issue deliver important findings which we hope will encourage opportunities for further research.

Triangle framework for procurement management

Adapted triangle framework for procurement policy and strategy

Adjei-Bamfo , P. , Maloreh-Nyamekye , T. and Ahenkan , A. ( 2019 ), “ The role of e-government in sustainable public procurement in developing countries: a systematic literature review ”, Resources, Conservation and Recycling , Vol. 142 , pp. 189 - 203 .

Atkinson , C.L. , McCue , C. , Prier , E. and Atkinson , A.M. ( 2020 ), “ Supply chain manipulation, misrepresentation, and magical thinking during the COVID-19 pandemic ”, The American Review of Public Administration , Vol. 50 Nos 6/7 , pp. 628 - 634 .

Brandon-Jones , A. and Knoppen , D. ( 2018 ), “ The role of strategic purchasing in dynamic capability development and deployment: a contingency perspective ”, International Journal of Operations and Production Management , Vol. 38 No. 2 , pp. 446 - 473 .

Burger , P. and Hawkesworth , I. ( 2011 ), “ How to attain value for money: comparing PPP and traditional infrastructure public procurement ”, OECD Journal on Budgeting , Vol. 11 No. 1 , pp. 91 - 146 .

Decarolis , F. and Giorgiantonio , C. ( 2015 ), “ Local public procurement regulations: the case of Italy ”, International Review of Law and Economics , Vol. 43 , pp. 209 - 226 .

Delmonico , D. , Jabbour , C.J.C. , Pereira , S.C.F. , de Sousa Jabbour , A.B.L. , Renwick , D.W.S. and Thomé , A.M.T. ( 2018 ), “ Unveiling barriers to sustainable public procurement in emerging economies: evidence from a leading sustainable supply chain initiative in Latin America ”, Resources, Conservation and Recycling , Vol. 134 , pp. 70 - 79 .

Di Mauro , C. , Ancarani , A. and Hartley , T. ( 2020 ), “ Unravelling SMEs’ participation and success in public procurement ”, Journal of Public Procurement , Vol. 20 No. 4 , pp. 377 - 401 .

Dilger , R.J. ( 2021 ), “ SBA Women-Owned small business federal contracting program”, congressional research service report, R46322 ”, available at https://fas.org/sgp/crs/misc/R46322.pdf

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Graells , A.S. ( 2015 ), Public Procurement and the EU Competition Rules , Bloomsbury Publishing .

Grandia , J.J. and Kruyen , P.P. ( 2020 ), “ Assessing the implementation of sustainable public procurement using quantitative text-analysis tools: a large-scale analysis of Belgian public procurement notices ”, Journal of Purchasing and Supply Management , Vol. 26 No. 4 , p. 100627 .

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Guarnieri , P. and Gomes , R.C. ( 2019 ), “ Can public procurement be strategic? A future agenda proposition ”, Journal of Public Procurement , Vol. ahead-of-print No. ahead-of-print , pp. 295 - 321 .

Handfield , R. , Finkenstadt , D.J. , Schneller , E.S. , Godfrey , A.B. and Guinto , P. ( 2020 ), “ A commons for a supply chain in the post‐COVID‐19 era: the case for a reformed strategic national stockpile ”, The Milbank Quarterly , Vol. 98 No. 4 , pp. 1058 - 1090 .

Harland , C. , Telgen , J. , Callender , G. , Grimm , R. and Patrucco , A. ( 2019 ), “ Implementing government policy in supply chains: an international coproduction study of public procurement ”, Journal of Supply Chain Management , Vol. 55 No. 2 , pp. 6 - 25 .

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Keulemans , S. and Van de Walle , S. ( 2017 ), “ Cost-effectiveness, domestic favouritism and sustainability in public procurement: a comparative study of public preferences ”, International Journal of Public Sector Management , Vol. 30 No. 4 , pp. 328 - 341 .

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Ma , Y. , Liu , Y. , Appolloni , A. and Liu , J. ( 2020 ), “ Does green public procurement encourage firm's environmental certification practice? The mediation role of top management support ”, Corporate Social Responsibility and Environmental Management , Vol. 28 No. 3 .

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Patrucco , A.S. , Luzzini , D. and Ronchi , S. ( 2016 ), “ Evaluating the effectiveness of public procurement performance management systems in local governments ”, Local Government Studies , Vol. 42 No. 5 , pp. 739 - 761 .

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Plaček , M. , Nemec , J. , Ochrana , F. , Schmidt , M. and Půček , M. ( 2019 ), “ Analysis of factors of overpricing in public procurement: a study for low-performing EU countries ”, International Journal of Public Administration , Vol. 43 No. 4 , pp. 350 - 360 .

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Uenk , N. and Telgen , J. ( 2019 ), “ Managing challenges in social care service triads – exploring public procurement practices of Dutch municipalities ”, Journal of Purchasing and Supply Management , Vol. 25 No. 1 , pp. 5 - 17 .

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Wesseling , J.H. and Edquist , C. ( 2018 ), “ Public procurement for innovation to help meet societal challenges: a review and case study ”, Science and Public Policy , Vol. 45 No. 4 , pp. 493 - 502 .

Wontner , K.L. , Walker , H. , Harris , I. and Lynch , J. ( 2020 ), “ Maximising community benefits” in public procurement: tensions and trade-offs ”, International Journal of Operations and Production Management , Vol. 40 No. 12 , pp. 1909 - 1939 .

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A Systematic Review of Implementation Challenges in Public E-Procurement

• Conference paper
• First Online: 01 April 2020
• Cite this conference paper

• Idah Mohungoo 14 ,
• Irwin Brown 14 &
• Salah Kabanda 14  

Part of the book series: Lecture Notes in Computer Science ((LNISA,volume 12067))

Included in the following conference series:

• Conference on e-Business, e-Services and e-Society

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Challenges faced in public e-procurement implementation are not well understood despite past studies focusing on the phenomenon. This paper, which is based on a systematic literature review of academic papers, seeks to synthesize and examine the key challenges impeding public e-procurement implementation. These challenges are categorized using the Technology-Organization-Environment (TOE) framework as follows (1) Technological challenges: e-procurement acceptance and usage, disruptive innovation characteristic of e-procurement, use of digital signatures, security and privacy of technology and technical aspects of e-procurement (2) Organizational challenges: stakeholders’ behavior, leaders’ behavior, shortcomings in leadership, lack of training and skilled personnel, resistance to change, organizational power and politics and the creation of public value underlying e-procurement (3) Environmental/Contextual challenges: regulatory framework for public procurement, Small-and-Medium-Size Enterprise issues, and context of the country. Key e-procurement implementation challenges are grounded in human and contextual issues. So we recommend more case studies on public e-procurement implementation in the future.

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1 Introduction

Public e-procurement, commonly referred to as e-GP, is an inter-organizational system (IOS) that is intended to facilitate Government-to-Business (G2B) and Government-Government (G2G) electronic communication, information exchange, and transaction support [ 53 ]. E-procurement, which is part of public procurement reform, is a powerful tool to reduce corruption in public procurement as it reinforces transparency, accountability, and integrity in procurement functions [ 38 ]. Several developed countries such as Singapore, Australia, the UK, the USA, and Japan have successfully implemented public e-procurement systems and are reaping its benefits [ 37 ]. However, in many countries, the implementation of public e-procurement systems is perceived as daunting [ 9 , 16 , 18 , 34 , 37 , 52 ] and it is not used to its full potential.

Sub-Saharan African countries, which on average have low scores on the corruption perception index [ 51 ], have expressed enthusiasm and interest in adopting e-procurement to help to curb corruption and make significant economic impacts. However, these countries face several e-procurement implementation challenges, which if not addressed, can firstly, delay the implementation process which has cost implications and; secondly, motivated leaders can lose interest and enthusiasm in driving implementation if there are too many challenges to be addressed.

Given that public e-procurement implementation is still problematic implies that implementation challenges of public e-procurement have not been well understood to date. To this end, this paper aims to provide an in-depth examination and synthesis from an information system (IS) perspective of the challenges to public e-procurement implementation using a sequentially-phased qualitative systematic literature review approach as informed by Okoli [ 39 ]. The research question, “ What are the implementation challenges to public e - procurement? ” will thus be addressed.

2 Conceptual Background

Public e-procurement implementation is a complex endeavour characterized by multiple Government-to-Business organizations (G2B), and private sector companies. These stakeholders have interests and power that can influence the outcome of the Inter-Organizational Information System (IOIS) implementation [ 9 ]. Under the assumption of information system (IS) as a socio-technical endeavour, the interplay between the implementation of e-procurement and the public-private sector context is deemed to be challenging [ 55 ]. These implementation challenges should be understood in order to formulate effective strategies to contain them. Furthermore, unlike e-procurement in the private sector context, public e-procurement is expected to reflect public values such as accountability and transparency.

Public e-procurement can be understood as a hybrid of e-government, information systems, and public administration. Thus, it is highly likely that e-procurement challenges are documented in papers published in these different domains. So far, there is a lack of an integrated approach to the synthesis of e-procurement implementation challenges; and when there is an attempt to do so, it is carried out in a rather fragmented manner. Researchers have seldom stepped outside a specific discipline in e-procurement literature reviews. For example, Patrucco [ 43 ] undertook a systematic literature review on public e-procurement, focusing only on papers published in the Journal of Public Procurement. While this provides an initial view of e-procurement, such studies fail to provide a holistic view of the phenomenon given that e-procurement spans works in e-government, information systems, and public administration. To address this shortcoming, this paper offers a systematic approach to synthesizing e-procurement implementation challenges by including publications from the three domains mentioned above. The Technology-Organizational-Environment (TOE) framework [ 50 ] which is popular in studies of adoption and implementation of innovations, will be used to present the e-procurement implementation challenges. The TOE framework [ 50 ] allows the identification of the main factors influencing the adoption and implementation of innovations within different organizational contexts and therefore serves a good starting point for structuring the study – specifically the identification of technological, organizational and environmental challenges constraining e-procurement implementation.

3 Research Methodology

3.1 research approach.

A sequentially-phased, qualitative systematic literature review approach informed by Okoli [ 39 ] is used in this paper. It is characterized by a sequence of activities starting with article search, followed by practical screening, a full reading of papers, synthesis, and analysis.

3.2 Data Collection

A Desktop search of relevant articles was systematically done using a timeline from 2001 to date. Based on Google Scholar, the earliest case studies on public e-procurement were published around the year 2001. Data collection was focused consistently around the aim of the research, and the keywords used were specific to the goal of the study, as shown in Fig.  1 , which depicts the different systematic passes used in the search and selection of relevant articles:

Search and selection of articles (after the fashion of Gunther et al. 2017)

The first pass : articles were searched and selected from top-rated journals in the streams of information systems, e-government, and public administration, e.g.:

Basket of eight leading Information Systems (IS) journals: European Journal of Information Systems, Information Systems Journal, Information Systems Research, Journal of Association of Information Systems, Journal of Management Information System, MIS Quarterly, Journal of Strategic Information Systems and Journal of Information Technology.

Given that in several developing countries including those in Africa, e-procurement implementation is an important issue, the top 3 IT4D journals, i.e., Electronic Journal of Information System in Developing Countries (EJISDC), IT for Development and IT for International Development were also searched.

IS conference proceedings focusing on emerging e-procurement implementation challenges that are found in research-in-progress in the respective afore-mentioned streams. The AIS top 4 conferences (ICIS, ECIS, PACIS, and AMCIS) were searched as well as IFIP conferences.

Leading top-rated e-government journals consulted were: International Journal of E-Government Research (IJEGR), Journal of E-Government, Journal of e-Governance, Government Information Quarterly

In public administration stream: the Journal of Public Administration and Public Administration Review were searched.

The second pass was a backward search after the initial search yielded few papers. The purpose of the second pass was to look for additional relevant conference papers and journal articles in other domains.

The third pass involved searching for adoption-focused e-procurement papers that were previously eliminated in the first-pass. This pass increased the likelihood of gathering additional secondary data on implementation challenges of e-procurement because some adoption-focused papers were case studies of post-acquisition of e-procurement software and thus were likely to contain facts on e-procurement implementation challenges.

3.3 Analysis

The data corpus, which now stood at 165 articles after the previous process, was subjected to a ‘Practical Screening’ phase to remove irrelevant articles [ 39 ] using a process of inclusion and exclusion criteria. This process required the principal researcher reading the article’s Title, Abstract, Introduction, and Conclusion, as explained in Table  1 . Following the screening, 45 papers were retained for full reading and 34 for the final analysis as shown in Table  2 . After this analysis process, relevant arguments that explain the implementation challenges faced in e-procurement implementation were extracted from the 34 papers. The key arguments were then subjected to thematic analysis in NVIVO. Emergent themes generated from common patterns in the data corpus are shown in Table  3 . These themes were then structured as per the TOE framework [ 50 ] for easier conceptualization.

4 Findings and Discussion

4.1 technological challenges.

Key technological challenges that deserve due attention given that they are tied with human and contextual issues are acceptance and usage issues, disruptive innovation, digital signature, and IT security issues. The remaining ones pertain to the technical aspects of e-procurement, and they are grouped as ‘other technological challenges’ in the discussion below.

Acceptance and Usage Issues.

The findings indicate that acceptance and usage is an important challenge for e-procurement. The reasons were vast, ranging from techno-centric issues to broader dimensions such as dissatisfaction with e-procurement systems that do not meet the needs of users with the consequence of emergence of multiple workarounds [ 37 ]; Lack of user-friendliness of e-procurement [ 5 , 34 ]; Complicated systems [ 5 , 20 ]; Inability to enlist sufficient suppliers in a timely manner to encourage IS use [ 53 ]; The use of technology which is in tension with cultural histories of IT usage, bureaucratic processes and business practices [ 55 ].

Disruptive Innovation.

E-procurement is viewed as a disruptive innovation [ 4 , 35 ] that can drive a radical transformation, thereby uprooting some institutionalized work practices. It may conflict with the slow-to-change culture of G2G stakeholders of e-procurement [ 36 ].

Digital Signature/Electronic Signature.

Costa, Arantes, and Tavarez [ 17 ] found that digital signature, which is mandatory for e-procurement, is complex to use and is costly, whereas Ojha and Pandey [ 40 ] found that the digital signature is a means of excessive security on e-procurement causing exclusion of some suppliers. Beyond these techno-centric aspects, the use of digital or electronic signatures can directly clash with the stakeholders’ values, beliefs, and customs associated with manuscript signatures [ 49 ].

IT Security issues.

Mc cue Roman [ 37 ] found that IT security and authenticity was the major challenge in e-procurement as stakeholders had concerns and demanded more re-assurance with regards to the robustness of the security aspect of the e-procurement platform in terms of IT security measures implemented for access control, backup and recovery [ 22 ].

Other Technological Challenges.

Other technological challenges include amongst others, system integration problems with legacy and suppliers’ systems, which is an important technical issue and is underpinned by the use of different enterprise software systems to handle each stage of the procurement cycle [ 2 , 34 ]; the presence of multi-platforms for tendering which confuse bidders [ 5 ]; excessively complicated systems and; different data formats [ 5 , 17 ].

4.2 Organizational Challenges

Organizational issues in e-procurement implementation are interlinked. Lack of a project champion and problems of change management are associated with shortcomings in leadership. Resistance to change is explained alongside other challenges, including departmentalism, major reform through ICT and organizational power and politics.

Stakeholders’ Issues.

Drawing from e-government studies, scholars advocated the importance of sustained engagement of stakeholders in e-government implementation to enhance IS acceptance [ 13 ]. The review findings indicate a lack of stakeholder engagement in e-procurement implementation [ 15 , 33 , 36 ]. Scholars advised implementers to convince stakeholders to get their buy-in to improve IS usage [ 15 , 34 , 52 ].

Leaders’ Behavior.

Williams-Elegbe [ 56 ] argues that public sector leaders often exhibit unethical behaviours which can hamper the implementation of e-procurement. Leaders’ behavior was associated with the failure of past e-government projects [ 25 , 28 ]. Some leaders played overt rationality whilst having buried agendas [ 18 ], and obfuscated the objectives behind e-government to achieve their interests [ 44 ].

Shortcomings in Leadership.

In some cases, public sector leaders are genuinely committed to achieving success in e-procurement implementation, but they may lack leadership skills [ 24 , 34 ] to address change management problems [ 1 , 24 ], and become good project champions which is a critical success factor in any e-government implementation [ 56 ].

Lack of Training and Skilled Personnel.

Inadequate staff training on e-procurement results in low e-procurement usage ([ 17 , 24 , 34 ]). Furthermore, lack of skilled ICT personnel on-site to deal with technical e-procurement issues, service-level agreements, and operationalization of the private-public partnership model of e-procurement implementation are serious impediments to e-procurement implementation ([ 30 , 40 , 46 ]).

Resistance to Change.

Resistance to change is a significant e-procurement implementation challenge with multiple underlying causes. Small and Medium Enterprises (SMEs) resist to e-procurement because they require equitable access to government business [ 55 ]. Besides, the reforms driven through e-government projects often conflict with reforms prescribed in public policies which follow the New Public Management (NPM): Somasundaram [ 46 ] found that centralization ideas underlying e-procurement, conflicted with the decentralization ideology [ 46 ] which challenged the norms of Danish local authorities; while Barca and Cordella [ 6 ] found that e-procurement faces departmentalism challenges which are perceived as a strong cultural and organizational barrier [ 6 ]. Resistance to change is also grounded in organizational power and politics [ 2 ] that shadowed the benefits of e-procurement: purchase managers were unwilling to use e-procurement despite agreeing with the economic arguments of cost-saving, and reduction of direct procurement costs related to the new e-procurement platform [ 29 ].

Value-Driven Outcome.

Unlike the private sector, implementation of public e-procurement is expected to reflect public values of transparency, integrity, and accountability [ 6 , 37 , 53 ]. If the government expects e-procurement to enforce accountability and transparency for good governance, implementation will be called a success when stakeholders make sense of these public values and embrace them, which is indeed challenging to achieve.

4.3 Environmental Challenges

E-procurement implementation yielded different outcomes in different countries, with varying success in Italy, Australia and, Scotland [ 55 ] but failure in Turkey whereby expected results of increased competition and lower procurement prices were not achieved [ 27 ]. Regulatory frameworks, SME issues, and the country context are among the key environmental challenges that have been found as relevant in this review.

Regulatory Framework.

Public procurement regulatory frameworks may present significant challenges in e-procurement implementation [ 21 , 29 , 57 ], the most pertinent ones being the mandated use of e-procurement; and the laws governing the use of digital signatures which limits the participation of SMEs in government bids.

SME Issues.

The difficulties that SMEs face with respect to e-procurement and public procurement process are amongst others: exclusion of SMEs [ 17 , 54 ]; SME lack of investment in ICT infrastructure [ 3 , 27 ]; lack of financial capabilities and contract guarantees as needed by government procurement; insufficient competence in terms of standards and technical qualifications set by the market [ 41 ]. The business context of a country, therefore, poses a challenge to the success of e-procurement implementation especially if SMEs make a substantial contribution to the GDP. In Turkey, exclusion of SMEs negatively affected competition in the market and caused a rise in prices which ran contrary to the proclaimed expectations from public e-procurement implementation [ 27 ].

Country Context.

The federal-state dynamic, especially in big countries has been found to be a key challenge for e-procurement [ 46 ], whereby the best practices underlying the success of e-procurement in a specific state were not replicated to other states as it could compromise the degree of autonomy of the other states. Considering cultural challenges, some developing countries continue with corrupt practices despite e-procurement because corruption has become entrenched in the culture. Overt and covert corruption has become the norm in these countries [ 56 ]. It is challenging to achieve the expected objectives of e-procurement, i.e., transparency, accountability and curbing corruption.

Other Country-Related Challenges.

E-procurement which is a G2B e-government project and is based on e-commerce technology, faces similar country-context challenges of e-government implementation in developing countries such as poor ICT infrastructure, language barriers, impact of local customs, norms and national culture, lack of financial instruments such as debit/credit card to facilitate e-commerce [ 11 , 32 ]. These contextual challenges are beyond the scope of this review but are directly relevant to e-procurement.

The key e-procurement implementation challenges are interlinked, as presented under the TOE typology [ 50 ] in Fig.  2 . The arrows indicate the relationship between the key challenges identified and discussed in this study.

Inter-relationship of key e-procurement implementation challenges

5 Conclusion

This study aimed to synthesize and examine the implementation challenges to public e-procurement. A multi-disciplinary qualitative systematic literature review was done based on papers published in the e-government, information systems and public administration domains. The study identified (1) technological challenges of acceptance and usage, e-procurement as a disruptive innovation and technical issues with e-procurement; (2) organizational challenges of stakeholders’ issues, leadership, inadequate training, and skilled personnel, resistance to change and value-driven outcome and (3) key environmental factors of procurement regulatory framework, the country context and, the problems faced by SMEs. These findings enlighten practitioners and policy implementors with information on the possible hindrances to successful e-procurement implementation. Building upon this awareness, future studies can embark on explaining the causal mechanism of these challenges and how best to address them in a context-specific manner. This research work focused on e-procurement implementation challenges as a whole and excluded challenges pertaining to specific e-procurement processes such as e-tendering and e-reverse auction. The proposed framework in this paper can be used in future case studies to examine e-procurement implementation challenges under each focus area of the TOE [ 50 ] and their relationship.

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Mohungoo, I., Brown, I., Kabanda, S. (2020). A Systematic Review of Implementation Challenges in Public E-Procurement. In: Hattingh, M., Matthee, M., Smuts, H., Pappas, I., Dwivedi, Y.K., Mäntymäki, M. (eds) Responsible Design, Implementation and Use of Information and Communication Technology. I3E 2020. Lecture Notes in Computer Science(), vol 12067. Springer, Cham. https://doi.org/10.1007/978-3-030-45002-1_5

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Ensuring sustainability: leadership approach model for tackling procurement challenges in bulgarian higher education institutions.

1. Introduction

2. evolution and challenges in heis’ sustainable public procurement, 3. materials and methods, 4. spp challenges in tu-sofia, 5. leadership approach model for tackling spp challenges in tu-sofia.

• To allocate the financial resources to achieve the best sustainable outcomes for all stakeholders, including students, academic and administrative staff, the community, and the economy of the country as a whole;
• To ensure the legitimate and efficient use of public funds while guaranteeing the publicity and transparency of Sustainable Public Procurement at TU-Sofia.
• SPPP effectiveness: The TU-Sofia's decisions regarding the purchase of goods, services, and construction through procurement are based on a balance between the economic benefits to the university and the impact on society and the environment;
• SPPP sustainability: TU-Sofia endeavors to procure goods and services that adhere to life-cycle sustainability criteria;
• SPPP publicity and transparency: The SPPP is accessible to all structural units of TU-Sofia, as well as to public procurement contractors when necessary, and is available on the university’s website;
• SPPP continuous improvement: TU-Sofia provides procurement management staff training and guidance on contractor relationship management, tender evaluation, and contracting.
• TU-Sofia encourages the procurement of products that are sustainably produced from recyclable and/or renewable resources and/or that require minimal transportation;
• TU-Sofia encourages the procurement of products with a minimum amount of packaging and, where possible, they should be made of recycled or recyclable materials;
• TU-Sofia encourages the procurement of assets that have a minimal environmental impact during their operation (reusable, energy-saving, etc.);
• TU-Sofia encourages the procurement of products that can be recycled or discarded with minimal environmental impact;
• TU-Sofia does not support procuring goods/or services with harmful impacts on the environment when it is possible to use sustainable, alternative ones.
• TU-Sofia encourages all structural units to assess the demand for goods and/or services following the principles of the SPPP;
• TU-Sofia strives to encourage structural units to adopt sustainability criteria in their decision making for the selection of goods and/or services;
• TU-Sofia supports the inclusion of sustainability criteria in the technical specifications for procurement products, including the life-cycle assessment of goods;
• TU-Sofia supports the structural units to perform all the activities sustainably, including the procurement of products and services.
• TU-Sofia encourages all structural units to systematically review and evaluate the demand of procured goods and/or services in order to minimize them wherever and whenever possible;
• TU-Sofia provides sustainable procurement management process training and guidance to facilitate the implementation of the SPPP.
• To observe the principles of the TU-Sofia Sustainable Development Strategy;
• To make the decisions for procuring goods and/or services based on the analysis of options for reuse and sharing assets;
• To be aware of the sustainability of the procured goods and services, and to strive to reduce the harmful impact on the environment;
• To give priority to procured goods and/or services that meet sustainability criteria;
• To increase sustainability awareness and knowledge to make informed decisions.
• To consult with sustainable procurement specialists when it comes to high-value, high-volume, high-impact, and/or high-risk products/or services;
• To conduct and take part in training on the implementation of SPPP at the university;
• To ensure that information on SPPP is easily accessible and available to all stakeholders;
• To provide consultation and advice on sustainable procurement issues within the TU-Sofia structural units;
• To actively engage with potential procurement contractors to ensure awareness and transparency of the TU-Sofia SPPP.

6. Discussion

7. conclusions, author contributions, institutional review board statement, informed consent statement, data availability statement, acknowledgments, conflicts of interest.

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Daskalova-Karakasheva, M.; Zgureva-Filipova, D.; Filipov, K.; Venkov, G. Ensuring Sustainability: Leadership Approach Model for Tackling Procurement Challenges in Bulgarian Higher Education Institutions. Adm. Sci. 2024 , 14 , 218. https://doi.org/10.3390/admsci14090218

Daskalova-Karakasheva M, Zgureva-Filipova D, Filipov K, Venkov G. Ensuring Sustainability: Leadership Approach Model for Tackling Procurement Challenges in Bulgarian Higher Education Institutions. Administrative Sciences . 2024; 14(9):218. https://doi.org/10.3390/admsci14090218

Daskalova-Karakasheva, Mina, Denitza Zgureva-Filipova, Kalin Filipov, and George Venkov. 2024. "Ensuring Sustainability: Leadership Approach Model for Tackling Procurement Challenges in Bulgarian Higher Education Institutions" Administrative Sciences 14, no. 9: 218. https://doi.org/10.3390/admsci14090218

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The Challenges of Public Procurement: A Case Study

Paul Golding, summarizes the UK Cabinet Office’s recent Guidance regarding contracts impacted by the COVID-19 emergency.

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Deciding the Procurement Strategy

Type of Resource Article Page

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The first step in managing a PPP transaction is defining the procurement strategy. This includes defining the following key aspects of the procurement process:

• Pre-qualification —whether to use a pre-qualification process to select the firms or consortia that will participate in the bidding process
• Bid process —whether to use a single-stage process to select the preferred bidder, or a multi-stage process in which proposals and the bidding documents may be reviewed and iterated
• Negotiation with bidders —to what extent discussions with bidders may lead to changes in the initial draft contract: either during the bidding process (with multiple bidders), or after final bids have been submitted
• Basis for award —whether to rank proposals and choose the preferred bidder based on a single financial or value-related criterion (after screening for technical merit), or some weighted evaluation of financial and technical criteria

This section briefly describes each of these aspects, with links to guidance, resources and examples in each case. An additional point for consideration, also described in this section, is dealing with bid costs—whether to charge a fee or require a bond to participate in the bid process; or conversely whether to provide support with bid costs.

The main goals of the procurement strategy, as described above, are both to find the best solution to the project’s objectives (from a technical and value for money perspective), and to select a competent firm or consortium to implement that solution. This typically requires a fair, competitive, transparent, and efficient procurement process. However, the best procurement strategy to achieve these objectives may depend on the context. For example, allowing dialogue with bidders can lead to stronger proposals. However, it can also make the process less transparent—so may not be the right choice in a country where achieving transparency and minimizing the risk of corruption is the more important consideration. This means the best procurement process may depend on the country context, and the nature and capacity of the government institutions involved, as well as on the characteristics of the particular project.

There may also be some constraints in how the procurement strategy can be defined. Firstly, as described in PPP Legal Framework , the procurement strategy for a PPP may be constrained by any laws or regulations on overall government procurement. Moreover, many governments choose to set PPP-specific procurement rules, in PPP laws, regulations or guidance material—that is, defining the procurement strategy for the PPP program as a whole rather than on a project-by-project basis. Doing so can improve transparency of PPP procurements; although there are also advantages to retaining flexibility to adapt processes to the needs of particular projects. Examples of PPP Procurement Procedures provides examples of PPP procurement procedures as defined in national or international laws and regulations. Finally, where the project involves funding from a multilateral development bank or other agency, the procurement options may also be constrained by the procurement rules of the funding agency. For example, the World Bank publishes and regularly updates regulations and guidance on its Procurement Framework ( WB 2017f ), which any project with World Bank funding must follow—the framework includes specific recommendations for procurement of PPPs.

Examples of PPP Procurement Procedures

Qualifying bidders

Most bidding processes set out qualification criteria that all participating firms must meet. Requiring bidders to set out their qualifications helps ensure a competent firm is selected with the capacity to implement the project. Clear qualification requirements can also encourage experienced firms to participate, and to invest in preparing quality proposals, as it reduces the risk that the bid process will be undermined by low-quality firms submitting very low bids.

Most governments require bidders to pre-qualify—that is, check bidders' qualifications before the start of the tender process, with a view to capping the number of bidders. Typically, pre-qualification involves ranking potential bidders according to specified qualification criteria. The top-ranking bidders—usually between three and six—are then invited to submit proposals.

The alternative is to set pass/fail qualification criteria, and qualify and invite proposals from all firms that pass. While this approach can be used in a pre-qualification process, it is more typically done simultaneously with the bidding process—sometimes called post-qualification . Under this approach, bidders can self-screen against the published qualification criteria before investing resources in preparing a proposal. For a few, large and very complex process the self-selection process (aided by the due-diligence that financing parties will exert upon prospective bidders) may be sufficiently stringent that no qualification is needed.

Prequalification has both advantages and disadvantages:

• The main advantage is in limiting the number of bidders. By reducing the number of bidders, the probability of success increases, and bidders may be incentivized to invest more effort in developing an efficient project and presenting a competitive bid. At the same time, the effort and resources required from government to evaluate bids can be reduced.
• The main disadvantage is that making public the list of pre-qualified bidders may enable collusive behavior. Moreover, pre-qualifying a set number of bidders can mean the same top-ranking firms tend to be invited to bid in a given sector, providing further temptation for collusion in the bidding process.

In some developing countries (particularly with new PPP programs) the problem can be too few rather than too many bidders—in this case, there may be no advantage to pre-qualification, and it may unnecessarily extend the procurement process.

The following resources provide more discussion and detail on the pros and cons of pre-qualification:

• PPIAF's toolkit for PPPs in roads and highways ( WB 2009a ) includes a section: Concessions: Main Steps in competitive bidding.
• Farquharson et al ( Farquharson et al. 2011 , 118–120) describes the pre-qualification process, some of its advantages and disadvantages, and the possible pitfalls. The authors also describe the option of a pre-revision phase, in countries where pre-qualification is not allowed by procurement law.

In practice, country approaches vary. For example, Infrastructure Australia Practitioner's Guide ( AU 2015 , 16) recommends using pre-qualification to select a particular number of bidders—at least three, sometimes more. On the other hand, Singapore PPP Handbook ( SG 2012 , 60) precludes pre-determining the number of qualified bidders, because this would limit competition. Examples of PPP Procurement Procedures provides more examples of PPP procurement processes, including whether and what type of pre-qualification process is included.

Bid process

The bid process is the process from issuing Requests for Proposal to select a preferred bidder. The quickest and simplest is a single-stage bid process , in which bidders present both technical and financial proposals, which are evaluated to select the preferred bidder.

The alternative is a two or multi-stage bid process . Under this approach, bidders present an initial proposal, which may include comments on the RFP and draft contract, and may or may not include a financial bid. Based on these proposals, the government reviews and possibly revises the RFP and draft contract, and requests revised proposals accordingly. The government may engage in discussion with bidders to varying extent, as described under Negotiation with bidders: during bidding process. The government may also eliminate some bidders at this stage, and the revision process may be repeated more than once. Bidders then submit final proposals, including a final financial bid.

A multi-stage process can have advantages over a single-stage process for complex projects, particularly where there is room for innovation. It can help ensure solutions are aligned to needs, and improve final quality of proposals. On the other hand, the multi-stage process is longer, more complex to manage and more expensive for all parties involved. Care needs to be taken to retain competitive pressure, protect intellectual property, and maintain transparency.

The following resources provide more information on the bid process options:

• Farquharson et al ( Farquharson et al. 2011 , 113–114) summarizes the advantage of sequential screening over multiple stages—improving the quality of bids.
• PPIAF's Toolkit for PPPs in Roads and Highways ( WB 2009a ) section: “Concessions: Main Steps in competitive bidding” describes one- and two-stage bid processes.

Many countries’ PPP frameworks leave open the decision of whether to use a single or multi-stage bidding process, depending on the nature of the project. Some also leave the option of asking for second bids open to resolve the problem of no clear bidder emerging from a single-stage process. For example, the South Africa PPP Manual procurement module ( ZA 2004a , Module 5, 51–52) states that a single-stage process with a clear winner is preferred, but that a best and final offer may be requested from two or more bidders. Examples of PPP Procurement Procedures provides further examples.

Negotiation with bidders: during bidding process

A major difference between procurement approaches in different countries is in the extent to which the government enters into negotiations with bidders. Negotiating at any stage can be challenging, and risks reducing the transparency of the bid process. For this reason, some governments do not allow negotiation on the contract at any stage of the process (although room for negotiation on bidders' proposals may remain).

In a multi-stage bidding process (see Managing the Bid Process ), government may choose to dialogue or negotiate with multiple bidders in between bidding stages. This can help clarify aspects of the RFP, draft contract, and bidders' initial proposals, and result in proposals that more closely meet the government's requirements. In other cases, governments may negotiate with a single bidder after a preferred bidder has been selected.

For example, in 2004 the European Commission introduced the competitive dialogue procedure for procuring PPPs in the European Union. Under this process, having received initial bids, the government can enter into a dialogue with bidders on all aspects of the RFP, contract, or proposals, before re-issuing a final version of the RFP documents and inviting final bids. The United Kingdom Treasury's guidance on the competitive dialogue procedure ( UK 2008 ) provides more details. In Australia, a similar process may be used, called an interactive tender . The Australian National PPP Practitioners' Guide ( AU 2015 , 70–71) describes the interactive tender process; protocols for the process are also provided in an appendix.

Kerf et al ( Kerf et al. 1998 , 110–112) provide further examples of competitive negotiations, and when it may be useful. The World Bank's water sector toolkit ( PPIAF 2006 , 169–170) also describes the advantages and disadvantages of this approach. In general, competitive negotiation has been used less in less developed countries.

Negotiation with bidders: post-bid

Once a preferred bidder has been identified, governments may then enter into post-bid negotiation —that is, further dialogue with that bidder to finalize the PPP contract. If negotiating with a preferred bidder—even if a reserve bidder is maintained as a fallback option—the implementing agency can no longer rely on competitive tension to ensure value for money. This may result in clauses that create additional benefits to the private party or reduce performance requirements. Expectations of post-bid negotiation may attract opportunistic bidders, and consequently discourage more serious bidders, reducing competition during the bid process itself. For this reason, most governments limit the extent of post-bid interaction to clarification and fine-tuning of proposals; some do not allow it at all, particularly where transparency of the process is a primary concern. Examples of PPP Procurement Procedures provides some examples.

The need for post-bid negotiation typically arises for two reasons: because the RFP requirements or draft contract were not clear, or because they were not acceptable to bidders and their lenders (in particular, with respect to the proposed risk allocation). For either reason, bidders may incorporate changes in their proposals, meaning the proposals no longer fully meet the government's requirements. Some legal frameworks mitigate this issue by mandating that conditional proposals will be excluded.

The following resources provide more guidance on the problems with post-bid negotiations, and whether and to what extent to allow for negotiation or dialogue with a preferred bidder:

• EPEC's Guide to Guidance ( EPEC 2011b , 31) briefly describes what matters should and should not be subject to negotiation post-bid, and the typical elements of a negotiation framework.
• Yescombe ( Yescombe 2007 ) also describes on the risks of post-bid negotiations, and why they typically arise.
• Kerf et al's Guide for Concessions ( Kerf et al. 1998 , 123) focuses on the importance of limiting the extent of negotiation in the post-bid phase, and how this can be achieved.

The best way to avoid the need for post-bid negotiation is to prepare a clear and comprehensive RFP and draft contract. Market sounding and pre-RFP consultation with bidders, as well as hiring experienced advisors, can help ensure the contract structure is acceptable to investors. For particularly complex contracts, the competitive negotiation procedure described above could be the best alternative.

Basis for Award

The government needs to evaluate the proposals received, to rank the proposals and select the preferred bidder. The criteria for doing so typically include the technical merit of the proposal, and some measure of their cost—given the overall aim of achieving value for money, or the optimum combination of costs and benefits. There are two, broad options for how proposals will be evaluated and the preferred bidder selected:

• Selection based on financial criteria —one approach is to undertake the evaluation in two stages, with the final selection based on the financial bid variable(s). Under this approach, technical proposals are evaluated first, on a pass-fail basis—only bidders that pass the technical evaluation proceed to the financial evaluation. The winning bidder is selected on the basis of the best financial proposal from those that passed the technical evaluation. In certain countries, concerns over corruption lead governments to focus on objective criteria, such as the user fee or annual availability payment. Therefore, they only require a financial proposal—quality is screened through the qualification of bidders.
• Selection based on financial and technical criteria —in some cases, proposals are evaluated based on a weighted combination of financial and technical criteria. This more closely encapsulates the idea of maximizing value for money. On the other hand, defining appropriate, quantitative criteria and how they will be weighted can be difficult and rely on subjective judgment by the evaluation team, which can undermine transparency of the tender process. These technical criteria also function as incentives for bidders to focus on particular technical issues when preparing proposals.

The following resources further describe these options, with examples:

• PPIAF's Toolkit for PPPs in Roads and Highways , in the section: Concessions: Main Steps in competitive bidding , describes evaluation rules, financial evaluation criteria, and the multiple-parameter approach. This section also presents the evaluation criteria for 13 Latin American road concessions.
• The Caribbean PPP Toolkit ( Caribbean 2017 , Module 5,6) presents and discusses several examples of award criteria for PPP projects.
• Kerf et al Guide to Concessions ( Kerf et al. 1998 , 118–123) has sections on technical and financial proposal evaluation. These describe choices regarding technical and financial criteria, and the pros and cons of a combined score approach, with examples in each case.

The best option, and the specific financial and technical criteria, may depend on project characteristics. It may also depend on the capacity of the public sector to undertake more complex evaluations, or on the risk of corruption, or perceived corruption, which could make transparency the most important objective.

Many governments allow either approach to be used. In Brazil , both the Federal Concessions Law (for user-pays PPPs) ( BR 1995 , Article 15) and the Federal PPP Law (for government-pays PPPs) ( BR 2004a , Article 12) allow both approaches. In all cases, the approach and criteria should be set in advance, and clearly communicated to potential bidders. Managing the Bid Process provides more guidance and resources on selecting the specific evaluation criteria.

Many governments require bidders to submit a bid bond, to ensure commitment to the process, and prevent the winning bidder from withdrawing without good cause. For example, the Spanish procurement law ( ES 2011 ) prescribes that bidders should provide a temporary guarantee to back their proposal and increase it to meet the definitive guarantee once the contract is awarded. The Philippines BOT Law ( PH 2006 , Section 7.1 Clause b (vi)) implementing regulations require a bid bond of between one and two percent of the estimated project cost. Kerf et al's guide to concessions ( Kerf et al. 1998 , 126) provides further examples, and briefly describes the pros and cons of requiring a bid bond. The authors note, for example, that the United Kingdom government discourages the use of bid bonds for PPP projects on the basis that they are expensive, and should only be sought in exceptional circumstances.

Approach to Bid Costs and Payments

Preparing a proposal for a PPP project is an expensive exercise. Equally, running a high-quality procurement process for a PPP is costly to government. Governments have different approaches to dealing with bid costs and commitments.

Governments have found different ways to deal with bid preparation costs. In some jurisdictions, the government may share bid costs, to encourage more bidders to participate. For example, Australia's PPP Practitioners' Guide ( AU 2015 , 29) states that bid costs may be reimbursed, but only in very limited and clearly defined circumstances. Conversely, Chile has a mechanism for asking pre-qualified bidders to jointly finance the engineering and other studies needed for the government to prepare for the transaction ( CL 2010b ). This was an element of the reform to the PPP law that took place in 2010.

A KPMG review of PPP procurement in Australia ( KPMG 2010 ) describes typical bid costs for the private party to a PPP in different countries. The report also draws on a survey of PPP practitioners to provide recommendations for how bid costs can be reduced. These recommendations focus on improving the efficiency of the PPP procurement process, as well as touching on the pros and cons of governments contributing to bid costs.

Find in pdf at  PPP Reference Guide - PPP Cycle  or visit the  PPP Online Reference Guide  section to find out more. 

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Updated: September 11, 2024