This chapter looks at how government efforts to support SME participation in public procurement also tackle policy implementation. The success of SME policies depends on the effectiveness of their implementation by contracting authorities and ultimately by public procurement practitioners. For this reason, governments typically go beyond policy development to support implementation by providing training, guidance and tools. Similarly, in many cases, SMEs depend on guidance and support in order to make the most of opportunities to participate in public procurement markets. This chapter identifies the enablers used by countries to support successful policy implementation. Mention is made that the strength of policy implementation for SMEs in public procurement will hinge on the strength of governments’ relationships with those SMEs, bolstered by direct consultation.
SMEs in Public Procurement
Chapter 4. Enabling implementation: What is it SMEs and public procurement officials need?
Abstract
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
SME enablement strategies in OECD countries aim to facilitate access to public procurement opportunities and ensure a level playing field among economic operators. As discussed in Chapter 2, a consensus has been formed on the characteristics of a public procurement system that facilitates access for all suppliers. Chapter 3 then discussed the policy measures required to develop those characteristics within the public procurement system. Yet while policy development is a key part of SME enablement, implementation of these measures in daily procurement operations will have a decisive effect on their impact.
To support successful implementation, central authorities in many countries have provided implementation tools such as action plans, guidelines, training programmes and workshops to contracting authorities and procurement practitioners. The choice of implementation tools tends to reflect a country’s governance structure, as well as the organisation of its public procurement function. For example, those countries with a weaker central mandate have only set general directions at the central level, giving the contracting authorities discretion as to how they will incorporate strategies or policies into their daily operations. For instance, the Dutch Central Government, which does not have a central CPB, encourages inclusion of strategic objectives in public procurement, leaving each contracting authority to decide how and when to incorporate them into policies and decisions.
When asked about the implementation stage of SME strategies and policies, respondents identified public procurement officials’ lack of knowledge and awareness, and the high level of discretion granted in procurement decision making, as two of the three most relevant challenges (Figure 4.1). In this light, this chapter presents and analyses approaches adopted by countries to meet those challenges.
Figure 4.1. Challenges in implementing strategies and policies to support SMEs through public procurement
Note: The survey respondents were asked to indicate how relevant each option is in their country - from 1 (not relevant) to 4 (very relevant).
Source: 2017 OECD survey on strategic use of public procurement to support SMEs.
4.1. Enhancing the capacities of public procurement officials
Capacity is a key pillar of a sound public procurement system. The OECD Recommendation stresses the link between the capacity of the public procurement workforce and an efficient and effective public procurement system (Box 4.1). Officials working in this field, when equipped with the right set of knowledge, skills, behaviour and competencies, can contribute to the future sustainability of the financial and governance system of public procurement (OECD, 2016[1]).
Box 4.1. OECD Recommendation of the Council on Public Procurement – Principle on Capacity
The Council:
IX. RECOMMENDS that Adherents develop a procurement workforce with the capacity to continually deliver value for money efficiently and effectively.
To this end, Adherents should:
i) Ensure that procurement officials meet high professional standards for knowledge, practical implementation and integrity by providing a dedicated and regularly updated set of tools, for example, sufficient staff in terms of numbers and skills, recognition of public procurement as a specific profession, certification and regular trainings, integrity standards for public procurement officials and the existence of a unit or team analysing public procurement information and monitoring the performance of the public procurement system.
ii) Provide attractive, competitive and merit-based career options for procurement officials, through the provision of clear means of advancement, protection from political interference in the procurement process and the promotion of national and international good practices in career development to enhance the performance of the procurement workforce.
iii) Promote collaborative approaches with knowledge centres such as universities, think tanks or policy centres to improve skills and competences of the procurement workforce. The expertise and pedagogical experience of knowledge centres should be enlisted as a valuable means of expanding procurement knowledge and upholding a two-way channel between theory and practice, capable of boosting application of innovation to public procurement systems.
Source: (OECD, 2015[2]).
The performance of SME enablement policies is closely linked to the capacity of the procurement practitioners who are responsible for implementing them. Design of the public procurement processes that affect SME participation – such as the types of procedures applied, decisions on the size of contracts, specifications of qualification criteria, etc. – involves a certain level of judgement from public procurement officials. For instance, public procurement regulatory frameworks in OECD countries define the grounds on which suppliers can be qualified and selected. However, these criteria are often generic in character. Qualitative criteria on technical capacity, as well as a subjective understanding of financial information, imply a certain degree of discretion for contracting authorities’ when executing procedures (Bovis and Calzolari, 2012[3]).
As such, the capacity of public procurement professionals has critical implications for effectively implementing public procurement strategies and the sound functioning of the system. However, for a number of reasons, governments face challenges in equipping the public procurement function with adequate capacity (OECD, 2013[4]). Management of the public procurement workforce is often under the responsibility of each public entity, for example, and often carried out by individuals who are not dedicated procurement professionals. Governments thus use a number of methods in order to enhance the capacity of the public officials in procurement function representing a broad and diverse workforce. Typically, these include practices such as issuing guidelines and providing online and in-person training courses.
4.1.1. Providing guidance to public procurement officials
It is clear from the preceding that sound implementation of the policies and strategies set out by governments depends to a large extent on the extent to which the contracting authorities truly understand the market and the need. The measures implemented to facilitate SME participation in public procurement (as discussed in Chapter 2) depend on several factors – among others, the procurement object, the market conditions, the needs of contracting authorities and the risks associated with the process. Governments must provide sufficient guidance to help public procurement officials take these elements into account when carrying out market analysis, designing technical specifications, awarding criteria, etc.
Considerations related to SMEs must also be taken into account during the development of the procurement strategy, the design of tender documentation and the execution of the procedure. These elements need to be clearly communicated to public procurement officials in a way that aligns with national policies and strategies. For instance, Circular 10/141, issued by the Department of Public Expenditure and Reform in Ireland, sets out guidance for all public sector bodies to further enable SMEs to compete for public contracts. It covers the key areas affecting their participation, such as market analysis (see Box 4.2), capacity and turnover requirements, sub-dividing contracts into lots, etc.
Box 4.2. Guidance on market analysis to assist SMEs in Public Procurement - Ireland
The Circular 10/14, applied to all public sector departments and offices, includes guidance for buyers to further enable SMEs to compete for public contracts. The guidance, which sets out positive measures that buyers should take to promote SME involvement in public sector procurement, includes the following on market analysis.
“Buyers should undertake market analysis prior to tendering in order to better understand the range of goods and services on offer, market developments and innovation, what commercial models are available, the competitive landscape, and the specific capabilities of SMEs etc. Initial consultation with the market should not have the effect of precluding or distorting competition. To ensure transparency, any information provided by the buyer during this process should be circulated to any potential tenderer.
The Office of Government Procurement has established Category Councils for 16 categories of goods and services bought by the Public Service. The role of each Category Council is to develop commercial strategies for sourcing goods and services in their category in line with the needs of customer organisations and in the context of obtaining best value for money. Each council is made up of members who are nominated by the departments and agencies that are the main users of the category. This initiative strengthens the professional approach that Government is now attaching to public procurement. Buyers can contact the Category Council lead (support@ogp.gov.ie) to understand how their needs align to the Category Council strategy or may be met by an existing framework or contract.”
Government guidance such as in the above example of Ireland is common. Such instruction can help contracting authorities understand practical application of public procurement rules and areas of consideration for SME participation. Guidance on easing their access to public procurement can exist either as a standalone document or as part of broader guidance – on strategic procurement for example, or for public procurement in general.
For instance, within the framework of its overall public procurement policy, Belgium has developed a guide to help contracting authorities take into account sustainable development criteria. One of the principal objectives of the guide is “improving the quality of economic growth, the competitiveness of companies and the conditions for competition through the creation of a level playing field that allows enough companies, including SMEs, to participate in public procurement.” Australia released guidance on payment policies and on the use of standardised documentation; these aim to improve procurement practices in general though SMEs stand to benefit from these initiatives.
Mandatory guidance is provided to contracting authorities in the Netherlands on use of the proportionality principle (Gids proportionaliteit). In Lithuania, guidance is issued on proper implementation of the Law on Public Procurement, prepared by the central procurement office. Slovenia has adopted several guidelines on how to procure in certain categories, including guidelines for procuring works; architectural and engineering services; information solutions; and cleaning and security services (currently under preparation), as well as recommendations for application of financial insurance in public procurement.
In addition to guidance, implementation efforts can also be supported by making changes to the template tender documentation provided to contracting authorities. In New Zealand and France, development of model contracts and simplification and standardisation of other tender documents have reduced compliance costs for suppliers that are felt acutely by SMEs. Lithuania has published educational materials on line, such as educational films, tests, briefings and infographics, all with a view to building the capacity of procurement professionals.
4.1.2. Training the public procurement workforce
Delivery of high-quality training can help public procurement employees increase their awareness of SME policies, and thus improve their capacity to apply them in daily procurement operations. Constant management and evaluation of workforce capacity, along with monitoring of capacity development efforts, could help sustain performance improvements (Mpofu and Hlatywayo, 2015[6]).
In order to ensure sound implementation of SME support strategies and policies, over half of the OECD countries surveyed organised specific training sessions to enhance public procurement officials’ capability (Figure 4.2). For instance, Australia has organised training sessions for key initiatives that benefit SMEs, such as standardised procurement documentation.
Figure 4.2. Specific training sessions organised for the public procurement workforce on the implementation of strategies and policies that support SMEs
Source: 2017 OECD survey on strategic use of public procurement to support SMEs.
In particular, training sessions and briefings were organised to discuss changes to the rules or the introduction of new public procurement regulatory frameworks. Some examples include:
Denmark: training on the implementation of the new Public Procurement Act of 2016, organised for government employees
Ireland: annual conference organised by the Office of Government Procurement covering all of the latest policy developments that are relevant to suppliers
New Zealand: briefing sessions held for contracting authorities, including chief executive briefings, regular “breakfast” sessions, tailored briefings on new policies (e.g. Government Rules of Sourcing Update and Extension of Rules and the Significant Service Contract Framework)
Slovenia: roadshows in several regions of the country as well as theme-based education were carried out following adoption of the Public Procurement Act (ZJN-3), and will continue to be carried out periodically.
In addition to training organised at the central level, some training sessions are organised by contracting authorities for their employees, as is the case at the Federal Ministry of Science, Research and Economy of Austria.
CPBs, as key players in the overall public procurement system, expend efforts to train their employees in implementation of SME enablement policies and strategies. In the case of Canada, a course is delivered on an ongoing basis to employees of Public Services and Procurement Canada (PSPC) on how to engage stakeholders while managing procurement. Another course is under development on how to build consensus with stakeholders for PSPC employees.
An increasing number of countries are realising that the effectiveness and impact of strategic public procurement relies significantly on the skills and competencies of the procurement workforce (OECD, 2018[7]). Forty-three percent of countries integrate SME considerations into capacity-building activities for the public procurement workforce (Figure 4.3). In Chile, inclusion of SMEs in public procurement is covered as a topic in the accreditation test for public procurement officials.
Figure 4.3. Extent to which SME support is integrated into general capacity-building activities for the public procurement workforce in OECD countries
Source: 2017 OECD survey on strategic use of public procurement to support SMEs.
Collaborative approaches with knowledge centres could also be a valuable means to expand public procurement workforce capacity. In order to benefit from the expertise of knowledge centres, the Ministry of Commerce, Industry and Tourism in Colombia, for instance, signed an agreement in 2012 with PROPAÍS (Institute for the Development of Microenterprises), which is a mixed-entity composed of public and private entities. The agreement was aimed at developing micro and small businesses by providing training and workshops on public procurement in different regions of Colombia.
4.2. Building SMEs’ capacity to participate in public procurement markets
Compared to their larger counterparts, SMEs often lack the legal and technical expertise to prepare bids or understand public procurement procedures. Some also argue that a lack of human and financial resources could prevent SMEs from adopting new technological solutions that could improve their overall performance (Grando and Belvedere, 2006[8]). This also implies that SMEs could be at a disadvantage when they are required to adopt different public procurement technologies. Research suggests that SMEs feel that their resources and capabilities affect their performance in public procurement markets, and the lack of administrative resources and legal expertise represents a hindrance to their participation (Karjalainen and Kemppainen, 2008[9]).
Recognising the relatively low capacity of SMEs, governments organise training and workshops in order to better equip them with the necessary information and knowledge to participate in public procurement markets. In two-thirds of surveyed countries, supplier capacity-building exercises are organised to support SMEs in public procurement (Figure 4.4).
Figure 4.4. Training and workshops carried out to support SMEs in public procurement
Source: 2017 OECD survey on strategic use of public procurement to support SMEs.
Supplier capacity-building exercises are typically organised by public bodies in charge of public procurement policies and central purchasing bodies (though in some countries these are housed within the same institution). Examples of the training activities organised by those bodies are displayed in Table 4.1
Table 4.1. Training and workshops for SMEs carried out by public procurement authorities
Source: Country responses to the 2017 OECD survey on strategic use of public procurement to support SMEs.
The government agencies and bodies established to support SME development are also closely involved in providing the capacity-building exercises. This is the case, for instance, of the Small and Medium Businesses Agency in Israel. The Polish Agency for Enterprise Development also offers training and services that help entrepreneurs to participate in the public procurement market (see Box 4.3).
Box 4.3. Training and workshops provided by the Polish Agency for Enterprise Development
The Polish Agency for Enterprise Development (PARP) (www.parp.gov.pl/) provides general and specific training and workshops for SMEs. PARP also offers training and services to help entrepreneurs answer strategic questions, such as:
What is the company going to be like in several years?
What will I produce?
To whom do I want to sell my products and services?
What skills and resources do I need?
To help entrepreneurs respond to these questions, PARP provides training in the areas of strategic management, participation in public procurement, international public procurement, and public-private partnerships.
The agency also offers various publications to help entrepreneurs participate and perform in public procurement markets. Some of the publications that relate to SMEs’ participation in public procurement include A New Approach to Public Procurement; Innovative Public Procurement in Poland; Public Procurement and Innovative SMEs; Innovative Entrepreneurship: Revealed and Hidden Potential for Innovation in Poland; and Is Your Company Innovative? How to Explore Innovations in the Service Sector? Hints for SMEs.
Source: Country responses to the 2017 OECD Survey on strategic use of public procurement to support SMEs.
Training for suppliers is also commonly provided in partnership with non-public bodies that focus on business development. For instance, InterTradeIreland, a cross-border trade and business development body funded by the Department of Business, Enterprise and Innovation Ireland and the Department for the Economy in Northern Ireland, provides training on different phases of tendering, with the support of the Office of Government Procurement, the central purchasing body of Ireland (see Box 4.4 for further information). New Zealand provides another example of a government partnership with regional businesses to provide information, training and, if appropriate, funding to local businesses. Business and industry associations also work with local businesses interested in tendering to government and other large organisations.
Box 4.4. Go-2-Tender Training Scheme for SMEs - Ireland
InterTradeIreland, an agency funded by the Department of Business Enterprise and Innovation in Ireland (DBEI) and the Department for the Economy, provides a number of services to business with the goal of enhancing growth opportunities, innovation and competitiveness. It is recognised for offering services targeted specifically at SMEs that aim to help them compete in procurement markets.
Its foremost service in this regard is the Go-2-Tender training scheme, two-day practical tender workshops designed for an SME audience that covers key aspects of procurement. During the seminar SMEs are taught the knowledge and practical skills that will enable them to be successful at tendering, such as identifying opportunities, registering on procurement portals, bid/no bid decision making, and drafting of successful proposals. To participate, companies must meet a number of eligibility criteria, such as being classified as an SME, operating in the manufacturing and tradable services sectors and demonstrating export potential. The workshops are conducted by experienced tender specialists and provide insight into the procurement practices of public sector bodies in Ireland. Guest speakers from central government/large public procurement organisations are also invited. In addition to the plenary session, half a day of the workshop is dedicated to mentoring sessions, where participants can choose their topic of interest. Workshops are offered in various locations and participation fees of EUR 100 apply. In 2016, seven seminars were held across the country and a similar number is foreseen for 2017. Participants can also apply for a follow-up workshop once they have concluded the first Go-2-Tender seminar. Since the programme was introduced in 2007, over 900 companies have completed the workshop and were able to win procurement contracts worth EUR 69 million.
In addition, InterTradeIreland organises practical half-day seminars aimed specifically at small business owners who will be new to public sector tendering, have limited knowledge and/or experience of the market, or simply want to refresh their knowledge of the public sector. Targeting the micro sector (<10 employees), these seminars focus on low-value/under-threshold opportunities. They also arrange Meet the Buyer events, offering SMEs the opportunity of face-to-face interaction. Finally, the agency offers FAQs, guides, videos and presentations as well as dedicated events on emerging trends that impact the procurement environment for SMEs.
Source: Country responses to the 2017 OECD Survey on strategic use of public procurement to support SMEs.
Ukraine provides an example of how training and workshops are organised for SMEs in co-operation with commercial providers and knowledge centres, including at the regional level (see Box 4.5).
Box 4.5. Training and workshops carried out for SMEs in a collaborative way – Ukraine
The Ministry of Economic Development and Trade of Ukraine, an authorised body in the public procurement sphere and the leader of public procurement reform, organises different regional public procurement workshops and training for SMEs in co-operation with operators of commercial e-platforms, business schools and international organisations. In all regions of Ukraine there are representatives of the public procurement reform team responsible for organising and carrying out seminars, training and consultation in the field of public procurement for suppliers and contracting authorities.
Furthermore, the Ministry has launched a project called the “GPA (Government Procurement Agreement) Implementation Office”, which helps Ukrainian suppliers, first and foremost SMEs, participate in international public procurement, in both an active and advisory capacity. The GPA also helps to create ecosystems that promote the participation of Ukrainian exporters in the public procurement markets of other GPA signatories and of importers from countries participating in the GPA. Main areas of business support include providing office; providing access to information on international requirements; assisting in the preparation of the tender offer; advising on fulfilling tender requirements; analysing public procurement markets of the Agreement; and supporting appeals in international tenders.
Source: Country responses to the 2017 OECD Survey on strategic use of public procurement to support SMEs.
Establishing advisory help desk services and dedicated contact points could supplement the guidance already offered through websites, manuals and training courses by providing SMEs with additional support on an ad hoc basis. For instance, PSPC, Canada’s central purchasing body, has an SME info-line that SMEs can contact by telephone, web forms and emails. Even where a help desk service has not formally been established, countries have opened up channels through which suppliers can contact contracting authorities. These channels are actively communicated on contracting authority websites and e-procurement platforms.
4.3. Ensuring implementation across and between different levels of government
Public procurement frameworks aimed at levelling the playing field for SME participation are very often defined at the central level. However, national policies do not prescribe specific applications for individual measures. Each contracting authority has different public procurement needs, and thus their application will reflect those needs and be relevant to the supplier market in question.
With this in mind, countries devote efforts to ensuring the sound implementation of central policies and strategies across government. In the case of Sweden, a dedicated body in charge of oversight facilitates government-wide implementation of the central strategy. While each contracting authority is responsible for implementing the National Public Procurement Strategy, the National Agency for Public Procurement has the specific task of following up on implementation of the strategy’s seven policy objectives.
Having a dedicated body or unit that provides support to SME enablement programmes in public procurement could facilitate communication between the public and private sectors and thus boost coherence among different parts of government. The Office of Small and Medium Enterprises within PSPC in Canada provides an advisory role in this regard (see Box 4.6).
Box 4.6. Addressing SMEs’ challenges and constraints through the Office of Small and Medium Enterprises in Canada
The Office of Small and Medium Enterprises (OSME) in Public Works and Government Services Canada assists the government in bridging the gap between supply and demand by bringing to light the concerns and challenges of SMEs in the federal procurement process. OSME works with SMEs to address their key challenges and constraints by:
understanding and reducing the barriers that prevent SMEs from participating in federal procurement
advising government buyers and policy makers on SME concerns
recommending improvements to procurement tools and processes to encourage SME participation in federal procurement.
PSPC provides additional information available to SMEs on their webpage under “Help for SMEs” (www.tpsgc-pwgsc.gc.ca/app-acq/pme-sme/index-eng.html). Information services include:
a portal that provides access to federal procurement information and open data including bid opportunities (tenders), standing offers and supply arrangements, and contract history
free seminars, webinars and one-on-one sessions to assist suppliers in understanding federal procurement
telephone information line for suppliers who have questions about the procurement process and related tools.
The Office of Small and Medium Enterprises also manages the Build in Canada Innovation Programme, which assists Canadian businesses in testing their innovative goods and services before they are commercialised.
Source: Country responses to the 2017 OECD Survey on strategic use of public procurement to support SMEs.
Requests can also be made at the central level to contracting authorities at regional and local levels in order to support broad implementation of national policies and strategies. An example can be found in Japan, where a request was issued by the Minister for Economy, Trade and Industry to the heads of each agency and ministry, prefectural governors, all municipal mayors, and mayors of the Tokyo special wards (1 805 organisations) regarding Cabinet approval of the Basic Policy on State Contracts with Small and Medium Enterprises. The request urged contracting authorities to increase opportunities for SMEs and micro-enterprises in public procurement activity.
Consultation with government agencies responsible for SME policies, or government-appointed SME advisory groups or panels, could further facilitate effective implementation of public procurement policies and strategies to support SMEs. In Finland, for instance, there is a network of procurement agents organised at the regional level that supports SME participation in public procurement.
Box 4.7. The network of public procurement agents, Finland
In 2009 the Federation of Finnish Enterprises launched a new service to improve SME participation in public procurement. This network of procurement agents helps SMEs participate in tendering processes, in particular through providing information and organising training and seminars. The network also offers electronic tools, market facts and other relevant information concerning tendering processes. The goal of the network is to provide all the assistance needed from one place.
In 2012 the service was extended to cover all regions of Finland; today network coverage extends to 11 regions. The network is financed by the Ministry of Economic Affairs and Employment and by the Federation of Finnish Enterprises. There is additional financing from e.g. municipalities, and the network can also charge small fees for its services.
Contracting authorities also have the possibility to use the network of procurement agents and its services. Currently there are over 17 000 SMEs and 2 000 contracting authorities using the service. The most popular service is the “invitation to tender watch”, which offers companies classified information about invitations for tenders in companies’ own business areas. This service is used more than 35 000 times each month.
Source: Information provided by Finland to the 2017 OECD Survey on strategic use of public procurement to support SMEs.
4.4. Engaging with SMEs to build a robust and lasting partnership
Engaging with stakeholders such as those that will be directly affected by a given policy constitutes a key element of developing and implementing that policy. Similarly, incorporating the voice of SMEs when developing SME enablement programmes in public procurement helps government better understand their challenges, and design and implement policies that will boost their participation and performance.
Governments indeed often carry out consultation with SMEs through their associations or at public events when assessing the constraints of public procurement frameworks. Box 4.8 illustrates how consultation with SMEs in the Netherlands improved the implementation of policies, while also addressing the challenge of procurement officials’ lack of knowledge regarding practical implementation.
Box 4.8. SME consultation to improve policy implementation – Netherlands.
During the implementation in 2016 of European directives (2014/14/EU) through amendment to the Dutch Public Procurement Act (“Aanbestedingswet 2012”), consultations were held with the branch organisation of SMEs (MKB Nederland). Furthermore, all SMEs had the opportunity to comment on the act through Internet consultation.
SMEs had been asked about their experiences with the Dutch Public Procurement Act during its evaluation in 2015. The evaluation concluded that the problems with the Act were mainly due to its practical application, as opposed to stemming from the act itself. To overcome these practical problems, the project Better Public Procurement (Beter Aanbesteden) was launched by the Dutch Government in 2016. In this project, SMEs work together with contracting authorities across different regions to identify constraints and develop concrete actions to improve public procurement practices. SME organisations were consulted also at the national level to discuss constraints and actions.
Source: Country response to 2017 OECD Survey on strategic use of public procurement to support SMEs.
Governments devote efforts to building sustained relationships with SMEs, not only when legal or regulatory changes are being introduced. For instance, Poland provides regular information meetings with interested enterprises, mainly SMEs, to encourage their engagement in, and knowledge of, topics such as the e-catalogue platform of the Public Procurement Office.
Enabling implementation: What is it SMEs and public procurement officials need?
References
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Note
← 1. Circular 10/14: Initiatives to assist SMEs in Public Procurement, accessible at http://etenders.gov.ie/Media/Default/SiteContent/LegislationGuides/Circular_10_-_14_0.pdf