Public Procurement in Lithuania

Annex B. Lessons learnt from the implementation of the pilot projects of strategic procurement

The Ministry of Economy and Innovation of Lithuania and the European Commission have called upon the OECD to support the Lithuanian authorities in promoting efficiency in public procurement while supporting its use for achieving broader policy objectives. Against this background, the OECD implemented the project funded by the European Union through DG REFORM Technical Support Instrument Increasing efficiency in public procurement system of Lithuania through the implementation of centralisation and professionalisation reforms, in collaboration with the Ministry of Economy and Innovation (MoEI), the Public Procurement Office (PPO) and CPO LT (the national central purchasing body). The implementation of the project started in September 2021 and was completed in November 2023.

One of the key outputs of this project was to provide practical support to selected contracting authorities in carrying out strategic (sustainable) public procurement in pilot projects. This annex summarises the salient points and lessons learnt from the implementation of the pilots with three relevant contracting authorities on strategic procurement.

Figure A B.1. Overall schedule of pilot projects

Source: Prepared by the author

Selection of pilot CAs and definition of scope for practical support

In May 2022, the MoEI and the OECD initiated the process to identify and select contracting authorities that would obtain practical support on implementing strategic procurement in pilot projects. By the end of August 2022, based on the alignment of priorities and strategic objectives and the willingness of three contracting authorities (Defence Resources Agency under the Ministry of National Defence, CPO LT and Republican Vilnius University Hospital), the MoEI and the OECD agreed on their participation in the pilot, including the objective and scope of the pilots, and the practical support to be provided during the pilot implementation period, taking into account their expectations and the overall duration of the project. The scopes of these pilots consisted of 1) integrating green criteria into military uniforms, 2) applying life cycle costing (LCC) onto functional beds for hospitals, and 3) seeking an innovative solution to develop an IT application to address bedsore issues (see Table A B.1).

Table A B.1. Overview of the selected pilot projects

Pilot organization	Subject matter of contract	Objective / Scope	Support provided
Defence Resources Agency under the Ministry of National Defence	Military uniforms: -Winter clothes -Camouflage clothes	Integrating green criteria	-Review of tender documents / conditions -Integrating green criteria
CPO LT	Functional beds (e-catalogue) -purchase module -rental module	Applying life cycle costing (LCC) as contract award criteria	-Technical expertise to define technical parameters and LCC model
Republican Vilnius University Hospital (RVUL)	Development of IT application for bedsore issue	Seeking innovative solution	-Technical expertise to identify / define needs -Proposal for the guidance of the market research

Source: Prepared by the author

Implementation of pilot projects

The implementation of the three pilot projects officially started in September 2022. Teams and timelines were agreed. On 4 May 2023, the OECD, together with the MoEI and PPO, organised a workshop in Vilnius to discuss the pilot implementation progress and exchange lessons learnt up until then from implementing the pilot projects with the three participants. From September 2022 until its completion, several technical and project meetings were held for each project. The pilot projects were formally completed on September 29, 2023, on occasion of the closing event for the entire project, by holding a panel discussion with pilot participants, as part of the programme for the conference.

Key lessons learnt from pilot projects

The implementation of these pilot projects drove and reconfirmed the following lessons and challenges related to the implementation of strategic procurement:

• Relevance of early market consultation and engagement to test the market readiness and refine procurement conditions;

• Strong appetite for paradigm shift to apply new procurement practices such as green criteria, LCC and innovative solutions;

• Necessity of appropriate human and financial resources to carry out strategic procurement; and

• Relevance of setting up a project team including the key stakeholders within the interested contracting authority including procurement specialists, market and category specialists and the end-user (technical departments)

The details of these lessons are described below for each pilot project.

Defence Resources Agency under the Ministry of National Defence

General information on the pilot

• Subject matter of contract: Military uniforms (Winter clothes and Camouflage clothes)

• Objective / Scope: Integrating green criteria

• Support provided:

  • Review of tender documents / conditions

  • Suggestion on integrating green criteria

Implementation progress

 

Activity / Milestone	The month of the implementation period
	2022						2023
	Jul	Aug	Sep	Oct	Nov	Dec	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep
	1	2	3	4	4	5	6	7	8	9	10	11	12	13	14
Agreement on the pilot scope
Receipt of draft tender documents
Review of draft T/D
Update of draft T/D (integration of GPP criteria)
Market consultation
Call for tender
Bid submission
Tender evaluation / Contract award

Key activities and lessons learnt

• Quality of tender documents

  Some corrections were made on tender clauses and conditions after the review of draft tender documents by the OECD experts. For example, the review found that some points were given as contract award criteria for meeting the minimum requirements in the technical specifications, which is not allowed.

• Integrating green criteria

  Defence Resources Agency integrated the following green criteria into technical specifications and/or contract award criteria:

  • set mandatory requirement for QR code for the manual;

  • set mandatory requirement that products must be delivered in recycled packaging (plastic bags not allowed);

  • use contract award criteria (5 points) if the recycled fibers are used for winter clothes.

• Relevance of early market engagement

  The market consultation carried out in February 2023 revealed that the market was not fully prepared for manufacturing military uniforms with recycled fabrics and that it would take time to conduct the research, considering that military uniforms have to be highly durable and have certain higher technical characteristics such as fabric strength, tear, and abrasion resistance. This feedback from the market made it difficult to incorporate contract award criteria to apply recycled materials in the uniforms under this pilot. This example shows the relevance of the early market consultation as well as the strong drive the public sector can have in changing the market behaviour from the demand side.

CPO LT

General information on the pilot

• Subject matter of contract: Functional beds (for health sector) in CPO LT e-catalogue (purchase and rental module)

• Objective / Scope: Applying life cycle costing (LCC) as contract award criteria

• Support provided:

  • Technical expertise to define technical parameters and LCC model

Implementation progress

 

Activity / Milestone	The month of the implementation period
	2022						2023
	Jul	Aug	Sep	Oct	Nov	Dec	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep
	1	2	3	4	4	5	6	7	8	9	10	11	12	13	14
Agreement on the pilot scope
Selection of the technical expert
Review of the information
Preparation of tender conditions and technical parameters for LCC
Preparation of award criteria
Market consultation
Final agreement on the LCC conditions

Key activities and lessons learnt

• Appetite for new paradigm

  This is the first time CPO LT introduced life cycle costing (LCC) as contract award criteria in the goods provided through its e-catalogue. CPO LT showed strong willingness and appetite for this new paradigm to make its centralised procurement services more sustainable and greener.

• Needs for a technical expert

  Defining technical parameters for LCC requires a capable technical expert who is familiar with the technical expertise of the subject matter of contract as well as the LCC calculation methodology. This pilot project successfully provided CPO LT with this technical expertise through the OECD expert.

• Relevance of market consultation

  CPO LT launched market consultation in March 2023. The market was asked to express their views on technical parameters and tender conditions as well as to indicate the estimated cost for technical parameters. This active approach of market consultation allowed for positive feedbacks from the market and refined the technical parameters and tender conditions such as the contract award criteria, warranty period, and maintenance conditions.

Republican Vilnius University Hospital (RVUL)

General information on the pilot

• Subject matter of contract: Development of IT application for bedsore issues

• Objective / Scope: Seeking innovative solution

• Support provided:

  • Technical expertise to identify / define needs

  • Proposal for the guidance of the market research

Implementation progress

 

Activity / Milestone	The month of the implementation period
	2022						2023
	Jul	Aug	Sep	Oct	Nov	Dec	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep
	1	2	3	4	4	5	6	7	8	9	10	11	12	13	14
Agreement on the pilot scope
Selection of the technical expert
Conceptualisation of the current processes and possible solution
Market consultation

Key activities and lessons learnt

• Innovation procurement requires proper resources

  Carrying out innovation procurement requires adequate resources, including human (capabilities and time) and financial resources. It takes time to identify and define a problem as well as properly describe the objectives to be achieved and the processes to be followed. Proper financial resources are necessary to prepare an innovation procurement procedure through solid market research and consultation. The case of the Republican Vilnius University Hospital reinstated it, by working intensively almost for one year to define and describe the problem that the hospital desired to solve, and finally launch a market consultation on September 20, 2023. The hospital is planning to define the technical parameters as a result of this market consultation and launch the corresponding innovation procurement procedure in 2024.

• Relevance of setting up a team of innovation project

  Innovation procurement is not only a procurement procedure but also should be considered as an innovation project. Therefore, it is indispensable to set up a team for the innovation project within a contracting authority, which includes the key stakeholders of the project such as procurement specialists, market and category specialists and the end-user (technical departments). The process shall be consulted with and reported to the senior management to obtain their buy-in.