Procuring change
The government is taking steps to promote innovative procurement and will soon hold five more workshops to explain the principle and how to put it into practice, the director of operations at the Department of Contracts, Anthony Cachia said."The...
The government is taking steps to promote innovative procurement and will soon hold five more workshops to explain the principle and how to put it into practice, the director of operations at the Department of Contracts, Anthony Cachia said.
"The Department of Contracts intends to revise the current guidelines on public procurement in order to bring them in line with current EU directives, to cover a framework for innovative procurement and ways to encourage it, such as the issue of prior information notices," he said.
Mr Cachia was speaking at the first workshop in the series, a well-attended one for public sector heads, organised by the Malta Council for Science and Technology at the Mediterranean Conference Centre.
The audience of over 130 included senior representatives from most of the government departments and corporations, ranging from the health and energy sectors to the Armed Forces.
The government has adopted a comprehensive strategy to promote research and innovation. One of the 66 measures in the strategy is the adoption of innovative public procurement.
"We need to imbue a culture for innovation, through which public procurement will demand innovation. Too often, we tend to apply public procurement as a transactional matter rather than as a strategic leverage to transform what we do and how we go about matters. In doing so, we tend to design tenders based on specifications of what we know exists, rather than on the outcomes that we should strive to achieve. Invariably, specification-led public procurement limits opportunities for the business communities to provide innovative solutions," Parliamentary Secretary Tonio Fenech said during his opening speech.
"Most often in undertaking public procurement, we shy away from dialogue and discussion with industry - the channel for communications being established through the iron-clad specifications set, which if not met - even if a better solution is provided - disqualify bidders..."
Mr Fenech said that innovative procurement did not come without problems, such as designing the outputs and the key performance indicators, and deciding what happens if the innovative soluton fails.
MCST will apply to the European Social Fund for training in the hope of creating a team that can push the policy forward.
MCST chairman David Spiteri Gingell warned, however, that innovation was a tool and would only be used if its benefits were recognised.
There is a lot at stake. The government procures Lm500 million worth of goods and services every year, representing 15-18 per cent of the GDP.
Another concern is the high level of tender appeals - which could get worse if the evaluation criteria are more complex.
"This will need a culture change," the director general at the Finance Ministry, Alfred Camilleri said, innovation does not only relate to technology but also to processes.
The EU has drawn up a strategy to promote innovative procurement, since the market has failed to do so of its own accord.
"Our role is to raise awareness and to provide guidance on how public authorities can become intelligent customers," he said.
The main obstacle to innovative procurement is risk-aversion - and it is important to get across the message that one must be prepared for failures and mistakes, he said.
"We will need to introduce continuous evaluation and share - and learn - from best practice. In Malta, we are not very good at post-project evaluation," he said.
The normal tendering process in Malta is usually based on straightforward provision against specifications.
However, there are two other procedures that could be exploited for innovative procurement. In some rare instances, a negotiated procedure is allowed and for complex contracts, competitive dialogue could be used.
MITTS was the first entity to use the negotiated procedure when it was purchasing an IT storage solution. It assessed the bidders' portfolios at the shortlisting stage, as well as the technical proposals they made. One important aspect was to ensure sufficient time for discussions.
During the process, MITTS also drew up a code of ethics which will prove very useful in the future as it includes ways to avoid obstacles that cropped up as they went through the process, MITTS representative Victor Camilleri explained.
He gave a frank evaluation of the problems encountered, including mistrust of the process and territorial pride among the experts.
"But we learned important lessons such as the need to continue talks with all the bidders until the final agreement is made. In fact, in structure it was probably closer to the competitive dialogue model," he said.
Competitive dialogue has also been used in a number of cases in Malta, such as the Mater Dei Hospital, the advertising campaign for the Malta Tourism Authority and the Mellieha home for the elderly.
The keynote speaker was Luke Georghiou from the Manchester Business School, who was the rapporteur to the EU on innovative procurement.
"Public procurement is a potentially powerful instrument to drive research and innovation by providing lead markets for new technologies.
"The principle is simple: Innovative procurement is not just aimed at improving public services but also as a driver for innovation. An EU study had shown that market demand is the most important factor influencing R&D investment. It is a risk to invest in R&D but this risk is greatly reduced if you know that there is a prospective buyer," he said.
"On the other hand, you have to remember that it is very difficult for innovative firms to get a foothold as they have no track record. But it can work. Let us not forget that it was the public sector which drove the creation of the internet!"
Prof. Georghiou said the problem is clear: Prospective buyers lack knowledge of future innovation.
"If you opt for a pre-commercial tendering system then you are in essence procuring goods or services on which R&D still needs to be done. All that is needed is for the good or service to be defined by its function and not in a prescriptive manner which prevents innovation."
He outlined some important steps in this process.
"The government would have to allow dialogue with the supplier - perhaps even once the tender is issued. It would also have to open up the process to the submission of variants and it must also come up with a formula to transfer the intellectual property of the innovation to the supplier - at a cost if need be.
"The competition is shifted from the sole focus on price to the provision of solutions, which offer the greatest advantage to users over the whole life of the purchase.
"So when you come to evaluate the award, it has to be on the basis of the most economically advantageous tender - and this would have to cover not only the cost of the acquisition but the whole life costs including its operation and its disposal," he said.
"The Department of Contracts intends to revise the current guidelines on public procurement in order to bring them in line with current EU directives, to cover a framework for innovative procurement and ways to encourage it, such as the issue of prior information notices," he said.
Mr Cachia was speaking at the first workshop in the series, a well-attended one for public sector heads, organised by the Malta Council for Science and Technology at the Mediterranean Conference Centre.
The audience of over 130 included senior representatives from most of the government departments and corporations, ranging from the health and energy sectors to the Armed Forces.
The government has adopted a comprehensive strategy to promote research and innovation. One of the 66 measures in the strategy is the adoption of innovative public procurement.
"We need to imbue a culture for innovation, through which public procurement will demand innovation. Too often, we tend to apply public procurement as a transactional matter rather than as a strategic leverage to transform what we do and how we go about matters. In doing so, we tend to design tenders based on specifications of what we know exists, rather than on the outcomes that we should strive to achieve. Invariably, specification-led public procurement limits opportunities for the business communities to provide innovative solutions," Parliamentary Secretary Tonio Fenech said during his opening speech.
"Most often in undertaking public procurement, we shy away from dialogue and discussion with industry - the channel for communications being established through the iron-clad specifications set, which if not met - even if a better solution is provided - disqualify bidders..."
Mr Fenech said that innovative procurement did not come without problems, such as designing the outputs and the key performance indicators, and deciding what happens if the innovative soluton fails.
MCST will apply to the European Social Fund for training in the hope of creating a team that can push the policy forward.
MCST chairman David Spiteri Gingell warned, however, that innovation was a tool and would only be used if its benefits were recognised.
There is a lot at stake. The government procures Lm500 million worth of goods and services every year, representing 15-18 per cent of the GDP.
Another concern is the high level of tender appeals - which could get worse if the evaluation criteria are more complex.
"This will need a culture change," the director general at the Finance Ministry, Alfred Camilleri said, innovation does not only relate to technology but also to processes.
The EU has drawn up a strategy to promote innovative procurement, since the market has failed to do so of its own accord.
"Our role is to raise awareness and to provide guidance on how public authorities can become intelligent customers," he said.
The main obstacle to innovative procurement is risk-aversion - and it is important to get across the message that one must be prepared for failures and mistakes, he said.
"We will need to introduce continuous evaluation and share - and learn - from best practice. In Malta, we are not very good at post-project evaluation," he said.
The normal tendering process in Malta is usually based on straightforward provision against specifications.
However, there are two other procedures that could be exploited for innovative procurement. In some rare instances, a negotiated procedure is allowed and for complex contracts, competitive dialogue could be used.
MITTS was the first entity to use the negotiated procedure when it was purchasing an IT storage solution. It assessed the bidders' portfolios at the shortlisting stage, as well as the technical proposals they made. One important aspect was to ensure sufficient time for discussions.
During the process, MITTS also drew up a code of ethics which will prove very useful in the future as it includes ways to avoid obstacles that cropped up as they went through the process, MITTS representative Victor Camilleri explained.
He gave a frank evaluation of the problems encountered, including mistrust of the process and territorial pride among the experts.
"But we learned important lessons such as the need to continue talks with all the bidders until the final agreement is made. In fact, in structure it was probably closer to the competitive dialogue model," he said.
Competitive dialogue has also been used in a number of cases in Malta, such as the Mater Dei Hospital, the advertising campaign for the Malta Tourism Authority and the Mellieha home for the elderly.
The keynote speaker was Luke Georghiou from the Manchester Business School, who was the rapporteur to the EU on innovative procurement.
"Public procurement is a potentially powerful instrument to drive research and innovation by providing lead markets for new technologies.
"The principle is simple: Innovative procurement is not just aimed at improving public services but also as a driver for innovation. An EU study had shown that market demand is the most important factor influencing R&D investment. It is a risk to invest in R&D but this risk is greatly reduced if you know that there is a prospective buyer," he said.
"On the other hand, you have to remember that it is very difficult for innovative firms to get a foothold as they have no track record. But it can work. Let us not forget that it was the public sector which drove the creation of the internet!"
Prof. Georghiou said the problem is clear: Prospective buyers lack knowledge of future innovation.
"If you opt for a pre-commercial tendering system then you are in essence procuring goods or services on which R&D still needs to be done. All that is needed is for the good or service to be defined by its function and not in a prescriptive manner which prevents innovation."
He outlined some important steps in this process.
"The government would have to allow dialogue with the supplier - perhaps even once the tender is issued. It would also have to open up the process to the submission of variants and it must also come up with a formula to transfer the intellectual property of the innovation to the supplier - at a cost if need be.
"The competition is shifted from the sole focus on price to the provision of solutions, which offer the greatest advantage to users over the whole life of the purchase.
"So when you come to evaluate the award, it has to be on the basis of the most economically advantageous tender - and this would have to cover not only the cost of the acquisition but the whole life costs including its operation and its disposal," he said.