A Better World Starts with Public Procurement

Fredo Schotanus is also co-founder of the Utrecht University Centre for Public Procurement (UUCePP) and is active as a principal consultant for Significant Synergy. He studies procurement that takes price, quality, people and the environment effectively and efficiently into account.

As a Professor of Public Procurement at the Utrecht University's School of Economics, what are the main academic discussions on sustainable public procurement (SPP) and does working with the students make you optimistic about the future of the field?

There are actually a multitude of discussions regarding SPP in academia presently. Take for example the debate surrounding the extent to which SPP should be mandatory. Some scholars believe that SPP is already mandatory, while others still argue that SPP is not a good idea at all. Although I disagree with this critical viewpoint, such scholars do bring up valid criticisms related to monitoring problems, corruption risks, and the actual effects of SPP. They also bring up discussions about optimal policy mixes: how should SPP, subsidies, taxes et cetera interact to be most effective?

Another example of an ongoing debate is the side effects of promising SPP ideas. For instance, what are the actual effects of well-intentioned certifications? Could these certifications lead to a sense of complacency among buyers and suppliers? And do they hinder the participation of SMEs in tenders?

Although it has not yet become a prominent debate in academia, I’m also interested in exploring the effects of higher national tender thresholds that are below the European thresholds for directly contracting social entrepreneurs. These are companies that share the same goals as many governments, to create a better world. Due to these shared goals, contracting such companies might necessitate less competition and monitoring. However, we need to be careful because reserved procurement, where contracts are set aside for specific groups, is usually not efficient in terms of price and quality. But reserved procurement might be efficient if sustainability is considered as well. Additional research is still needed on this subject.

When it comes to students entering the public procurement profession, I'm optimistic. Today's generation seems to be more interested in sustainable practices like buying second-hand items, choosing foods that are environmentally friendly, and making a positive impact on society. They also leverage tools like ChatGPT to streamline tasks that used to take a lot of time, just like I did for editing my answers for this interview. These personal attitudes and techniques are aligned with SPP goals. What's even more advantageous is that SPP makes our profession more appealing by showcasing the impact of procurement on our society. Typically, students might not find purchasing transactions very exciting, but when we demonstrate how our profession contributes to a better world, it becomes much more compelling.

In your inauguration address ‘A better world starts with public procurement’ you spoke about the importance of sustainable procurement. In your opinion, what is missing to achieve a more sustainable and social world? How can governments improve their procurement activities and policies?

Those are great questions, but it is difficult to answer them thoroughly in a brief interview. Nevertheless, I have three thoughts to share. Firstly, most (sustainable public) procurement policies should provide more guidance. Rather than merely stating ambitious goals, the focus should shift toward prescribing specific choices. For instance, in the case of external labor, it could be prescribed that the SPP focus should be on promoting diversity and inclusion. For construction, the focus could be on reducing emissions and promoting circularity. Et cetera. An example of an effective SPP policy is a Dutch policy called "Procurement with Impact." Jacco van Berkel, a former student, and I conducted a study on the effects of this policy and found that it significantly increased the attention given to sustainability in tenders in a short period of time.

My next thought is inspired by the work of my UUCePP colleague Professor Elisabetta Manunza. In tender processes, our focus needs to shift from more competition to better competition. This means that in some cases, it's crucial to get several bids, but in other situations, it's less important, such as when selecting bids from social entrepreneurs. Even though the quantity, measured in the number of bids, may be lower in such cases, the SPP quality is likely to be higher. However, many economists, including ourselves, still tend to measure the effectiveness of tenders based on indicators such as price savings and the number of bids. This is largely because we often don't have sufficient data to evaluate tenders by other measures.

This leads me to my final point: we should start paying more attention to contract outcomes instead of tender processes. While procurement platforms like TED report on tender publications and contract awards, they don't provide information on the actual outcomes of awarded contracts. Monitoring sustainability outcomes is challenging though, as it's not always easy to measure emissions or social issues in distant countries. However, digitalization could play an important role in providing more insight into what really happens in supply chains.

For those interested in reading more on some of these topics, my inaugural address, "A Better World Starts with Public Procurement," is available online.

What role do you have with Utrecht University Centre for Public Procurement (UUCePP) and what types of research does the centre carry out? Can you give us an example of your latest study?

UUCePP is a Utrecht University research centre dedicated to public procurement, bringing together legal and economic perspectives. Our group of about 20 researchers works towards improving the utilization, regulation, promotion, social and sustainable use of public procurement through research on topics such as the art of choosing, responsible commissioning, national security, critical infrastructure, and fighting corruption.

One example of a recent project with the involvement of UUCePP is a book edited by Dr. Willem Janssen from UUCePP and Prof. Roberto Caranta from the University of Turin. The book focuses on mandatory sustainability requirements in EU public procurement law. Ruben Nicolas, another UUCePP member, and I also contributed a conceptual chapter on how the uptake of SPP can be accelerated using different types of ‘forces’: coercive, mimetic, and normative. In our chapter, we explore the balance between comply-or-explain mechanisms for sustainability, requirements for sustainability, online tender platforms that enable governments to copy and customize great examples of sustainable tenders and investing in further improving professional norms.

Another example of UUCePP research is an empirical study conducted by Marly Celis Gálvez, Dr. Vita Titl and me on the effects of changes in discretionary tender thresholds in the Czech Republic. Tender thresholds below certain levels allow for direct contract awards or simplified tender procedures. Increasing thresholds may increase flexibility and reduce transaction costs, while lowering thresholds may increase competition and reduce corruption. Despite several recent changes in these thresholds in Czechia, the preliminary results of the study suggest that the changes have little effect. In other words, if there are already reasonable thresholds in place, tweaking the thresholds may not create significant gains and may even lead to ‘bunching’ inefficiencies. This research is relevant for SPP as well, as it offers a deeper understanding of the impacts of different tender thresholds and the potential to propose new SPP policies aimed at increasing thresholds for sustainable purchases.

You are also part of the DemoTrans project. Can you explain the objectives and activities of the project and how public procurement can support DemoTrans’ mission?

DemoTrans is a project funded by the EU and led by Prof. Kristof de Witte from KU Leuven and Vita Titl, in collaboration with two other universities and an NGO. Recent evidence from a broad range of fields shows that there are some patterns in the economic systems in the EU that challenge liberal democratic governance. These patterns include globalisation, digitalisation, de-regulation and the financialization of economies. In DemoTrans, we aim to help mitigate the negative effects of these patterns stemming from the interaction between corporations and governments, including in the areas of democracy and sustainability.

Emilie Wojcieszynski, a researcher also involved with UUCePP, is investigating the impact of corporate lobbying on governmental decision-making in Europe, including public procurement. Private corporations have been found to exert significant influence on democratic decision-making processes, potentially resulting in (un)fair regulations and misallocations of public funds, eroding trust in democracy. Emilie's research aims to evaluate the impact of lobbying and political influence and to analyze the effects of transparency and digitalization reforms aimed at mitigating these likely adverse effects.

Utrecht University Centre for Public Procurement (UUCePP)