A free hand or a free market? How competitive is public procurement in Europe? Part two of a three part series
This article is the second part of a three part series on competitive tendering in public procurement in Europe. There is a correlation between competitive tendering in public procurement and value for money as well as broader, positive procurement outcomes (e.g. contract completion on time, in full). As before, data was extracted from Tenders Electronic Daily or TED, one of the many data sources we use for tenders and contracts data. We looked at data over the past three financial years (FY), counted as between 1st April and 31st March.
In this part of the series, we’ll be looking at the amount of information bidders receive. The incumbent, being the provider, usually has most if not all of the information but outside, potentially more competitive parties do not. The key therefore is to give bidders as much information as possible in order to prevent information asymmetry between the incumbents and newcomers.
Tenders with an abnormally low description (3 FY average)
In order to effectively identify an opportunity, bidders need as much information as possible. A tender that has little to no information in its title or description can often go missed, providing a clear advantage to the incumbent and anyone else with knowledge of the tender. Therefore, we looked at the number of tenders in each European country on TED to what proportion of tenders had ten words or less in the title or description.
The best performers
The table below shows the best performers:
We can see from this table that the best countries are below double digits. However, they have all been publishing more tenders with short descriptions over the past three years. The rate of increase is high albeit from a low starting point and it should be noted that TED’s own trend is increasing from 8% in FY16/17 to 17% in FY 18/19. Given this, the overall picture for the top 5 is positive. The contrast between the top 5 and the bottom 5 however is stark.
Areas of improvement
All of the bottom 5 countries are significantly below average and the trend is getting worse, especially in Portugal. Of the bottom five, 33% of three countries’ tenders have short descriptions. In Macedonia, the total is closer to 50%. In fact, one in five of ten countries’ tenders have abnormally short descriptions, including the Netherlands. The UK’s total sits at 19%. Moreover, both the UK and the Netherlands are seeing an increase in tenders with short descriptions.
In this case, the picture in Europe is less optimistic than before. Over 1 in 10 tenders in Europe are published with short descriptions. The number of short description tenders has also increased over the past three years. Moreover, larger economies such as the UK and the Netherlands are publishing more and more short tenders and are approaching or even hitting the 20% mark. Clearly, there is much improvement to be made in Europe in this regard.
In the next and final part of the series, we’ll be looking at third metric of uncompetitive tendering: single bid tenders.
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