Oxford University Press's
Academic Insights for the Thinking World

Government by contract: Who prods the procurers?

When Roman censor Appius Claudius Caecus commissioned the city’s first aqueduct in 312 BC, he started a network which would grow to some 500 kilometres and sustain a population of one million. There is no record of the contract awarded, but it likely specified that the Aqua Appia be built mostly underground to protect it from contamination and sabotage. It was kept in use for over 250 years, undergoing various renovations and expansions.

Between 1933 and 1938, the Public Works Administration set up as part of Roosevelt’s New Deal awarded $6 billion worth of contracts to private construction companies to build roads, bridges, dams, hospitals, and schools. Much of this infrastructure remains in place today – in some areas it has never been matched by subsequent levels of public investment.

Since the reunification of Germany in 1990, more than €1.5 trillion in “Solidaritätszuschlag” has been transferred to the former East Germany to help develop its economy and infrastructure. This has been subject to criticism both by those who resent the tax and those who preferred East German architecture. Despite this, its effect in bringing living standards in the east and west of the country closer together cannot be doubted.

None of these feats of public administration could have been achieved without the procurement of goods and services from the market. The way in which the state procures, and its ability to manage contracts, underlies much of what we expect from it. Beyond construction, the operation of schools, hospitals, and prisons requires a constant supply of goods and services. Not to mention what is spent on defence procurement and various IT projects. So who pays attention to how all this is done? Like many technocratic chores, we have outsourced it to the European Union.

Bonn- EU flag by R/DV/RS via Flickr
Bonn-EU flag, by R/DV/RS. CC-BY-2.0 via Flickr.

Procurement law is typically more concerned with the process of buying than what is bought. It aims to ensure a level of accountability in the award of contracts by requiring them to be advertised publicly and defined procedures to be followed. It also provides remedies for infringements of the rules, which may be enforced by disgruntled bidders. At a basic level, procurement law makes it more difficult to award a contract corruptly. But it may also make it more difficult to award a contract well. The EU procurement rules are sometimes accused of this, and not only by those who have failed to win a contract.

In the European context, procurement law is primarily concerned with the free movement of goods and services across the 28 Member States. If it had existed in Roman times, commissioners of aqueducts would have been obliged to consider materials from Germania or an engineer from Gaul. The basic principles are simple enough: bidders should be treated equally, contracts should be advertised and awarded in a transparent manner, and the rules applied by public authorities should be proportionate to the requirements of the contract. If that were the sum of EU procurement law, it might easily be inscribed on a tablet. Instead we have directives running to hundreds of pages, and judgments of the Court of Justice running to thousands.

Some of the concepts which have emerged from this proliferation of law have a metaphysical flavour. The criteria applied by public authorities “must not confer an unrestricted freedom of choice” upon them. This does not mean that procurement decisions should be formulaic, but rather that authorities must define in advance how they propose to exercise their discretion. This is achieved through the publication of criteria and specifications and the requirement to notify bidders of the reason for decisions. If a bidder wishes to challenge a procedure, a common cause of action is that an authority has departed from the rules or criteria, or applied them in a way which the bidder could not have anticipated.

To judge when complaints of this nature are valid, the EU Court of Justice devised a further concept – that of the ‘reasonably well–informed and normally diligent tenderer.’ This fictional character has been likened to the famous man on the Clapham omnibus as a standard of reason and common sense – although in reality few bus journeys are long enough to allow a passenger time to wade through voluminous tender documents. Nevertheless the English courts have embraced the reasonably well–informed and normally diligent tenderer as a foreign–born but naturalised personage. Applying the hypothetical common sense of such a character saves much time which might otherwise be spent in determining each bidder’s personal views of what a particular set of words in a tender document meant.

The desire to use public contracts to achieve broader environmental and social goals has lead to some further metaphysical developments in procurement law. Directives from 2014 – which are currently being transposed into 28 legal systems – inform us that specifications may concern ‘factors which do not form part of the material substance’ of the goods or services being bought. This is taken neither from Plato nor Thomas Aquinas but from the idea that public authorities should be able to insist on sustainable production methods being applied, for example by specifying energy from renewable sources or food from organic agriculture. All of this adds to the complexity of procurement, and it is hard to imagine commissioners of the Appian, New Deal or German reunification projects being delayed by such concerns. However the idea of looking beyond the surface of what is being purchased would surely have found favour amongst those tasked with such colossal and instrumental schemes.

Featured image: “CJCE – European Court of Justice”, by Cédric Puisney. CC-BY-2.0 via Flickr

Recent Comments

There are currently no comments.

Leave a Comment

Your email address will not be published. Required fields are marked *