The public procurement role in the digital transition

The current challenges facing the public sector, both at the national and EU level, cover several aspects. In a long-term perspective, these challenges relate primarily to issues of technological (digital), environmental transformation and geostrategic issues. From the public procurement perspective digital transformation includes activities centered around the use of modern technologies based on the 4th Industrial Revolution, Internet of Things, 5G network, Blockchain and the Smart City concept. Environmental transformation is implemented primarily to achieve the Paris Agreement concluded in 2015. At that time, during the climate conference in Paris (COP 21), an agreement was adopted which assumes a series of actions aimed at stabilizing global warming at a level below 2ºC. This level is calculated in relation to the level from the pre-industrial era. Reaching this level will help to avoid exceeding important critical points of the Earth's climate system. The geostrategic aspect in turn raises the question of effective cooperation between the European Union and the leading world economies, i.e. the Chinese and American. Of particular importance is possible cooperation between member states and China under the New Silk Road initiative. This concept, also called the Belt and Road Initiative, was presented by the President of the People's Republic of China - Xi Jinping in 2013. Development based on modern infrastructure that takes advantage of technological advances is one of the cornerstones of China's Belt and Road Initiative. The political and geopolitical implications of technological development are now becoming increasingly apparent. There is a perceptible shift away from the unquestioned technological supremacy of the United States to a much more fragmented global landscape with a more unpredictable foreign policy reality in which state and non-state actors compete for influence and digital competencies become more important than ever. We are becoming witness to a digital arms race in which not only China and the United States, but also their technology giants, will compete for global dominance. It is worth pointing out in this context the emergence of new institutions aimed at mobilizing or facilitating the financing of infrastructure based on modern technologies, such as the Asian Infrastructure Investment Bank (AIIB), the New Development Bank, the Global Infrastructure Fund and the Global Infrastructure Hub. The indicated institutions offer interesting solutions for public sector entities to leapfrog civilization with modern technologies.

Both at the EU and national levels, we are witnessing increased efforts to develop strategies that will allow the economy to adapt its development to the current challenges. The strategy of the new European Commission assumes two pillars of economic transformation: environmental and digital transition. In this regard, the European Commission has prepared new public policies to define the place of the European Union in the dynamically changing global system. The directions of development of the EU economy have been included in two fundamental acts, i.e.: the New European Green Deal and the New Industrial Strategy of the European Union. The New European Green Deal was presented by the new European Commission in December 2019. It sets out to build a sustainable EU economy by seeing climate and environmental challenges as opportunities for growth in all policy areas and delivering a transformation that is fair and inclusive. The New European Green Deal applies to all sectors of the economy, but in particular to transport, energy, agriculture, construction and industries such as steel, cement, ICT, textiles and chemicals. The New Industrial Policy was presented by the European Commission in March 2020. The policy is cross-cutting in nature and its objective is to ensure framework conditions conducive to industrial competitiveness. It is also linked to many EU policies, e.g. trade, internal market, research and innovation, employment, environment and public health. In particular, EU industrial policy should aim to: accelerate industry's adjustment to structural change, foster an environment favourable to initiative and to the development of enterprises throughout the Union, especially small and medium-sized enterprises, foster an environment favourable to cooperation between enterprises, and encourage better use of the industrial potential of innovation, research and technological development policies.

New Industrial Strategy for Europe uses the concept of digital transformation. Analyzing the content of this Strategy, as well as the Communication on "A vision and direction for digital transformation in Europe 2030" announced on March 9, 2021, it seems that the term "digitalization" should be understood comprehensively. It becomes a starting point for the creation of a specific ecosystem of digital solutions connected with a wide use of modern technology and related products, services and infrastructure. Digitalization concerns issues related to the acquisition of modern technologies in the context of supplies, services or works carried out by the public sector through procurement. This aspect is of key importance and refers to several issues linked to the concept of digitization including: 4th Industrial Revolution, Internet of Things, 5th generation mobile network (5G), Blockchain and binding all the above phenomena into one - the concept of Smart City. The 4th Industrial Revolution refers to the development of new information technologies such as artificial intelligence, automation, robotics, which have an impact on conventional economic models. 4th IR is driven by a wide range of technology trends interacting with each other to create an exponential economic, social and political transformation. Soon, embedded sensors and distributed computing power-the so-called Internet of Things-will be connected by ubiquitous fifth-generation wireless networks (5G networks) to create an unprecedented amount of digital data, stored conveniently in the global cloud. Artificial intelligence (AI), driven by high-performance computing (HPC) systems, will in turn allow data to be analyzed and interpreted, yielding a wealth of previously inaccessible information. It will also enable the creation of new systems that can ingest, process and respond to this information at the speed of a machine. In this context, we can therefore speak of an existing technology ecosystem - a series of interconnected product, service and infrastructure solutions based on digitization.

The risk concerning the dynamics of implementation of the 4th Industrial Revolution is based on the assumption that many public institutions will continue to prefer the reliance on traditional industry, ignoring the changes that dynamically create the future. This threat relates in particular to the sector of public procurers who, as market data indicates, absorb modern solutions much more slowly than the private sector. This applies both to the organizational sphere and to the technological advancement of products and services purchased. Digitalization affects the public sector in the context of public procurement in two ways. Firstly, it affects the purchasing processes themselves, referring, among other things, to the issue of the digitalization of public procurement. Secondly, digitalization concerns issues connected with the acquisition of modern technologies in supplies, services or construction works realized by the public sector through public procurement. The second aspect is of key importance. Public procurement will play an important role in the implementation of modern solutions. They have the potential to implement digital transformation due to the number of entities obliged to use adequate legal regulations and the amount of funds spent annually on public procurement. This aspect is explicitly pointed out in the New Green Deal. The New Green Deal stresses that public sector entities, including the EU institutions, should set an example and ensure that their public procurement is environmentally friendly. At the same time, the European Commission was obliged to propose new regulations and guidelines for green public procurement. The New Industrial Strategy, on the other hand, underlines that in order to ensure that the EU's mobility sectors remain world leaders in terms of technology, it will be necessary to maintain a leading position in research and innovation, to rapidly put in place the necessary infrastructure, and to introduce strong incentive measures, including through public procurement.

The role of public procurement in supporting technology transformation stems from several reasons. First, public procurement has a key impact on the availability and level of specific technological solutions in supplies, works and services for the public sphere. This is because procurement involves the purchase of specific products or services that may, to a greater or lesser extent, meet the criteria of technological advancement. It is worth noting that part of the procurement will be carried out in the interest of the contracting authority, while the majority will be in the interest of the recipients of services provided by the public sector. In particular, areas such as public transport, public buildings, health care carry a burden of responsibility for the contracting authorities towards the beneficiaries.

Secondly, public procurement can be seen as a method of stimulating the supply of specific technological solutions through incentives addressed to entrepreneurs, especially representatives of the SME sector. A stable public sector that sends a clear signal to the private market, indicating a demand for new technologies, should result in the development of entrepreneurs who are ready to cooperate with public entities. Often a barrier to the development of modern technologies is the risk of their introduction on the market. The risk connected with financing research and product development can be transferred to the public sector thanks to public procurement. In this aspect, the question of redistribution of possible benefits from the implementation and commercialization of these solutions, in the financing of which the public sector participated.

Thirdly, the public procurement environment itself should be highly technologically advanced. In this respect, two areas stand out: the digitalization of the purchasing process and technological support for public procurement at the contract preparation and execution stages. It is therefore desirable for public procurement to make use of, among other things, technological tools influencing the way in which the implementation of public procurement contracts is monitored. It is important to use modern technologies at the stage of preparation and realization of public investments. These include augmented and virtual reality used in design and construction, or building information modeling systems (BIM). It is also important to use technology to monitor the stages of investment implementation, e.g. by using drones or sensors at the site of construction works to control the materials used. Modern technologies enable comprehensive supervision of design, contracting, construction and operation of public investments. They also affect the reduction of costs or delays in the implementation of investments. Moreover, the integrated use of technological tools can improve the transparency of processes leading to the award of public contracts, the processes of concluding and modifying procurement contracts, payments to contractors and subcontractors, and the elimination of corruption.

Recommendation of professor Alexandra Harrington's new book: International Law and Global Governance Treaty Regimes and Sustainable Development Goals Implementation

Prof. Alexandra Harrington is the Director of Studies for the International Law Association Colombian branch, a member of the International Law Association Committee on the Role of International Law in Sustainable Natural Resource Management for Development, and an adjunct professor at Albany Law School. She also provides guest lectures globally on topics related to international law, environmental law, global governance and sustainable development.

Prof. Harrington has served as a consultant for entities such as the Commission for Environmental Cooperation of the North American Agreement on Environmental Cooperation and UN Environment. Prof. Harrington’s publications address a variety of fields relating to international law, including environmental law, legal issues relating to climate change, natural resources regulation, international organizations, international human rights law, international child’s rights, international trade law, corporate social responsibility, and criminal law. Prof. Harrington routinely presents her works at domestic and international conferences.

International Law and Global Governance

This book explores the methods through which international law and its associated innovative global governance mechanisms can strengthen, foster and scale up the impacts of treaty regimes and international law on the ability to implement global governance mechanisms.

Examining these questions through the lens of the Sustainable Development Goals (SDGs), the book looks at environmental, social and economic treaty regimes. It analyses legal methodologies as well as comparative methods of assessing the relationship between the SDGs and treaty regimes and international law. Contradictions exist between international treaty regimes and principles of international law resulting in conflicting implementation of the treaty regimes and of global governance mechanisms. Without determining these areas of contest and highlighting their detrimental impacts, the SDGs and other efforts at global governance cannot maximize their legal and societal benefits.

The book concludes by suggesting a path forward for the SDGs and for international treaty regimes that is forged in a solid understanding and application of the advantages of global governance mechanisms, including reflections from the COVID-19 pandemic experience. Addressing the strengths, gaps and weaknesses related to treaty regimes and global governance mechanisms, the book provides readers with a comprehensive understanding of this increasingly important topic. It will be of interest to students, researchers and practitioners with an interest in sustainability and law.

Webinar: Green Transition in Public Procurement, 30 March 2021

Please join the free webinar on Green Transition in Public Procurement.

The webinar is organized by the Polish Public Procurement Law Association stowarzyszeniepzp.pl

Tuesday, 30 March 2021 - 11.00 - 12.30 

Agenda:

11.05 Welcome on behalf of the Public Procurement Law Association 

11.10 - 11.25 EU provisions and case law on GPP

Associate professor, Dr Marta Andhov University of Copenhagen

Marta Andhov is an associate professor in public procurement law at the University of Copenhagen Faculty of Law. Her main research interests focus on sustainability and governmental contracts. She is a co-host of the Bestek Public Procurement Podcast, a steering committee member of the Horizon 2020 project the Sustainability and Procurement in International, European, and National Systems (SAPIENS). In the past, Marta has provided her insight and expertise to key research projects for the European Commission, Danish Institute for Human Rights and multiple organisations and national procurement agencies. She is a well established and respected authority in sustainable public procurement with a vast publication list in leading journals and publishing houses. Her 2019 co-edited book, Cost and EU Public Procurement Law – Life-Cycle Costing for Sustainability, contributes to developing life-cycle criteria tools and public procurement methodologies in the EU. It includes both sector-crossing contributions, analysing the most relevant theoretical and legal aspects such as EU law and contract theory, and sector-specific contributions to some of the most important sustainable goods and services markets.

11.25 - 11.40 What's on the horizon? The Future of Green Public Procurement requirements in the EU

Assistant professor, Dr Willem Janssen, Utrecht University

Willem A. Janssen is an Assistant Professor in European and Dutch Public Procurement Law at the law department of Utrecht University, and a researcher at the Centre for Public Procurement and RENFORCE. In addition to his monologue ‘EU Public Procurement Law & Self- organisation’, he has published extensively in international and Dutch academic journals on pressing issues related to cooperation, sustainability, and societal value in the context of Dutch and EU public procurement law. Having been a visiting fellow at George Washington University, he is currently a visiting fellow at Copenhagen University in 2020-2021 and guest lectures at various universities and public institutions. He hosts Bestek – the Public Procurement Podcast, actively contributes to the public debate through various blogs and columns and aims to improve public procurement law and practice through his academic work.

11.40 - 11.55 Interpretation of the link to the subject matter of the contract in practice

Dr Abby Semple Public Procurement Analysis / Greenville Procurement Partners

Abby Semple, LL.B., Ph.D. is a consultant advising public bodies on strategic and legal aspects of procurement. Her main focus is on the environmental and social impact of public contracts and how these can be meaningfully addressed through the contracting process. Through her consultancy Public Procurement Analysis, Abby has managed complex tenders on behalf of public sector clients in Ireland and the UK, and developed policy and guidance at the EU level and in Germany, the Netherlands, Poland, Romania, Spain, Switzerland, Ukraine and the United States. Her writing and speaking engages with academic and practitioner audiences, including over 80 presentations and training sessions throughout Europe and the world. Abby is the author of one of the first books on the 2014 EU Procurement Directives A Practical Guide to Public Procurement, published by Oxford University Press in 2015. Her academic writing on topics including living wages and citizen participation in public contracts can be accessed on SSRN.

11.55 – 12.10 What is the Status Quo of GPP in Poland?

Professor Michal Kania, University of Silesia

12.10 - 12.30 Discussion

Webinar's link

ADR in the new Polish Public Procurement Law

On March 16, 9:00-11:00 a.m. I will have the pleasure to participate in the 8th National Conference on Public Procurement on the topic: The new public procurement law - consequences and difficulties of implementation.

During my presentation I will address issues concerning new Polish regulation on ADR in public procurement contracts disputes. Contracts on public procurement regardless of their classification as civil law contracts, public law contracts, or mixed contracts have an important common feature. They give rise to disputes of an economic nature, the resolution of which usually takes place in the course of proceedings before judicial bodies. These disputes not only have negative consequences for the parties to the agreement - the contracting authority and the contractor - but also for the beneficiaries of some of the tasks carried out through public procurement. We are talking here above all about infrastructure investments implemented on the basis of public procurement. Saving time, continuing to carry out public procurement in accordance with previously agreed assumptions, as well as strengthening relations between the public and private sectors, justify a broader turn towards alternative methods of resolving and settling disputes that arise in connection with public procurement contracts.

It seems that this approach has been eventualy recognized by the Polish legislator in the new Act of 11 September 2019 Public Procurement Law. The legislator decided to introduce expressis verbis into the new law regulating the public procurement market in Poland solutions based on the so-called Alternative Dispute Resolution (ADR) methods. These methods are widely used in public procurement in countries such as the United States, where ADR appeared in the 1970s. ADR enjoys great popularity also in the countries of Western Europe, including Great Britain, the Netherlands, Spain or France.

The regulation contained in art. 591 - 594 of the new Polish Public Procurement Law provides explicitly the possibility of using out-of-court methods of resolving disputes arising from the performance of contracts in public procurement matters. These methods in practice include mediation and conciliation.

Mediation is an attempt to reach an amicable solution to a dispute to the satisfaction of the parties through voluntary negotiations conducted with the participation of a third party who is neutral towards the parties and their conflict, i.e. a mediator. The mediator is neutral, impartial, supports the negotiations, relieves tension and assists the parties in reaching a mutually satisfactory agreement and final settlement. Conciliation, on the other hand, is the examination of a dispute by an independent conciliator or a special conciliation commission (permanent or ad hoc), who will propose solutions that are acceptable to the parties to the dispute or that allow them to work out their own solution to the dispute. The parties to the conciliation procedure are not bound by the settlement proposal submitted to them and the choice of solution always rests with the parties to the dispute, while the conciliators are responsible for drawing up the final agreement (settlement).

Location of the basic provisions on out-of-court dispute resolution in the new Public Procurement Law allows us to assume that the intention of the legislator was to promote ADR in public procurement and to increase the number of settlements concluded against the background of contracts in public procurement matters. The construction of section X of the act, its title "dispute resolution" and the reference to art. 54a of the act on public finance, where the outcome of a settlement is said to be more favorable than the likely outcome of court or arbitration proceedings, indicates that the solutions contained de lege lata in the Public Procurement Law refer to mediation and conciliation proceedings. The broader concept of amicable dispute resolution includes arbitration, whose admissibility in the context of contracts in matters of public procurement results lege iuris from Art. 1154 of the Code of Civil Procedure.

It is worth pointing out several advantages of alternative methods of dispute resolution, which also apply to Polish public procurement disputes. First, ADR makes it possible to resolve commercial cases much more quickly than ordinary courts. The speed of the settlement (resolution) of a dispute should be in the interest of each of the parties to economic relations guided by the principle of effectiveness. For that reason, among others, it should also be important for the ordering parties, as defined in the Public Procurement Law.

Secondly, ADR in its assumption is connected with professionalization of entities conducting the proceedings. Neutral mediators, conciliators and arbitrators conducting arbitration proceedings should have appropriate qualifications, as well as experience in the scope of cases to be resolved. The courts of general jurisdiction do not always guarantee the appropriate level of knowledge of persons resolving disputes arising from public procurement contracts.

Third, above all with regard to mediation, it is pointed out that it replaces a situation of conflict with a consensual solution, which should foster proper relations between the parties in the future. The solution adopted by the parties assumes a voluntary and mutually satisfactory conclusion of the dispute, based on the win-win principle, and moving away from the winner-loser relationship.

Fourth, ADR seems to be of particular importance in the era of the Covid-19 pandemic. Due to the de facto temporary shutdown of common courts in the first phase of the lockdown, the growing number of cases led to significant dysfunction in the processing of disputes, which translates into a dysfunction of the entire economic turnover. The congestion in the ordinary courts has led to another prolongation of business disputes. An alternative to achieving a state of legal certainty during and after the pandemic may therefore be methods categorized as ADR.

A broader study on ADR in the new Public Procurement Law will appear in the next issue of the Public Procurement Journal C.H.Beck

PPP – Perspectives for 2021 - Conversation with David Baxter

Please join the 60 minute conversation with David Baxter about the challenges and opportunities concerning public - private partnerships in 2021. We will be discussing issues related to the current state of the PPP in certain regions of the world (USA, Africa, Europe), the role of PPP in the support of sustainable projects, the competition or coexistance between PPP and EU funds in Europe, will be looking into the lessons learned from Covid-19 pandemic and much more.

David Baxter - is a senior adviser to the International Sustainable and Resilience Center, Member of Steering Committee in the World Association of PPP Units & Professionals, independent consultant to governments, development agencies and institutions, and consulting companies around the world in the areas of ethical governance, procurement, PPP policy and practice, concession planning, and sustainable and resilient development planning.

David has deep relationships with several International Development Institutions including: The World Bank, UNECE in Geneva, USAID, the Millennium Challenge Corporation, Inter American Development Bank, and more.

ISRC founded in 2018 is one of 8 International PPP Specialist Centers of Excellence under the United Nations Economic Commission for Europe International PPP Centre of Excellence (UNECE-ICoE). 

WAPPP is a Geneva-based, global, independent non-governmental organization. It aims to establish an international network of PPP units and PPP practitioners (both corporate and individual, public and private) involved in the design and implementation of PPP policies, initiatives, programs, and projects. By coming together, these industry players can create a win-win situation that benefits themselves and society. WAPPP members can share their experiences, help set industry standards, lobby for best practices, and generally network to find jobs, contracts, investors, and opportunities.

Registration: Conversation with David Baxter