Price driven procurement in CEEC.

• Best Price is not always the best value for the money.

• Outdated national procurement guidelines and lack of experience in applying complex evaluation criteria.

• Implement Most Economically Advantageous Tender (including social and environmental criteria) instead of Best Price principle. 

• Conduct benchmark studies to find out best practice models worldwide and improve the knowledge capacity of the procurement authorities as well as promote knowledge exchange at the regional level.

• Untransparent tendering practices (e.g. asking for a bid to test the price level and to find technology know-how from potential subcontractors by third-country companies).
• Untransparent procurement procedures can result in higher prices and less commitment from the selected contractor.

• Technological capacity, ownership of equipment and trained workers to be considered as criteria for tender participation.
• Ensure early additional stakeholders involvement to help with knowledge transfer and technical assistance and implement more “Competitive Dialogue” procedures in case of complex, technical tenders. 

• Over-bureaucratization of tender procedures and low quality of tender documentation can lead to delays and improper bidding.
• The tender procedure requires too many certifications and approvals for a bid due to over-bureaucratization.

• Simplify tender procedures and set a standard for quality of tender documentation. 
• Organize a cross-institutional online communication platform so all needed documents could be provided by the relevant state institutions online “one-stop-shop”.

Lack of clear national and European universal standards/standardization.

• • In some countries there are no universal specifications for highways/tunnels/national roads.
• Lack of a legal model for a public construction contract and of harmonization of contract conditions throughout Europe.

• Develop EU recommendations for standards in infrastructure projects that the national government could adapt and implement at the local level. 

• Propose a pan-European standard contract draft so that any construction contracts could rely on its structure.

Subcontracting and unfair competition.

• Allowing local companies to work only certain types of works and as subcontractors for 25-30% of work.
• Difficult to check the references for non-European companies.

• Change legislation regarding foreign companies and regulate foreign and local companies’ professional relations. 
• Non-European companies to present references for construction companies in english or in the language of the country they are trying to deliver projects in. 

Standardization and technological integration.

• Standardization and technological integration issues can occur in case third country companies build and supply tech support a separate part of a larger project.
• Standardization can cause high costs for SMEs because the EU harmonized norms need to be bought. 

• For every third party/non-EU technological input a neutral consultancy to check compliance with the EU standards.
• Develop joint (European and non-European financing institutions) minimum standards for the procurement system and implement those when financing projects in Africa and non-EU European countries.

• Best Price does not always offer the best value for the money as compared to Most Economically Advantageous Tender (MEAT). 
• Not enough usage of TOTEX instead of CAPEX as an evaluation criteria.

• Implement Most Economically Advantageous Tender (including social and environmental criteria) instead of Best Price principle. 

• Add timelines, supply-chain risks and diversification, transport costs (financial and environmental) as tender evaluation criteria to encourage local sourcing. 

• Support the implementation of TOTEX as a more reliable evaluation criteria. 

• Tendering authorities. 
• Contractors.
• National governments. 
• PIANO, SPP, Procura, etc.

• Organize learning networks and communities of practices (e.g. PIANO) – where knowledge on MEAT procedures and implementation is shared with contractors and contracting authorities.
• Support the implementation of MEAT procedures into the local/national procurement legislation through stakeholder engagement and a wide media campaign.
• Create an interactive guidebook for implementation of MEAT and TOTEX so that stakeholders and procurement authorities could share their experience and recommendation regarding it. 

• Outdated national procurement guidelines that do not take into account current state-of-the-art practices.

• Conduct benchmark studies to find out best practice models worldwide.
• Design an implementation strategy for international best practices adapted to local specificities (e.g. legislation, institutional structure and capacity).
• The usage of the EU procurement directive to encourage the application of qualitative criteria in the tendering process.

• Tendering authorities.
• National parliaments. 
• Contractors.
• Procurement experts.
• Chambers of commerce.
• Research groups.

• Create an online procurement guidebook and engage all relevant stakeholders in drafting it.
• The guidebook would include state-of-the-art practices and feedback from local stakeholders in order to ensure its fitness to the local context. 

• Lack of experience in applying complex evaluation criteria.

• Improve the knowledge capacity of the procurement authorities and promote knowledge exchange at the regional level.
• Consultancies could provide assistance in implementing best practices, state-of-the-art solutions and training of the procurement officials.

• Tendering authorities.
• Consultancies.
• PIANO, SPP, Procura, etc.
• National governments.

• Organize online knowledge exchange groups/communities to include all relevant stakeholders with the scope to improve procurement practices.
• Through the online knowledge sharing groups organize training courses engaging private consultants, associations, unions and university experts. 

• Reluctance to take responsibility for evaluation on more complex criterias.

• Procurement officials to work together with consultancies  specialized in evaluation of more complex criterias to share the responsibility and the workload.

• Tendering authorities.
• Consultancies. 

• Devise a cross-institutional cooperation mechanism and accept assistance from outside consultants or other procurement authorities (either national or international) for tenders where more complex criterias are applied.
• Promote multi-stakeholder engagement in the tendering process (e.g. different ministries, consultancies, procurement officers) to ensure that there is a shared responsibility for the tendering process.

• Absence of a national Index Price Lists to prevent abnormally low offers.

• Transpose standards developed by other institutions/countries in the region and implement a National Price Index List. 

• Procurement authorities.
• Research group.
• National parliaments.

• Organize a working group to develop a National Price Index List to be used in order to prevent abnormally low offers. 

• Direct engagement with foreign financing institutions which can result in the appointment of a predefined foreign government contractor.

• Implement legislation that prevents any special agreements that surpass the national procurement law.

• Tendering authorities.
• Foreign financing institutions (EIB; EBRD etc).
• National governments. 

• Conduct a media campaign to promote the idea of equal conditions in procurement regardless of the source of financing, thus encouraging universal application of the existing procurement law.

• Untransparent procurement procedures can result in higher prices and less commitment from the selected contractor.

• Develop an effective and transparent planning model.
• Ensure early additional stakeholders (e.g. engineering companies, unions) involvement to help with knowledge transfer and technical assistance.
• Implement more “Competitive Dialogue” procedures in case of complex, technical tenders.

• Chambers of commerce. 
• Engineering companies.
• Tendering authorities.

• Tendering authorities to organize working groups in order to engage relevant stakeholders starting with the planning phase. 
• Implement resilient digital solutions for tendering so that the whole process would be more transparent and easy to verify.

• Untransparent tendering practices (e.g. asking for a bid to test the price level and to find technology know-how from potential subcontractors by third-country companies).

• Technology providers must show that they have the production capacity to deliver the contracted materials.

• Tendering authorities.
• Technology and equipment suppliers/providers.

• Include proof of production capacity as a prerequisite for participating in bidding.

• Technological capacity, ownership of equipment and trained workers are not considered when evaluating offers.

• Technological capacity, ownership of equipment and trained workers to be considered as criteria for tender participation.

• Tendering authorities.
• Construction companies. 
• Chambers of commerce.
• Research group.

• Create a ranking system for companies based on 3 variables (technological capacity; ownership of equipment and trained workers). The company score is the aggregated score on each of the variables.
• Create a prequalification system for projects that is based on the required fulfilment of each of the 3 variables, thus requiring companies to have a specific minimum score.

• COVID-19 crisis is used for special procurement legislation (to quicken the acquisition of critical goods) however this can lead to decreasing transparency if the rules are maintained for longer periods). 

• Make clear what is the extent to which special legislation can apply and communicate it to the wider public and major stakeholders.

• National governments.
• NGOs. 

• Clearly specify the time limit for which the new procurement legislation is in place. 
• Define the exact sectors and goods for which the new regulations of the procurement legislation apply.

• Information on specific projects in some cases is published on a short notice sometimes only two weeks before the prequalification round. 

• Improve and standardize communication in the procurement process.

• Set a standard for timely communication and define the minimum time between the publication and the dead-line. 

• Tendering authorities.
• Digital solutions companies.
• Media companies.
• TED platform.
• National authorities.

• Create an European/ regional platform for early warning and tender information.
  • Use TED (Tenders Electronic Daily) when designing the regional tendering platform. 
  • Additionally to TED, the platform would list all the projects, including non-EU countries, engaging contracting authorities to post the call for proposals directly on the platform.

• Low quality of tender documentation (e.g. documents are often copy pasted, the budget is underestimated and unrealistic).

• Set a standard for quality of tender documentation (outlining what is the minimum quality requirement a document must satisfy).
• Develop proper digital infrastructure to provide timely and qualitative information to all potential bidders.

• Tendering authorities.
• National governments.
• Chambers of commerce.
• Research group.
• Political parties.

• Organize a cross-institutional online communication platform so all needed documents could be provided by the relevant state institutions online “one-stop-shop”.
• Formulate a universally acceptable standard in terms of tender documentation. 
• Develop standardized digital templates for documents to be implemented at the institutional level and to be used across the industry.

• The tender procedure requires too many certifications and approvals for a bid due to over-bureaucratization (e.g. Montenegro).

• Simplify tender procedures by reducing bureaucratization and encourage digitalization of certificates and approvals.

• Tendering authorities.
• National governments.
• Chambers of commerce.
• Research group.
• Political parties.
• European Commission – DG Grow (DIR G – public procurement strategy/procurement legislation and remedies).

• Bring together a core group of actors to work together and identify points that would reduce bureaucratization. 

• Legal appeals cause long project delays. In some countries the contestation can be formulated even by external companies or private individuals (e.g. Romania).

• Establish an EU level arbitration court to solve the major contestation regarding construction projects to quicken the contestation process.
• Introduce bank guarantee for the contestation process and if the court rules that the contestation is lacking substantial arguments, the company loses the bank guarantee.

• Tendering authorities.
• National authorities.
• European Commission – DG Grow (DIR G – public procurement strategy/procurement legislation and remedies).

• The National authorities to establish a threshold to be included as a bank guarantee for the contestation process. 
• Contestations involving bank guarantees to be reviewed by a special supranational body (EU level arbitration court).

• Dead-line for the execution is an important tendering criteria which bidders can use to win the tenders and then delay the execution.

• Implement “sanctions” for delaying the execution over the dead-line. 

• Tendering authorities.
• National governments.
• Chambers of commerce.

• Introduce a “dead-line” bank guarantee that could be withheld by the contracting authority and paid to the contractor only at the end, when and if the project is finished until the dead-line. 
• A core group of construction companies adhere to this approach, in order to make it an industry standard. 

• Foreign companies frequently offer dumping bids for contracts, having knowledge of the incompleteness of the offer in advance, leads to higher prices and delayed project execution.

• Focus on tender preparation and documentation as a way to ensure that it is not possible for companies to submit incomplete bids.
• Ensure that proper pre-qualification criterias are applied.

• Tendering authorities.
• Stakeholder working group.

• Organize a workgroup to design a clear set of rules for proper tender documentation. The rules can be uploaded in the online guidebook to ensure those are timely updated.

• Bank guarantees can become a burden for small companies that want to participate in multiple tenders.

• Authorities to encourage the development of small/new companies. 

• Tendering authorities.
• National governments.
• Chambers of commerce.
• Construction companies.
• Financing institutions.

• Establish the criteria to determine if a given company is eligible to be absolved of bank guarantee (e.g. company has a proven record of efficient works).

• The program of preliminary works (geotechnical survey or geotechnical investigation works) often is not precisely defined which leads to significant differences in prices given by the bidders.

• Clearly distinguish between geotechnical survey and geotechnical investigation works in order to precisely define the program of preliminary works
• Establish an industry wide program of preliminary works standard, universally acceptable by all actors. 

• Tendering authorities.
• Engineering companies.
• Construction companies.
• Chambers of commerce.
• PIANO.

• Organize an online working group in order to provide clear guidelines of what pre-tender documentation must be compiled and what are the mandatory standards for it.

• Request for design documentation is not detailed enough. That leads to significant changes in design documentation during construction works and therefore increases of project costs.

• Establish an industry wide request for design documentation standard, universally acceptable by all actors. 

• Tendering authorities.
• Construction companies. 
• Chambers of commerce.
• Engineering companies.
• PIANO.

• Promote early stakeholder engagement through an online platform to ensure that any uncertainties are clarified in the tender preparation phase.

• European Banks (EIB, EBRD) often do not get involved in the procurement process and focus mostly on financial sustainability of the proposal.

• European financing institution to promote new procurement criterias through project conditionalities combined with policy dialogue at the national level.

• European financing institutions. 
• Tendering authorities.
• National governments.

• Open an online discussion group between European financing institutions and public bodies from targeted countries on the need to work together and promote new procurement criterias. 

• In some countries there are no universal specifications for highways/tunnels/national roads so these need to be developed for each project separately.
• For small countries it is difficult (financially and institutional wise) to develop and implement state of the art standards.

• Develop EU recommendations for standards in infrastructure projects that the national government could adapt and implement at the local level. 

• Tendering authorities.
• European Commission – DG Grow (DIR G – public procurement).
• National governments.

• Organize a European working group of relevant authorities and experts to develop a series of universal standards that could be adapted and applied by national authorities.
• In coordination with regional procurement authorities to create and promote adoption and use of an European standardized contract form.

• No general standard for what is a feasibility study.

• Design a minimum requirement for a feasibility study and implement it through a dedicated public policy.

• Tendering authorities.
• European Commission – DG Grow (DIR G – public procurement strategy/procurement legislation and remedies).
• Engineering companies.
• Chambers of commerce / Unions.
• Research group.

• Organize a multi-stakeholder working group to outline minimum criterias for a sustainability study.

• In some countries there is no legal model for a public construction contract. 
• Lack of harmonization of contract conditions throughout Europe.

• Propose a pan-European standard contract draft so that any construction contracts could rely on its structure.

• Tendering authorities.
• National governments.
• Financing institutions.
• EU Commission.

• Constitute a workgroup that includes European Commission, procurement authorities, contracting parties, national governments and other relevant stakeholders to develop a draft contract proposal that could be further adapted to the local needs.
• Provide a European universally acceptable construction contract standard. 

• Allowing local companies to work only as subcontractors for 25-30% of work, hinders the prospects of acquiring experience and knowledge in mapping large projects for these companies. 
• Local companies are allowed only certain types of works, such as earthworks, diminishing their returns and possible technological advances.

• Change legislation targeting foreign companies and regulate foreign and local companies’ professional relations. 

• National governments. 
• Tendering authorities.
• Construction companies.

• National authorities to mandate a threshold for the involvement of local companies in projects undertaken by foreign general contractors (e.g. 55% of works to be done by local companies).
• Authorities issuing tenders to include in eligibility criteria:

• Knowledge exchange and best practices to be exchanged. 
• Workforce to be sourced locally.

• National authorities to mandate involvement of local companies in all types of works, as long as the local company has the resources (technologically and specialized workforce).

• Difficult to check the references for non-European companies.

• Non-European companies are mandated to present references for construction companies in english or in the language of the country they are trying to deliver projects in. 

European Commission:

• DG GROW – DIR G – Public procurement: Public Procurement Strategy; Access to Procurement Markets; Innovative and Digital Procurement).
• Tendering authorities.

• National governments.
• Digital solutions companies.

• Create a European level repository of non-European companies references – the accuracy of the information provided is to be assured by high level dialogue and contacts. 
• Creation of a special unit/task force to perform due diligence. If significant inconsistencies are observed, the company is banned from doing business in the EU. 

• Standardization and technological integration issues can occur in case third country companies build and supply tech support a separate part of a larger project (e.g. Serbia).

• Put pressure on Chinese and non-EU financing institutions to adopt European standards for sustainability (environmental, economic and social) in procurement. 

• For every third party/non-EU technological input a neutral consultancy to check compliance with the EU standards (e.g Budapest Belgrade Railway).

• non-European financial institutions.
• Neutral consultancy companies .
• Tendering authorities.

European Commission:

• DG GROW – DIR G – Public procurement: Public Procurement Strategy; Access to Procurement Markets; Innovative and Digital Procurement).

• Organize an online working group to:
  • Create a EU Technology standards guidebook to be used by all tendering authorities and which can be updated regularly.
  • Support tendering authorities to implement the requirement to use of technology solely in compliance with the EU Standards.

• There is a problem of bundling the construction works and technical equipment prices (e.g. building a hydro-power plant and supplying equipment and technology) as the best construction company might not have the best technology solution.

• Consider split lots for bidding, containing detailed information on different cost categories thus opening the participation of technology providers directly (e.g. in hydropower plants construction).

• Tendering authorities.
• Construction companies.
• Technology and equipment. suppliers/providers. 

• Tendering authorities to split lots for bidding in order to differentiate between construction works and technical equipment. 

• Standardization can cause high costs for SMEs because the EU harmonized norms need to be bought.

• Develop joint (European and non-European financing institutions) minimum standards for the procurement system and implement those when financing projects in Africa and non-EU European countries.

• Financial institutions.
• European Union.
• DG GROW – DIR G – Public procurement: Public Procurement Strategy; Access to Procurement Markets; Innovative and Digital Procurement).

• Allocate European and national  funds for SMEs to cover the costs of standardization.