1 policy making and regulatory development for pp: challenges and approaches - the austrian...

Policy making + regulatory

development for PP:

challenges + approaches

- The Austrian example

Dr. Michael Fruhmann OECD/Sigma Paris

24th April 2014

© Michael Fruhmann 2014

OECD reference

• OECD Sigma brief Nr 26 – Organising Central

Public Procurement Functions (see:

http://www.sigmaweb.org/publications/Brief26_C

entralPPFunctions_2013.pdf)


Historic Background –

where did we start from?

Discussion about “PP-Law” started 1889

1st law on PP introduced 1993 (several unsuccessful regulatory projects launched before 1993) – still a quite “young” PP system !

Background (1993): accession to EEA (resp. EC in 1995) + need to align AUT legislation to PP Directives


Background –

constitutional set-up of AUT

AUT organized as a “federal state” (federation + 9 regions [“Länder”] with legislative competencies) but federation has a (very) strong position (“federalized central state”)

1993: PP considered as part of organizational competence 1 federal law + 9 regional laws on PP; but: PP (Länder) Laws very similar to Federal PP Law (“copy + paste” strategy)


Background –

constitutional set-up of AUT II 2002: successful parliamentary initiative for a uniform PP

Law – amendment of AUT constitution (see Art. 14b B-VG)

Federal level has the competence to regulate material aspects of PP (definition of “PP” follows system of Directory of Community Legislation: whatever EU qualifies as “PP” falls within the federal competence – dynamic concept! - automatically covers inter alia new PP areas like concessions)

since 2002: 1 Federal Law (material aspects + remedies for federal PP) + 9 Länder PP review Laws (only remedies for Länder PP)


Background –

constitutional set-up of AUT III

1.1. 2014: major constitutional reform entered into force: introduction of Administrative Courts!

PP on federal level Federal Administrative Court

PP on regional/local level (resp.) Regional (Länder) Administrative Court


Background –

constitutional set-up of AUT IV Constitution provides for unique regulatory cooperation (“formalized” informal procedure) to “create” material rules (= primary law) concerning PP:

• Länder must be involved in the drafting process and

• publication only upon prior approval of the Länder (silent procedure rule applies)

– see Art. 14b AUT Federal constitution (B-VG)


Background –

constitutional set-up of AUT V Constitution provides:

strict understanding of rule of law: (primary) law as principle form of legislation! PP Directives must be transposed by primary law

secondary legislation only possible for specifying primary law in PP for ex: determining publication media or fees for review procedures


Set-up on federal level

Federal Chancellery (Constitutional Service) as responsible ministry (see Federal Ministries Act 1986 – BMG; but “PP” not explicitly mentioned)

no deliberate decision but historic development (going back to 1930s)


Set-up on federal level II

Federal Chancellery (Constitutional Service) as central focal point for PP on federal level; responsible for:

drafting of legislation

developing/coordinating of PP policy (in a wide sense encompassing green/social/innovative PP, defence procurement …)

negotiating PP issues (on EU/WTO/UN-level)

representing AUT in specialized courts (ECJ, Constitutional Court)


Set-up on federal level III

Line ministries, Länder + specialized bodies (for ex Central purchasing bodies – CPBs) responsible for:

implementing PP Law + policies

developing/coordinating specific PP policies in line with the general PP policy (for ex sustainable PP Action Plan, “Procure Inno” – Guideline for innovative PP …)


Consequence of

constitutional set-up “Cooperative” legislative procedure:

Federal Chancellery has central role in the legislative process (esp. drafting/consultation phase) - decides for ex what should be regulated in Federal PP Law (clean car, late payment, energy efficiency …) basic approach: all PP specific provisions should be contained in Federal PP Law (in order to avoid patchwork-legislation)


Consequence of

constitutional set-up II Pros (ctd.):

one (!) focal point for PP situated at the heart of (Federal) Government

unique position with unique oversight on developments/activities in PP

single contact point (internally and externally)

one voice vis-à-vis Union (important for ex for infringement procedures)

one (!) team for negotiation and transposition!


Consequence of

constitutional set-up III Pros:

Federal Chancellery perceived as trustworthy (quasi-neutral) mediator between various stakeholder groups (contracting authorities versus business, federation versus Länder …)

(“moral” + legal) authority because of its reputation + location within the federal bureaucracy

possibility to harmonize + develop PP policy with other (horizontal) federal policies (e-Gov strategy, sustainability strategy …)


Consequence of

constitutional set-up IV Cons:

Federal Chancellery relies heavily on “authority” (unlike Germany no guiding competence vis-à-vis line ministries)

limited influence on Länder

limited (institutional) specialized know-how

dependence on feed-back (necessary for coordination)

limited resources to perform all central (core) PP functions in an equal manner (esp. monitoring, compliance assessment) – need for prioritization!

necessity to coordinate other PP functions (performed by line ministries and spin-offs/outsourced entities)


Decentralized PP functions

why:

because of constitutional requirements (“federal state”)

Chancellery cannot perform all functions (resources)

decentralized system better suited for functions which should be as close to “customer” as possible

where specialized know-how is needed

what:

training, advice (PP hotline), publication platform(s), central purchasing activity, specific assessments (for ex SME)


Controlling/coordinating a spin-off?

Example – central purchasing body (CPB):

explicitly founded to perform PP-procedures for federal level for off-the-shelf products and services (8 main categories)

2012: 47,6% of turnover for federal level

2012: 1335 articles/services in portfolio

Questions: too big to fail? competition? dominant market position – SMEs – supply chain management!?, dependence on services!, still identity of interests with federal state?


Centralizing/decentralizing PP

functions? no “single” or “correct” solution, because depends on various factors

AUT experience:

centralizing (specific) core PP functions worked very well (prerequisite: well educated personnel + enough resources)

decentralized system for supplementary PP functions, but this involves some issues


Future challenges

General:

•“life-cycle” of PP legislation is shortening (see for ex Directives)

•PP process is becoming more complex (technically, economically; see for ex PPPs)

•concept of PP is broadening (PP cycle: PP planning tendering invoicing evaluating planning …); trend to regulate the whole cycle (necessary/sensible?)


Specific challenges

new PP Directives provide for mandatory e-procurement (see for ex Art. 22 + 90 2014/24/EU)

will revolutionize PP on all levels (esp. local/regional)

requires (new) resources + know-how + extensive training

capacity issue - outsourcing as a solution?

will de facto influence areas outside PP Directives (esp. PP below thresholds)

challenge not to (inadvertently) create market obstacles (thorough impact analyses needed)


Specific challenges II

mandatory e-procurement (ctd) – specific additional AUT issues

e-publication system (single platform [costs!] or network with mandatory interconnectivity)

federal state: no (legal) possibility to force Länder to use specific e-procurement system(s) but clear policy to avoid e-procurement patchwork (detrimental to business + contracting authorities)


Specific challenges III

new PP Directives provide for more leeway to use secondary objectives (see for ex Art. 67, 68, 70, 74ff 2014/24/EU)

will lead to more complex PP procedures capacity issue (on all levels)

extensive training (own staff and business) required

(very likely) result in more review procedures (esp. in beginning since lot of legal uncertainties; see for ex. award criteria, LCCs)


Lessons learned

Policy making (for regulator)

good preparation of process (development of policy as such coordination/consultation + communication) and content (basic impact assessment)

develop a “basic” message for your policy (anti-corruption, transparency, deregulation, green/social …) for “selling/promoting” the policy (vis-à-vis public + political level)

you need a leading figure both on technical and political level (ownership!)


Lessons learned II

Policy making (for regulator)

take your time!

if not (absolutely) necessary: don’t aim for unanimity/general consensus re policy (if you achieve it – be happy) but necessity to sell the policy to “key” players


Lessons learned III Regulatory development process

good legislative drafting takes time! + keep regulation as simple as possible (language!)

involve all relevant stakeholders in a transparent process + communicate (why + what) – continuously! (burdensome in short term but helpful long-term) – “they” can help!

try to find the “golden mean” (btw the opposing regulatory interests – if both sides are equally unhappy/happy you are close; doesn’t preclude that in some cases regulator takes a specific position – overall regulatory balance!)

Any questions?

Thank you for your attention!

Contact: Dr. Michael Fruhmann, Federal Chancellery,

Constitutional Service, Republic of Austria

[email protected]

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