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1 Policy making and regulatory development for PP: challenges and approaches - The Austrian example_English

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ENI East Regional Conference Public Procurement Policy making regulatory development for PP Fruhmann English

ENI East Regional Conference Public Procurement Policy making regulatory development for PP Fruhmann English

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  • 1. Policy making + regulatory development for PP: challenges + approaches - The Austrian example Dr. Michael Fruhmann OECD/Sigma Paris 24th April 2014
  • 2. © 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)
  • 3. © Michael Fruhmann 2014 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
  • 4. © Michael Fruhmann 2014 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)
  • 5. © Michael Fruhmann 2014 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)
  • 6. © Michael Fruhmann 2014 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
  • 7. © Michael Fruhmann 2014 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)
  • 8. © Michael Fruhmann 2014 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
  • 9. © Michael Fruhmann 2014 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)
  • 10. © Michael Fruhmann 2014 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)
  • 11. © Michael Fruhmann 2014 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 …)
  • 12. © Michael Fruhmann 2014 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)
  • 13. © Michael Fruhmann 2014 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!
  • 14. © Michael Fruhmann 2014 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 …)
  • 15. © Michael Fruhmann 2014 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)
  • 16. © Michael Fruhmann 2014 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)
  • 17. © Michael Fruhmann 2014 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?
  • 18. © Michael Fruhmann 2014 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
  • 19. © Michael Fruhmann 2014 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?)
  • 20. © Michael Fruhmann 2014 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)
  • 21. © Michael Fruhmann 2014 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)
  • 22. © Michael Fruhmann 2014 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)
  • 23. © Michael Fruhmann 2014 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!)
  • 24. © Michael Fruhmann 2014 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
  • 25. © Michael Fruhmann 2014 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!)
  • 26. Any questions? Thank you for your attention! Contact: Dr. Michael Fruhmann, Federal Chancellery, Constitutional Service, Republic of Austria michael.fruhmann@bka.gv.at