If you are interested in government procurement systems and effects of International regimes on it, this is the right document for you.

1. NATIONAL AND
INTERNATIONAL PROCUREMENT:
A COMPARATIVE APPROACH
SAMIR ALIYEV

2. NATIONAL PUBLIC
PROCUREMENT SYSTEMS
• Economic Scope of Government
Procurement
• Public procurement & good government
• National schemes vs. international
schemes
• Common threads for national regimes
• Australian and Swiss public procurement
regimes in a nutshell
Page 1 Geneva, 30 October 2017 Samir Aliyev

3. ECONOMIC SCOPE OF
GOVERNMENT PROCUREMENT
Government procurement is very big business.As per OECD reports between
2001 and 2011, government expenditures per capita increased by 2.2% per year.
Government expenditures of OECD members in 2011 - 45.4% of GDP
Public procurement of OECD members in 2011 - 13% of GDP
12% 45%
£ 190 bln
2013
$ 800 bln 100 top
federal contractors 2013
Page 2 Geneva, 30 October 2017 Samir Aliyev

4. PUBLIC PROCUREMENT &
GOOD GOVERNMENT
The realization Western/developed nations reached that instituting a good public procurement
scheme helps ensure fairness and efficiency in spending, provide transparency and prevent
corruption.
Link? The fight against cronyism and corruption, inefficiency and waste, international standards.
History? From red clay tablet in Syria between 2400 - 2800 B.C. to the present.
Modern Public Procurement?
The World Bank? reducing bottlenecks, competing corruption, and building capacity in
procurement help governments maximize the buying power of their budgets and improve the quality
of service delivery to their citizens. Competitive and transparent public procurement systems are
therefore a key element to achieving sustainable development and more prosperous societies in Africa.
1893 1925
Page 3 Geneva, 30 October 2017 Samir Aliyev

5. NATIONAL SCHEMESVS.
INTERNATIONAL SCHEMES I
Sovereign nation states are still core building block of the international community.
Government procurement, more than most areas of government operations, is within, or
comes close to being, in this category of central state functions.
3 specific common rationales for domestic preference in public procurement: (Trebilcock
and Howse)
1. Protecting employment in declining industries
2. Protecting the supply of strategic defense goods
3. Supporting emerging domestic high-tech industries
Page 4 Geneva, 30 October 2017 Samir Aliyev

6. NATIONAL SCHEMESVS.
INTERNATIONAL SCHEMES II
Some explicit and implicit means, aim at effectively discriminating against foreign suppliers.
„Price preference“ - price differential in favor of local bids, whereby foreign bids are only
accepted if significantly cheaper than local ones.
„Offsets“ - requiring foreign bidders to purchase from the local market if their bid is accepted.
„Discounts for domestic content of bids“ - limiting bidding to domestic firms only
(invitation system or reserving for them areas such as defense spending)
The multilateral rules of the WTO „have little significance for government procurement at present“.
As a result: under both GATT and GATS governments remain free to discriminate in favor of national
industry and to choose their own procurement procedures and policies, no matter what obstacles these
might create for suppliers from other WTO Members in participating in government contracts.
Page 5 Geneva, 30 October 2017 Samir Aliyev

7. NATIONAL SCHEMESVS.
INTERNATIONAL SCHEMES III
Each of international schemes contain a distinctive balance between substance, coverage, procedures and
institutions.
• International regimes tent to present general principles, leaving it to national regimes to „fill in the blank“
• International regimes are especially concerned with inter-national trade, they tend to focus on one
specific flaw of national public procurement schemes and stress the need for non-discrimination against
foreign bidders
Where does this
leave international
and supranational
instruments?
What they have to
say regarding
domestic public
procurement regimes?
Page 6 Geneva, 30 October 2017 Samir Aliyev

8. COMMONTHREADS FOR
NATIONAL REGIMES I
Western/developed nations share a view on the theoretical advantages of mandating a competitive bidding
system for domestic public procurement.
3 categories for objectives of public tenders (following Omer Dekel).
1. Ensuring a clean government: public tenders reduce the possibility of favoritism and corruption
in the government decisions on deal with private sectors.
2. Making government efficient: as trustee of the public, government must make the most
efficient use of the assets and funds entrusted to it.
3. Ensuring fair governance: all members of the public an equal opportunity to enjoy this public
benefit that the Government has decided to allocate.
Page 7 Geneva, 30 October 2017 Samir Aliyev

9. COMMONTHREADS FOR
NATIONAL REGIMES II
Six characteristics core common elements of existing national procurement regimes:
1. A mandatory system - a competitive public procurement scheme
2. Application - which sectors, entities and what type of activity will the scheme apply to?
3. Method - open and restricted tendering.The former means any bidder can apply, while the latter means that
bidding is limited to selected suppliers.
4. Pre-tender procedure - fairness and on due process.A call for offers needs to be made in a timely
manner, be publicized and clearly spell out the ground rules for participation.
5. Tender mechanics - heart of tender process.The actual submission of bids, the review process, the
possibility of direct contact with bidders and finally decision to award a contract.
6. Accountability and review - to find the outcome of the bidding process and remedy against decisions.
Page 8 Geneva, 30 October 2017 Samir Aliyev

10. AUSTRALIAN PUBLIC PROCUREMENT
REGIME IN A NUTSHELL
The only major Western economy currently not party to be GPA.
Regulatory Framwork: Commonwealth Procurement Guidelines CPG - Ministry of
Finance and Deregulation under the Financial Management and Accountability Act, 1997.
The framework for the proper management of public money and property - „proper
use“ means efficient, effective, economical and ethical use of Commonwealth resources
as well as accountability and transparency.
As for the treatment of foreign bidders, the CPG (Art. 5.2) clearly states that it is non-
discriminatory and that procurement methods must not discriminate agains potential
suppliers due to their degree of foreign affiliation or ownership, location or size.
Page 9 Geneva, 30 October 2017 Samir Aliyev

11. Regulatory framework: The Swiss public procurement regime is shaped by international
treaties, Swiss federal law, and cantonal law.
International treaties.At the international level, Switzerland is a signatory state to the:
• WTO Agreement on Government Procurement of 15 April 1994 (GPA).
• Bilateral agreement between the European Community and the Swiss Confederation
on certain Aspects of Government Procurement of 21 June 1999
Switzerland is also a member state of the European Free Trade Association (EFTA) and applies
the EFTA rules on public procurement.
As Switzerland is not an EU member state, EU Directives on public procurement do not
apply.
Federal law.At the federal level, public procurement is governed by the:
• Federal Act on Public Procurement of 16 December 1994 (FAPP)
SWISS PUBLIC PROCUREMENT
REGIME IN A NUTSHELL I
Page 10 Geneva, 30 October 2017 Samir Aliyev

12. According to Articles 1, 8, 15 and 20 of the FAPP, the fundamental
principles for procurement procedures are:
SWISS PUBLIC PROCUREMENT
REGIME IN A NUTSHELL II
Transparency
Protection
of workers
Fairness
Economic
use of public funds
Free
Competition
Equality
of men and women
Equal
treatment of bidders
Confidentiality
Non-
discrimination to foreign
bidders
Page 11 Geneva, 30 October 2017 Samir Aliyev

13. Are any industries subject to specific regulation?
In line with international law, certain industries such as the water supply, energy, traffic
and telecommunications industries are specifically subject to the public procurement
regime. In principle, however, the regime is the same as for public authorities.
What are the recent trends in the public procurement sector?
There is an increasing shift toward e-procurement using the government's platform
Système d'information sur les marchés publics en Suisse (Simap) (www.simap.ch). For
example, in the canton of Berne, notices relating to public procurement can only be
published electronically on simap.ch, abolishing the usual procedure of publication in
the official cantonal gazette.The only official publication in public procurement
matters is on simap.ch.
SWISS PUBLIC PROCUREMENT
REGIME IN A NUTSHELL III
Page 12 Geneva, 30 October 2017 Samir Aliyev

14. PROCUREMENT SYSTEMS UNDERTHE
INTERNATIONAL AND
SUPRANATIONAL LAW
Page 13 Geneva, 30 October 2017 Samir Aliyev

15. THE WTO ANDTHE GAP I
Reason?
The needs of international trade, cooperation and development required more; increasing similarity among
- domestic regimes and, establishment of inter- and supra-national agreements.
The first GATT, signed in Geneva in 1947 and World War II
The first international round of negotiations focused on tax reductions and national treatment (NT) and
most-favored-nation (MFN).
Result of 50 years negotiations: a significant reduction of customs.
First time, the potential of public procurement to serve as non-tariff-barriers NTB, a vehicle for
protectionism, was recognized, leading to the creation of „The Government procurement Code“ in 1979.
Page 14 Geneva, 30 October 2017 Samir Aliyev

16. THE WTO ANDTHE GAP II
The Code`s success and failing places and resulted in the signing of the GPA in 1994, one of the central instruments of international tenders, which now covers 43TWO
members (of whom 28 are EU States).
- pulilateral agreement
- efficient and effective management of public resources
- at least minimum standards for members that are defined in the Agreement
- Goods and services
- Measures of price preferences and offsets.
- electronic tools - electronic auctions, notice of intended procurement
Only for
central
government
entities
Plurilateral
agreement
with 20
signatories
Limited
Applications
Did The Code work?
No service
contracts
Limited
coverage to the
procurement of
goods
has failed?
Page 15 Geneva, 30 October 2017 Samir Aliyev

17. PROCUREMENT AND EU LAW I
• EU is a sui generis international organization,
• the unique form of international cooperation,
• radically different from conventional inter-governmental agreements.
Years of negotiations followed culminating with the 1971 Directive on
Public Works and the 1976 Directive on Public Suppliers. Both
directives were updated in 2004 and 2014 in order to modernize
EU procurement Law.
Regulation? Directive?
Page 16 Geneva, 30 October 2017 Samir Aliyev

18. PROCUREMENT AND EU LAW II
Core Principles of the EU Procurement Law:
A clear and comprehensive definition for „contracting authority“ - the states and its
organs
Transparency - publication of public procurement contracts
Certain value thresholds
Selection and qualification of the bidders - to eliminate arbitrariness and discrimination
Tendern procedures - 1. open, 2. negotiated, 3. restricted
Awarding public contracts are the lowest price and the most economically
advantageous offer
There is a large range of over 250 000 contracting authorities across the EU, in excess of
2 million procedures valued at around Euro 420 billion for the award of public contracts.
Page 17 Geneva, 30 October 2017 Samir Aliyev

19. THANKYOU
Geneva, 30 October 2017, Samir Aliyev