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May 23rd 2011




OFE Procurement Report 2010: More than one in ten government IT tenders illegally specify brands


 Openforum Europe's annual assessment of procurement practice across the European Union reveals that for the third year running a significant proportion of government agencies are illegally specifying trademarks when they engage suppliers from the private sector for specific IT contracts worth billions of euros.


The OFE Procurement Report 2010 found that 13 % of a sample of tenders published in the Supplement to the Official Journal of the European Union made reference to specific trademarks or brand names. It also identified a new trend: government agencies are increasingly resorting to negotiated procedures using one preferred supplier without any call for competition. While there can be good grounds for applying the negotiated procedure without any call for competition, it can also be used to renew contracts with existing vendors without the complications of holding an open tender.


This trend emerges at a time when governments are under intense pressure to cut costs. The discriminatory practice of specifying brands in tender documents, instead of holding open competition may in the long run result in higher administrative costs for contracting agencies.


It also has a very important impact on the market. Public procurement accounts for nearly 20 percent of the EU's gross domestic product – around 2.2 trillion euros according to Eurostat figures from 2009. By opting for one preferred supplier, public bodies are inadvertently helping existing suppliers maintain their stranglehold on markets to the detriment of new competitors.


“The abuse of the tendering process we identify in our latest procurement monitoring report is just the tip of the iceberg,” said Bob Blatchford, chief operating officer of Openforum Europe.


“We focused on illegal specification of trademarks but there are many other possible abuses going on that distort the IT procurement process in Europe. In future monitoring reports we will go into greater detail, looking at a broader sample of tenders, focusing on a wider range of abuses,” he said.


The OFE Procurement Report 2010 examined 441 tenders issued by contracting authorities ranging from small local government offices to one EU-wide government agency, Frontex, the EU agency for external border security, between February and April 2010. In light of its findings, OFE urges EU lawmakers to address such discriminatory practices as they debate the forthcoming revision of the EU Public Procurement Directive.


The existing Directive has not been enforced sufficiently in order to keep a check on these practices, which are not only against the principles of competition and the fulfillment of the Single Market, but also act as obstacles to SMEs eager to compete in a market that should be open, innovative and transparent.


OFE recommends three concrete actions by EU lawmakers to address the problem:


1 Improve EU-wide guidelines to overcome lack of awareness of procurement law at local level, explaining clearly the long term costs of lock-in, to encourage a life-cycle perspective instead of a short term view.


2 Closer scrutiny of the use of the negotiated procedure without calls for competition.


3 Align Regulations governing procurement by EU institutions and agencies with the reformed Procurement Directive to ensure that EU institutions are also forced to improve their tenders.



The report is at this link


For more information please contact Bob Blatchford +44 7739 180472 bob@openforumeurope.org





OpenForum Europe (OFE) is an independent, not-for-profit organisation and is supported by major IT suppliers (inc Deloitte, Google, IBM, Oracle, Red Hat), SMEs, user and consumer organisations, and national partners across Europe. OFE's focuses on delivering an open, competitive ICT market, and strongly supports both Open Standards and use of Open Source Software. OFE works closely not only with the European Commission but with many national governments across Europe. OpenForum Europe acknowledges all the input received from its members and partners in the compilation of this document. However, OpenForum Europe does not seek to represent any specific community nor present its opinions as being unanimously supported by its full membership. References given are fully attributed and every effort made to ensure they have been taken in true context.





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