The purpose of this study is to promote value as a core concept enabling innovative and socially responsible procurement. It suggests how organisations should analyse value from…
Abstract
Purpose
The purpose of this study is to promote value as a core concept enabling innovative and socially responsible procurement. It suggests how organisations should analyse value from their own perspective and from that of their stakeholders and users, to keep pace with the expectations of today's society.
Design/methodology/approach
The study examines developments in recent legislation and case law of the EU as well as observed good practice. It builds on these bases and on economic and behavioural approaches to define value and embed it in the awarding framework of public contracts.
Findings
While traditional “prescriptive” approaches face legality and efficiency challenges as buyers must take into account societal considerations, this change of perspective allows to pursue policies in a more transparent and defendable manner. The study proposes a simple value model as a framework for such analysis.
Research limitations/implications
The study opens a field for further qualitative and comparative research, measuring or determining how active implementation of value approaches improve efficiency and/or lead to better fulfilment of procurement and policy objectives.
Practical implications
Reasoning in terms of value can be further developed into enabling measures promoting sustainable sourcing, support of local and small businesses and bonds with communities.
Social implications
An explicit introduction of value as a procurement enabler should help organisations to implement their sustainability policies and to better use public procurement as a strategic instrument, and even as a driver of social innovation.
Originality/value
In spite of the pressing practical challenges related to value in public procurement, literature on this topic is scarce and has mostly tackled the problematics from a purely legal or theoretical point of view. This paper tends to address it from different and more practical perspectives, such as contribution of procurement to governance; linking public procurement and public policy; meaning of innovation from transaction (market) perspective and its implications for tendering.
Details
Keywords
Philipp Kiiver and Jakub Kodym
This article presents a simple and objective formula to determine a tender's price-quality ratio, for the purpose of value-for-money awards, which is literally quality divided by…
Abstract
This article presents a simple and objective formula to determine a tender's price-quality ratio, for the purpose of value-for-money awards, which is literally quality divided by price (Q/P). Most formulas used in public procurement today first translate prices into points, in a process which has several flaws, and in the end they do not produce any actual ratios, a fact which makes them less objective. To adjust the proposed Q/P formula to the relative weight of the price criterion from the buyer's point of view, all tenders start out with a fixed quality score to compress or expand quality differences between them. Tenders then compete for the remaining range of quality points up to the maximum, and in the end have their quality score divided by the price that they offer.