Competition in public procurement
Struensee & Co. serve public procurement organizations and private sector institutions who wish to start supplying goods and services to the public sector
If the public sector is to increase efficiency, it requires constant realization of the potential for improvement. Resources are scarce, while needs and demands are large and getting bigger. One of the areas in which public senior leaders are able to increase efficiency is through optimizing procurement. This can be done through ensuring low prices on procured goods and sufficient governance of demand in the public sector institutions. In Denmark, there are a wide range of joint procurement agreements in place for both the state, the municipalities, and smaller bilateral agreements between public sector institutions to increase efficiency in. These joint agreements serve to provide the public sector with the best prices the market has to offer. Still the procurers in the public sector steer clear of these agreements in many situations. Of total procurement spend in municipalities, procurement on Statens og Kommunernes Indkøbsservice (SKI), which is the largest joint procurement program, accounted for only 7% of total procurement spend in 2015.
One way to increase efficiency in public procurement is increasing the competition. Struensee & Co. serve public procurement organizations in increasing the number of bidders on tenders and private sector institutions who wish to start supplying goods and services to the public sector. Read more about the services we offer public procurement organizations and private sector institutions below.
The situation on the Danish public procurement is characterized by low competition on public tenders. This is reinforced by municipal directors of procurement, who report inadequate competition on their own and joint procurement agreements, which leads to high prices on procurement. This suggestion is further reinforced by the data, which shows that for 63% of Danish public tenders in 2016, less than 5 bids were submitted.
To mitigate the low competition on public procurement, it is important to understand the barriers for increased competition. Using our extensive knowledge of the public sector and our wide network in both public and private sector institutions, Struensee & Co. assists private corporations in overcoming the most important barriers. Struensee & Co. research shows that the most important barriers for increased competition are:
- Private institutions’ lacking knowledge of the Danish public sector, its institutions, and the key people within these
- The tender documents are almost exclusively submitted in Danish
- Local presence is needed for suppliers
- Public procurement organizations put in a low effort in trying to attract bidders to public sector tenders
- Rigid rules around bidding on public sector tenders, makes the private sector institutions shy away from the public market
- Procurers focus on legal framework rather than competition