Public procurement for the future

Speech by Minister of Government Administration and Reform Ms Heidi Grande Røys at the official opening of the Public procurement for the future conference in Oslo, 19 May 2009.

Ladies and gentlemen,
Good morning and welcome to the “Public procurement for the future” conference here in Oslo. We are very pleased that you could join us for this important two day event! I hope that you enjoyed the reception at Oslo City hall last night, and that you will have a good time at the banquet at our new opera house tonight. We are very proud of the opera house. It has rapidly become a major tourist attraction in Oslo.

The aim of public procurement is not only to give tax payers best value for money, but also to

• enable innovation
• utilise public private partnerships
• create market opportunities for small and medium sized enterprises
• include social and environmental considerations
• and utilise electronic means.

This ensures compliance with the fundamental principles of equal treatment, non-discrimination, mutual recognition, proportionality and transparency.
Public procurement accounts for about 270 billion Norwegian kroner a year, about 31 billion Euros. This is about one third of total consumption in Norway. Even a small improvement will release substantial amounts that again can be used for other purposes. And there is a great potential for improvements. Just to give you a clearer idea: 270 billion Norwegian kroner equals sixty new opera houses each year!

Great potential for improvements
I recently delivered a white paper on public procurement to the Norwegian parliament. The focus of this white paper is to professionalize and develop better routines for public procurement.

Unfortunately, we often experience that the principles in the Norwegian Public Procurement Act are not being followed, and that municipalities and public agencies manage their procurements in an unprofessional manner. Not only is this bad for the economy, it also reduces trust in public management. The white paper presents examples and solutions on how it is possible to reverse this negative trend.

In order to achieve more professional public procurements, we need to provide leaders with better guidance and increased responsibility. Procurers at all levels will have to increase their knowledge and competence, and a variety of procurement networks will ensure that procurements are organized more efficiently. In addition we will focus on implementing electronic solutions. E-procurement alone has the potential to save the Norwegian government major amounts of money.

Pan European Public Procurement Online
As a coordinator of the large scale pilot project PEPPOL, we wish to promote a successful national implementation of e-procurement.
Through PEPPOL we have taken a significant role in the European effort to support cross border public procurement. Norway – like all European countries – can benefit from increased competition for our public procurement contracts. At the same time, we would also like to make it as easy as possible for our national industry to compete in the European public procurement market.

In our view, both can be achieved by the use of electronic means, provided that the solutions are aligned through common standards and connected through a reliable and secure transport infrastructure. Based on this, I am pleased to see that our national initiatives on e-signatures, provision of company information, e-catalogues, e-ordering and e-invoicing is carried out in cooperation with the PEPPOL project. This is handled by Difi, our Agency for Public Management and eGovernment, in cooperation with both relevant public and private sector entities.

Cooperation between the public sector and the private sector is a separate topic that will be discussed later this afternoon. More than a thousand Public Private Partnership agreements have been signed world-wide. However, the use of this procurement tool is still controversial and the experiences with it vary quite a lot. There is a need to learn more about under which conditions PPP gives value for money.

Sustainable Public Procurement
Sustainable public procurement (SPP) is another major topic for this conference.
For many years, the single most important indicator in the practice of public purchasing was the economic factor. Environmental and social factors were seldom, if ever, taken into account. However, the importance of non-economic factors in public procurement has increased significantly. 
Why is it that public procurement is so relevant when it comes to making consumption and production more sustainable?

First of all, public procurement is a powerful market force.  Public authorities in Europe have a purchasing power, equal to 16% of the EU's GDP. Few suppliers can avoid taking into account the signals from such an important actor. Therefore, by using their market leverage to choose for goods and services that also respect the environment, public authorities can have a major influence on suppliers. They can stimulate the production of more sustainable goods and services.
Secondly, public procurement can give consistent signals to the market. Public procurement can coordinate their requirements to help suppliers make long term plans and commitments to develop.

The Norwegian government believes that, as a major customer, the public sector has a particular responsibility to minimize the environmental impact of its procurement. We have to be a demanding customer. The public sector can then help the business sector to become more competitive in a market where the demand for environmental technology is growing fast.

Public enterprises must make adjustments for environmental and social responsibility in their management systems, and increase their knowledge in this area. Studies show that lack of competence is one of the greatest barriers to good integration of environmental and social considerations in public procurement today.
We wish to address this issue, and have therefore drawn up a three-year action plan for environmental and social responsibility in public procurement.

DIFI is responsible for implementing this action plan. They are working with capacity building, tools, and networking to increase awareness and competence in these fields.

The challenge is how to implement SPP in practice. The SPP session tomorrow seeks to assess ways to meet this challenge through presenting examples of

• firstly, how the European Commission is promoting tools and providing a regulatory framework at the national level
• secondly, how local authorities are working with SPP
• and finally, how the business community views the opportunities provided by SPP.

I am convinced that improved public procurement will make a major contribution in increasing effectiveness in the public sector. It will also help achieve a more sustainable society.

So to put it in a nutshell:
Public procurement is not just about buying – it is also about shaping the future.

Have a good conference. Thank you!