Good procurement means sitting on the same side of the table

26.10.2022 14.08
”Not only do we need more skills on the procurement side, but also more time and more peace of mind,” was an idea that was stressed in the seminar’s panel discussion “How can everybody win in public procurement?” on 12 October 2022. Photo: Saija Äikäs.

Fairness in tendering, realistic participation also for new entrepreneurs, sufficient human resources and a focus on quality rather than price. These are the development tips that Business Espoo’s procurement seminar sent out to the public sector.

How can everybody win in public procurement? And how to build and develop cooperation between entrepreneurs and the city’s procurement organisation?

These were the nuts and bolts of the day, chewed over at a seminar organised by Business Espoo at the Aalto University Undergraduate Centre on Wednesday. According to both entrepreneurs and procurement professionals, clear steps forward have been made in municipal procurement, but there is still room for improvement in tendering practices and selection priorities.

Many entrepreneurs find it cumbersome and complicated to participate in public tenders. Confidence in your own success can also be low – especially if you have lost a few races early on.

On the other hand, the panel discussion in the morning also created an understanding of the procurement of municipalities and cities. “In many places, work is done in a very busy and pressurised environment,” said Pentti Komssi, the Public Procurement Agent for entrepreneurs in the Helsinki Metropolitan Area.

“Procurement people are skilled in their field, but many have too much work to do.  Then there is y have no time to do proper ground work and have proper the appropriate market discussions. So they might just dig out an old tender from a desk drawer and put it out into the world with minor updates,” said Komssi.

Added pressure will come from tightening spending by municipalities.

“A much better savings tip would be to hire more skilled procurement professionals. Then better purchases would be made, which would also bring savings,” added Komssi.

Quality and cooperation often undermined by price

Matti Mäenpää, Senior Advisor at furniture manufacturer Martela, also tackled the same problem. More skills are needed on the procurement side, but also more time and more peace and quiet to get the work done.

“Calls for tenders can contain contradictions and sometimes additional questions that are difficult for companies to understand. It should be remembered that it is also possible to suspend a call for tenders and then republish it with specifications. Once the additional questions have been answered properly, the offers will also improve,” said Mäenpää.

According to Taneli Kalliokoski, Service Productions Manager of the City of Espoo’s Facilities Services, the lack of time is a clear challenge for them. The service area under Kalliokoski’s responsibility makes purchases to the value of around €30 million a year, including cleaning, construction, security and property management services.

”Quite often, we are really rushed with tenders, and resources are scarce. Often, calls for tenders are only put out when they absolutely have to be. Then we do our best to get them to the finish line within a reasonable time,” he admitted.

According to Matti Mäenpää, this kind of hurry involves a risk that the tendering will lead to a selection where the main criterion is the cheapest price. At the same time, the ground work done and the real requests of the end-users are forgotten. For example, why buy cheap workwear that users have repeatedly said is uncomfortable and of poor quality.

”This can lead to compromises in service levels and at the same time torpedo open cooperation. In well-functioning procurement, the seller and buyer are on the same side of the table,” said the experienced procurement professional.

Activity an advantage

So how can new businesses get a better foothold in public procurement?

According to Marko Silen, Director, Legal Affairs at the Helsinki Region Chamber of Commerce, the challenge is often that participating in tenders is quite laborious and the timeframes for procurement processes are short.

”It is therefore worth using electronic tools and search services, such as Hilma alerts, for products or services that are suitable for your business. It is also worth asking for more information, as this will help to develop and clarify the whole procurement,” he said.

This was also stressed by Komssi.

”A recent survey in the Helsinki Metropolitan Area showed that companies that have contacted the procurement services also do better in tenders.  So it pays to be active yourself,” he advised.

Framework agreements need some brushing up

The morning was rounded off with constructive greetings from Samuel Hyry, Managing Director of ATL-Rakennushuolto, a City of Espoo partner. Among other things, the company is responsible for renovation work in Espoo-based schools, day-care centres and HUS buildings.

Hyry generally found the 2–4-year framework agreement to be a straightforward and quite functional model of cooperation, but he said there was room for improvement.

”Often, work orders only focus on fixing a visible problem when they should be looking for the root causes of, for example, water damage or poor indoor air quality. Quite often, the reason for this is lack of time and resources on the part of the client,” he said.

Another annoyance is the ”mini-tenders” within framework contracts, which should be targeted at a much smaller group at a time than they are at present.

“If a call for tenders for a contract worth, say, €100,000, is issued to 15–20 companies, there may not be that many replies. The probability of winning in such a large group is low and there are always costs related to bidding,” said Hyry.

The seminar also included presentations by Pihla Hynynen, Procurement Director of the City of Espoo, and Salla Koivusalo, Leading Sustainable Development Adviser at Motiva, as well as information on employment conditions, sustainable development policies and upcoming health and social services agreements  related to Espoo’s procurement.

Text: Timo Sormunen
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Couldn’t make it, but would have been interested in the topic? Don’t worry. Click on our YouTube channel(external link) for a recording of the event (in Finnish).

Seminar was attended by nearly 100 people at the Aalto University Undergraduate Centre in person and remotely.
  • Entrepreneusrship