Data and procurement policy: some thoughts on the Single Market Scoreboard for public procurement

There is a growing interest in the use of big data to improve public procurement performance and to strengthen procurement governance. This is a worthy endeavour and, like many others, I am concentrating my research efforts in this area. I have not been doing this for too long. However, soon after one starts researching the topic, a preliminary conclusion clearly emerges: without good data, there is not much that can be done. No data, no fun. So far so good.

It is thus a little discouraging to confirm that, as is widely accepted, there is no good data architecture underpinning public procurement practice and policy in the EU (and elsewhere). Consequently, there is a rather limited prospect of any real implementation of big data-based solutions, unless and until there is a significant investment in the creation of a proper data foundation that can enable advanced analysis and policy-making. Adopting the Open Contracting Data Standard for the European Union would be a good place to start. We could then discuss to what extent the data needs to be fully open (hint: it should not be, see here and here), but let’s save that discussion for another day.

What a recent twitter threat has reminded me is that there is a bigger downside to the existence of poor data than being unable to apply advanced big data analytics: the formulation of procurement policy on the basis of poor data and poor(er) statistical analysis.

This reflection emerged on the basis of the 2018 iteration of the Single Market Scoreboard for Public Procurement (the SMSPP), which is the closest the European Commission is getting to data-driven policy analysis, as far as I can see. The SMSPP is still work in progress. As such, it requires some close scrutiny and, in my view, strong criticism. As I will develop in the rest of this post, the SMSPP is problematic not solely in the way it presents information—which is clearly laden by implicit policy judgements of the European Commission—but, more importantly, due to its inability to inform either cross-sectional (ie comparative) or time series (ie trend) analysis of public procurement policy in the single market. Before developing these criticisms, I will provide a short description of the SMSPP (as I understand it).

The Single Market Scoreboard for Public Procurement: what is it?

The European Commission has developed the broader Single Market Scoreboard (SMS) as an instrument to support its effort of monitoring compliance with internal market law. The Commission itself explains that the “scoreboard aims to give an overview of the practical management of the Single Market. The scoreboard covers all those areas of the Single Market where sufficient reliable data are available. Certain areas of the Single Market such as financial services, transport, energy, digital economy and others are closely monitored separately by the responsible Commission services“ (emphasis added). The SMS organises information in different ways, such as by stage in the governance cycle; by performance per Member State; by governance tool; by policy area or by state of trade integration and market openness (the latter two are still work in progress).

The SMS for public procurement (SMSPP) is an instance of SMS by policy area. It thus represents the Commission’s view that the SMSPP is (a) based on sufficiently reliable data, as it is fed from the database resulting from the mandatory publications of procurement notices in the Tenders Electronic Daily (TED), and (b) a useful tool to provide an overview of the functioning of the single market for public procurement or, in other words of the ‘performance’ of public procurement, defined as a measure of ‘whether purchasers get good value for money‘.

The SMSPP determines the overall performance of a given Member States by aggregating a number of indicators. Currently, the SMSPP is based on 12 indicators (it used to be based on a smaller number, as discussed below): [1] Single bidder; [2] No calls for bids; [3] Publication rate; [4] Cooperative procurement; [5] Award criteria; [6] Decision speed; [7] SME contractors; [8] SME bids; [9] Procedures divided into lots; [10] Missing calls for bids; [11] Missing seller registration numbers; [12] Missing buyer registration numbers. As the SMSPP explains, the addition of these indicators results in the measure of ‘overall performance’, which

is a sum of scores for all 12 individual indicators (by default, a satisfactory performance in an individual indicator increases the overall score by one point while an unsatisfactory performance reduces it by one point). The 3 most important are triple-weighted (Single bidder, No calls for bids and Publication rate). This is because they are linked with competition, transparency and market access–the core principles of good public procurement. Indicators 7-12 receive a one-third weighting. This is because they measure the same concepts from different perspectives: participation by small firms (indicators 7-9) and data quality (indicators 10-12).

The most recent snapshot of overall procurement performance is represented in the map below, which would indicate that procurement policy is rather disfunctional—as most EEA countries do not seem to be doing very well.

Source: European Commission, 2018 Single Market Scorecard for Public Procurement (based on 2017 data).

Source: European Commission, 2018 Single Market Scorecard for Public Procurement (based on 2017 data).

In my view, this use of the available information is very problematic: (a) to begin with, because the data in TED can hardly be considered ‘sufficiently reliable‘. The database in TED has problems of various sorts because it is a database that is constructed as a result of the self-declaration of data by the contracting authorities of the Member States, which makes its content very dishomogeneous and difficult to analyse, including significant problems of under-inclusiveness, definitional fuzziness and the lack of filtering of errors—as recognised, repeatedly, in the methodology underpinning the SMSPP itself. This should make one take the results of the SMSPP with more than a pinch of salt. However, these are not all the problems implicit in the SMSPP.

More importantly: (b) the definition of procurement performance and the ways in which the SMSPP seeks to assess it are far from universally accepted. They are rather judgement-laden and reflect the policy biases of the European Commission without making this sufficiently explicit. This issue requires further elaboration.

The SMSPP as an expression of policy-making: more than dubious judgements

I already criticised the Single Market Scoreboard for public procurement three years ago, mainly on the basis that some of the thresholds adopted by the European Commission to establish whether countries performed well or poorly in relation to a given indicator were not properly justified or backed by empirical evidence. Unfortunately, this remains the case and the Commission is yet to make a persuasive case for its decision that eg, in relation to indicator [4] Cooperative procurement, countries that aggregate 10% or more of their procurement achieve good procurement performance, while countries that aggregate less than 10% do not.

Similar issues arise with other indicators, such as [3] Publication rate, which measures the value of procurement advertised on TED as a proportion of national Gross Domestic Product (GDP). It is given threshold values of more than 5% for good performance and less than 2.5% for poor performance. The Commission considers that this indicator is useful because ‘A higher score is better, as it allows more companiesto bid, bringing better value for money. It also means greater transparency, as more information is available to the public.’ However, this is inconsistent with the fact that the SMSPP methodology stresses that it is affected by the ‘main shortcoming … that it does not reflect the different weight that government spending has in the economy of a particular’ Member State (p. 13). It also fails to account for different economic models where some Member States can retain a much larger in-house capability than others, as well as failing to reflect other issues such as fiscal policies, etc. Moreover, the SMSPP includes a note that says that ‘Due to delays in data availability, these results are based on 2015 data (also used in the 2016 scoreboard). However, given the slow changes to this indicator, 2015 results are still relevant.‘ I wonder how is it possible to establishes that there are ‘slow changes’ to the indicator where there is no more current information. On the whole, this is clearly an indicator that should be dropped, rather than included with such a phenomenal number of (partially hidden) caveats.

On the whole, then, the SMSPP and a number of the indicators on which it is based is reflective of the implicit policy biases of the European Commission. In my view, it is disingenuous to try to save this by simply stressing that the SMSPP and its indicators

Like all indicators, however, they simplify reality. They are affected by country-specific factors such as what is actually being bought, the structure of the economies concerned, and the relationships between different tendering options, none of which are taken into account. Also, some aspects of public procurement have been omitted entirely or covered only indirectly, e.g. corruption, the administrative burden and professionalism. So, although the Scoreboard provides useful information, it gives only a partial view of EU countries' public procurement performance.

I would rather argue that, in these conditions, the SMSPP is not really useful. In particular, because it fails to enable analysis that could offer some valuable insights even despite the shortcomings of the underlying indicators: first, a cross-sectional analysis by comparing different countries under a single indicator; second, a trend analysis of evolution of procurement “performance” in the single market and/or in a given country.

The SMSPP and cross-sectional analysis: not fit for purpose

This criticism is largely implicit in the previous discussion, as the creation of indicators that are not reflective of ‘country-specific factors such as what is actually being bought, the structure of the economies concerned, and the relationships between different tendering options’ by itself prevents meaningful comparisons across the single market. Moreover, a closer look at the SMSPP methodology reveals that there are further issues that make such cross-sectional analysis difficult. To continue the discussion concerning indicator [4] Cooperative procurement, it is remarkable that the SMSPP methodology indicates that

[In previous versions] the only information on cooperative procurement was a tick box indicating that "The contracting authority is purchasing on behalf of other contracting authorities". This was intended to mean procurement in one of two cases: "The contract is awarded by a central purchasing body" and "The contract involves joint procurement". This has been made explicit in the [current methodology], where these two options are listed instead of the option on joint procurement. However, as always, there are exceptions to how uniformly this definition has been accepted across the EU. Anecdotally, in Belgium, this field has been interpreted as meaning that the management of the procurement procedure has been outsource[d] (e.g. to a legal company) -which explains the high values of this indicator for Belgium.

In simple terms, what this means is that the data point for Belgium (and any other country?) should have been excluded from analysis. In contrast, the SMSPP presents Belgium as achieving a good performance under this indicator—which, in turn, skews the overall performance of the country (which is, by the way, one of the few achieving positive overall performance… perhaps due to these data issues?).

This should give us some pause before we decide to give any meaning to cross-country comparisons at all. Additionally, as discussed below, we cannot (simply) rely on year-on-year comparisons of the overall performance of any given country.

The SMSPP and time series analysis: not fit for purpose

Below is a comparison of the ‘overall performance’ maps published in the last five iterations of the SMSPP.

Source: own elaboration, based on the European Commission’s Single Market Scoreboard for Public Procurement for the years 2014-2018 (please note that this refers to publication years, whereas the data on which each of the reports is based corresponds to the previous year).

Source: own elaboration, based on the European Commission’s Single Market Scoreboard for Public Procurement for the years 2014-2018 (please note that this refers to publication years, whereas the data on which each of the reports is based corresponds to the previous year).

One would be tempted to read these maps as representing a time series and thus as allowing for trend analysis. However, that is not the case, for various reasons. First, the overall performance indicator has been constructed on the basis of different (sub)indicators in different iterations of the SMSPP:

  • the 2014 iteration was based on three indicators: bidder participation; accessibility and efficiency.

  • the 2015 SMSPP included six indicators: single bidder; no calls for bids; publication rate; cooperative procurement; award criteria and decision speed.

  • the 2016 SMSPP also included six indicators. However, compared to 2015, the 2016 SMSPP omitted ‘publication rate’ and instead added an indicator on ‘reporting problems’.

  • the 2017 SMSPP expanded to 9 indicators. Compared to 2016, the 2017 SMSPP reintroduced ‘publication rate’ and replaced ‘reporting problems’ for indicators on ‘missing values’, ‘missing calls for bids’ and ‘missing registration numbers’.

  • the 2018 SMSPP, as mentioned above, is based on 12 indicators. Compared to 2017, the 2018 SMSPP has added indicators on ‘SME contractors’, ‘SME bids’ and ‘procedures divided into lots’. It has also deleted the indicator ‘missing values’ and disaggregated the ‘missing registration numbers’ into ‘missing seller registration numbers’ and ‘missing buyer registration numbers’.

It is plain that there are no two consecutive iterations of the SMSPP based on comparable indicators. Moreover, the way that the overall performance is determined has also changed. While the SMSPP for 2014 to 2017 established the overall performance as a ‘deviation from the average’ of sorts, whereby countries were given ‘green’ for overall marks above 90% of the average mark, ‘yellow’ for overall marks between 80 and 90% of the average mark, and ‘red’ for marks below 80% of the average mark; in the 2018 SMSPP, ‘green’ indicates a score above 3, ‘yellow’ indicates a score below 3 and above -3, and ‘red’ indicates a score below -3. In other words, the colour coding for the maps has changed from a measure of relative performance to a measure of absolute performance—which, in fairness, could be more meaningful.

As a result of these (and, potentially, other) issues, the SMSPP is clearly unable to support trend analysis, either at single market or country level. However, despite the disclaimers in the published documents, this remains a risk (to the extent that anyone really engages with the SMSPP).

Overall conclusion

The example of the SMSPP does not augur very well for the adoption of data analytics-based policy-making. This is a case where, despite acknowledging shortcomings in the methodology and the data, the Commission has pressed on, seemingly on the premise that ‘some data (analysis) is better than none’. However, in my view, this is the wrong approach. To put it plainly, the SMSPP is rather useless. However, it may create the impression that procurement data is being used to design policy and support its implementation. It would be better for the Commission to stop publishing the SMSPP until the underlying data issues are corrected and the methodology is streamlined. Otherwise, the Commission is simply creating noise around data-based analysis of procurement policy, and this can only erode its reputation as a policy-making body and the guardian of the single market.