In its interesting paper 'How Competitive is "Competitive" Procurement in the Social Services?' (2014) The American Review of Public Administration 1-23 (advanced on-line access available here), Scott Lamothe conducts an interesting empirical study where he shows that using measures of competition for contracts that go beyond the crude number of tenders received (ie, assessing the quality of the bids submitted) casts new light on the assessment of the degree of effective competition in procurement settings.
More importantly, his findings indicate that "while the measures used in earlier studies align reasonably well with the raw number of initial responders to competitive solicitations, they tend to overestimate competition when the quality component is included in the analysis. That is, social service markets may be even weaker than previously reported."
In view of that evidence from the US, EU policy-makers and legislators will be well-advised to read this paper and digest its insights before they embark into the transposition of Art 74-77 of Directive 2014/24 in a way that allows for a reduction in the competition for social services contracts that makes these markets even weaker.
In the UK, this is particularly relevant for the transposition of Art 77 Dir 2014/24, where the Government insists in maximising the possibilities of limiting competition for the procurement of social and special services. This has been very recently stressed in the Government's response to the consultation on transposition through the Public Contracts Regulations 2015, which clearly emphasises that "The implementation of the proposed Regulation 77 [equivalent to Art 77 in the Directive] regarding reserved contracts for certain services is a strategic Government priority to support the mutuals programme" (para 132).
The
empirical evidence mentioned above suggests that this strategy is bound
to create very poor results in the medium term, particularly because
the lack of proper competition will not create appropriate checks and
balances to the provision of those services by de facto monopolists.
Hence, the UK Government would be advised to further reconsider their strategy to maximise the carve-out from competitive procedures in the procurement of social and special services--not least because the regulatory constraints on these markets are also attenuated due to the structural conflict of interest that affects the sector regulator's ability to enforce competition and procurement rules in a proper way; as discussed in A Sanchez-Graells, Monitor and the Competition and Markets Authority (2014) University of Leicester School of Law
Research Paper No. 14-32]. Will the UK Government respond to this wake up call?
