The perils of not carrying out technology-centered research into digital technologies and procurement governance -- re Sava and Dragos (2022), plus authors' response

This is a post in two parts. The first part addresses my methodological concerns with research on digital technologies and public procurement (and public governance more generally), as exemplified by a recent paper. The second part collects the response by the authors of that paper.

This pair of points of view are offered together to try to create debate. While the authors found my comments harsh (I cannot judge that), they engaged with them and provided their own counter-arguments. In itself, I think that is laudable and already has value. Any further discussion with the broader community, via comments (or email), would be a bonus.

Part 1: The perils of not carrying out technology-centered research into digital technologies and procurement governance -- re Sava and Dragos (2022)

When I started researching the interaction between digital technologies and procurement governance, it was clear to me that a technology-centered legal method was required. A significant amount of the scholarship that is published fails to properly address the governance implications of digital technologies because it simply does not engage with their functionality—or, put otherwise, because the technology is not understood. This can lead to either excessive claims of what ‘technology fixes’ can achieve or, perhaps even more problematic, it can generate analysis that is based on a misleading, shallow and oftentimes purely literal reading of the labels with which the technology is described and referred to.

A recent paper on smart contracts and procurement clearly exemplifies this problem: N.A. Sava & D. Dragos, ‘The Legal Regime of Smart Contracts in Public Procurement’ (2022) Transylvanian Review of Administrative Sciences, No. 66 E/2022, pp. 99–112.

Conceptual problems

From the outset, the paper is at pains to distinguish blockchain and smart contracts, and proposes ’a needed conceptual distinction that would fit the public contracts theory: before a contract is signed, it is logical to refer to blockchain technology when discussing digital means of awarding the procurement contract. As a result of this award, the concluded contract could be a “smart contract”’ (at 101).

The trap into which the paper falls, of course, is that of believing that blockchain and smart contracts can be distinguished ‘conceptually’ (in a legal sense), rather than on the basis of their technological characteristics and functionality.

Blockchain is a type of distributed ledger technology (DLT). In some more detail: ‘A DLT system is a system of electronic records that enables a network of independent participants to establish a consensus around the authoritative ordering of cryptographically-validated (‘signed’) transactions. These records are made persistent by replicating the data across multiple nodes, and tamper-evident by linking them by cryptographic hashes. The shared result of the reconciliation/consensus process - the ‘ledger’ - serves as the authoritative version for these records’ (M Rauchs et al, Distributed Ledger Technology Systems. A Conceptual Framework (2018), at 24). Blockchain is thus a ‘passive’ digital technology in the sense that it cannot perform any sort of automation of (decision-making) processes because it simply serves to create a data infrastructure.

In turn, smart contracts are a type of ‘active’ (or automating) digital technology that can be deployed on top of a DLT. In more detail: ‘Smart contracts are simply programs stored on a blockchain that run when predetermined conditions are met. They typically are used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary’s involvement or time loss. They can also automate a workflow, triggering the next action when conditions are met’ (IBM, What are smart contracts on blockchain? (undated, accessed 1 July 2022)).

What this means is that, functionally, ‘smart contracts’ may or may not map onto the legal concept of contract, as a ‘smart contract’ can be a unilaterally programmed set of instructions aimed at the automation of a workflow underpinned by data held on a DLT.

Taking this to the public procurement context, it is then clear that both the management of the award process and the execution of an awarded public contract, to the extent that they could be automated, would both need to be instrumentalised via smart contracts plus an underlying blockchain (I would though be remiss not to stress that the practical possibilities of automating either of those procurement phases are extremely limited, if at all realistic; see here and here, which the paper refers to in passing). It does not make any (technological/functional) sense to try to dissociate both layers of digital technology to suggest that ‘blockchain technology [should be used] when discussing digital means of awarding the procurement contract. As a result of this award, the concluded contract could be a “smart contract”’ (Sava & Dragos, above, 101).

This is important, because that technology-incongruent conceptual distinction is then the foundation of legal analysis. The paper e.g. posits that ‘the award of public contracts is a unilateral procedure, organized by state authorities according to specific rules, and that automation of such procedure may be done using blockchain technology, but it is not a ‘“smart contract” (sic). Smart contracts, on the other hand, can be an already concluded procurement contract, which is executed, oversaw (sic) and even remedied transparently, using blockchain technology (sic)’ (ibid, 103, emphasis added).

There are three problems here. First, the automation of the procurement award procedure carried out on top of a DLT layer would require a smart contract (or a number of them). Second, the outcome of that automated award would only be a ‘smart contract’ in itself if it was fully coded and its execution fully automated. In reality, it seems likely that some parts of a public contract could be coded (e.g. payments upon invoice approval), whereas other parts could not (e.g. anything that has to happen offline). Third, the modification of the smart contract (ie coded) parts of a public contract could not be modified (solely) using blockchain technology, but would require another (or several) smart contract/s.

Some more problems

Similarly, the lack of technology-centricity of the analysis leads the paper to present as open policy choices some issues that are simply technologically-determined.

For example, the paper engages in this analysis:

… the question is where should the smart public contracts be awarded? In the electronic procurement systems already developed by the different jurisdictions? On separate platforms using blockchain technology? The best option for integrating smart contracts into the procurement procedures may be the already existing digital infrastructure, therefore on the electronic procurement platforms of the member states. We believe this would be an optimal solution, as smart contracts should enhance the current electronic procurement framework and add value to it, thus leveraging the existing system and not replacing it (at 103, emphasis added).

Unless the existing electronic procurement platforms ran on blockchain—which I do not think they do—then this is not a policy option at all, as it is not possible to deploy smart contracts on top of a different layer of information. It may be possible to automate some tasks using different types of digital technologies (e.g. robotic process automation), but not smart contracts (if the technological concept, as discussed above, is to be respected).

The problems continue with the shallow approach to the technology (and to the underlying legal and practical issues), as also evidenced in the discussion of the possibility of automating checks related to the European Single Procurement Document (ESPD), which is a self-declaration that the economic operator is not affected by exclusion grounds (see Art 59 Directive 2014/24/EU).

The paper states

In the context of automatized checks, the blockchain technology can provide an avenue for checking the validity of proofs presented. The system could automate the verifications of the exclusion grounds and the selection criteria by checking the original documents referenced in the ESPD in real time (that is, before determining the winning tender). The blockchain technology could verify the respect of the exclusions grounds and rule out any economic operator that does not comply with this condition (at 104, emphasis added).

This is a case of excessive claim based on a misunderstanding of the technology. A smart contract could only verify whatever information was stored in a DLT. There is no existing DLT capturing the information required to assess the multiplicity of exclusion grounds regulated under EU law. Moreover, the check would never be of the original documents, but rather of digital records that would either be self-declared by the economic operators or generated by a trusted authority. If the latter, what is the point of a blockchain (or other DLT), given that the authority and veracity of the information comes from the legal authority of the issuer, not the consensus mechanism?

There are also terminological/conceptual inconsistencies in the paper, which does not consistently stick to its conceptual distinction that blockchain should be used to refer to the automation of the award procedure, with smart contracts being reserved to the awarded contract. For example, it (correctly) asserts that ‘When it comes to selection criteria, the smart contract could also perform automatic checks on the elements listed in the contract notice’ (at 104). However, this can creates confusion for a reader not familiar with the technology.

Other issues point at the potentially problematic implications of analysis based on a lack of in-depth exploration of the technologies. For example, the paper discusses a project in Colombia, which ‘created a blockchain software that allowed for record keeping, real time auditability, automation through smart contracts and enhanced citizen engagement’ (at 105). After limited analysis, the paper goes on to stress that ‘Our opinion is that the system in Colombia resembles very much the regular e-procurement systems in Europe. For instance, Romania’s SEAP (Electronic Public Procurement System) insures exactly the same features — non-alteration of bids, traceability and automatic evaluation of tenders (price). So, the question is whether the smart contract system in Colombia is anything else than a functional e-procurement system’ (ibid). This reflects a conflation of functionality with technology, at best.

In the end, the lack of technology-centered (legal) analysis significantly weakens the paper and makes its insights and recommendations largely unusable.

The need for a technology-centric legal methodology

To avoid this type of problems in much-needed legal scholarship on the impact of digital technologies on public governance, it is necessary to develop a technology-centric legal methodology. This is something I am working on, in the context of my project funded by the British Academy. I will seek to publish a draft methodology towards the end of the year. Comments and suggestions on what to take into account would be most welcome: a.sanchez-graells@bristol.ac.uk.

Part 2: authors’ response

Dear Professor,

As a first-year PhD student, being read and offered feedback, especially in the incipient phase of the research, is an amazing learning opportunity. Not all PhD students have the chance to exchange on their topic, and even more with a revered name in the doctrine of public procurement like yourself, therefore am I am very grateful for this debate (Sava).

The co-author Dragos also shares the respect and gratitude for the scholarly critique, although considers the comments rather theoretical and lacking an alternative constructive conclusion.

Concerning the need to conduct a ʻtechnology-centered legal’ research, I fully agree, and I will try to integrate more technology-centered research into the thesis.

However, being lawyers, we believe that technology-centered research does not take into account the established concepts from law and especially public procurement law, therefore an interdisciplinary perspective is needed.

Now we will address the arguments you formulated.

1) Conceptual problems

Concerning the definitions of blockchain and smart contract that you offer, we are of course familiar with them and agree with them.

We agree that blockchain-based smart-contracts could automate certain aspects of the procurement procedures, both in the award and in the execution phase. In our paper, we acknowledge the fact that ʻsmart contracts could automate any process that can be presented as an IF+THEN formula’ (p. 100-101). In this sense, like you noticed, we give the example of automating the check of the selection criteria: ‘When it comes to selection criteria, the smart contract could also perform automatic checks on the elements listed in the contract notice’ (p. 104).

However, beyond these two concepts (blockchain and smart contracts), there is a third concept, that of a ʻsmart legal contract’.

DiMatteo, L., Cannarsa, M. and Poncibò, C., in The Cambridge Handbook of Smart Contracts, Blockchain Technology and Digital Platforms (Cambridge: Cambridge University Press, 2019, p. 63) draw attention to the inadequacy of the terminology: ʻFor blockchain-based smart contracts, a useful dichotomy can be drawn between the ‘smart contract code’ that is, the computer code that is ‘– stored, verified, and executed on a blockchain and the ‘smart legal contract’ - a complement (or maybe even a substitute) for a legal contract that applies that technology. In essence, a ‘smart legal contract’ is a combination of the ‘smart contract code’ and traditional legal language.

'The LawTech panel recently decided that (...) smart contracts could still be legally binding provided that they include the typical elements of a contract.’ (https://juro.com/learn/smart-contracts, consulted on the 2nd of July 2022). Like you mention, ‘functionally, ‘smart contracts’ may or may not map onto the legal concept of contract, as a ‘smart contract’ can be a unilaterally programmed set of instructions aimed at the automation of a workflow underpinned by data held on a DLT’.

Therefore, the correct conceptual distinction would be between ʻsmart contract code’ and ʻsmart legal contract’. In the paper, we tried to focus on the smart legal contract, and discuss its compatibility with public procurement contracts. Through the conceptual distinction, we actually wanted to point out the fact that it would be difficult to imagine a smart legal contract (legally binding) exclusively in the award phase. On the other hand, concerning the ʻsmart contract code’ we agree that it could be applicable to both the award and the execution phase, although the terminology remains debatable.

2) The question of where to integrate smart contracts

We state that ʻThe best option for integrating smart contracts into the procurement procedures may be the already existing digital infrastructure, therefore on the electronic procurement platforms of the member states. We believe this would be an optimal solution, as smart contracts should enhance the current electronic procurement framework and add value to it, thus leveraging the existing system and not replacing it’ (p. 103).

Of course, we do not believe that the current system works on blockchain (in the paper we explore why this would be a difficult task), but we did discuss the integration of emerging technologies in the existing context of e-procurement tools. However, this would be an integration among the e-procurement tools, not on top of the existing tools, as adequate infrastructure would be needed.

Actually we mean exactly what you pointed out in your conclusions, so we are in agreement here: some aspects of the procedure could be automated, yet the rest of the procedure could function based on the rules already in place. By the idea of not replacing the e-procurement system, we mean automatizing some punctual aspects, but not replacing the entire system.

3) The ESPD

The idea was that smart contracts could automatically check certain documents, such as the ones referenced in the ESPD.

In our text, we only discuss the idea of a verification, we do not describe in detail how this should be performed and we do not state that the DLT should capture on its own ʻthe information required to assess the multiplicity of exclusion grounds regulated under EU law’. Of course, these documents would need to be uploaded to the DLT and the uploaded documents would have a digital form. By ‘original document’ we refer to the document per se, the reference document and not the simple declaration from the ESPD.

An analogy of this idea could be made with the Canadian ‘Supplier information registration system, which facilitates the registration of supplier information on blockchain to validate it against different records and to validate it in an automated way’ (NTT Data Presentation at EPLD Meeting, May 2022).

4) The Colombian example

We could not understand your critique here. The referenced example described a system for selecting economic operators in public procurement (for more information: https://www.weforum.org/reports/exploring-blockchain-technology-for-government-transparency-to-reduce-corruption/), which we believe is comparable with a regular e-procurement portal.

5) Conclusions

Through our analysis, we intended to raise the following question: would automating some aspects of the public procurement procedure through “smart contracts” ensure the same characteristics and guarantees as the ones offered by an e-public procurement system of an EU member state? In that case, what is the added value of “smart contracts” in public procurement? It is a research question that we will try to focus on in the future, we merely pose it here.

This paper is an exploratory and incipient one. For the moment, our goal was to raise some questions and to explore some potential paths. Apart from theoretical “what ifs”, it is hard to find specificities of assertions that new digital technologies will definitely have numerous and game-changing applications in the procurement process, as long as the procurement process is still managed unilaterally by public bodies and entertains a public law regime.

The intention is to challenge a rather theoretical assumption on the role of digital technologies in public procurement and subsequently trying to find real, practical examples or applications, if any.

In no circumstance did we state that we are formulating policy recommendations, this was misunderstood. Only after extensive research conclusions may lead to policy recommendations but we are still far from that moment.

However, we believe that in order to actually draw some conclusions on the use of such technologies in public procurement, scholars should delve in more depth into the topic, by critically assessing the current literature in the field and trying to have an interdisciplinary (legal, technological and managerial) look at the topic. As of now, the literature is too theoretical.

In other words, in our opinion, the exclusive tech-centered approach that you suggest would be equally harmful as an exclusively legal one.

Thank you for this chance of a constructive dialogue, we are looking forward to future exchange on the topic.

More detail on the UK's procurement transparency ambitions -- some comments and criticisms

© GraceOda / Flickr.

On 30 June 2022, the UK Government’s Cabinet Office published the policy paper ‘Transforming Public Procurement - our transparency ambition’ (the ‘ambitions paper’, or the ‘paper’). The paper builds on the Green Paper and the Government’s response to its public consultation, and outlines ‘proposals to dramatically improve transparency of UK public contracts and spending’. The ambitions paper provides a vision well beyond the scant (almost null) detail in the Procurement Bill (clause 88), which is attracting a number of proposed amendments to try to enshrine in law the basic elements now spelled out in the paper.

In this post, I reflect on the need to amend the Procurement Bill to bind (successive) UK Governments to the current transparency aspirations. I also comment on other aspects of the paper, including persistent issues with the lack of granularity in planned access to procurement data, which I already raised in relation to the Green Paper (see here, Q27 and Q29, and here).

A necessary amendment of the Procurement Bill

The additional level of detail in the paper is welcome and helpful in understanding how the UK plans to operationalise its procurement transparency ambitions. However, a first point to make is that the publication of the ambitions paper should in no way deactivate concerns on the insufficiency of the Procurement Bill to ensure that a significant change in the way procurement information is captured and disseminated in the UK is achieved. In particular, the wording of clause 88(1) has to change.

It is nowhere close to good enough to simply have a weak enabling clause in legislation, stating that ‘An appropriate authority may by regulations make provision requiring certain information to be shared in a particular way, including through a specified online system’. The obvious first shortcoming is that the authority may do so, which also means it may not do so. The second is that the indication of a specified online system as a possible particular way of sharing information seems to take us back quite a few years. If not online (and if not as open data), how would a transparency aspiration be commensurate to the UK’s commitment to e.g. the open contracting data standard?.

Given the high level of aspiration in the paper, a more solid legal grounding is required. My proposal, which builds on discussions with the open contracting community, as well as the amendment already tabled by Baroness Hayman of Ullock, would be to amend clause 88(1) of the Procurement Bill, so it reads:

'An appropriate authority shall by regulations make provision requiring certain information to be shared through a specified online system. Such online system shall, at a minimum, establish and operate a freely accessible, machine-readable and licence-free digital register for all public procurement notices under this Act, wherein all information will be regularly updated in accordance with the time limits for the publication notices set out in the Act.'

Comments on the aspirations paper

Once the general commitment to having single digital register is strengthened, we can move on to consider the detail of what (and how) should be published in the register, what should be kept for restricted use, and what further transparency-related interventions can build upon it—e.g. the creation of a dashboard with useful data analytics, or the interconnection of the register with other sources of e.g. relevant anti-corruption information (for discussion, see here). There are some indications of what the UK aspires to do, but also some lack of clarity in the paper, and some clear risks of undesirable knock-on effects from the maximalist approach to procurement transparency it embraces.

Vision

The aspirations paper indeed starts from a maximalist position, indicating that the vision is ‘to create a fully transparent public procurement system’. However, there are two clear limitations to that approach.

First, the proposal itself includes a proportionate approach to transparency requirements: ‘we want to ensure that we are only asking for the most detailed information - contract documents, performance markings etc - from the largest contracts, in order to maintain transparency without bogging procurement teams down in unnecessary bureaucracy for low-value contracts’. This immediately means that a potentially large volume of (local) procurement will not be subjected to (some aspects) of the new transparency regime. Moreover, as the Procurement Bill stands, there would also be significant exclusions from important transparency obligations e.g. in relation to light touch contracts (see here, section 7, issues #21 on performance-related KPIS and non-performance notices, and #23 on modification notices). That already falls short of generating a ‘fully transparent’ procurement system, precisely in relation to the award of contracts where the risk of capture can be high.

Second, the publication of procurement information remains subjected to the general exclusions and carve-outs resulting from i.a. the Freedom of Information Act 2000 (FOIA). Interestingly, the ambitions paper does not refer to it at all, despite the Green Paper having made clear that, in the absence of FOIA reform (which is not sought), ‘only data which would be required to be made available under FOIA … would be publishable’ (at 167). Regardless of the paper’s silence on the issue, FOIA will continue to play a significant role in establishing which level of detail is disclosed, in particular in relation to disclosure of information not captured as a matter of mandatory disclosure in the relevant (award) notices, and perhaps even in relation to that.

The importance of preserving commercial confidentiality in the procurement setting is clear, and was also a clear focus of concern in the Green Paper consultation, leading e.g. to the Cabinet Office dropping its initial ambition of publishing tenders received in procurement procedures. As the Government’s response stressed: ‘We have considered the potential impact of public disclosure of information, such as (but not limited to) tenders. The feedback we received from stakeholders was that publishing tenders at this stage could prejudice future competitions that may run if the initial one is aborted and re-run for any reason, as bids will have been disclosed to the competition. As a result, we will not require disclosure of tenders submitted in a procurement’ (at 221).

Therefore, the system will not (and should not be) fully transparent. What is more useful is to see what the vision wants to enable in relation to procurement data and related analytics and insights. The vision indicates that the UK Government would like for everyone ‘to be able to view, search and understand what the UK public sector wants to buy, how much it is spending, and with whom’. This is a more realistic aspiration that does not necessarily entail total transparency and, given some safeguards and a more granular approach to the disclosure of differing levels of detail in the information (see here and discussion below), it should be welcome. Ultimately, the Government wants the future platform to help people understand:

1. current and future procurement opportunities created in the UK public sector; including pipelines of future work. [This should open up opportunities within the public sector to small businesses, driving down prices, increasing innovation and improving the business landscape across the country];

2. how much money the public sector spends on purchasing essential goods and services. [This should] allow taxpayers to see how much is being spent through procurement on and in their local area, who it is spent with and how it is delivering on local priorities. [Moreover, this should show] which routes to market are available to contracting authorities, and how much has been spent through each of those. [This should] give contracting authorities the data they need to collaborate better, drive value for money and identify cost savings in their procurements, so they can monitor for signs of waste and inefficiency;

3. which contracts finished on time and on budget–and which did not. [This means providing more detail across] the true lifecycle of government contracts, including how much the final amount spent on a contract differs from its original intended value, or how often contracts have been extended;

4. which companies have been excluded from winning future work due to fraud, corruption or persistent poor performance; [and]

5. who is really benefiting from public money - not just the companies winning contracts but the ownership of those companies

This list (which regroups the longer and slightly repetitive list in the paper, as well as aggregate the purpose for the disclosure of specific information) points to three categories. First, a category where the information is purely notice-based (categories 1, 4). Second, a category where the related insights should be easily derived from the information included mandatory notices (categories 2 and 3). Third, a category (mainly 5) that concerns non-procurement information and will require either (a) embedding disclosure obligations in the procurement life-cycle (thus raising the red tape and participation costs), or (b) interconnection with non-procurement databases.

The first category is relatively unproblematic, although there is an inherent tension between the disclosure of planned procurement opportunities and the facilitation of collusive practices (more details below).

The second category probably points at the need of considering the extent to which data dashboards should differentiate between different users, including the level of detail (and timeliness) of the information published in each of them (also discussed below).

The third category points at the need to consider issues of design and interoperability of the platform, as it would be preferable for it to be susceptible of plugging into other databases. Moreover, there are other (anti-corruption) functionalities that could be enabled, such as cross-checks against databases of political donations to identify potentially problematic relationships between procurement awardees and political donors. In relation to this category, and to anti-corruption efforts more generally, the ambitions paper is not particularly ambitious. However, the creation of a solid procurement data architecture on the basis of OCDS could facilitate those extensions in the future.

The future platform

The ambitions paper indicates that the Government seeks to operationalise the new transparency regime through two main elements (as the ‘tell us once’ supplier register is a parallel and distinct intervention):

• The introduction of a number of new procurement ‘notices’, covering the entire procurement lifecycle from planning through to contract expiry

• A digital platform which will display all of this information publicly, with API access to data published to the Open Contracting Data Standard (OCDS). Once we have completed the core notice development, over time we also plan to build a number of useful registers, and explore integrating commercial data analysis tools

What this means is that the future platform will initially simply bring into one place what is currently published across a scattered landscape of transparency tools (see section 3.1 in the paper). That is an improvement, but the more significant change will only come when register and dashboard insights get developed. Importantly, however, the design of these registers and dashboards need to be very carefully considered and linked back to the intended (and likely) use by different audiences. However, the ambitions paper does not seem to consider this need and rather seeks to establish a system accessible to any type of data user on an undifferentiated form (see section 4.4).

Research has shown that most of the gains from procurement transparency concern ex ante disclosure of information [M Bauhr et al, ‘Lights on the shadows of public procurement: Transparency as an antidote to corruption’ (2020) 33(3) Governance 495-523]. Conversely, the publication of ex post information is particularly risky in relation to e.g. anticompetitive practices, as well as corruption, and can generate limited benefits as it is unlikely that there will be a sustained level of engagement with that information by most stakeholders with a theoretical motivation to engage in procurement oversight [N Köbis, C Starke and I Rahwan, ‘The promise and perils of using artificial intelligence to fight corruption’ (2022) 4 Nature Machine Intelligence 418-424].

In that regard, it is particularly problematic that the aspirations paper seems to indicate that the UK Government would be publishing (in real time, for everyone to see) information such as: ‘Analysis of bid and win rates, analysis of supplier & bidder beneficial ownership patterns, general market trends analysis’. This should concern regulators such as the Competition and Markets Authority, as well as the Serious Fraud Office. While the latter should absolutely have access to that information and market intelligence, its public disclosure (in detail, with no time lag) could be counterproductive and help, rather than hinder, corrupt and collusive practices. In that regard, it is of paramount importance that those authorities (and others, such as the National Audit Office) are involved in the design of the system—which is not entirely clear from the ‘user-centric’ approach embraced in the aspirations paper (see section 4.1).

A multi-layered level of transparency

In relation to these risks and issues, it is necessary to reiterate a call for a more nuanced and discriminating approach than the one that transpires from the aspirations paper. As stressed in the response to the Green Paper consultation (here Q29), while it can but be endorsed that the platform needs to be created, and the data automatically fed into it in accordance with OCDS and other technical interoperability requirements, a key feature of the new system should be its multi-layered level of access/transparency.

Analysis carried elsewhere (see here) supports a nuanced approach to the level of transparency created by public contract registries similar to the envisaged central digital platform, which needs to fall short of the full transparency paradigm in which it seems to have been conceived. As a functional criterion, only the information that is necessary to ensure proper oversight and the effectiveness of anti-corruption measures should be disclosed, whereas the information that can be most damaging for competition should be withheld.

Generally, what is needed is granularity in the levels of information that are made accessible to different stakeholders. A full transparency approach whereby all information was made available to everyone would fall very short from the desired balance between the transparency and competition goals of public procurement. A system based on enabling or targeted transparency, whereby each stakeholder gets access to the information it needs for a specific purpose, is clearly preferable.

In more specific terms, it is submitted that:

• The content of the central digital platform should not be fully available to the public. Access to the full registry should be restricted to public sector officials under a strong duty of confidentiality protected by appropriate sanctions in cases of illegitimate disclosure.

• Even within the public sector, full access to the central digital platform should be made available on a need-to-know basis. Oversight entities, such as the National Audit Office, the Serious Fraud Office, or the Competition and Markets Authority, as well as the new public procurement review unit (PPRU) should have full access. However, other entities or specific civil servants should only access the information they require to carry out their functions.

• Limited versions of the central digital platform that are made accessible to the public should aggregate information by contracting authority and avoid disclosing any particulars that could be traced back to specific tenders, specific contracts, or specific undertakings.

• Representative institutions, such as third sector organisations, journalists or academics should have the opportunity of seeking full access to the central digital platform on a case-by-case basis where they can justify a legitimate or research-related interest. In case of access, ethical approval shall be obtained, anonymization of data attempted, and specific confidentiality requirements duly imposed.

• Delayed full access to the central digital platform could also be allowed for, provided there are sufficient safeguards to ensure that historic information does not remain relevant for the purposes of protecting market competition, business secrets and commercial interests.

• Tenderers should have access to their own records, even if they are not publicly-available, so as to enable them to check their accuracy. This is particularly relevant if public contract registries are used for the purposes of assessing past performance under the new rules.

• Big data should be published on an anonymised basis, so that general trends can be analysed without enabling ‘reverse engineering’ of information that can be traced to specific bidders.

• The entity in charge of the central digital platform should regularly publish aggregated statistics by type of procurement procedure, object of contract, or any other items deemed relevant for the purposes of the public accountability of public buyers (such as percentages of expenditure in green procurement, etc).

• The entity in charge of the central digital platform should develop a system of red flag indicators and monitor them with a view to reporting instances of legal non-compliance to the relevant oversight entity, or potential collusion to the competition authority. In that regard, the earlier attempts (eg through the abandoned ‘Screening for Cartels’ tool) should be carefully analysed to avoid replicating past errors.

Protecting procurement's AI gatekeeping role in domestic law, and trade agreements? -- re Irion (2022)

© r2hox / Flickr.

The increasing recognition of the role of procurement as AI gatekeeper, or even as AI (pseudo)regulator, is quickly galvanising and leading to proposals to enshrine it in domestic legislation. For example, in the Parliamentary process of the UK’s 2022 Procurement Bill, an interesting amendment has surfaced. The proposal by Lord Clement-Jones would see the introduction of the following clause:

“Procurement principles: automated decision-making and data ethics

In carrying out a procurement, a contracting authority must ensure the safe, sustainable and ethical use of automated or algorithmic decision-making systems and the responsible and ethical use of data.”

The purpose of the clause would be to ensure ‘that the ethical use of automated decision-making and data is taken into account when carrying out a procurement.’ This is an interesting proposal that would put the procuring entity, even if not the future user of the AI (?), in the legally-mandated position of custodian or gatekeeper for trustworthy AI—which, of course, depending on future interpretation could be construed narrowly or expansively (e.g. on whether to limit it to automated decision-making, or extend it to decision-making support algorithmic systems?).

This would go beyond current regulatory approaches in the UK, where this gatekeeping position arises from soft law, such as the 2020 Guidelines for AI procurement. It would probably require significant additional guidance on how this role is to be operationalised, presumably through algorithmic impact assessments and/or other forms of ex ante intervention, such as the imposition of (standard) requirements in the contracts for AI procurement, or even ex ante algorithmic audits.

These requirements would be in line with influential academic proposals [e.g. M Martini, ‘Regulating Algorithms. How to Demystify the Alchemy of Code?’ in M Ebers & S Navas, Algorithms and Law (CUP 2020) 100, 115, and 120-22], as well as largely map onto voluntary compliance with EU AI Act’s requirements for high-risk AI uses (which is the approach also currently followed in the proposal for standard contractual clauses for the procurement of AI by public organisations being developed under the auspices of the European Commission).

One of the key practical considerations for a contracting authority to be able to discharge this gatekeeping role (amongst many others on expertise, time, regulatory capture, etc) is access to source code (also discussed here). Without accessing the source code, the contracting authority can barely understand the workings of the (to be procured) algorithms. Therefore, it is necessary to preserve the possibility of demanding access to source code for all purposes related to the procurement (and future re-procurement) of AI (and other software).

From this perspective, it is interesting to take a look at current developments in the protection of source code at the level of international trade regulation. An interesting paper coming out of the on-going FAccT conference addresses precisely this issue: K Irion, ‘Algorithms Off-limits? If digital trade law restricts access to source code of software then accountability will suffer’ (2022) FAccT proceedings 1561-70.

Irion’s paper provides a good overview of the global efforts to protect source code in the context of trade regulation, maps how free trade agreements are increasingly used to construct an additional layer of protection for software source code (primarily from forced technology transfer), and rightly points at risks of regulatory lock-out or pre-emption depending on the extent to which source code confidentiality is pierced for a range of public interest cases.

What is most interesting for the purposes of our discussion is that source code protection is not absolute, but explicitly deactivated in the context of public procurement in all emerging treaties (ibid, 1564-65). Generally, the treaties either do not prohibit, or have an explicit exception for, source code transfers in the context of commercially negotiated contracts—which can in principle include contracts with the public sector (although the requirement for negotiation could be a hurdle in some scenarios). More clearly, under what can be labelled as the ‘EU approach’, there is an explicit carve-out for ‘the voluntary transfer of or granting of access to source code for instance in the context of government procurement’ (see Article 8.73 EU-Japan EPA; similarly, Article 207 EU–UK TCA; and Article 9 EU-Mexico Agreement in principle). This means that the EU (and other major jurisdictions) are very clear in their (intentional?) approach to preserve the gatekeeping role of procurement by enabling contracting authorities to require access to software source code.

Conversely, the set of exceptions generally emerging in source code protection via trade regulation can be seen as insufficient to ensure high levels of algorithmic governance resulting from general rules imposing ex ante interventions. Indeed, Irion argues that ‘Legislation that mandates conformity assessments, certification schemes or standardized APIs would be inconsistent with the protection of software source code inside trade law’ (ibid, 1564). This is debatable, as a less limiting interpretation of the relevant exceptions seems possible, in particular as they concern disclosure for regulatory examination (with the devil, of course, being in the detail of what is considered a regulatory body and how ex ante interventions are regulated in a particular jurisdiction).

If this stringent understanding of the possibility to mandate regulatory compliance with this being seen as a violation of the general prohibition on source code disclosure for the purposes of its ‘tradability’ in a specific jurisdiction becomes the prevailing interpretation of the relevant FTAs, and regulatory interventions are thus constrained to ex post case-by-case investigations, it is easy to see how the procurement-related exceptions will become an (even more important) conduit for ex ante access to software source code for regulatory purposes, in particular where the AI is to be deployed in the context of public sector activity.

This is thus an interesting area of digital trade regulation to keep an eye on. And, more generally, it will be important to make sure that the AI gatekeeping role assigned to the procurement function is aligned with international obligations resulting from trade liberalisation treaties—which would require a general propagation of the ‘EU approach’ to explicitly carving out procurement-related disclosures.

Public procurement and [AI] source code transparency, a (downstream) competition issue (re C-796/18)

© Diverse Stock Photos/Flickr.

Two years ago, in its Judgment of 28 May 2020 in case C-796/18, Informatikgesellschaft für Software-Entwicklung, EU:C:2020:395 (the ‘ISE case’), the Court of Justice of the European Union (CJEU) answered a preliminary ruling that can have very significant impacts in the artificial intelligence (AI) space, despite it being concerned with ‘old school’ software. More generally, the ISE case set the requirements to ensure that a contracting authority does not artificially distort competition for public contracts concerning (downstream) software services generally, and I argue AI services in particular.

The case risks going unnoticed because it concerned a relatively under-discussed form of self-organisation by the public administration that is exempted from the procurement rules (i.e. public-public cooperation; on that dimension of the case, see W Janssen, ‘Article 12’ in R Caranta and A Sanchez-Graells, European Public Procurement. Commentary on Directive 2014/24/EU (EE 2021) 12.57 and ff). It is thus worth revisiting the case and considering how it squares with regulatory developments concerning the procurement of AI, such as the development of standard clauses under the auspices of the European Commission.

The relevant part of the ISE case

In the ISE case, one of the issues at stake concerned whether a contracting authority would be putting an economic operator (i.e. the software developer) in a position of advantage vis-à-vis its competitors by accepting the transfer of software free of charge from another contracting authority, conditional on undertaking to further develop that software and to share (also free of charge) those developments of the software with the entity from which it had received it.

The argument would be that by simply accepting the software, the receiving contracting authority would be advantaging the software publisher because ‘in practice, the contracts for the adaptation, maintenance and development of the base software are reserved exclusively for the software publisher since its development requires not only the source code for the software but also other knowledge relating to the development of the source code’ (C-796/18, para 73).

This is an important issue because it primarily concerns how to deal with incumbency (and IP) advantages in software-related procurement. The CJEU, in the context of the exemption for public-public cooperation regulated in Article 12 of Directive 2014/24/EU, established that

in order to ensure compliance with the principles of public procurement set out in Article 18 of Directive 2014/24 … first [the collaborating contracting authorities must] have the source code for the … software, second, that, in the event that they organise a public procurement procedure for the maintenance, adaptation or development of that software, those contracting authorities communicate that source code to potential candidates and tenderers and, third, that access to that source code is in itself a sufficient guarantee that economic operators interested in the award of the contract in question are treated in a transparent manner, equally and without discrimination (para 75).

Functionally, in my opinion, there is no reason to limit that three-pronged test to the specific context of public-public cooperation and, in my view, the CJEU position is generalisable as the relevant test to ensure that there is no artificial narrowing of competition in the tendering of software contracts due to incumbency advantage.

Implications of the ISE case

What this means is that, functionally, contracting authorities are under an obligation to ensure that they have access and dissemination rights over the source code, at the very least for the purposes of re-tendering the contract, or tendering ancillary contracts. More generally, they also need to have a sufficient understanding of the software — or technical documentation enabling that knowledge — so that they can share it with potential tenderers and in that manner ensure that competition is not artificially distorted.

All of this is of high relevance and importance in the context of emerging practices of AI procurement. The debates around AI transparency are in large part driven by issues of commercial opacity/protection of business secrets, in particular of the source code, which both makes it difficult to justify the deployment of the AI in the public sector (for, let’s call them, due process and governance reasons demanding explainability) and also to manage its procurement and its propagation within the public sector (e.g. as a result of initiatives such as ‘buy once, use many times’ or collaborative and joint approaches to the procurement of AI, which are seen as strategically significant).

While there is a movement towards requiring source code transparency (e.g. but not necessarily by using open source solutions), this is not at all mainstreamed in policy-making. For example, the pilot UK algorithmic transparency standard does not mention source code. Short of future rules demanding source code transparency, which seem unlikely (see e.g. the approach in the proposed EU AI Act, Art 70), this issue will remain one for contractual regulation and negotiations. And contracts are likely to follow the approach of the general rules.

For example, in the proposal for standard contractual clauses for the procurement of AI by public organisations being developed under the auspices of the European Commission and on the basis of the experience of the City of Amsterdam, access to source code is presented as an optional contractual requirement on transparency (Art 6):

<optional> Without prejudice to Article 4, the obligations referred to in article 6.2 and article 6.3 [on assistance to explain an AI-generated decision] include the source code of the AI System, the technical specifications used in developing the AI System, the Data Sets, technical information on how the Data Sets used in developing the AI System were obtained and edited, information on the method of development used and the development process undertaken, substantiation of the choice for a particular model and its parameters, and information on the performance of the AI System.

For the reasons above, I would argue that a clause such as that one is not at all voluntary, but a basic requirement in the procurement of AI if the contracting authority is to be able to legally discharge its obligations under EU public procurement law going forward. And given the uncertainty on the future development, integration or replacement of AI solutions at the time of procuring them, this seems an unavoidable issue in all cases of AI procurement.

Let’s see if the CJEU is confronted with a similar issue, or the need to ascertain the value of access to data as ‘pecuniary interest’ (which I think, on the basis of a different part of the ISE case, is clearly to be answered in the positive) any time soon.

Procurement recommenders: a response by the author (García Rodríguez)

It has been refreshing to receive a detailed response by the lead author of one of the papers I recently discussed in the blog (see here). Big thanks to Manuel García Rodríguez for following up and for frank and constructive engagement. His full comments are below. I think they will help round up the discussion on the potential, constraints and data-dependency of procurement recommender systems.

Thank you Prof. Sánchez Graells for your comments, it has been a rewarding reading. Below I present my point of view to continue taking an in-depth look about the topic.

Regarding the percentage of success of the recommender, a major initial consideration is that the recommender is generic. It means, it is not restricted to a type of contract, CPV codes, geographical area, etc. It is a recommender that uses all types of Spanish tenders, from any CPV and over 6 years (see table 3). This greatly influences the percentage of success because it is the most difficult scenario. An easier scenario would have restricted the browser to certain geographic areas or CPVs, for example. In addition, 102,000 tenders have been used to this study and, presumably, they are not enough for a search engine which learn business behaviour patterns from historical tenders (more tenders could not be used due to poor data quality).

Regarding the comment that ‘the recommender is an effective tool for society because it enables and increases the bidders participation in tenders with less effort and resources‘. With this phrase we mean that the Administration can have an assistant to encourage participation (in the tenders which are negotiations with or without prior notice) or, even, in which the civil servants actively search for companies and inform those companies directly. I do not know if the public contracting laws of the European countries allow to search for actively and inform directly but it would be the most efficient and reasonable. On the other hand, a good recommender (one that has a high percentage of accuracy) can be an analytical tool to evaluate the level of competition by the contracting authorities. That is, if the tenders of a contracting authority attract very little competition but the recommender finds many potential participating companies, it means that the contracting authority can make its tenders more attractive for the market.

Regarding the comment that “It is also notable that the information of the Companies Register is itself not (and probably cannot be, period) checked or validated, despite the fact that most of it is simply based on self-declarations.” The information in the Spanish Business Register are the annual accounts of the companies, audited by an external entity. I do not know the auditing laws of the different countries. Therefore, I think that the reliability of the data is quite high in our article.

Regarding the first problematic aspect that you indicate: “The first one is that the recommender seems by design incapable of comparing the functional capabilities of companies with very different structural characteristics, unless the parameters for the filtering are given such range that the basket of recommendations approaches four digits”. There will always be the difficulty of comparing companies and defining when they are similar. That analysis should be done by economists, engineers can contribute little. There is also the limitation of business data, the information of the Business Register is usually paywalled and limited to certain fields, as is the case with the Spanish Business Registry. For these reasons, we recognise in the article that it is a basic approach, and it should be modified the filters/rules in the future: “Creating this profile to search similar companies is a very complex issue, which has been simplified. For this reason, the searching phase (3) has basic filters or rules. Moreover, it is possible to modify or add other filters according to the available company dataset used in the aggregation phase”.

Regarding the second problematic aspect that you indicate: “The second issue is that a recommender such as this one seems quite vulnerable to the risk of perpetuating and exacerbating incumbency advantages, and/or of consolidating geographical market fragmentation (given the importance of eg distance, which cannot generate the expected impact on eg costs in all industries, and can increasingly be entirely irrelevant in the context of digital/remote delivery).” This will not happen in the medium and long term because the recommender will adapt to market conditions. If there are companies that win bids far away, the algorithm will include that new distance range in its search. It will always be based on the historical winner companies (and the rest of the bidders if we have that information). You cannot ask a machine learning algorithm (the one used in this article) to make predictions not based on the previous winners and historical market patterns.

I totally agree with your final comment: “It would in my view be preferable to start by designing the recommender system in a way that makes theoretical sense and then make sure that the required data architecture exists or is created.” Unfortunately, I did not find any articles that discuss this topic. Lawyers, economists and engineers must work together to propose solid architectures. In this article we want to convince stakeholders that it is possible to create software tools such as a bidder recommender and the importance of public procurement data and the company’s data in the Business Registers for its development.

Thank you for your critical review. Different approaches are needed to improve on the important topic of public procurement.

The importance of procurement for public sector AI uptake

In case there was any question on the importance and central role of public procurement for the uptake of artificial intelligence (AI) by the public sector (there wasn’t, though), two recent policy reports confirm that this is the case, at the very least in the European context.

AI Watch’s must-read ‘European landscape on the use of Artificial Intelligence by the Public Sector’ (1 June 2022) makes the point very clearly by reference to the analysis of AI strategies adopted by 24 EU Member States: ‘the procurement of AI technologies or the increased collaboration with innovative private partners is seen as an important way to facilitate the introduction of AI within the public sector. Guidance on how to stimulate and organise AI procurement by civil servants should potentially be strengthened and shared among Member States’ (at 26). Concerning guidance, the report refers to the European Commission’s supported process of developing standard contractual clauses for the procurement of AI (see here), and there is also a twin AI Watch Handbook for the adoption of AI by the public sector (25 May 2022) that includes a recommendation on procurement guidance (‘Promote the development of multilingual guidelines, criteria and tools for public procurement of AI solutions in the public sector throughout Europe‘, recommendation 2.5, and details at 34-35).

The European landscape report provides some more interesting detail on national strategies considering AI procurement adaptations.

The need to work together with the private sector in this area is repeatedly stressed. However, strategies mention that historically it has been difficult for innovative companies to work together with government authorities due to cumbersome procurement regulations. In this area, several strategies (12, 50%) [though note the table below indicates 13, rather than 12 strategies] come up with new policy initiatives to improve the procurement processes. The Spanish strategy, for example, mentions that new innovative public procurement mechanisms will be introduced to help the procurement of new solutions from the market, while the Maltese government describes how existing public procurement processes will be changed to facilitate the procurement of emerging technologies such as AI. The Dutch and Czech strategies mention that hackathons for public sector AI will be introduced to assist in the procurement of AI. Civil servants will be given training and awareness in procurement to assist them in this process, something that is highlighted in the Estonian strategy. The French strategy stresses that current procurement regulation already provides a lot of freedom for innovative procurement but that because of risk aversion present within public administrations all possibilities are not taken into consideration (at 25-26, emphasis in the original).

Own elaboration, based on Table 7 in the AI Watch report.

There is also an interesting point on the need to create internal public sector AI capabilities: “Some strategies say that the public organisations should work more together with private organisations (where the missing skillsets are present), either through partnerships or by procurement. On the one hand, this is an extremely important and promising shift in the public sector that more and more must move towards a networking perspective. In fact, the complexity and variety of skills required by AI cannot be always completely internalised. On the other hand, such partnerships and procurement still require a baseline in expertise in AI within the public sector staff to avoid common mistakes or dependency on external parties” (at 23, emphasis added).

Given the strategic importance of procurement, as well as the need to upskill the procurement workforce and to build additional AI capacity in the public sector to manage procurement process, this is an area of research and policy that will only increase in relevance in the near and longer term.

This same direction of travel is reflected in the also recent UK's Central Digital and Data Office ‘Transforming for a digital future: 2022 to 2025 roadmap for digital and data’ (9 June 2022). One of its main aspirations is to generate ‘Significant savings by leveraging government’s combined purchasing power and reducing duplicative procurement, to shift to a “buy once, use many times” approach to technology’. This should be achieved by the horizontal promotion of ‘a “buy once, use many times” approach to technology, including by making use of a common code, pattern and architecture repository for government’. Implicitly, this will also require a review of procurement policies and practices.

Importantly—and potentially problematically—it will also raise the stakes of AI procurement, in particular if the roll-out of the ‘bought once’ technology is rushed and its negative impacts or implications can only be identified once it has already been propagated, or in relation to some implementations only. Avoiding this will require very careful IA impact assessments, as well as piloting and scalability approaches that have strong risk-management systems embedded by design.

As always, this will be an area fun to keep an eye on.

Procurement recommender systems: how much better before we trust them? -- re García Rodríguez et al (2020)

© jm3 on Flickr.

How great would it be for a public buyer if an algorithm could identify the likely best bidder/s for a contract it sought to award? Pretty great, agreed.

For example, it would allow targeted advertising or engagement of public procurement opportunities to make sure those ‘best suited’ bidders came forward, or to start negotiations where this is allowed. It could also enable oversight bodies, such as competition authorities, to screen for odd (anti)competitive situations where well-placed providers did not bid for the contract, or only did in worse than expected conditions. If the algorithm was flipped, it would also allow potential bidders to assess for which tenders they are particularly well suited (or not).

It is thus not surprising that there are commercial attempts being developed (eg here) and interesting research going on trying to develop such recommender systems—which, at root, work similarly to recommender systems used in e-commerce (Amazon) or digital content platforms (Netflix, Spotify), in the sense that they try to establish which of the potential providers are most likely to satisfy user needs.

An interesting paper

On this issue, on which there has been some research for at least a decade (see here), I found this paper interesting: García Rodríguez et al, ‘Bidders Recommender for Public Procurement Auctions Using Machine Learning: Data Analysis, Algorithm, and Case Study with Tenders from Spain’ (2020) Complexity Art 8858258.

The paper is interesting in the way it builds the recommender system. It follows three steps. First, an algorithm trained on past tenders is used to predict the winning bidder for a new tender, given some specific attributes of the contract to be awarded. Second, the predicted winning bidder is matched with its data in the Companies Register, so that a number of financial, workforce, technical and location attributes are linked to the prediction. Third and final, the recommender system is used to identify companies similar to the predicted winner. Such identification is based on similarities with the added attributes of the predicted winner, which are subject to some basic filters or rules. In other words, the comparison is carried out at supplier level, not directly in relation to the object of the contract.

Importantly, such filters to sieve through the comparison need to be given numerical values and that is done manually (i.e. set at rather random thresholds, which in relation to some categories, such as technical specialism, make little intuitive sense). This would in principle allow the user of the recommender system to tailor the parameters of the search for recommended bidders.

In the specific case study developed in the paper, the filters are:

• Economic resources to finance the project (i.e. operating income, EBIT and EBITDA);

• Human resources to do the work (i.e. number of employees):

• Specialised work which the company can do (based on code classification: NACE2, IAE, SIC, and NAICS); and

• Geographical distance between the company’s location and the tender’s location.

Notably, in the case study, distance ‘is a fundamental parameter. Intuitively, the proximity has business benefits such as lower costs’ (at 8).

The key accuracy metric for the recommender system is whether it is capable of identifying the actual winner of a contract as the likely winning bidder or, failing that, whether it is capable of including the actual winner within a basket of recommended bidders. Based on the available Spanish data, the performance of the recommender system is rather meagre.

The poor results can be seen in the two scenarios developed in the paper. In scenario 1, the training and test data are split 80:20 and the 20% is selected randomly. In scenario 2, the data is also split 80:20, but the 20% test data is the most recent one. As the paper stresses, ‘the second scenario is more appropriate to test a real engine search’ (at 13), in particular because the use of the recommender will always be ‘for the next tender’ after the last one included in the relevant dataset.

For that more realistic scenario 2, the recommender has an accuracy of 10.25% in correctly identifying the actual winner, and this only raises to 23.12% if the recommendation includes a basket of five companies. Even for the more detached from reality scenario 1, the accuracy of a single prediction is only 17.07%, and this goes up to 31.58% for 5-company recommendations. The most accurate performance with larger baskets of recommended companies only reaches 38.52% in scenario 1, and 30.52% in scenario 2, although the much larger number of recommended companies (approximating 1,000) also massively dilutes the value of the information.

Comments

So, with the available information, the best performance of the recommender system creates about 1 in 10 chances of correctly identifying the most suitable provider, or 1 in 5 chances of having it included in a basket of 5 recommendations. Put the other way, the best performance of the realistic recommender is that it fails to identify the actual winner for a tender 9 out of 10 times, and it still fails 4 out of 5 times when it is given five chances.

I cannot say how this compares with non-automated searches based on looking at relevant company directories, other sources of industry intelligence or even the anecdotal experience of the public buyer, but these levels of accuracy could hardly justify the adoption of the recommender.

In that regard, the optimistic conclusion of the paper (‘the recommender is an effective tool for society because it enables and increases the bidders participation in tenders with less effort and resources‘ at 17) is a little surprising.

The discussion of the limitations of the recommender system sheds some more light:

The main limitation of this research is inherent to the design of the recommender’s algorithm because it necessarily assumes that winning companies will behave as they behaved in the past. Companies and the market are living entities which are continuously changing. On the other hand, only the identity of the winning company is known in the Spanish tender dataset, not the rest of the bidders. Moreover, the fields of the company’s dataset are very limited. Therefore, there is little knowledge about the profile of other companies which applied for the tender. Maybe in other countries the rest of the bidders are known. It would be easy to adapt the bidder recommender to this more favourable situation (at 17).

The issue of the difficulty of capturing dynamic behaviour is well put. However, there are more problems (below) and the issue of disclosure of other participants in the tender is not straightforwardly to the benefit of a more accurate recommender system, unless there was not only disclosure of other bidders but also of the full evaluations of their tenders, which is an unlikely scenario in practice.

There is also the unaddressed issue of whether it makes sense to compare the specific attributes selected in the study, which it mostly does not, but is driven by the available data.

What is ultimately clear from the paper is that the data required for the development of a useful recommender is simply not there, either at all or with sufficient quality.

For example, it is notable that due to data quality issues, the database of past tenders shrinks from 612,090 recorded to 110,987 useable tenders, which further shrink to 102,087 due to further quality issues in matching the tender information with the Companies Register.

It is also notable that the information of the Companies Register is itself not (and probably cannot be, period) checked or validated, despite the fact that most of it is simply based on self-declarations. There is also an issue with the lag with which information is included and updated in the Companies Register—e.g. under Spanish law, company accounts for 2021 will only have to be registered over the summer of 2022, which means that a use of the recommender in late 2022 would be relying on information that is already a year old (as the paper itself hints, at 14).

And I also have the inkling that recommender systems such as this one would be problematic in at least two aspects, even if all the necessary data was available.

The first one is that the recommender seems by design incapable of comparing the functional capabilities of companies with very different structural characteristics, unless the parameters for the filtering are given such range that the basket of recommendations approaches four digits. For example, even if two companies were the closest ones in terms of their specialist technical competence (even if captured only by the very coarse and in themselves problematic codes used in the model)—which seems to be the best proxy for identifying suitability to satisfy the functional needs of the public buyer—they could significantly differ in everything else, especially if one of them is a start-up. Whether the recommender would put both in the same basket (of a useful size) is an empirical question, but it seems extremely unlikely.

The second issue is that a recommender such as this one seems quite vulnerable to the risk of perpetuating and exacerbating incumbency advantages, and/or of consolidating geographical market fragmentation (given the importance of eg distance, which cannot generate the expected impact on eg costs in all industries, and can increasingly be entirely irrelevant in the context of digital/remote delivery).

So, all in all, it seems like the development of recommender systems needs to be flipped on its head if data availability is driving design. It would in my view be preferable to start by designing the recommender system in a way that makes theoretical sense and then make sure that the required data architecture exists or is created. Otherwise, the adoption of suboptimal recommender systems would not only likely generate significant issues of technical debt (for a thorough warning, see Sculley et al, ‘Hidden Technical Debt in Machine Learning Systems‘ (2015)), but also risk significantly worsening the quality (and effectiveness) of procurement decision-making. And any poor implementation in ‘real life’ would deal a sever blow to the prospects of sustainable adoption of digital technologies to support procurement decision-making.

UK Procurement Bill, general principles and additivity -- why there is no such risk

© hehaden / Flickr.

Those following the commentary on the UK Procurement Bill will have noticed the discussions concerning the absence of a clause on the general principles of procurement [see e.g. K McGaughey, ‘Losing your principles – some early thoughts on the Procurement Bill’ (13 May 2022) http://shorturl.at/tFJP2]. In fact, there is already a proposed amendment by Baroness Hayman seeking to introduce the principles as initially envisaged in the green paper, which risks losing the additions that resulted from the public consultation. However, it is not certain that the amendment will make it to the final version of the future Act. One of the reasons behind resisting the inclusion of general principles seems to be a concern by legislative drafters that it would generate additivity — which I understand as the risk of creating self-standing obligations beyond those explicitly imposed by the specific provisions of the primary (and future secondary) legislation.

In my view, the inclusion of general principles cannot generate such a risk of additivity, as the role and function of those principles is to act as interpretive guides for the provisions in the legislation. They can hardly be seen as gap fillers or generators of self-standing obligations. Conversely, the absence of such general principles can be problematic, not only for creating a vacuum of interpretive guidance, but also for seemingly signalling a deviation from global standards.

Below are the reasons why I think the general principles of procurement, and in particular those of transparency and competition, should be included in an amended Bill before it completes its Parliamentary procedure.

General principles as global standards

Transparency and competition are crucial and intertwined general principles and/or goals in every procurement legislative framework. However, both are missing in the Procurement Bill, which thus lags international standards and best practice.

The fundamental importance of transparency and competition is recognised at the higher level of international legislation, starting with the United Nations Convention Against Corruption (UNCAC), which Article 9(1) explicitly requires signatory States (including the UK) to ‘take the necessary steps to establish appropriate systems of procurement, based on transparency, competition and objective criteria in decision-making, that are effective, inter alia, in preventing corruption’.

The same applies to the World Trade Organisation Government Procurement Agreement (WTO GPA), which explicitly links to UNCAC and translates its requirements into Art IV(4), which binds its parties (including the UK) to ensure that ‘A procuring entity shall conduct covered procurement in a transparent and impartial manner that: a) is consistent with this Agreement, using methods such as open tendering, selective tendering and limited tendering; b) avoids conflicts of interest; and c) prevents corrupt practices’.

There should thus be no question that the UK is bound under international law to ensure that its procurement is based on principles of transparency, competition and objectivity.

The UNCITRAL Model Law on public procurement also places transparency as a general goal amongst the overarching objectives of any domestic legislation enacting it. The preamble clearly sets out that the enacting State: ‘considers it desirable to regulate procurement so as to promote the objectives of: … (c) Promoting competition among suppliers and contractors for the supply of the subject matter of the procurement; … [and] (f) Achieving transparency in the procedures relating to procurement.’ Even if the Procurement Bill is not enacting the UNCITRAL Model Law, it can reasonably be expected to meet the best practices it highlights, not least because this is a benchmark that will be used to assess the quality of the UK procurement legislation post-reform.

Inclusion of the principle of transparency in the Bill

The intended inclusion of a principle/goal of transparency was clear in the Transforming Public Procurement Green Paper of December 2020 (para 27), and there was no indication of a change of position in the government’s response to the public consultation in December 2021 (para 33). Moreover, the response clarified that ‘The transparency principle previously proposed will set a minimum standard in terms of the quality and accessibility of information where there is a publication obligation elsewhere in the Bill’ (para 35).

The inclusion of an explicit principle of transparency was thus not meant to (or arguably capable of) generating additional self-standing obligations, but simply to establish an interpretive guideline in line with international obligations and best practice benchmarks. If there are concerns that the principle can in itself generate additivity over and above the specific transparency obligations in the Bill, it should be stressed that the existence of an explicit principle of transparency in the Public Contracts Regulations 2015 (reg.18(1)) has not led to an expansion of the transparency duties under the current regime. To the contrary, where such expansion has arguably taken place, it has been on the basis of common law doctrines (see e.g. R (Good Law Project & Others) v Secretary of State for Health and Social Care [2021] EWHC 346 (Admin) [at 132 ff]). 

Moreover, there are safeguards in the Bill preventing a maximalist interpretation of transparency requirements. Clause 85 (General exemptions from duties to publish or disclose information) affords the government the possibility to withhold information for specific purposes. This would thus ensure that there is no risk of additivity from the inclusion of a general principle dictating that data should be made transparent.

The inclusion of the principle of transparency has been supported by the entire spectrum of academic commentators, including those of a pro-deregulation persuasion (e.g. S Arrowsmith ‘Transforming Public Procurement Law after Brexit: Early Reflections on the Government’s Green Paper’ (Dec 2020) at 4). I have also stressed how, in the absence of a reform of e.g. the Freedom of Information Act 2000, the inclusion of a transparency principle will not generate meaningful practical changes to the existing disclosure obligations (e.g. A Sanchez-Graells, ‘The UK’s Green Paper on Post-Brexit Public Procurement Reform: Transformation or Overcomplication?’ (Jan 2021) at 6).

Inclusion of the principle of competition in the Bill

The principle of competition was not included in the Transforming Public Procurement Green Paper of December 2020. However, following submissions by the Competition and Markets Authority and commentators such as myself (see here for details), the government’s response to the public consultation of December 2021 indicated in no ambiguous terms that ‘We will introduce an additional objective of promoting the importance of open and fair competition that will draw together a number of different threads in the Green Paper that encourage competitive procurement’ (para 39).

The inclusion of an explicit principle of competition was thus also not meant to (or arguably capable of) generating additional self-standing obligations, but simply to establish an interpretive guideline in line with international obligations and best practice benchmarks. Similarly to the analysis above in relation to the principle of transparency, the existence of a principle of competition (or a narrower prohibition on the artificial narrowing of competition, as others interpret it) can hardly be seen as capable of generating self-standing obligations (for discussion, see A Sanchez-Graells, ‘Initial comments on the UK’s Procurement Bill: A lukewarm assessment’ (May 2022) 7).

Even where recent UK case law has derived obligations from general principles (R (Good Law Project and EveryDoctor) v Secretary of State for Health and Social Care [2022] EWHC 46 (TCC)), the obligations did not derive from the principle of competition, or the other principles (especially equal treatment) themselves, but from an essentialisation of the general requirements of procurement leading to the identification of ‘an irreducible minimum standard of objective fairness that applies to such procurements, even in the absence of open competition’ (at para 334, see my criticism here). As above, this does not point out to an additivity risk resulting from the general principle of competition, but rather from broader judicial considerations of the proper way in which procurement needs to be conducted.

It is worth reiterating that the importance of the inclusion of the principle of competition in the Bill was underlined by the Competition and Markets Authority, in particular in relation to its interaction with the principle of transparency: ‘Transparency can play a vital role in effective public procurement by dispelling perceptions of favouritism and maintaining trust in the procurement process – which in turn encourages competitors to contest the market. However, higher levels of transparency can also make collusion between bidders easier to sustain ... The CMA considers it essential that public procurement officials are aware of the link between collusion and transparency and report any suspicious activity by suppliers to the CMA. … The CMA proposes that … the new regulatory framework for public procurement should include a further principle of ‘effective competition’: Effective competition - procurement should promote healthy, competitive markets, which in turn drive better value for money and reduce the risk of illegal bid-rigging cartel.’ (at paras 3.2 and 3.3).

The inclusion of the principle of transparency thus needs to be twinned to the introduction of the principle of competition (for discussion of the interaction between the triad of overarching principles of competition, transparency, and integrity, see Steve Schooner, ‘Desiderata: Objectives for a System of Government Contract Law‘ (March 2002) 3 ff).

Implications and final thoughts 

Given the UK’s international commitments and the universal recognition of the importance of enshrining the general principles of transparency and competition in procurement legislation, their absence in the Procurement Bill can:

1. generate doubts as to the intended transparency and pro-competition orientation of the system—which could be used e.g. in the context of the WTO GPA by trading partners seeking to raise issues with the UK’s position in the agreement; as well as

2. push for a pro-competition and/or transparency-regarding interpretation of other general goals included in the Bill and, in particular, the ones in clause 11(1)(a) of ‘delivering value for money’, clause 11(1)(c) of ‘sharing information for the purpose of allowing suppliers and others to understand the authority’s procurement policies and decisions’, and clause 11(1)(d) of ‘acting, and being seen to act, with integrity’. Such interpretation could, coupled with common law doctrines and other precedent (as above), generate additional (self-standing) obligations in a way that the more generic principles of transparency and competition may not. And, even if they did, there would be no risk of additivity compared to the original text of the Bill.

There is thus no clear advantage to the omission of the principles, whereas their explicit inclusion would facilitate alignment of the Procurement Bill with the international standards and regulatory benchmarks it will be assessed against. The explicit inclusion of the principles of transparency and competition is thus the preferable regulatory approach.

In my view, the easiest way of ensuring the introduction of both principles would be to alter the amendment proposed by Baroness Hayman as follows (with bold indicating changes or additions):

After Clause 10

BARONESS HAYMAN OF ULLOCK

Insert the following new Clause

“Procurement principles

(1) In carrying out a procurement, a contracting authority must pursue the following principles—

(a) [omit]
(b) value for money, by having regard to the optimal whole-life blend of economy, efficiency and effectiveness that achieves the intended outcome of the business case,
(c) transparency, by acting openly to underpin accountability for public money, anti-corruption and the effectiveness of procurements,
(d) integrity, by providing good management, preventing misconduct, and control in order to prevent fraud and corruption,
(e) equal treatment of suppliers, by ensuring that decision-making is impartial and without conflict of interest,
(f) non-discrimination, by ensuring that decision-making is not discriminatory, and
(g) effective competition, by ensuring that procurement does not artificially narrow competition for a specific contract, promotes healthy, competitive markets, and reduces the risk of illegal bid-rigging cartels.”

As there is no good reason why a contracting authority should not be able to act in accordance with those principles, I would advocate for a deletion of the second paragraph of the amendment as proposed.

Law, technology and broad socio-legal considerations -- re Schrepel (2022)

© Automatic Eyes / Flickr.

I have just read T Schrepel’s ‘Law + technology’, which main premise is that the ‘classical approach to “law & technology” focuses on harms created by technology … [whereas] another approach dubbed “law + technology” can better increase the common good … [because it can] consider both the issues and positive contributions technology brings to society’, with ultimately the ‘goal … to address the negative ramifications of technology while leveraging its positive regulatory power’ (at 1). This leads to the claim that ‘“law + technology” can further increase the common good than a classical “law & technology” approach because it better preserves technology that regulates society in ways legal rules and standards cannot’ (at 3).

This is a weird paper and another exercise in creative labelling (or click bait) by the author (see other notable examples, such as ‘Antitrust without Romance’). The creative labelling starts with the term ‘classical “law & technology”’ itself, as the author notes: ‘Not all scholars that use the label “law & technology” recognize themselves in the meaning I attribute to the label in this article. I, nonetheless, assign a specific meaning to the label “law & technology” to highlight the differences between the dominant legal approach to technology and the one … propose[d] in this article’ (fn 2). The creative labelling exercise is completed by the artificial use of “law + technology” as a distinguishing label. I wonder how one could appreciate the (non-visual) differences if the argument was made without written support (unless one is given the clue that it should be read as 'law plus technology’, see fn 87) …

More importantly, the distinction (and the paper in general) is both artificial and far overshoots the mark of making the much simpler points that the regulation of technology needs to be underpinned by proper impact assessments (at 15-16), allow for iteration or incrementalism in particular in relation to immature technologies (at 17), and follow a certain element of proportionality to constrain e.g. the application of the precautionary principle, where too stringent legal rules could deprive society from beneficial technological advances without materially impinging on superior socio-legal values—which is what I think the author actually says on substance in the paper.

The paper thus does not really deviate from the criticised ‘classical “law & technology”’ approach, as it also recognises the two main issues: that certain socio-legal values (should) weigh more than technological innovation, and that such weighing needs to pay attention to the different (positive and negative) impacts.

In fact, the clear superiority of legally-protected values or interests is seemingly acknowledged in the paper, as it submits that ‘When law and technology present irreconcilable interests, the law must prevail in a rule of law system’ (fn 13)—even if this is then muddied in the promotion of a ‘Darwinian take on regulating technology’ that should seek not to eliminate a technology’s distinguishing features even if they breach such higher level socio-legal values (such as eg the fundamental right to an effective remedy) (at 7), or the statement that ‘When legal rules reduce technology’s chances of survival, policymakers and regulators deny one of “law + technology” two pillars. The “law + technology” approach thus requires considering different methods’ (at 17-18). Therefore, the extent to which the paper either really upholds the superiority of certain socio-legal values or, conversely, takes a more technology-centric approach is ultimately unclear (but that lack of clarity is in itself evidence of the limited deviation from the criticised approach, if any).

Similarly, the main focus on (obscurely) advocating for a regulatory approach that ceteris paribus (and only ceteris paribus) allows for a higher level of socio-technological benefits is also tucked away, but present, in the statement that ‘Under a “law & technology” approach, regulators are not comparing the effect of different intervention methods on the positive ramification of technology. They are not in a position to balance the effectiveness of the rule and its effect on the technology. Regulators may choose a regulation with comparable efficiency to others but a more negative impact on the technology’ (fn 14). Here the paper seems to simply insist on a comprehensive impact assessment, which should capture any losses derived from restrictions or prohibitions concerning the use of a given technology. This is, however, obscured by the proposal of an ‘EM ratio’ as some sort of mathematical formalisation (see fn 81) of what is simply a proportionality assessment that will almost never be susceptible to quantitative reductionism), which obscures or glosses over the impossibility of directly comparing some of the potential positive and negative impacts as they affect different socio-legal values, some of them with specific (constitutional) protection.

Overall, creative labelling aside, the paper seems to make two relatively uncontroversial statements that are also not new. Technology can facilitate legal compliance, and law and regulation should not disproportionately stifle technological innovation. So far, so good.

The labelling is still highly problematic, though, especially as it carries the risk (or intent?) of sullying ‘law and technology’ scholarship as partial or unnecessarily biased in a pro-interventionist manner. So the labelling deserves some further scrutiny.

From where I stand, it is almost impossible to assign specific meaning to “law and technology” as a field, as the interaction between law and technology can be and is being assessed from a wide-ranging and diverse set of perspectives (see e.g. the very interesting political economy approach by Julie E. Cohen, Between Truth and Power: The Legal Constructions of Informational Capitalism (OUP, 2019); or the explicit consideration of blockchain as a regulatory technology by Michèle Finck, Blockchain Regulation and Governance in Europe (CUP, 2018)). More importantly, the main hypothesis or postulate of the paper, i.e. that ‘technology and law can better increase the common good together than in a silo’ (at 4) ignores the fact that the mutual interdependence and interaction between technology and law is very much at the core of the political economy analysis of what the paper would term ‘classic “law and technology”’, as lucidly articulated by Cohen (above, 1-2).

It is also difficult to support a statement attributing to such (deemed) ‘classical’ approach to “law & technology” a one-way consideration of potential negative impacts of technologies only—unless one ignores all work on e.g. SupTech, or automated compliance; or one is blind to the fact that the balance of interests and potential impingement of rights that triggers regulatory and legislative intervention cannot result from a mere cost-benefit analysis that allows trade-offs that imply e.g. violations of fundamental rights or essential protections in consumer, labour or data privacy as key elements of the legal system. The author seems reluctantly aware of this, although the paper quickly discounts it in stressing that: ‘To be sure, the positive ramifications of technology are sometimes mentioned under “law & technology,” but they are excluded from the analytical scope when tackling the negative ramifications. In short, “law & technology” expresses at best an “on-the-one-hand-on-the-other-hand-ism,” but it fails to connect both positive and negative aspects’ (at 2-3).

Simply, then, the premises of the paper are highly questionable and generate a caricature of 'law and technology’ scholarship that is simply too far removed from reality.

Moreover, the use of unnecessarily flashy terms (e.g. Darwinian take on regulation, based on complexity theory, when what the author means is very close to systems thinking; or the formulation of an ‘EM ratio’ to refer to what is simply a proportionality assessment) is pervasive in the paper and cannot really mask the limited originality of thought underpinning the arguments.

Overall, I think this is not a helpful contribution to the debate and I hope not much time will be lost on labelling a field where the key regulatory challenges are otherwise well understood (if difficult to tackle).

Initial comments on the UK's Procurement Bill: A lukewarm assessment

Having read the Procurement Bill, its Impact Assessment and the Explanatory Notes, I have some initial comments, which I have tried to articulate in a working paper.

In the paper I offer some initial comments on the Bill and related documents, including: (i) the economic justification in its impact assessment; (ii) some general comments on legislative technique and the quality of the Bill and its Explanatory Notes; (iii) some observations on what may have not been carried over from the Transforming Public Procurement consultation and government response; (iv) a mapping of important aspects of procurement regulation that the Bill does not cover and will thus have to wait for secondary legislation and/or guidance; (v) some general considerations on the unclear impact of different wording for ‘terms of art’, including their interpretation; and (vi) fifty selected issues I have spotted in my first reading of the Bill. I close with some considerations on the difficulty of ensuring a sufficient fix along the legislative process.

In case of interest, the paper can be dowloaded here: https://ssrn.com/abstract=4114141.

More than ever, this is work in progress and I would be grateful for any feedback or discussion: a.sanchez-graells@bristol.ac.uk.

Not a hot take on the UK's Procurement Bill

As anticipated, the UK Government has moved at tremendous speed to introduce the Procurement Bill for Parliamentary passage. The text of the Bill as introduced, and information on the Parliamentary process, are available here.

The Procurement Bill comprises 116 sections and 11 schedules, and it will take some careful reading to identify how the Bill:

• meets the UK’s international commitments under the WTO GPA, the EU-UK TCA, and other FTAs with procurement chapters;

• deviates from the current EU-derived Public Contracts Regulations 2015, and the rest of the regulations transposing EU procurement law;

• embeds the key changes resulting from the Transforming Public Procurement consultation — which will also largely depend on secondary legislation and guidance yet to be published;

• generates potential interpretative issues that could be ironed out through the Parliamentary procedure; and

• is likely to work out in practice to deliver the ambitious goals of the UK Government.

So this is not material suitable for a hot take. Sorry to disappoint! I will try to publish a more considered view by the end of the month, although it may take longer… For now, happy reading of the Bill.

UK procurement law reform: Queen's Speech update

© Morten Morland / The Times.

The post-Brexit de/re/regulation of public procurement in the UK requires legislative reform to create the new overarching framework supporting the policy and regulatory changes described in the 2020-21 Transforming Public Procurement public consultation (see here and here).

However, finding Parliamentary time to take the process forward has proved difficult. A Procurement Bill was initially announced in the 2021 Queen’s Speech, but was not introduced in the last Parliamentary session. This delayed the timeline for the entry into force of the new procurement regime, which the Government’s response to the public consultation considered ‘unlikely to come into force until 2023 at the earliest’.

In April 2022, the Government confirmed that it would be introducing the Procurement Bill for the coming session, and this was also considered a clear possibility in recent Parliamentary briefings and quasi-insider commentators.

Today’s 2022 Queen’s Speech has reiterated that ‘Public sector procurement will be simplified to provide new opportunities for small businesses’.

What does this mean for the timeline of UK procurement law reform?

Unfortunately, this is not entirely clear. Or, as you would expect from a lawyer, the answer is that it depends.

First, because a Bill being announced in the Queen’s Speech does not guarantee that it will be effectively introduced, as we saw in the 2021 session (although this may have had to do with the large volume of responses to the public consultation, which made the process more protracted and could have had a knock-on effect on the Cabinet Office team’s bandwidth to work on the Procurement Bill itself). The likelihood of the Bill being effectively introduced is hard to guess, as the 2022 Queen’s Speech also included proposed legislation to tackle quite a few urgent challenges with electoral tags clearly attached to them (eg cost of living crisis), as well as controversial constitutional reform bills that, by themselves, could take up most Parliamentary time—especially if there is extended ping-pong with the House of Lords, as one would hope.

Second, because the Procurement Bill has been announced as part of the ‘Brexit Package’ in the Queen’s Speech, together with the Brexit Freedoms Bill, as well as the reform of the Data Protection Bill, and the Financial Services Bill. It will be interesting to see if there is internal competition for Parliamentary time within this group of Brexit-related Bills. If that is the case, I would not be surprised if the Procurement Bill was put on the backburner again, especially if the Government is aware of the limited practical changes that a new Procurement Bill can deliver in terms of one of their main political promises linked to procurement: a (sort of ) Buy British procurement policy.

However, there are also indications that the procurement reform team within Cabinet Office is pushing hard for advances in procurement reform. On 29 April 2022, the UK Government published a new programme website where it states that ‘New legislation is introducing a reformed public procurement regime that will come into effect in 2023’ (emphasis added, and note the change of wording compared to ‘unlikely … until 2023 at the earliest’ above — unless there are different intended meanings between ‘entry into force’ and ‘entry into effect’ — one for legal drafting aficionados…). A few job ads linked to the rollout of the training programme supporting the transition to the new regime have also been published, so investment in this area seems to have started to materialise (could not find details, though).

If there is indeed a push, and given that the Government has committed to giving a minimum of 6 months’ notice before the new regime goes live, the Procurement Bill should receive Royal Assent by end of June 2023 at the latest, if the 2023 deadline is to be met (in extremis). Based on the outcome of the public consultation, the likely approach will be to have a minimalistic, bare bones legislative instrument twinned with voluminous guidance. Therefore, the Procurement Bill can be expected to be relatively short.

However, it will include some controversial issues and, as above, it will be competing for limited Parliamentary time — and perhaps appetite for and attention to highly technical legislation. If the Government wants to have the new system in place at the end of 2023 (or even 1 Jan 2024, or early April 2024 to match the fiscal year …), the Procurement Bill should be introduced sooner rather than later.

Therefore, we may be about to enter a rather intense 12-month period of discussion (and public scrutiny) of the more definite plans for UK public procurement law reform. Watch this space.

'Government Cloud Procurement' as precursor of procurement gatekeeping? -- re McGillivray (2022)

I have started reading K McGillivray, Government Cloud Procurement. Contracts, Data Protection, and the Quest for Compliance (Cambridge University Press 2022), which promises to be a big addition to the literature on the procurement of digital technologies. One of the key issues the book explores at length is the central role that public contracts play in filling (some of the) regulatory gaps left by the absence of legislation addressing the challenges of cloud computing.

This got me thinking that this gap-filling function of public contracts in the cloud sphere is reflective of the broader role that procurement procedures and the ensuing public contracts are starting to develop in relation to other types of digital technology—notably, artificial intelligence (AI).

Procurement regulation will increasingly (be expected to) play a crucial gatekeeping role in the adoption of digital technologies for public governance and public service delivery. As rightly stressed: ‘The rules governing the acquisition of algorithmic systems by governments and public agencies are an important point of intervention in ensuring their accountable use’ [Ada Lovelace Institute, AI Now Institute and Open Government Partnership, Algorithmic Accountability for the Public Sector (August 2021) 33]. Ultimately, contracts and other arrangements for the development and acquisition of digital solutions are the entry point into the public sector for these innovations, and the procurement rules can be either a catalyst or a hindrance to co-production and experimentation with digital governance solutions.

The gatekeeping role of procurement underpinned eg one of the recommendations of the UK’s Committee on Standards in Public Life, in its report on Artificial Intelligence and Public Standards: ‘Government should use its purchasing power in the market to set procurement requirements that ensure that private companies developing AI solutions for the public sector appropriately address public standards. This should be achieved by ensuring provisions for ethical standards are considered early in the procurement process and explicitly written into tenders and contractual arrangements’ (2020: 51). A variation of the gatekeeping approach can concentrate on procurement practice and the embedding of specific controls as a matter of public buyer deontology [see P Oluka Nagitta et al., ‘Human-centered artificial intelligence for the public sector: The gate keeping role of the public procurement professional’ (2022) 200 Procedia Computer Science 1084-1092].

There is thus a growing recognition of the pragmatic utility of leveraging procurement mechanisms to ensure transparency and accountability in algorithmic systems, particularly considering that these systems play a crucial role in policymaking and decision-making by public agencies [DK Mulligan and KA Bamberger, ‘Procurement as policy: Administrative process for machine learning’ (2019) 34(3) Berkeley Technology L. J. 773-851]. Consequently, there is increasing interest in a reassessment of the existing procurement rules as they apply to contracts for digital technologies; as well as in the redesign of procurement to foster reliability, sustainability, and public trust in AI [see e.g. UK Government, BEIS, DCMS and Office for AI, Guidelines for AI procurement (8 June 2020); also W Naudé and N Dimitri, ‘Public Procurement and Innovation for Human-Centered Artificial Intelligence’ (2021)].

However, the challenges in effectively mobilising procurement for this gatekeeping function are yet to be properly conceptualised and understood [See e.g. P Nowicki, ‘Deus Ex Machina?: Some Remarks on Public Procurement in the Second Machine Age’ (2020) 1 EPPPL 53-60; see also K Mcbride et al, ‘Towards a Systematic Understanding on the Challenges of Procuring Artificial Intelligence in the Public Sector’ (2021)].

As I keep thinking about this (see here for earlier thoughts), I am realising that the emerging discussion or conceptualisation of public procurement (or procurement professionals) as gatekeepers of the adoption of AI by the public sector (and more broadly) can fall into the same trap of partiality as the equivalent discussion of financial gatekeepers in the corporate governance sphere years ago.

As Prof Coffee brightly pointed out [Gatekeepers: The Professions and Corporate Governance (OUP, 2006) 2-3] in the context of financial markets, there are two important dimensions of gatekeeping at play: one concerns ‘strict’ gatekeeping in terms of veto capacity (eg an audit firm can decline providing an opinion on corporate accounts, or a lawyer can decline to provide an opinion required for the closing of a specific corporate transaction). The other dimension, however, concerns a reputational aspect of gatekeeping that can generate reliance by third parties (eg an investment bank acquiring shares of a target company can lead others to also invest in that company).

In the procurement context, it seems to me that there is also a strict gatekeeping function (procurement requirements determine which technology/provider cannot get a public contract, eg to protect a specific public interest or avoid a specific public harm; or which one can provided it abides by specific contractualised requirements), as well as a reputational gatekeeping function (eg procurement of specific technologies/from specific providers can have a signalling effect that triggers further procurement by other public buyers and/or adoption by the private sector).

While in financial markets the reputational aspect is dependent on market-based issues (such as repeat transactions), in procurement settings reputation is almost a given due to a presumption of strict scrutiny of public providers (and thus the importance of ‘past performance’, or other signals such as being able to disclose that a technology or provider is used by Department X, or in some other settings ‘by appointment to HM the Queen’). This compounds the importance of procurement gatekeeping, as it not only concerns the specific decision adopted by a given public buyer, but also the broader access of technologies and providers into the public sector (and beyond).

However, a significant difference between gatekeeping in financial markets and in procurement however stems from the likely main source of potential failure of the gatekeeper. While in financial markets gatekeepers can be expected to be high-skilled but subject to structural conflicts of interest, in particular due to the way they are remunerated (which impinges on their independence), in procurement markets there is a real risk that public buyers are not only subject to potential conflicts of interest (an enduring issue in procurement regulation, and the source of incomplete attempts at the regulation of conflicts of interest and integrity in procurement), but also underprepared for the gatekeeping task.

In other words, the asymmetry of information seems to operate in reverse in both settings. While in financial markets the superior information and related skills belong to the gatekeeper (as compared to the retail, or even (passive) institutional investors), in procurement markets the information and skills disadvantage plays against the gatekeeper (public buyer) and in favour of those seeking to sell their technology.

And this is where the analysis by McGillivray is again interesting, as it highlights compliance challenges and gaps resulting from the parallel procurement-based gatekeeping of data protection law in the government cloud procurement sphere. Plenty food for thought (at least for me).

Flexibility, discretion and corruption in procurement: an unavoidable trade-off undermining digital oversight?

Magic; Stage Illusions and Scientific Diversions, Including Trick Photography (1897), written by Albert Allis Hopkins and Henry Ridgely Evan.

As the dust settles in the process of reform of UK public procurement rules, and while we await for draft legislation to be published (some time this year?), there is now a chance to further reflect on the likely effects of the deregulatory, flexibility- and discretion-based approach to be embedded in the new UK procurement system.

An issue that may not have been sufficiently highlighted, but which should be of concern, is the way in which increased flexibility and discretion will unavoidably carry higher corruption risks and reduce the effectiveness of potential anti-corruption tools, in particular those based on the implementation of digital technologies for procurement oversight [see A Sanchez-Graells, ‘Procurement Corruption and Artificial Intelligence: Between the Potential of Enabling Data Architectures and the Constraints of Due Process Requirements’ in S Williams-Elegbe & J Tillipman (eds), Routledge Handbook of Public Procurement Corruption (Routledge, forthcoming)].

This is an inescapable issue, for there is an unavoidable trade-off between flexibility, discretion and corruption (in procurement, and more generally). And this does not bode well for the future of UK procurement integrity if the experience during the pandemic is a good predictor.

The trade-off between flexibility, discretion and corruption underpins many features of procurement regulation, such as the traditional distrust of procedures involving negotiations or direct awards, which may however stifle procurement innovation and limit value for money [see eg F Decarolis et al, ‘Rules, Discretion, and Corruption in Procurement: Evidence from Italian Government Contracting’ (2021) NBER Working Paper 28209].

The trade-off also underpins many of the anti-corruption tools (eg red flags) that use discretionary elements in procurement practice as a potential proxy for corruption risk [see eg M Fazekas, L Cingolani and B Tóth, ‘Innovations in Objectively Measuring Corruption in Public Procurement’ in H K Anheier, M Haber and M A Kayser (eds) Governance Indicators: Approaches, Progress, Promise (OUP 2018) 154-180; or M Fazekas, S Nishchal and T Søreide, ‘Public procurement under and after emergencies’ in O Bandiera, E Bosio and G Spagnolo (eds), Procurement in Focus – Rules, Discretion, and Emergencies (CEPR Press 2022) 33-42].

Moreover, economists and political scientists have clearly stressed that one way of trying to strike an adequate balance between the exercise of discretion and corruption risks, without disproportionately deterring the exercise of judgement or fostering laziness or incompetence in procurement administration, is to increase oversight and monitoring, especially through auditing mechanisms based on open data (see eg Procurement in a crisis: how to mitigate the risk of corruption, collusion, abuse and incompetence).

The difficulty here is that the trade-off is inescapable and the more dimensions on which there is flexibility and discretion in a procurement system, the more difficult it will be to establish a ‘normalcy benchmark’ or ‘integrity benchmark’ from which deviations can trigger close inspection. Taking into account that there is a clear trend towards seeking to automate integrity checks on the basis of big data and machine learning techniques, this is a particularly crucial issue. In my view, there are two main sources of difficulties and limitations.

First, that discretion is impossible to code for [see S Bratus and A Shubina, Computerization, Discretion, Freedom (2015)]. This both means that discretionary decisions cannot be automated, and that it is impossible to embed compliance mechanisms (eg through the definition of clear pathways based on business process modelling within an e-procurement system, or even in blockchain and smart contract approaches: Neural blockchain technology for a new anticorruption token: towards a novel governance model) where there is the possibility of a ‘discretion override’.

The more points along the procurement process where discretion can be exercised (eg choice of procedure, design of procedure, award criteria including weakening of link to subject matter of the contract and inclusion of non(easily)measurable criteria eg on social value, displacement of advantage analysis beyond sphere of influence of contracting authority, etc) the more this difficulty matters.

Second, the more deviations there are between the new rulebook and the older one, the lower the value of existing (big) data (if any is available or useable) and of any indicators of corruption risk, as the regulatory confines of the exercise of discretion will not only have shifted, but perhaps even lead to a displacement of corruption-related exercise of discretion. For example, focusing on the choice of procedure, data on the extent to which direct awards could be a proxy for corruption may be useless in a new context where that type of corruption can morph into ‘custom-made’ design of a competitive flexible procedure—which will be both much more difficult to spot, analyse and prove.

Moreover, given the inherent fluidity of that procedure (even if there is to be a template, which is however not meant to be uncritically implemented), it will take time to build up enough data to be able to single out specific characteristics of the procedure (eg carrying out negotiations with different bidders in different ways, such as sequentially or in parallel, with or without time limits, the inclusion of any specific award criterion, etc) that can be indicative of corruption risk reliably. And that intelligence may not be forthcoming if, as feared, the level of complexity that comes with the exercise of discretion deters most contracting authorities from exercising it, which would mean that only a small number of complex procedures would be carried out every year, potentially hindering the accumulation of data capable of supporting big data analysis (or even meaningful econometrical treatment).

Overall, then, the issue I would highlight again is that there is an unavoidable trade-off between increasing flexibility and discretion, and corruption risk. And this trade-off will jeopardise automation and data-based approaches to procurement monitoring and oversight. This will be particularly relevant in the context of the design and implementation of the tools at the disposal of the proposed Procurement Review Unit (PRU). The Response to the public consultation on the Transforming Public Procurement green paper emphasised that

‘… the PRU’s main focus will be on addressing systemic or institutional breaches of the procurement regulations (i.e. breaches common across contracting authorities or regularly being made by a particular contracting authority). To deliver this service, it will primarily act on the basis of referrals from other government departments or data available from the new digital platform and will have the power to make formal recommendations aimed at addressing these unlawful breaches’ (para [48]).

Given the issues raised above, and in particular the difficulty or impossibility of automating the analysis of such data, as well as the limited indicative value and/or difficulty of creating reliable red flags in a context of heightened flexibility and discretion, quite how effective this will be is difficult to tell.

Moreover, given the floating uncertainty on what will be identified as suspicious of corruption (or legal infringement), it is also possible that the PRU (initially) operates on the basis of indicators or thresholds arbitrarily determined (much like the European Commission has traditionally arbitrarily set thresholds to consider procurement practices problematic under the Single Market Scorecard; see eg here). This could have a signalling effect that could influence decision-making at contracting authority level (eg to avoid triggering those red flags) in a way that pre-empts, limits or distorts the exercise of discretion—or that further displaces corruption-related exercise of discretion to areas not caught by the arbitrary indicators or thresholds, thus making it more difficult to detect.

Therefore, these issues can be particularly relevant in establishing both whether the balance between discretion and corruption risk is right under the new rulebook’s regulatory architecture and approach, as well as whether there are non-statutory determinants of the (lack of) exercise of discretion, other than the complexity and potential litigation and challenge risk already stressed in earlier analysis and reflections on the green paper.

Another ‘interesting’ area of development of UK procurement law and practice post-Brexit when/if it materialises.

New paper on competition and procurement regulation -- in memory of Professor Steen Treumer

Image credits: Steve Johnson.

Last year brought the saddest news with the passing of Professor Steen Treumer after a long illness. Steen was a procurement colossus and a fantastic academic. I was extremely lucky to count him amongst my mentors and champions, especially at the very early stages of my research and academic career, before he had to take a step back to focus on his health. I am particularly grateful to him for having opened the door of the European Procurement Law Group to me. And for his generosity in providing feedback, job and promotion references, and thoughtful and clever advice without ever asking for or expecting anything in return.

It is nigh impossible to do justice to the intellectual contribution Steen made to the procurement field and the influence his approach had on the research of others such as myself. It is now a humbling honour to have been invited to contribute to an edited collection in his memory (a Mindeskrift). If he could read my contribution, I am not sure Steen would agree with what I say in the paper, but we would certainly have an interesting and stimulating discussion on the basis of the sharp comments (even some devil’s advocate ones) he would surely come up with. I hope you will find the contribution worth discussing too.

Probably unsurprisingly, the paper is entitled ‘Competition and procurement regulation: a goal, a principle, a requirement, or all of the above?’ and its abstract is below. In the paper, I use the background of recent developments in UK and EU case law, as well as the UK’s procurement rulebook reform process, to reframe the issue of the role of competition in procurement regulation. While I do not provide any insights I had not already developed in earlier writing, I bring some scattered parts of my scholarship together and hopefully clarify a few things along the way. The paper may be particularly interesting to those looking for an entry point to the discussion on the role of competition in public procurement, but hopefully there is also something for those already well versed on the topic. As always, comments most welcome: a.sanchez-graells@bristol.ac.uk.

In this contribution, I reflect on the role of competition in public procurement regulation and, more specifically, on whether competition should be treated as a regulatory goal, as a general principle of public procurement law, as a specific (implicit or explicit) requirement in discrete legal provisions, or all of the above. This is an issue I had the pleasure and honour of discussing with Professor Steen Treumer back in 2009, when I was a PhD student visiting the Copenhagen Business School. While Steen never revealed to me what he really thought, his probing questions continue to help me think of this issue, which remains at the core of my research efforts. This contribution shows that the role of competition keeps cropping up in procurement regulation and litigation, as evidenced in recent UK developments. This is thus an evergreen research topic, which were Steen’s favourites.

The full citation is: Sanchez-Graells, Albert, ‘Competition and procurement regulation: a goal, a principle, a requirement, or all of the above?’, to be published in Steen Treumer’s Mindeskrift edited by Carina Risvig Hamer, Erik Bertelsen, Marta Andhov, and Roberto Caranta (Ex Tuto Publishing, forthcoming 2022). Available at SSRN: https://ssrn.com/abstract=4012022.

New paper on the growing thicket of multi-layered procurement liberalisation between WTO GPA parties

© Tom Burke/Flickr.

I have expanded on the thoughts around the multi-layered regulation of procurement-related trade liberalisation in this new working paper: The growing thicket of multi-layered procurement liberalisation between WTO GPA parties, as evidenced in post-Brexit UK. The abstract is as follows:

The World Trade Organisation Government Procurement Agreement (GPA) has created the most comprehensive plurilateral system for procurement-related trade liberalisation. However, there has been a proliferation of free trade agreements (FTAs) regulating public procurement liberalisation, including between GPA parties, which seek to bypass or go beyond the GPA on a bilateral basis, or with a more limited plurilateral remit. Such FTAs tend to follow a ‘GPA+’ approach to provide incremental trade liberalisation based on the substantive provisions of the GPA. However, there is a trend of substantive deviation between the GPA regulatory baseline and the FTA regulation of crucial issues, such as the national treatment obligation or access to remedies, including in FTAs involving the European Union or, recently, its former Member State, the UK. This creates a situation of potential conflict of treaty norms that has so far received limited attention. This article focuses on the resolution of conflicts between GPA and FTA substantive provisions under the 1969 Vienna Convention on the Law of Treaties, using the UK’s post-Brexit FTAs as a case study. It argues for a rationalisation of the system by extending the use of incorporation by reference of the GPA in FTAs involving GPA parties.

As always, feedback and any suggestions for improvement before final publication would be most welcome. The paper can be freely downloaded via SSRN: https://ssrn.com/abstract=4054711.

Deviating from the GPA in bilateral or multilateral FTAs -- how good or effective is that regulatory strategy?

© Thomas Leth-Olsen/Flickr.

One of the issues procurement lawyers may be unlikely to think much about (at least going by my own experience) is the interaction of the several (and growing number of) pieces of international regulation of procurement-related trade liberalisation. And, in particular, the interaction between the World trade Organisation Government Procurement Agreement (GPA) and the procurement chapters in the multilateral and bilateral free trade agreements (FTAs) that have been mushrooming for a while now.

This is an issue I encountered for the first time when looking at the procurement chapter of the UK-Australia FTA (UK-AUS FTA, see here and here), and on which I will be submitting evidence to the International Trade Committee of the House of Lords tomorrow. In case of interest, here are my thoughts on the matter.

**Warning**, tackling this issue requires a bit of a deep dive into the 1969 Vienna Convention on the Law of Treaties, so this post may be niche (or even more niche than usual). TLDR: despite (intentionally?) deviating from the text of the GPA, FTAs are unlikely to generate practical effects where they vary or reduce GPA-based obligations, except in limited cases where the effects are only for the economic operators of the two jurisdictions signing the FTA, which is both counterintuitive and prone to litigation, especially where GPA- situations concern access to procurement remedies.

What’s the matter?

For an increasing number of jurisdictions, procurement-related trade liberalisation has become a multi-layered regulatory puzzle. Let’s take the example of the EU. The EU is a member of the GPA, as are Singapore and Canada (all of them members of the 2012 version of the GPA since 6 April 2014). The EU has also concluded procurement chapters in FTAs, eg with Canada in 2017 (EU-Canada FTA (CETA), Chapter 19), or Singapore in 2019 (EU-Singapore FTA, Chapter 9). In these chapters, the EU has adopted a GPA+ approach based on reiterating and tweaking the rules of the GPA—as opposed to the approach followed eg with the UK in 2021, where the EU-UK Trade and Cooperation Agreement explicitly incorporates the GPA (Art 277 EU-UK TCA), and then adds some additional rules.

The dual regulation of procurement liberalisation between GPA parties in bilateral FTAs (or in plurilateral agreements) can create legal issues where the rules in the later FTAs deviate from the GPA in a manner that varies or reduces GPA obligations (ie GPA-). This is the case, for example, of seemingly reduced national treatment obligations concerning suppliers of the relevant parties offering goods or services of other GPA parties. The issue is as follows (bear with me).

The GPA imposes national treatment and non-discrimination obligations as the foundation of its regulatory architecture. The GPA national treatment clause reads ‘With respect to any measure regarding covered procurement, each Party, including its procuring entities, shall accord immediately and unconditionally to the goods and services of any other Party and to the suppliers of any other Party offering the goods or services of any Party, treatment no less favourable than the treatment the Party, including its procuring entities, accords to: a) domestic goods, services and suppliers; and b) goods, services and suppliers of any other Party’ (Art IV(1) emphasis added). This creates a two-tier requirement of ‘most favoured treatment’, both between the goods, services and suppliers of two given GPA members (procuring and supplying) and across the goods, services and suppliers of all GPA parties other than the procuring party. The underlined clause leaves the possibility open for differential treatment of suppliers of a GPA party offering goods or services of a non-GPA party but extends the national treatment obligation to suppliers offering goods of services originating anywhere in the ‘GPA club’.

This is in line with the GPA non-discrimination clause, which reads: ‘With respect to any measure regarding covered procurement, a Party, including its procuring entities, shall not: … b) discriminate against a locally established supplier on the basis that the goods or services offered by that supplier for a particular procurement are goods or services of any other Party’ (Art IV(2) emphasis added). Again, the possibility is open for differential treatment of suppliers of a GPA party offering goods or services of a non-GPA party—on the implicit assumption that domestic suppliers offering goods or services of a non-GPA party are subjected to the same differential treatment.

Now, under both CETA and the EU-Singapore FTA, the regulation of these obligations is altered (and seemingly narrowed down).

The position under CETA is that ‘With respect to any measure regarding covered procurement, each Party, including its procuring entities, shall accord immediately and unconditionally to the goods and services of the other Party and to the suppliers of the other Party offering such goods or services, treatment no less favourable than the treatment the Party, including its procuring entities, accords to its own goods, services and suppliers.‘ (Art 19.4(1) CETA, emphasis added). Prima facie, this clashes with the GPA because it reduces the circle of protected goods and services accessing procurement opportunities via suppliers to Canadian and EU goods and services, and to the exclusion of those originating in other GPA jurisdictions. This is not contradicted by the non-discrimination clause, according to which ‘With respect to any measure regarding covered procurement, a Party, including its procuring entities, shall not: … (b) discriminate against a locally established supplier on the basis that the goods or services offered by that supplier for a particular procurement are goods or services of the other Party.’ (Art 19.4(2) CETA, emphasis added). Therefore, as a result of CETA, there is an open question as to whether EU/Canadian suppliers offering non-EU/Canadian (GPA) goods or services are protected from discrimination.

The position under the EU-Singapore FTA is perhaps slightly less straightforwardly in clash with the GPA, and it is that ‘With respect to any measure regarding covered procurement, each Party, including its procuring entities, shall immediately and unconditionally accord to the goods and services of the other Party and to the suppliers of the other Party treatment no less favourable than the treatment the Party, including its procuring entities, accords to domestic goods, services, and suppliers’ (Art 9.4(1) EU-Singapore FTA, emphasis added). This omits the GPA reference to suppliers ‘offering the goods or services of any Party’ (although it does not limit it to the goods and services of the parties, as in CETA) and could seem like a logical tailoring of the obligation to a bilateral situation. However, it generates doubts as to the position of EU and Singaporean suppliers offering non-EU/Singaporean goods or services originating in GPA jurisdictions, which would have had access under the GPA but may not have access under the FTA. A restrictive interpretation limiting access to those suppliers offering EU/Singaporean goods and services could be supported by the parallel modification of the non-discrimination clause relative to the GPA standard, which reads ‘With respect to any measure regarding covered procurement, a Party, including its procuring entities, shall not: … (b) discriminate against a locally established supplier on the basis that the goods or services offered by that supplier for a particular procurement are goods or services of the other Party (Art 9.4(2) EU-Singapore FTA, emphasis added). Therefore, the same issues as in CETA arise, although there is some more wiggle room for legal interpretation in this case.

In both cases, however, it is at first difficult to establish definitely whether suppliers offering goods or services from GPA parties other than the EU and/or Singapore/Canada have indeed lost protection as a result of the newer FTA obligations. Such a modification would have been implemented without consent from the relevant GPA party and, in practice, would be challenged. More importantly, then, both FTAs create at least a risk of breach of GPA obligations for the EU (and Singapore and/or Canada) in relation to the goods or services from other GPA parties now potentially being (indirectly) discriminated against as a result of their being offered by an EU/Singaporean and/or Canadian supplier (in effect, a ‘GPA-’ situation, despite the aim of the FTA to create a GPA+ regime).

Here is where the Law of Treaties kicks in.

The regulation in the 1969 Vienna Convention

1. General regulatory background regarding conflicting treaty norms

Art 30 of the 1969 Vienna Convention on the Law of Treaties (VCLT)[1] controls the matter of conflicting treaty norms. Before engaging in an assessment of its conflict rules, it is worth stressing that a conflict between treaty norms will only arise where an interpretation of the later treaty that avoids it is either not possible, or not accepted by the parties.[2] Equally, or in a mutually reinforcing manner, understanding how the conflict norms would operate can have an effect on the interpretation of an obligation under the later treaty that the parties are likely to (voluntarily) adopt. In reality, in cases of potential conflict between treaty norms, there will be a clear interpretive ‘pull’ to try to ensure coherence, or minimise divergence, through interpretation of the later treaty which takes account of the obligations owed to others through the earlier agreement. It is a practical approach which can lessen (but cannot eliminate) the difficulties resulting from treaty clashes. In particular because Art 30 VCLT applies to successive treaties relating to the same subject matter and establishing the subject matter of a treaty can in itself be a disputed issue.[3]

Explicit regulation. In case of conflict between treaty norms other than the Charter of the United Nations (which has precedence; ex Art 30(1) VCLT), Art 30(2) VCLT foresees the possibility of explicit regulation via a conflict clause, in which case: ‘When a treaty specifies that it is subject to, or that it is not to be considered as incompatible with, an earlier or later treaty, the provisions of that other treaty prevail’.

Unregulated conflicts between the same parties. In the absence of an explicit conflict clause, the VCLT establishes residuary rules, distinguishing two situations. First, in the case of successive treaties with identical parties, Art 30(3) VCLT establishes precedence for the later treaty,[4] and ‘the earlier treaty applies only to the extent that its provisions are compatible with those of the later treaty’.

Unregulated conflicts between different parties. The second situation concerns successive treaties with different parties, for example a successive treaty between some but not all the signatories of the previous treaty. In this case, Art 30(4) VCLT establishes two rules, based on a distinction between the effects of the new treaty between its signing parties, and its effects vis-à-vis the other signatories of the previous treaty. Between the parties to both treaties, the rule in Art 30(4)(a) is the same as in Art 30(3) VCLT. That is, the newer treaty takes precedence and ‘the earlier treaty applies only to the extent that its provisions are compatible with those of the later treaty’. Conversely, and due to the relativity of treaty rights (Art 34 VCLT), under Art 30(4)(b) VCLT, ‘as between a State party to both treaties and a State party to only one of the treaties, the treaty to which both States are parties governs their mutual rights and obligations.’ Or, in other words, Art 30(4) VCLT establishes that ‘the newer treaty may be applied by its parties but only by leaving intact the rights of those that are only parties to the earlier treaty’.[5]

Modification of treaties between certain of their parties only. Art 30(5) VCLT clarifies that the two rules in Art 30(4) are subject to Art 41 VCLT concerning agreements to modify multilateral treaties between certain parties only, under the rules of those multilateral treaties. Art 41 VCLT covers two situations: (a) the possibility that such a modification is provided for by the treaty; or (b) the modification in question is not prohibited by the treaty, it does not affect the enjoyment by the other parties of their rights under the treaty or the performance of their obligations, and it does not relate to a provision, derogation from which is incompatible with the effective execution of the object and purpose of the treaty as a whole.

Art 30 VCLT does not provide explicit residual rules concerning ‘triangular situations’, where the same action by one of the parties to both conflicting treaties affects the rights resulting from both treaties at the same time (albeit for different parties), and thus unavoidably breaches one of the treaties[6] due to the 'variable geometry' of treaty-resulting obligations. In that case, the possibility of international responsibility of a State for the breach of one of the treaties arises (Art 30(5) VCLT)–especially in the cases falling under Art 30(4)(b) VCLT.[7]

Given this possibility, as mentioned above, where a State is party to two treaties imposing different obligations for triangular situations, it will have a strong incentive to try to resolve the conflict through interpretation or, to the extent allowed by the respective treaties, it will have a strong incentive to comply with the most demanding treaty in order to avoid incurring in international responsibility. Where avoiding breach of either of the treaties in those ways is not possible, States retain discretion to choose which treaty to breach[8] (under the so-called ‘principle of political decision’[9]) and may have an incentive to breach the treaty that would trigger the least (potential) international responsibility, which may well be the newer treaty with a more limited number of parties.

2. Application to the procurement context

The issue of conflicting treaty norms and their potential effect on the interpretation of the deviating clauses of the later treaty is relevant in the context of public procurement, and in particular in the context of the EU’s example above, in particular given the regulatory overlap and divergence between the GPA and the EU’s FTAs with Canada and Singapore.

Modification of the GPA between certain of its parties only. Given that the EU, Singapore and Canada are GPA parties, one possibility would be to consider their bilateral agreements as a modification of the GPA. In that regard, the GPA includes a specific clause on modifications (Art XXII(11) GPA) that would trigger Art 41 VCLT. However, Art XXII(11) GPA requires acceptance of the intended treaty modification by two thirds of the GPA parties, which makes bilateral modification of the agreement impossible (other than concerning schedules of coverage, which are structurally negotiated on a bilateral basis). Therefore, the relevant analysis is based on Art 30 VCLT.

Explicit conflict clause in the FTAs? It is worth noting that the EU-Singapore does contain a (pseudo)conflict clause regarding the GPA, according to which ‘If the Revised GPA is amended or superseded by another agreement, the Parties shall amend this Chapter by decision in the Committee on Trade in Services, Investment and Government Procurement … as appropriate’ (Art 9.20 EU-Singapore FTA). CETA contains another type of (pseudo)conflict clause in relation to the WTO Agreement and other agreements (Art 1.5 CETA), according to which ‘The Parties affirm their rights and obligations with respect to each other under the WTO Agreement and other agreements to which they are party.’ It is highly unlikely that either of these clauses qualifies as an explicit conflict clause meeting all requirements of Art 30(2) VCLT (above).

An unregulated conflict. Therefore, the potential conflict between the procurement provisions in CETA or the EU-Singapore FTA and the GPA seems to be governed by the rule in Art 30(4)(a) VCLT: ie the FTA prevails in the procurement relationship between the EU and Singapore/Canada, with the GPA provisions applying only to the extent they are compatible with the FTA. In any case and regardless of this interpretation, however, the rule of Art 30(4)(b) stands and, in their relationships with other GPA members, the EU, Canada and Singapore are bound by the GPA, regardless of any conflict with their FTA.

This makes the existence of unregulated ‘triangular situations’ particularly challenging where the FTAs deviate from the GPA in a manner that changes or limits the parties’ obligations towards each other (‘GPA-‘). Given that the extensions of coverage under CETA and under the EU-Singapore FTA are only incremental above the general coverage included in the GPA schedules for each of the parties, most of the procurement opportunities covered by the FTAs will be subject to dual regulation—or, in other words, most procurement covered by the EU’s FTAs will generate ‘triangular situations’.

GPA- situations pose significant legal uncertainty but, for the reasons below, they will likely lack any practical relevance if the EU (Canada and Singapore) want to avoid international responsibility for breach of the GPA.

What is the proper interpretation of the FTAs, then?

As above, a literal interpretation of Art 19.4 CETA would suggest that suppliers of either of the parties are protected under the national treatment regime only when they offer goods or services of the parties. This literal interpretation is clearly much more restrictive than the GPA and can affect the rights of suppliers offering non-EU/Canadian goods or services, as well as the access that should be afforded to those goods and services.

Conversely, a literal interpretation of Art 9.4 EU-Singapore FTA would suggest that suppliers of either of the parties are protected under the national treatment regime, even if they offer goods or services from third parties, whether those are GPA or not (unless domestic suppliers offering goods or services from third parties are also subjected to specific differential treatment—eg exclusion—which would set the benchmark of the national treatment obligation). Such an interpretation would significantly expand the scope of the national treatment under the EU-Singapore FTA compared to the GPA in relation to (non-GPA) third country goods and services, which does not seem to plausibly represent the parties’ intent under the FTA. However, such literal interpretation would follow Art 30(4)(a) VCLT.

In contrast, a systematic interpretation that took account of the fact that Art 9.4(2)(b) EU-Singapore FTA only refers to locally established suppliers offering goods or services of the other party (ie either EU or Singapore), would suggest an implicit requirement in Art 9.4(1) that suppliers are only protected as long as they offer EU or Singaporean goods or services. While this interpretation seems more aligned with the putative intention of the parties under the FTA, it does create problems in case of dual regulation procurement (or triangular situations), as EU and/or Singaporean suppliers offering goods or services of a different GPA origin could seek GPA national treatment of the goods or services themselves, which attempted exclusion (under a ‘GPA-’ approach) would likely breach Art 30(4)(b) VCLT.

To avoid breaching their international obligations under the GPA (Art IV(1)) in relation to the goods or services of other GPA parties offered by EU or Canadian/Singaporean suppliers, the EU, Singapore and Australia must refrain from any discrimination of covered suppliers offering goods or services originating anywhere in the ‘GPA club’. This means that, by virtue of the operation of the rule in Art 30(4)(b) VCLT in relation to the goods or services of the GPA parties protected by Art IV(1)GPA, the interpretation limiting the scope of protection under Art 9.4(1) EU-Singapore FTA cannot have any practical relevance. And, more challenging, it also means that the EU and Canada need to set aside Art 19.4(1) CETA.

Conversely, EU or Singaporean suppliers offering non-GPA goods or services may attempt to push for the maximalist literal interpretation sketched above, based on Art 30(4)(a) VCLT. However, given the explicit constraints in Art 9.4(2)(b) EU-Singapore FTA, this is unlikely to succeed under the broader rules of interpretation in the VCLT.

Conclusion

The (lengthy and technical…) analysis above shows that, given the pervasiveness of triangular situations, despite (intentionally?) deviating from the text of the GPA, FTAs are unlikely to generate practical effects where they vary or reduce GPA-based obligations. However, there is an important exception to this, which concerns cases covered by Art 30(4)(a) VCLT, where the effects are only for the economic operators of the two jurisdictions signing the FTA, which is both counterintuitive and prone to litigation, especially where GPA- situations concern access to procurement remedies (this is further assessed here).

Even if these views are correct and there is no practical effect resulting from the deviation in the text of the FTAs from the GPA standard wording, the mere existence of the legal uncertainty resulting from such deviation is undesirable. It is also difficult to ascertain whether any practical effects intended by the respective negotiating teams/governments deciding on the textual deviations are neutralised by the rules in the VCLT, in which case there may be knock-on effects concerning the balance of reciprocal concessions across the procurement chapter, or even across chapters, of the relevant FTAs. At any rate, in my view, a direct incorporation of the GPA rules and an explicit conflict clause giving the GPA precedence over the relevant FTA would be a preferable regulatory technique from this perspective, and one that has already been used by the UK, eg in the EU-UK TCA.

_________________________________________

[1] https://legal.un.org/ilc/texts/instruments/english/conventions/1_1_1969.pdf.

[2] Indeed, in some cases, they can avoid the ‘conflict’ altogether by agreeing to a GPA-compliant interpretation; see eg A Orakhelashvili, ‘Article 30’ in O Corten and P Klein (eds), The Vienna Convention on the Law of Treaties. A Commentary, vol. 1 (OUP 2011) 764, 776 at para 31; see also J Klabbers, ‘Beyond the Vienna Convention: Conflicting Treaty Provisions’ in E Cannizzaro (ed), The Law of Treaties Beyond the Vienna Convention (OUP 2011) 192, 203.

[3] However, as this is not a difficulty concerning the specific field of public procurement, this submission will not address it in any detail. For discussion, see A Orakhelashvili, ‘Article 30 of the 1969 Vienna Convention on the Law of Treaties: Application of the Successive Treaties Relating to the Same Subject-Matter’ (2016) 31(2) ICSID Review - Foreign Investment Law Journal 344-365.

[4] Subject to other general principles, such as those resulting from a conflict between lex posterior and lex specialis, see R Kolb, The Law of Treaties. An Introduction (Edward Elgar 2016) 190.

[5] Klabbers, above n 2, 194.

[6] Orakhelashvili, above n 2, 792 at para 75.

[7] International Law Commission, Draft Articles on the Law of Treaties with commentaries (1966) 271, para (11), https://legal.un.org/ilc/texts/instruments/english/commentaries/1_1_1966.pdf. See also K von der Decken, ‘Article 30’ in O Dörr and K Schmalenbach (eds), Vienna Convention on the Law of Treaties. A Commentary (Springer 2018) 539, 551.

[8] Kolb, above n 4, 186.

[9] Klabbers, above n 2, 195 and 204-205.

Some thoughts while on strike for pensions and fair working conditions at UK universities

Staff at 68 UK universities are on strike over threatened pension cuts and unfair working conditions. So here I am again, on strike, sitting idly at home fighting the temptation to catch up on reading, finish *that* paper, or the (lesser) temptation to finish my marking or prepare the teaching that will resume after the strike.

And it is a difficult internal fight because, when it comes to research (and teaching too, mostly), academia is a vocation and a source of intellectual stimulation that is hard to resist. Sadly, this vocation and curiosity are in good measure the fuel on which the unfairness we are resisting keeps burning.

Universities (in the UK, and elsewhere) are only viable (or even profitable) organisations because they can access talent and dedication under often exploitative, and mostly below-market terms. It is well known that universities abuse the flexibility of (highly deregulated) labour markets to minimise payroll relating to teaching activities (eg through hourly-paid contracts or teaching only contracts not covering eg summer months). Universities also try to keep their ‘research competitiveness’ by eroding or simply dismantling progression systems for research-focused colleagues. Not to touch upon the derision of career opportunities in the professional services pathway. Even at the *higher-end* of the academic recruitment scale (lecturer and above), it is glaring that in many disciplines universities can hardly recruit at salaries that are a fraction of what industry can offer, and that the only reason they continue to recruit at all is either the attraction of academia as a vocation, or privilege that allows some (like myself) to take underpaid jobs because of other sources of privilege, or a mixture of both. All of this unavoidably leads to casualisation, gender, ethnicity and disability pay gaps, and inadequate and exploitative working conditions.

There is also the issue of Universities being made to run as a business in a very badly regulated quasi-market, with the most insane of the regulatory issues being the impossibility of sustainably operating under a fixed (excessive) fees income stream for teaching and dwindling research funding pots, while costs (should) raise (especially under high inflation scenarios, such as the one the cost of living crisis in the UK is evidencing). The only ‘way out’ that University managers (let’s not call them leaders, please) can find is to grow and try to find economies of scale (ie bums on seats) in courses with low infrastructure demands (and online/blended is helping them there), as well as to try to push costs down even beyond reasons, such as systematically offering below-inflation pay increases and seeking to chop pension costs. There is also the added strategy of sinking even lower down the exploitation chain and further resorting to labour under casualised and unfair terms and conditions.

Maybe somebody (in Government) thought that all of this could last because, as I said earlier, academia is a vocation and an occupation that can bring many (non-financial) rewards. But surely there are limits, and those were long exceeded.

What I do not understand, and may never get to understand, is why University managers do not realise that in pursuing their policies and doing the Government’s dirty job (of pushing UK academia down this unsustainable path), they are killing the institutions they are meant to steward (albeit in a timeframe that, they probably hope, will mean that their demise will not personally affect them).

Would it not be a more sensible approach to listen to staff and student concerns and *quickly* realise that the root of many problems is in the funding model, the poor regulation of the higher education quasi-market, and the exploitation and unfairness that underpins it all? Would it not be more sensible to galvanise the sector to lobby for a proper reform of the system that allows for its sustainable redirection?

I guess it would be, both better and more sensible, but it is certainly easier to continue cashing six figure salaries to try to firefight systemic issues … or so it seems. Shame on those who perpetuate the unfairness.

Doing procurement differently after Brexit? [update]

The UK in a Changing Europe (UKICE) has published a new report: ‘Doing things differently? Policy after Brexit‘. The report provides an update on last year’s ‘UK regulation after Brexit', as well as additional analysis.

‘Doing things differently? Policy after Brexit’ brings together a number experts in their respective fields to investigate how policy and policymaking have changed in a range of sectors. UKICE asked them to consider how changes so far compare to what was promised before Brexit, and to analyse what changes lie ahead and what their impact might be.

I contributed a section on public procurement. For more details and broader developments in UK procurement regulation, you can also see my recent country report for EPPPL.

What changes were promised after Brexit?

Public procurement regulation is a set of rules and policies controlling the award of public contracts for works, supplies, and services. Its main goal is to ensure probity and value for money in the spending of public funds, to prevent corruption, collusion, and wastage of taxpayers’ money. As pandemic-related procurement has shown, the absence of procurement rules (or their disapplication due to an emergency), all too often leads to the improper award of public contracts. Nonetheless, the benefits of constraining discretion in the award of public contracts are easily forgotten in ‘normal times’, and procurement regulation is permanently challenged for creating an administrative burden on both the public sector and on companies tendering for public contracts, and for stifling innovation.

Procurement has long been heavily influenced by international and regional agreements, which constrain domestic choices to facilitate cross-border tendering for public contracts. Before Brexit, the UK was directly bound by the procurement rules of the European Union (EU), and indirectly by those of the World Trade Organisation’s Government Procurement Agreement (GPA), to which EU rules are aligned. As a result, UK regulatory autonomy was limited to the spaces left by general EU rules requiring domestic transposition. The UK decided not to exercise that limited discretion and consistently took a copy-out approach to the transposition of EU rules, so pre-Brexit UK procurement regulation was virtually identical to the EU’s.

During the Brexit process, public procurement was ear-marked for reform. Boris Johnson promised a ‘bonfire of procurement red tape to give small firms a bigger slice of Government contracts’ and his Government proposed to significantly rewrite the procurement rulebook, and to adopt an ambitious ‘Buy British’ policy to reserve some public contracts to British firms.

What has changed so far?

Despite those promises, the UK Government has made big efforts to replicate international and regional procurement agreements post-Brexit, which means it will continue to be hard to introduce an effective ‘Buy British’ policy. The UK gained GPA membership in its own right on 1 January 2021. This now directly constrains domestic choices on procurement regulation. The EU-UK Trade and Cooperation Agreement (TCA) also includes a chapter on public procurement that leaves mutual market access commitments virtually unchanged.

The UK Government was slow to understand (or at least clearly communicate) the implications of this continuity in the trade-related aspects of procurement regulation. On 15 December 2020, the Cabinet Office issued a Procurement Policy Note (PPN) on ‘Reserving below threshold procurements’ that formulated the new ‘Buy British’ policy in terms of reserving contracts by supplier location (either UK-wide, or by county) and/or reserving them for small and medium sized enterprises (SMEs) or voluntary, community and social enterprises (VCSEs). Aggressive implementation could have contravened international agreements to which the UK had signed up. This led to the publication on 19 February 2021 of a new PPN on ‘The WTO GPA and the UK-EU TCA,’ stressing that the pre-Brexit limits on a ‘Buy British’ policy remain in place and virtually unchanged post-Brexit.

On 15 December 2020, the UK Government published the green paper ‘Transforming Public Procurement’ to consult on planned legislative changes to the procurement rulebook. The original timeline envisaged the introduction of a Procurement Bill in Parliament after summer 2021. However, the volume of responses to the public consultation (over 600) and the complex issues they raised, as well as the intrinsic difficulty in seeking to significantly change procurement law in a manner that is compliant with international obligations led the Cabinet Office to adjust the timeline. The 6 December 2021 Government response to the public consultation clarified that the new regime will not come into force until 2023 at the earliest.

So far, then, the Brexit-related changes have been modest. There have been some policy developments, such as the adoption of a National Procurement Policy Statement seeking to embed government goals such as growth and jobs and climate change in procurement decision-making; a push for a fresh approach to assessing social value in the award of government contracts; new requirements for firms applying for major contracts to have Carbon Reduction plans; and to also require those firms to have systems in place that ensure prompt, fair and effective payments to their supply chains. None of these will reduce procurement red tape and most, if not all, would have been possible pre-Brexit.

What are the possibilities for the future?

Given the commitments in the GPA and TCA, there is virtually no scope for a Buy British policy. The UK could be more aggressive in the exclusion of tenderers from non-GPA jurisdictions such as China, India or Brazil (something the EU is increasingly doing) as a practical way of seeking to boost contract awards to UK companies.

By contrast, the process of reform of the UK’s procurement rulebook is likely to result in a new set of streamlined regulations, as well as a voluminous body of guidance. Despite the Government’s prioritisation of simplification as a primary goal of legislative reform, the extent to which procurement can be significantly deregulated is unclear, as a result both of international commitments and, more importantly, the need to create a legislative framework fit for purpose that does not overwhelm the public sector in its complexity.

There is an opportunity for the Procurement Bill to make some progress on the modernisation and digitalisation of procurement systems, which has been slow in the UK despite it being a shared strategic goal with the EU. It is likely that the new rules will bring a clearer focus on open procurement data, which could enable a change of approach to the practice and management of procurement and offer some benefits from a red tape perspective. However, the green paper was criticised, among other things, for a lack of ambition in the automation of public procurement, so the extent to which tech will be a pillar of procurement ‘transformation’ in the UK remains unclear.

Overall, not much has changed and, rhetoric apart, there is limited scope for further change.

The 'NHS Food Scanner' app as a springboard to explore the regulation of public sector recommender systems

In England, the Department of Health and Social Care (DHSC) offers an increasingly wide range of public health-related apps. One of the most recently launched is the ‘Food Scanner’, which aims to provide ‘swap suggestions, which means finding healthier choices for your family is easier than ever!’.

This is part of a broader public health effort to tackle, among other issues, child obesity, and is currently supported by a strong media push aimed primarily at parents. As the parent of two young children, this clearly caught my attention.

The background for this public health intervention is clear:

Without realising it, we are all eating too much sugar, saturated fat and salt. Over time this can lead to harmful changes on the inside and increases the risk of serious diseases in the future. Childhood obesity is a growing issue with figures showing that in England, more than 1 in 4 children aged 4-to 5-years-old and more than 1 in 3 children aged 10 and 11-years-old are overweight or obese.

The Be Food Smart campaign empowers families to take control of their diet by making healthier food and drink choices. The free app works by scanning the barcode of products, revealing the total sugar, saturated fat and salt inside and providing hints and tips adults plus fun food detectives activities for kids.

No issues with that. My family and myself could do with a few healthier choices. So I downloaded the app and started playing around.

As I scanned a couple of (unavoidably) branded products from the cupboard, I realised that the swaps were not for generic, alternative, healthier products, but also for branded products (often of a different brand). While this has the practical advantage of specifying the recommended healthier alternative in an ‘actionable’ manner for the consumer, this made my competition lawyer part of the brain uneasy.

The proposed swaps were (necessarily) ranked and limited, with a ‘top 3’ immediately on display, and with a possibility to explore further swaps not too easy to spot (unless you scrolled down to the bottom). The different offered swaps also had a ‘liked’ button with a counter (still in very low numbers, probably because the app is very new), but those ‘likes’ did not seem to establish ranking (or alter it?), as lower ranked items could have higher like counts (in my limited experiment).

I struggled to make sense of how products are chosen and presented. This picked my interest, so I looked at how the swaps ‘work’.

The in-app information explained that:

How do we do this?

We look into 3 aspects of the product that you have scanned:
1) Product name; so we can try and find similar products based on the words used within the name.
2) Ingredients list; so we can try and find similar products based on the ingredients of the product you have scanned.
3) Pack size; finally we look into the size of the product you have scanned so that, if have scanned a 330ml can, we can try and show you another can-sized product rather than a 1 litre bottle.

How are they ordered?

We have a few rules as to what we show within the top 3. We reserve spaces for:
1) The same manufacturer; if you have scanned a particular brand we will do our best to try and find a healthier version of that same brand which qualifies for a good choice badge.
2) The same supermarket; if you have scanned a supermarket product we will again do our best to show you an alternative from the same store.
3) Partner products; there are certain products which team up with Change4life that we will try and show if they match the requirements of the products you have scanned.

I could see that convenience and a certain element of ‘competition neutrality’ were clearly at play, but a few issues bothered me, especially as the interaction between manufacturer/supermarket is not too clear and there is a primary but nebulous element of preferencing that I was not expecting in an app meant to provide product-based information. I could see myself spending the night awake, trying to find out how that ‘partnership’ is structured, what are the conditions for participating, if there are any financial flows to the Department and/or to partner organisations, etc.

I also realised some quirks or errors in the way information is processed and presented by the Food Scanner app, such as the exact same product (in different format) being assigned different ‘red light’ classifications (see the Kellogg’s Corn Flakes example on the side bar). At a guess, it could be that these divergences come from the fact that there is no single source for the relevant information (it would seem that ‘The nutrient data provided in the app is supplied by Brandbank and FoodSwitch’) and that there is not an entity overseeing the process and curating the data as necessary. In fact, DHSC’s terms and conditions for the Food Scanner app (at 6.10) explicitly state that ‘We do not warrant that any such information is true or accurate and we exclude all liability in respect of the accuracy, completeness, fitness for purpose or legality of that information’ . Interesting…

It is also difficult to see how different elements of the red light system (ie sugar vs saturated fat vs salt) are subject to trade-offs as eg, sometimes, a red/green/yellow product is recommended swapping with a yellow/yellow/yellow product. Working out the scoring system behind such recommendations seems difficult, as there will necessarily be a trade off between limiting (very) high levels of one of the elements against recommending products that are ‘not very healthy’ on all counts. There has to be a system behind this — in the end, there has to be an algorithm underpinning the app. But how does it work and what science informs it?

These are all questions I am definitely interested in exploring. However, I called it a night and planned to look for some help to investigate this properly (a small research project is in the making and I have recruited a fantastic research associate — keep an eye on the blog for more details). For now, I can only jot down a few thoughts on things that will be interesting to explore, to which I really have no direct answers.

The Food Scanner is clearly a publicly endorsed (and owned? developed?) recommender system. However, using a moderate research effort, it is very difficult to access useful details on how it works. There is no published algorithmic transparency template (that I could find). The in-app explanations of how the recommender system works raise more questions than they answer.

There is also no commitment by the DHSC to the information provided being ‘true or accurate’, not to mention complete. This displaces the potential liability and all the accountability for the information on display to (a) Brandbank, a commercial entity within the multinational Nielsen conglomerate, and to (b) Foodswitch, a data-technology platform developed by The George Institute for Global Health. The role of these two institutions, in particular concerning the ‘partnership’ between manufacturers and Change4life (now ‘Better Health’ and, effectively, the Office for Health Improvement & Disparities in the DHSC?), is unclear. It is also unclear whether the combination of the datasets operated by both entities is capable of providing a sufficiently comprehensive representation of the products effectively available in England and, in any case, it seems clear to me that there is a high risk (or certainty) that non mass production/consumption ‘healthy products’ are out of the equation. How this relates to broader aspects of competition, but also of public health policy, can only raise questions.

Additionally, all of this raises quite a few issues from the perspective of the trustworthiness that this type of app can command, as well as the broader competition law implications resulting from the operation of the Food Scanner.

And I am sure that more and more questions will come to mind as I spend more time obsessing about it.

Beyond the specificities of the case, it seems to me that the NHS Food Scanner app is a good springboard to explore the regulation of public sector recommender systems more generally — or, rather, some of the risks implicit in the absence of specific regulation and the difficulties in applying standard regulatory mechanisms (and, perhaps, especially competition law) in this context. Hopefully, there will be some interesting research findings to report by the summer. Stay tuned, and keep healthy!