Executive Summary - The Problem Explained
There will always be winners and losers in public procurement competitions. Each competition will necessarily require an investment of time and resources from those who decide to participate. This is the reality we cannot change and we do not wish to do so. However, we aim to make the public procurement process in Belgium as efficient and effective as possible, choosing excellence while saving time and money invested by both architects and public authorities. In order to live up to this ambition, major architectural firms gathered in the G30 initiated a research project to study how such improvements can be achieved. The research identified four main problems related to public procurement in Belgian architecture.
Problem 1: The One-stage Procedure and Neglect of the Design Contest
The prevailing procedure used in architecture is the one-stage open procedure. In the last years, 70% of all calls were open, requiring the participating firms to submit long and elaborated proposals, while public authorities must invest significant resources into their evaluations. For architectural competitions, so-called design contests have been developed as procurement form. However such contests are applied only rarely (in 1 to 4% of all procurements). (Details pages 12-13)
Problem 2: Public Procurement is for Architects Riskier than it should be
In 2013, the winning hit-rate was 19% which is similar to that observed across the last few years. In addition, almost 10% of competitions attended by G30 members were suspended by public authorities after the proposals were submitted. This means a lot of time invested in vain – time that is often not remunerated. Only in 30% of cases, architects were paid for the creation of elaborated proposals and such remuneration was substantial in only 16% of cases (= at least 75% of the real time spent). This implies that a large amount of sunk hours must be recuperated in other ways, with potential losses to the creative economy and society in Belgium as a consequence. In addition, the time needed for evaluation has been steadily increasing in last years, reaching more than 180 days in 2012. This makes the public procurement market even more unpredictable. (Details page 13-15)
Problem 3: Public procurement costs are higher than needed
We estimated the sums of money wasted by both the architectural firms and public authorities. On average in 2013, each member of the G30 sample invested 23 627 EUR in personnel costs in every single public procurement competition while all these members together spent 4.3 million EUR on such tenders. Public authorities, however, spent money too. Given the long time needed for evaluation, our estimate is around 47 142 EUR for one bid assessment in personnel costs alone. Given the fact that there are 6 participants per competition on average in the sample considered, it means that one public procurement entry means about 142 000 EUR invested by architects for proposals and an additional 47 142 EUR spent by public authorities for their evaluation (excluding tender preparation and external advice). Altogether, this would amount to 189 000 EUR in total personnel costs per competition – almost half the average of the tender value itself (in 2012 reaching around 400 000 EUR for the above-threshold procurement. (Details pages 15-16)
Problem 4: A too narrow view on selection criteria
Anecdotal evidence suggests that a narrow view to the evaluation of bids is often applied – with a strong focus on the costs for the architectural services themselves, rather than costs of the whole building and throughout its life cycle. This practice provides few incentives to high-quality designs promoting longer term and sustainable use hence clear benefits for society. (Details pages 17-18)
Elements of good practices can be learned from other EU countries. For example in Germany, the negotiated procedure prevails, where participants are evaluated on the basis of a simple and not costly design concept and gradually eliminated in the competition process. In France, the two-stage procedure is much more common, while all participants must be remunerated for their proposals. However the systematic limited number of participants offers little room for newcomers. The UK and France also offer an example of independent bodies that benchmark best practices in public procurement and that monitor the efficiency of the process. The EU can show a way forward too. The revised Public Procurement Directive 2014/24/EU offers wide use of life cycle costing and the new partnership procedure promotes innovative solutions in the course of the procurement process in the search for more quality and sustainability. Also, it encourages eTendering, saving time for both architects and public bodies. (Details pages 19-22).
Recommendations
The Belgian public procurement process is in several respects ill-fitting, unnecessarily risky and costly, not only for architects but for society as a whole and most often it does not ensure a fair remuneration of the services provided, which are not considered for their real value. The existing practice provides few incentives to high-quality designs promoting longer term and sustainable use. The G30 Association of Architects wishes to contribute to improving the process. The following, specific recommendations are submitted in connection with the implementation of the new EU Directive on Public Procurement (2014/24/UE) that must be transposed by April 2016.
Recommendation I: Increased clarity and stability of the procurement process
The procurement process should be as clear as possible. If a two-stage process is chosen, conditions for advancement must be clear and competitors not qualified for the next stage must know the reasons why. Each public decision must be supported by facts and documentation. Also, the procurement process must have clear deadlines for both the authority and architects and calls should not be suspended without clear reasons. Means to increase stability and clarity include use of e-procurement tools and detailed requirements described in tendering documents.
Recommendation II: Detailed design plans should be either remunerated or not required
The quality of a proposed design can be easily evaluated on the basis of a simple concept design (sketch). If an authority wishes to have detailed documentation, this should be required from the part of a limited number of architectural firms only and once remunerated. If this is not the case, both public authorities and architects and other design consultants record unnecessary costs associated with creating long proposals free of charge and their evaluation. Furthermore ‘cherry picking’ must be banned and intellectual property rights preserved.
Recommendation III: Bring back design contest to allow for high quality design
Since the design contest is barely used by Belgian public authorities, the quality of the building stock in Belgium is endangered. Only a highly qualified, competent and independent jury can bring a range of opinions and the experience needed in order to evaluate a tender in such a complex field as architecture and urban design. Moreover, the decision of the jury must be binding and hence the mission awarded to the winner.
Recommendation IV: Use of procedures that allow for efficiency and fast evaluation
If the evaluation process of tenders lasts for too long, both public authorities and architects lose out. The combination of open procedure with requirements for detailed plans causes both high costs invested into the evaluation process by public authorities, and an impossibility to plan the work for architects and other design consultants. The two-stage procedure or various types of negotiated procedures allows for gradual elimination of contestants and thus time and money saved for everyone while guaranteeing a fair process.
Recommendation V: Clear and stable terms and criteria defined at the beginning of each tender
A tendering package issued by a public authority beyond a clear definition of the actual needs must state clearly what type of documentation is required in order to take part in the tender, including the level of detail of designs. The tender package also needs to lay-down at the very beginning the criteria and respective weighing according to which the winner will be selected. The authority should be fully aware of its own expectations and state these in the project specification.
Recommendation VI: Life cycle costing as a benchmark for sustainability and innovativeness
Costs of each building to be constructed should be assessed on the basis of its whole life cycle. The same goes for urban design. If only costs of construction are taken into consideration, together with a frequent push for a price as low as possible, long-term losses for society will be high. They would adversely affect sustainability, while low quality materials and inappropriate global energy efficiency conception would increase the need for long term renovation. Omitting Life cycle costing also discourages innovativeness.
Recommendation VII: Fair remuneration on the basis of agreed benchmarks
In order to improve the quality of designs and hence the sustainability of the resulting built environment the actual value of the services provided by architects and other design consultants must be fully appreciated in economic terms. Alike existing recognised systems for public contracts in place in countries such as for instance Luxembourg, Germany or Canada it is desirable to establish in Belgium a reference benchmark system for the fees applicable to specific services in the selection and awarding processes according to the degree of technical detail. While effectively laying more emphasis on sustainability issues such a move would contribute to take duly account of the public interest.
Recommendation VIII: Monitoring of quality and excellence via an independent body
An independent body should be set up by the Belgian public administration, in charge of monitoring the efficiency and quality of public procurement in the construction sector. As its mission it will benchmark best practices and initiate reflections and relevant recommendations with regard to those that could be improved.