An incorrect method is applied in approximately two-thirds of tender procedures in the Netherlands, meaning that the wrong party may be selected as the winner.
In 20 percent of tenders, the results can be manipulated. This is the view that Jan Telgen, Professor of Public Procurement, will put forward during his farewell lecture at the University of Twente. He will also call for local authorities to stop tendering for WMO and youth care services. “Many local authorities and politicians in the Netherlands wrongly believe that tendering is compulsory in these branches.”
Prof. Jan Telgen says farewell to the University of Twente after thirty-one years. He is considered an authority in the world of public sector procurement and tenders. During his farewell lecture on 25 May, Telgen will discuss the options and limitations of using public procurement to achieve social objectives, and consider just how suitable the tendering process is for the social service departments WMO and youth care. Telgen believes that tenders are incorrectly blamed for a large number of social problems. His reason is as follows: “Tenders are not dealt with in a practical manner and are unnecessarily complicated.”
Incorrect method
In 67 percent of public tenders in the Netherlands in 2016, for example, a mathematical method was used to select a winner. According to Telgen, this method was “not exactly what you could call mathematically sound”. In the method that was used, the number of points a party received for its price completely depended on the relationship between its bid and the lowest of all the bids. The problem is that the winner of the tender is dependent on whether a party with a low price but no chance of winning the tender takes part or not. In other words, if party C does not take part in the tender, party A will win, but if party C does take part, then party B will win. Telgen: “Clients use this method because they have too little insight into the prices that will be bid before the process starts. They obviously do not have sufficient knowledge of the market.”
Telgen believes that a better method for selecting the winner of a tender is to award the maximum number of points for the category ‘price’ to the lowest bidder. X points should then be deducted from other parties for every (e.g.) 1000 euros above the lowest bid. “The value of X represents the relationship between price and quality, and it is the task of the purchaser to determine this value.”
No tenders for WMO and youth care
There has been a lot of heated discussion about tendering in the social sector in the Netherlands. Ever since local authorities have been responsible for WMO and youth care, complaints have been flooding in. Telgen believes, however, that it is not necessary to use tenders to organize these services. “A ruling by the European Court of Justice clearly states that tendering is not necessary, as long as the client chooses the provider, and not the local authority. The local authority still pays, but as long as it does not select the care provider itself, there is no need to tender.” The Professor is surprised that so few Dutch local authorities and politicians are aware of this. Local authorities only have to set out the conditions that providers must meet, such as the requirements for the providers, their services and their fees. Clients can then choose from all the providers that meet these conditions.
