AmCham: Price Should Not Be the Main Criterion in Public Procurement

The American Chamber of Commerce in Croatia (AmCham) advocates that the economically most favorable offer should be used as a framework for public procurement, and that price should not be the only criterion as it usually is, it was stated on Tuesday at the chamber’s business breakfast ‘The Strategic Role of Public Procurement’.

The Executive Director of AmCham Croatia Andrea Doko Jelušić emphasized that the chamber has been advocating for the introduction of the principle of the economically most favorable offer, digitalization, and so on for years.

This year, amendments to the public procurement law are planned, primarily concerning the electronic public procurement bulletin platform, but AmCham believes that these amendments should be expanded to other areas where there is room for improvement, including the economically most favorable offers, framework agreements, simple procurement, etc.

According to Doko Jelušić, the economically most favorable offer is the most significant cornerstone of public procurement in the coming years, and a few years ago when it was introduced as a mandatory element in offers, it began to be ‘slowly used’.

– However, price still represents the largest part and cornerstone of public procurement in Croatia, and it is not always what is actually and long-term the optimal solution for state contracting authorities – she emphasized.

Therefore, AmCham advocates that the economically most favorable offer be used as a framework for public procurement, but that price should not be the only criterion, as it usually is.

– The desire is to ensure an environment of transparent, market-competitive tenders in which contracts are signed by business entities thanks to not only price but also quality, expertise, and innovation – stated Doko Jelušić.

As she added, buying the cheapest ‘can work’ for some very simple products, consumer goods, etc. However, if more complex technology parts or something that needs to show certain efficiency in the long term are being purchased, then price is not actually the best criterion.

She took public procurement in healthcare as an example, stating that if, for instance, a younger patient is implanted with a substandard artificial hip, there is a risk that the operation will have to be repeated, which is unfavorable for the patient and more expensive for the system.

– If the emphasis is on quality, then it can be much more cost-effective in the long run than buying the cheapest from the start – added the Executive Director of AmCham.

Public procurement accounts for 14 percent of the EU’s GDP

The head of public procurement at PwC Croatia Jelena Drndić says that public procurement permeates various sectors and can therefore have a significant impact on their progress, for example, on innovation and the ‘green’ sector.

Namely, public procurement accounts for 14 percent of the European Union’s GDP and has a significant impact on investments, as almost half of the European structural and investment funds are spent precisely through public procurement contracts.

This share is almost the same in Croatia, and when it comes to our country, Drndić highlighted the importance of strengthening the competencies of officials and the way public procurement is conducted, strengthening interdepartmental cooperation, better connectivity and collaboration between the public and private sectors, which can contribute to better efficiency, faster implementation of public procurement, and ultimately strengthening small and medium-sized enterprises.