Andreas H. Glas

Designing a public procurement strategy: lessons from local governments

Public sector procurement faces competing priorities, such as cost-efficiency, legal conformity, the advancement of environmental protection and the promotion of innovation. In addition, procurement departments are moving away from being mere organizational servants to having a strategic function. This paper looks at current public procurement strategy research, revealing neglected aspects. The authors propose a new analytical framework and suggest avenues for future research.

Performance-based contracting: contextual factors and the degree of buyer supplier integration

Purpose Performance-based contracting (PBC) links pricing with performance objectives in service business relationships. Although interest in PBC has surged recently, there is still great uncertainty about the risks, opportunities and challenges. This paper aims to provide a deeper understanding of the contextual factors of PBC and how providers assess them. Design/methodology/approach This paper includes conducting a multiple-case study evaluation and analyzes data from 21 cases. Risks, opportunities and contextual factors are identified through interviews, and the case data are analyzed with several methods, including Borda count and cross-tabulation. Findings The results show that the most important factors of PBC are clear responsibilities, clear performance indicators, transparent measurement, cooperative culture and a precise utilization profile of core assets. Surprisingly, incentives are of minor perceived relevance. The analysis supports the differentiation of PBC into two subcategories: lean (low integrated) and customized (high integrated) PBC. Research limitations/implications While many studies stress the uniqueness of PBC in accordance with the “one-size-does-not-fit-all” mantra, this research differentiates the standardized PBC from a customized one. The findings face the limitations of case study research and qualitative data analysis in general. Practical implications Practitioners are provided with guidance to develop either a customized or a standardized PBC. Originality/value Previously, broader empirical insights have still been rare; thus, this paper contributes to the PBC literature, as it provides data from multiple cross-industry cases. The findings (e.g. the minor relevance of incentives) stand in contrast to parts of the academic literature and contribute also to the wider service management field.

Considering Small and Medium-Sized Suppliers in Public Procurement—The Case of the German Defence Sector

The consideration of Small and Medium-Sized Enterprises (SMEs) in tender processes is an important goal of public procurement regulation. Public procurement law sets the rule to divide contracts in smaller lots as SMEs are expected to have better chances for a lot than for the whole task. This assumption is questioned with data from the German defence sector. This investigation determines the percentages of SMEs participating in and winning public tenders as well as the specific factors that influence award decisions. Key finding is that an increase in lot-wise calls will normally not lead to an increase in successful SME participation in public procurement processes. This is unexpected because lot-wise tenders are considered to be the main tool available to public procurement agents to increase the ability of SMEs to participate in and win public tenders.

Missing performance management and measurement aspects in performance-based contracting: A systematic process-based literature analysis of an astonishing research gap

Purpose Performance-based contracting (PBC) is a business model for the adaptive and innovative delivery of product-service systems. In PBC, the provider is paid according to the service performance with the aim of providing monetary incentives to safeguard possible outcomes as much as possible for the PBC customer. Performance measurement and its management are crucial for PBC success and, in particular, for the pay-for-performance link. However, the literature on PBC performance management is rather sparse, and there has been no systematic review on the topic. Thus, the purpose of this paper is to fill that gap and to present a comprehensive and systematic review of performance measurement and management in the PBC context. Design/methodology/approach The paper builds on a literature review based on a sample of 102 subject-relevant articles from academic journals. The content analysis follows a two-step procedure. First, the articles are coded following a process-based research framework. Second, the content of each process step is assessed in a qualitative text analysis. Findings The results show a surprising scarcity of papers that explicitly address performance management topics in the context of PBC. Only the topics of performance specification and performance indicators are broadly addressed, whereas in all of the other areas, e.g., strategic alignment, data capture and reporting, only limited specific findings could be found. Research limitations/implications The paper concludes that future research on performance management in PBC should expand its theoretical framework and empirical efforts in four specific proposed directions. Originality/value The paper provides an up-to-date review that is focused on performance management and measurement in the emerging context of PBC.

An organizational perspective on the implementation of strategic goals in public procurement

In the EU and especially in Germany, public procurement is bound to a tight legislation that also sets and enforces strategic goals such as innovation or sustainability. The purpose of this paper is to analyze whether different archetypes of public procurement organizations (centralized or decentralized; state-level or local-level) perceive and implement strategic goals differently. A survey with data from 104 entities is used for this purpose. The findings reveal that the implementation of strategy is different in centralized or state-level organizations compared with decentralized or local organizations. Centralized organizations give goals such as innovation, transparency, and sustainability a high priority, while local ones highlight regional development and SME support

Procurement of a supply information system: Lessons learned from the purchase of an inventory management system for C-parts

Purpose – Given the high importance of information systems for procurement, surprisingly there have been little efforts to analyze the process and the relevant reasons for the procurement decision of such systems from a stakeholder perspective. The purpose of this paper is to explore these aspects in the context of low-value (C-)parts. Design/methodology/approach – Research is based on a case study in a pre-fabricator company in Germany and analyzes the process to procure a system for sourcing low-value parts. Findings – As a finding, the procurement process and decision attributes have been integrated into a framework which supports corporate decision-making considering the procurement reasons of all involved stakeholders (internal departments, external customers and suppliers). Research limitations/implications – Research is based on case study analysis. Findings are specific to case companies and the environment in which they operate. The framework should be tested further in different contexts. Practi...

PBL – ein Lösungsansatz für die deutsche Verteidigungsbeschaffung?

Dieser einfuhrende Beitrag diskutiert die Ausgangslage des Diskurses von Managementkonzepten fur den Bereich der Verteidigung. Obwohl bereits jetzt Reformanstrengungen unternommen werden, um bei knappen Budgets eine bestmogliche Ausrustung der Streitkrafte sicherzustellen, wird zunehmend auf die Erfolgspotentiale innovativer und bereits in Streitkraften anderer Nationen bewahrter Beschaffungskonzepte verwiesen und deren Nutzung postuliert. Performance Based Logistics, als der prominenteste Vertreter solcher neuartiger Optimierungsansatze, wird inhaltlich und konzeptionell definiert und ein spezifischer Managementansatz vorgestellt. Dabei geht dieser Beitrag explizit auf die notwendigen Veranderungen ein, die der Ansatz fur die Zusammenarbeit der Streitkrafte mit ihren Lieferanten mit sich bringt. Als vorlaufiges Ergebnis dieses Einfuhrungskapitels werden funf Thesen fur die Nutzbarkeit von Performance Based Logistics fur die Verteidigungsbeschaffung formuliert. Zur Vertiefung dieser Thesen wird dann auf die nachfolgenden Beitrage dieses Werkes verwiesen.

A COST INCREASE ANALYSIS OF WEAPON SYSTEMS USING THE PAACHE INDEX: CASES FROM THE GERMAN BUNDESWEHR

Abstract The media and the public often make claims regarding the excessive cost increases in the development and production of major weapon systems such as fighter planes, submarines or tanks. The purpose of this research is in assessing the cost increase of such weapon systems during their procurement periods with the help of the Paasche price index. In contrast to other approaches, which focus upon either the specific situations of single weapon systems or cost increases relative to planned budgets, we compare several projects of military services and their cost increases over time to reveal generalisable trends. For this purpose, we used a framework model that allows for performance and cost comparisons. This paper primarily emphasises the cost perspective by calculating a Paasche index for each chosen project. As a background case for our analysis, we have used the acquisition projects for major weapon systems in Germany. However, the framework model that this study employs is universally applicable. In contrast to the public perception of cost increases, we could not find any clear trend that would indicate that modern weapon systems have a significantly higher (or lower) cost increase than was the case for projects several decades before. To give brief insight into the empirical findings, the cost increase ratios of the Starfighter and Eurofighter jets have the same level, while cost increase ratios of other weapon systems (APC tanks, submarines) differ significantly (to the worse and to the better) over time. Our findings imply that there is no general trend that today the costs for weapon systems increase more/less than some decades ago. This paper calculates data only from the regarded seven cases therefore we could not question the causes for this observation on basis of our sample. However, it appears that, within a specific service or a specific vehicle type (tank, fighter jet, ship/boat), cost increases may be similar over time.

Performance-based Logistics als neues Beschaffungskonzept der öffentlichen Hand – Konzeption und Anwendung am Beispiel von Rüstungsgütern

Zum Erhalt der Leistungsfahigkeit bei knappen Haushaltsmitteln beauftragen offentliche Auftraggeber immer mehr privatwirtschaftliche Unternehmen, um Teile der offentlichen Wertschopfung zu ubernehmen. Viele Beispiele lassen sich der Beschaffung der Bundeswehr von ziviler Ausstattung (Fuhrpark, IT-Systeme) als auch dem Kernbereich, der Rustung, zuordnen. Wahrend sich in privaten Lieferanten-Abnehmer- Beziehungen kooperative Konzepte innerhalb der Wertschopfungskette seit Langerem durchsetzen, scheinen im offentlichen Sektor die genutzten Verfahren nicht auszureichen. Deshalb untersucht dieser Beitrag alternative Sourcingkonzepte, die unter dem Oberbegriff „Performance-based Logistics“ (PBL) vor allem im angelsachsischen Raum bereits eindrucksvolle Erfolge vorweisen. Auf Basis eines Rahmenkonzepts werden die Moglichkeiten von PBL in Deutschland mittels einer explorativen Studie (30 Experten aus 13 Organisationen) untersucht und anhand eines Beispiels der Rustungsbranche veranschaulicht.

Factors that influence the success of small and medium-sized suppliers in public procurement: evidence from a centralized agency in Germany

One of the major methods to promote small- and medium-sized enterprises (SMEs) in public procurement is to split tenders into lots. The basic assumption is that SMEs have better chances of awarding smaller or more specialized contracts. This paper aims to investigate whether this widely accepted assumption is correct.,This article examines four hypotheses about the factors that influence SME success in public procurement. The empirical analysis uses real data from 380 contract award files and logistic regression to test the hypotheses.,The results show that a higher number of lots in a tender does not significantly increase the success rate of SMEs, and other factors, including the type of public procurement procedure, the number of participating companies and the overall tender volume, significantly influence SME success.,There are several implications for theory and practice, including the need to further strengthen the academic evaluation of public procurement policies, the suggestion to implement SME support instruments in public legislation with the utmost caution in practice and the managerial indication that SME competitiveness is more relevant to their success in public bidding than public support policies.,The findings stand in fundamental contrast to the legal regulations, which postulate that lots are the driving force for SME promotion in public procurement. This is also in contrast to public procurement policies that, for many years, have recommended splitting contracts into smaller lots to become SME-friendly.