Challenges in public procurement in water and sanitation – part 2

For a long time, the Water Industry's member companies have seen recurring challenges in public procurement for the water and sanitation sector. Two years of pandemic followed by the strained situation with the war in Ukraine, makes it even more important that the challenges in procurement are discussed. All to ensure our most important food - water.

To address the challenges in procurement in the water and sanitation sector, a survey has been conducted by the focus group for procurement issues under the umbrella of the Water Industry. In a series of articles, we follow up on the problems that have been identified and that, if left untreated, risk resulting in cancelled procurements and unnecessary and costly processes for both municipalities and bidders. First in the series of articles was the problem formulation No bids received. We have now reached the second part of the article series about cancelled procurements.

Cancelled procurements

It often happens that procurements are cancelled, which is costly and leads to delays. The reasons can be many, but examples can be:

Budgetary limits that cannot be met
Matching a requirement specification with associated budgets with the actual possibilities that product or service providers have to deliver can be a challenge. With the current world situation, it is especially difficult to get it right and get a picture of the costs. The result may be that the client is forced to cancel the procurement because the tenders received are higher than the set budget.
The procurement is many years in the future
Sometimes a request is sent out too early and the procurement is many years in the future. The reasons for this can be different, but usually additional preparatory work needs to be done together with the establishment of budget frameworks before a serious response can be provided.
Risk premiums increase the bid amount
The addition of risk premiums may, for example, be based on technical ambiguities in the request or that other conditions and requirements in the request are designed in such a way that a large cost risk is transferred to the supplier and contractor. When risk premiums are added, the consequence may be that the tender amount becomes so high that it exceeds the client's budget.
No qualified suppliers submit bids
The reasons for this can be many, or a combination of several reasons, such as excessively high functional guarantees without a penalty ceiling or that it is difficult to calculate the risks with an excessively high risk exposure as a consequence. Delivery terms that deviate from standard or unnecessarily complicated terms can also mean that serious suppliers do not submit bids.

The goal of the Water Industry is to work for a healthy and long-term sustainable relationship between client and supplier. Effective processes mean that focus can instead be placed on the challenges that the water and sanitation industry needs to solve together in the climate and to build a resilient water and sanitation Sweden. Increased responsiveness between the parties, where the opportunity for supplier dialogue even before procurement and to ask questions and provide answers is used to a greater extent during the tender period, could mean that cancelled procurements are prevented. It is important that the right people with good knowledge and understanding handle Questions & Answers.

Methods such as Negotiated Procedure or Competitive Dialogue make it easier for both the client and the supplier and the project.

The article is compiled by the focus group for Project Implementation & Procurement within the Water Industry, which works with the long-term goal of creating more effective business processes for the Water Industry.

Procurement