Public Procurement as a Driver of Economic Growth

In the coming months, Italy will begin to benefit from a considerable volume of resources, in the context of both the Next Generation EU and the new cohesion policy pushed by Prime Minister Mario Draghi. This is an opportunity that the country and its public administration have the duty to exploit productively, to sustain the society and the economy.

Using these resources well implies not only selecting priorities and making plans, but also using purchasing tools and logics differently, an area that has always been considered a "minefield" by most of the personnel in the PA. In recent years, purchases have been the subject of numerous measures: first of all, centralization as a tool to implement the spending review. While on the one hand that approach made it possible to create economies of specialization and have greater control over spending, on the other, it has not always allowed for fully exploiting the ability of the market to identify more innovative responses to needs that have become more diversified and complex, especially when associated with a culture largely focused on administrative procedures and saving as an end in itself.

Public procurement represents a very important category of spending in every country (in Italy public spending in goods, work, and services comprises approximately 15 percent of GDP) and must increasingly channel demand which is evolving, conscious, and aimed at generating increasing public value. It is a considerable portion of the public budget, that must be used according to principles of efficiency of processes, efficacy of results, and environmental, social, and economic sustainability, to obtain the expected effects. Moreover, purchases, not only in the post-Covid-19 period, will have to stimulate innovation of the economic system and serve as a driver of competition and innovation for suppliers, who are important and often decisive actors in the purchasing process. The coming months will be essential to define a new posture for procurement, that cannot but imply a strengthening of management skills in both the public and private sector, to favor greater trust between the PA and the market, a fundamental pillar for a change in course.

To learn about the new challenges and goals in the field of procurement, we met with Valeria Vaccaro, the new president of Consip, the purchasing center for the Italian public administration, of which the Ministry of Economics and Finance (MEF) is the sole shareholder.

As soon as he was inaugurated, US President Joe Biden stressed the crucial role of public demand as a mechanism for economic growth. While the optimal use of public resources is certainly essential, the actions of the PA should be oriented not so much towards short-term savings, but towards value for money, that is, the search for the difficult balance between low costs, efficiency, and efficacy, and even more so, the generation of public value. Following the logic of public value in purchasing means that the commissioning body should be able to obtain the best result for the resources committed, measured in terms of satisfaction of the needs of stakeholders, strategic goals, and (economic and social) policies. How do you see the role of Consip from this perspective?

"It is certainly essential and urgent to place the well-being of society as a whole at the center of public policies, and Consip can provide a contribution on this point. There is no question that Consip was born with the goal of generating savings on spending, and that all of the entities that have dealt with the spending review in the institutions have referred to the Consip, strengthening the commitment to contribute to this goal. However, I believe that it is now time to intensify our efforts to evolve the role of Consip, from a tool supporting the review of spending to that of an agent that also enables the creation of value for society."

To create value with purchases, it is necessary for lawmakers and administrations to understand that purchasing does not only mean applying transparent selection procedures; it is necessary for certain goals to be placed at the center of the process, redefining the relationship with the market, and thus shifting from purely a transactional logic to one of collaboration, so that economic actors can identify responses and not only formulate offers. This requires knowledge, capacity for dialogue, and co-planning with the market, the exercise of administrative discretion and the selection of economic actors based on more sophisticated criteria, such as reliability, the capacity to manage risk and to propose innovative and sustainable solutions. What can Consip contribute to this transition?

"The construction of a different relationship with the market – while always respecting the framework of current laws and practices – is a key point to use procurement virtuously and with the goal of overall long-term well-being. I believe that Consip must continue to play the role of interface with the market, experimenting and refining practices that can be replicated by public agencies. This is a necessary goal, even more so in the context of Next Generation EU. An initial element to work on is the preliminary interaction with the market. Businesses should be considered more as subjects in an interactive relationship, especially for tenders with more innovative content. From this perspective, the market must also be re-educated for constructive interaction. Another element is undoubtedly the role of the scientific community, especially as regards purchases in the health sector from a value-based standpoint and with value-based goals. But perhaps this issue requires a separate discussion, because it opens up very important scenarios regarding innovation."

To act as a sophisticated buyer, that is, to carry out purchases from the standpoint of value, and thus to move from a logic of strict administrative compliance to one of responsiveness, it is necessary to invest in skills. You are now the of one of the largest public agencies, the Ministry of Economics and Finance, with 11,000 employees; from 2011 to 2018 you held the position of Director of Personnel of the MEF, and in this role you invested a great deal in people, in both training and innovation in the recruitment of highly specialized employees. How can we return to investing in skills, and in this specific case, in the skills of public buyers?

"There is no question that far too often, purchasing procedures and the role of public buyer, with the related responsibilities, generate fear in managers. To allow them to overcome this attitude it is necessary to invest in management skills, that need to accompany legal competences, to enable public employees to put into practice this new approach which procurement must follow, making them able to identify innovative solutions and evaluate various purchasing solutions in a "rounder" way. Practical training is needed, and good practices are needed as a point of reference, through pilot projects. Consip intends to make an important contribution on this point; this could represent a way of rethinking our role, as I said, and not only seeking to generate savings."

Sustainability and CSR policies are now a fundamental pillar of businesses, especially the most innovative and far-sighted ones, and sustainability is increasingly becoming a factor of competitiveness. Interiorizing the logic of sustainability in public tenders can not only stimulate businesses, but also make the PA more resilient. It's not a problem of rules, but of culture. What role can Consip play in this process?

"This is certainly a fundamental issue for Consip, which has already made strong commitments in this area, and has the duty to enable and promote increasingly sustainable purchases and public services. I am firmly convinced that public procurement must represent a true driver of development and environmental sustainability. A first step was taken with the issuance of tools to carry out award procedures entirely digitally, that made it possible to eliminate 4,500 tons of CO₂ due to the paper saved. Another issue that is very close to my heart is gender equality, and I would really like to leverage the new value-based purchase logics to, among other things, explore forms of gender-responsive procurement. Italy is still very far, too far behind in this area, and the data on female unemployment during the pandemic is alarming. At Consip we are working on this, starting from an analysis of what has been done, for example, by the Commissioning Center of the Latium Region. These are areas in which I think Consip can make a fundamental contribution to the implementation of the National Recovery and Resilience Plan."