Politique Internationale — In the field of transport infrastructure, can public procurement and innovation go hand in hand?
Thierry Laloum and Emmanuel Rollin — Nature is reminding humankind that we need to change the ways we use the planet by protecting it and saving resources. At this time, it seems wise to ask whether France, Europe as a whole and other major countries with infrastructure have the tools needed to support the necessary environmental revolution that is under way.
The question is particularly significant for transport infrastructure when the use of fossil fuels is pointed to as one of the main causes of pollution; when electric cars and hydrogen-powered engines are becoming a feature of the landscape; and when the technology for driverless cars is almost up and running.
It has become commonplace in France to say that the bidding process for constructing public infrastructure drags on, and that contracts are difficult to draw up… and that this would not be the case “elsewhere”, where highly innovative forms of contract allow the public authorities to act as though they were private buyers.
In fact, there are few countries where the authorities are not criticised for their infrastructure projects, whether it is their design by a private entity, their usefulness to the public or their complex contracting process.
However, except for some emblematic projects, most public contracts run smoothly. In addition, public procurement in France is subject to the same legal framework as in all EU member countries, including the United Kingdom until recently.
Public procurement has always been an essential vector of social and environmental progress. Moreover, requests for proposals, and other public procurement tools that set out specifications and targets for social development and the environment, have always been very efficient tools.
P. I. — Why are the public authorities so faint-hearted about public- private partnerships such as PFI or PPP? Is the impression that these projects end up in court well founded?
T. L. and E. R. — The major projects making headlines are very often those which are challenged politically or socially, or which are technically complex and face difficulties during the construction period. However, it should be noted that very few major projects performed under a PPP – or similar – scheme are cancelled, which goes to show that public buyers are vigilant and rigorous when it comes to embarking on this type of project.
Although these contracts are rarely terminated, there may be difficulties after signing, either at the construction stage or at the operation and maintenance stage. It sometimes happens that the definition of needs drawn up in advance does not cover all the relevant interests and especially the needs of users. Public authorities focus more on a conceptual public interest and do not sufficiently act like customers purchasing a structure or work to satisfy their needs or the users’ needs. The “customer” or “user” positioning would benefit from being taken into consideration at the same time as the definition of needs. As for the technical aspects, they should be simply considered as necessary tools and means. Once again, the question here is not specifically about France but rather about the approach every buyer has for projects in each country.
Another pitfall could be avoided by reviewing risk allocation in these large contracts as much as possible. The natural tendency for public buyers is to shift the greater part of the risk to the private contractor. This approach is logically justified since these contracts transfer the project leadership to the private co-contractor. However, as understandable as it is, this attitude makes it much more difficult to implement a real partnership approach, which is the only approach that can face up to the challenges of our time.
P. I. — How do you foresee changes in the awarding of public contracts to meet the great challenges of this environmental revolution?
T. L. and E. R. — COP 21 set new challenges: innovation, creativity and urgency. This means that public authorities, as well as bidders, will have to accept the possibility of finalising the project during the bidding process itself, and even the risk that the project might change. They will have to be able to adapt.
There is certainly no need to rewrite the Public Procurement Code to encourage the innovation and creativity required to face these new challenges.
Some adjustments will definitely be necessary to develop forms of “alliancing” that could be used by French contracting authorities – like their British counterparts do already with railways, for instance. However, public procurement regulations already offer a range of adaptable mechanisms such as sourcing, competitive dialogue and various types of request for proposals (“appel à manifestations d’intérêt”, “appels à projet”, etc.).
These tools, however, are not employed as much as they are in other countries. They are used more frequently in projects for developing urban areas than for transport infrastructure projects.
The use of these procedures is itself skewed by a cultural prism. For instance, when it comes to competitive dialogue, some authorities use this procedure to co-develop their project and to “source” ideas in order to optimise the project. Other authorities, on the contrary, prefer to introduce the bidders into a constrained framework and use dialogue to ensure that they all submit offers in strict compliance with the initial project specifications. This is more common in southern European countries, including France, where the private party is considered as a contractor that will build according to the public authority’s design, and not as a partner who can bring a touch of creativity and experience to the project as originally conceived. Better use of these procedures would certainly enable more integration of innovations and technical progress into projects.
Traditional public procurement processes will also make room for innovation if contracting authorities decide to include environmental impact and innovation as criteria for the award. Indeed, nothing prevents public buyers from incorporating this kind of criteria when analysing offers for infrastructure projects, as has happened in construction and public-private partnerships that include energy performance criteria (which, in fact, are essentially consumption assessments).
The limits are the same as the limits that apply to all criteria: they must be objective; they must not favour a particular candidate; and their importance in the final rating must be known in advance. In respect of transport infrastructure, therefore, the criteria (and the objective way of evaluating them) that will enable technological evolution are still to be defined.
P. I. — What could these criteria be as regards transport infrastructure?
T. L. and E. R. — For a road, it cannot be savings in its use, as could be calculated for heating or electricity consumption savings in a school, college, student housing or an office building intended to house the civil service. Instead, the following could be considered: the carbon footprint needed to build the road and the materials used (e.g. the use of vegetal binders instead of bitumen); integrated technologies (such as fibres and photovoltaic); and innovations that improve user safety or user-friendliness.
To take things further, using the “partenariat d’innovation” (innovation partnerships) procedure followed by the expansion of “marchés globaux” (global contracts) to road infrastructure would allow new technologies and innovations to be implemented on a broader scale. In the most traditional form of public procurement, ecological technical alternatives should also be prioritised or even become systematically authorised.
In a transitional phase, the development of technical alternatives appears to be a convenient solution since it benefits the public buyer. Indeed, offers must be compliant and alternative proposals must also be efficient to carry out the work. In addition, this opens the door to alternatives that the buyer could not anticipate and which will be an opportunity for bidders to propose ground- breaking solutions from an environmental standpoint. Clearly expanding the possibility of alternative offers – together with the criteria for scoring offers that prioritise more ecological or more innovative solutions – would be positive for progress. To ensure that the proposed alternative offers are not unfairly favoured, contracts should also provide for sanction mechanisms in the event of the failure to implement (or poorly implement) environmental or technological offers that have led to a higher rating.
P. I. — Do you think there is any ideal legal tool to address environmental challenges in road construction?
T. L. and E. R. — Innovation partnerships (“partenariats d’innovation”) appear to be the ideal tool to meet the challenges of the environmental revolution. However, their role is limited to the use of disruptive technologies or implementing ad hoc innovations that will then be tested by the markets. Considering the disruptive technologies needed to achieve the goals of the Paris Agreement, promoting innovation partnerships will necessarily be a factor of development. Nevertheless, we need to remain vigilant regarding the limits of this procedure: it should be restricted to real technological developments, and buyers will have to justify the lack on the market of the existing technology that is necessary to satisfy needs. To avoid abuses, the procedures will need to be controlled and clear guidelines established by the authorities.
The types of global contract already available in the Public Procurement Code – design and build, global performance contracts, global contracts by sector – can make it easier to meet current needs.
One of the forms of global performance contracts which, under the form of Design Build, Operate and Maintain, enabled French public facilities to develop towards buildings with better energy performance, could be used in the road infrastructure sector, provided that some changes to the applicable rules are implemented.
The procedure for global performance contracts, as defined by Article L. 2171-3 of the Public Procurement Code, is quite efficient as it holds the private contractor responsible for meeting objectives, especially “in terms of the level of activity, the quality of service, energy efficiency or ecological impact”. By its very nature, this procedure seems destined for a great future in the current context. It is surprising, therefore, that it is used so little on road infrastructure.
P. I. — What are the technical and practical obstacles that professionals in your sector encounter in implementing these contracts? And how can they be handled?
T. L. and E. R. — The first problem is technical. It is certainly possible to define building use cases and to ask candidates to design a project that will not reach a specific consumption threshold. However, it is more difficult to find simple and objective – and therefore measurable – criteria for roads. A road, once it has been built, consumes nothing. However, the progress made by road technologies and, above all, uses, certainly leaves room for the definition of technical performance criteria. Contractors proposing new technologies will have to highlight the benefits of these technologies and explain to their customers how to measure or monetise these advantages.
The second difficulty is practical: public buyers must have at their disposal the means to define and control the expected performance.
These two reasons, added to the recent reforms in the procedure, probably explain the small number of global performance contracts signed so far.
With some ambition, the scope of this tool could be developed further and used for long-term projects where specific investments, especially technological, are – or will be – necessary over time. The banning of deferred payments in public contracts (which only defence and security contracts avoid) and the “performed service” rule could easily be dealt with if advances or rents paid by the public entity throughout the life of the project were guaranteed, for example, by securities or by issuing on-demand bank guarantees for an equivalent amount.
In conclusion, it appears that the tools available for public procurement in France and, more generally, in Europe, already offer all the means to promote innovation, creativity and new technologies that will allow public authorities to support the ecological and environmental revolution.