Procurement in the margins of Italy – and are buyers too powerful?

I recently had the great chance of going to Venice, Italy through some procurement related work I was dealing with. Venice is such a lovely place, a pity it was pouring down and that I was there for barely 2 days, the time to deliver the work and go back and forth…

On this occasion I met up with the Venice chamber of commerce who have a tender support service for their local companies where they inform them regularly of what European tenders could be of interest. It is a good step towards getting small companies aware of what is out there and that exporting or cross-border sales (exporting is not a term used when you speak about exchanges between EU countries) do not need to be done just with the private sector.

Cross-border tendering is a huge issue in Europe and the powers in Brussels have been scratching their heads for quite a while on how to make things happen more easily. The EU directive broadly give the same legal background, procedures to all procurers in the EU but small companies still find it difficult translating their success on home markets into their neighbour’s.

I met up with half a dozen businesses and we shared some experience about how tendering is seen from their perspective. As Italians they are never really fond of rules and regulations and anything they have to deal with administratively. Winning contracts for them is difficult but somehow they felt winning a contract in Italy for a non-Italian company is even harder.  One of the companies was interested in doing more in the EU but somehow found it easier to deal with the Middle-East and African countries… They are structural engineers, dealing with bridges, stadia, highways and the like. There is still a need in the EU for all of these, why don’t they get on with it nearer home?

The answer is that they really would like to, and they will try in the future but at the moment the margins are much better somewhere else.

This brought to me the thought that maybe the procurement process as it is designed / managed in Europe gives too much power to the procurers? We all want to have the best products for as cheap a price as possible but we sometimes forget that the companies selling these products also need to survive and be rewarded for their risks and investments. Without the bridge company making huge profits in Dubai they would not be able to build a bridge in the UK at an UAE “subsidised” price.

The same can apply to pretty much any products we buy as individuals – we may get them at a favourable price because of other markets supporting the seller.

Without making all procurement people feel super important, the procurers are pretty much the masters of the world. How do you control them? How do you guide them in making decisions that in the short term are not the most interesting? Is buying a bridge from Italy a better option to buying a bridge from the UK for a British buyer?

Scratching head still in progress but there are some new rules coming up in Europe that are looking at how to do more “social procurement” i.e. buying with the society in mind. Will that change things?

Until next time…

Toni Saraiva works in England (but travels a lot) for EISC, who help small firms in particular understand the wonders of EU procurement and how to bid for contracts.

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