Concerns Over Price-Centric Public Procurement Practices

Public procurement is a critical component in fostering healthy competition in the marketplace. However, an excessive emphasis on obtaining the lowest possible price, coupled with inadequate oversight during the contract period, may open the door for opportunistic players in the construction sector who lack the necessary qualifications.

In Sweden, the annual value of public procurement is estimated to exceed 900 billion kronor. When managed properly, effective public procurement can result in profitable ventures for both buyers and contractors while minimizing the financial burden on taxpayers. Nonetheless, the most affordable option on paper is not always the most advantageous choice.

A recent survey conducted by Byggföretagen, involving over 500 construction professionals, revealed that 75% of respondents believe that public organizations rarely initiate discussions before upcoming procurement processes. Furthermore, more than half of the participants feel that the dialogue that does occur often yields little to no significant impact. There exists a widespread perception that public procurement within the construction and civil engineering sectors is overly focused on price as the primary determinant.

This preoccupation with the lowest price, accompanied by insufficient monitoring throughout the contractual period, increases the likelihood of engaging unqualified contractors. The European Union has witnessed a near doubling of contracts awarded to a single bidder over the past decade, which raises significant concerns.

When price is prioritized excessively, there is a risk of incurring hidden costs. Unscrupulous contractors may attempt to offset low bids by compromising on quality. When pressures on pricing reach their limits, the standards for materials and labor may be lowered, ultimately jeopardizing the quality and durability of the end product.

Moreover, the lack of diligent follow-up can foster unhealthy competition, leading to issues such as unreported labor and poor working conditions. This trend not only undermines the integrity of the construction industry but also adversely impacts society as a whole.

Public procurement holds substantial potential to drive societal development in a positive direction. However, this transformation necessitates a shift from short-term savings to long-term investments. By prioritizing fair competition and quality standards, stakeholders can collaboratively build a more sustainable and equitable framework for the construction industry.