Performance-Based Specifications: Exploring When They Work and Why

There is extensive research and attention on innovation and sustainable public procurement (SPP) in the European Union at present, with the 2014 revision of the Procurement Directives, the Innovation Union strategy and other European Union policy initiatives. This report seeks to contribute to this discussion through the investigation of the use of performance based specifications (PBSs) in public procurement in the European Union and the United States. The report outlines the benefits and limitations of the use of PBSs, even in the most "progressive" public procurement environments, such as the Netherlands, particularly around their ability to support sustainable development goals and deliver environmental benefits for a procuring authority, such as energy and resource efficiency. Additionally, this report aims to identify the sectors in which the enabling conditions for the successful use of PBSs in public procurement are in place and to understand what policies and regulations are needed to promote the use of PBSs in public tenders and public procurement framework agreements

Procurement and Predation: Dynamic Sourcing from Financially Constrained Suppliers

This paper studies the interaction between financially constrained and financially strong firms on a procurement market. It characterizes and discusses a procurement agency’s optimal response when faced with financially asymmetric firms. By considering a dynamic setting, both present and future consequences and incentives are taken into account

Defining the dimensions of engineering asset procurement: towards an integrated model

Procuring engineering asset management is a critical activity of all types of government, with optimal approaches to procurement still in need of identification. This paper advances a novel approach of exploring the procurement of engineering assets across a number of dimensions: Project rules, organisational interaction rules and complexity. The dimensions of project rules are held to include cost, quality and time. The dimensions of organisational interaction rules are held to be collaboration, competition and control. Complexity is seen as in the project itself, in the interaction between organisations or in the business environment. Taken together these dimensions seem salient for any type of engineering asset, and provide a useful way of conceptualising procurement arrangements of these assets

Market Design for Generation Adequacy: Healing Causes rather than Symptoms

Keywords JEL Classification This paper argues that electricity market reform – particularly the need for complementary mechanisms to remunerate capacity – need to be analysed in the light of the local regulatory and institutional environment. If there is a lack of investment, the priority should be to identify the roots of the problem. The lack of demand side response, short-term reliability management procedures and uncompetitive ancillary services procurement often undermine market reflective scarcity pricing and distort long-term investment incentives. The introduction of a capacity mechanism should come as an optional supplement to wholesale and ancillary markets improvements. Priority reforms should focus on encouraging demand side responsiveness and reducing scarcity price distortions introduced by balancing and congestion management through better dialog between network engineers and market operators. electricity market, generation adequacy, market design, capacity mechanis

The simple micro-economics of public-private partnerships

We build a unified theoretical framework to analyze the main incentive issues in Public Private Partnerships (PPPs) and the shape of optimal contracts in those contexts. We present a basic model of procurement in a multitask environment in which a risk-averse agent chooses unobservable efforts in cost reduction and quality improvement. We begin by studying the effect on incentives and risk transfer of bundling building and operation into a single contract, allowing for different assumptions on the contractual framework and the quality of the information held by the government. We then extend the basic model in several directions. We consider the factors that affect the optimal allocation of demand risk and their implications for the use of user charges and the choice of contract length. We study the relationship between the operator and its financiers and the impact of private finance. We discuss the trade-off between incentive and flexibility in long-term PPP agreements and the dynamics of PPP contracts, including cost overruns. We also consider how the institutional environment, and specifically the risk of regulatory opportunism, affects contract design and incentives. We conclude with some policy implications on the desirability of PPPs

Is public procurement going green? experiences and open issues

Public purchasing authorities are in a leading position for the introduction, promotion and development of green procurement. Indeed, the public sector can influence green procurement both by designing suitable policies and by driving “green” markets through the significant share of public purchases on GDP. The European Commission (EC) has emphasized the importance of cost-efficient GPP and, in compliance with the EU’s Integrated Product Policy (IPC), Member States have been encouraged to devise national action plans. As a result, many countries have already adopted steps in the direction of greening public purchases. The aim of our paper is twofold: first, we focus on the state of the art in terms of the EU and Italian Legislation; then, we highlight open questions related to crucial issues in GPP implementation, with a particular attention to the design of green tenders and awarding criteria to account for environmental quality in public purchasing procedures.Green Public Procurement/Purchasing (GPP), Italy, EU, Legislation and Implementation

Control and Communication Protocols that Enable Smart Building Microgrids

Recent communication, computation, and technology advances coupled with climate change concerns have transformed the near future prospects of electricity transmission, and, more notably, distribution systems and microgrids. Distributed resources (wind and solar generation, combined heat and power) and flexible loads (storage, computing, EV, HVAC) make it imperative to increase investment and improve operational efficiency. Commercial and residential buildings, being the largest energy consumption group among flexible loads in microgrids, have the largest potential and flexibility to provide demand side management. Recent advances in networked systems and the anticipated breakthroughs of the Internet of Things will enable significant advances in demand response capabilities of intelligent load network of power-consuming devices such as HVAC components, water heaters, and buildings. In this paper, a new operating framework, called packetized direct load control (PDLC), is proposed based on the notion of quantization of energy demand. This control protocol is built on top of two communication protocols that carry either complete or binary information regarding the operation status of the appliances. We discuss the optimal demand side operation for both protocols and analytically derive the performance differences between the protocols. We propose an optimal reservation strategy for traditional and renewable energy for the PDLC in both day-ahead and real time markets. In the end we discuss the fundamental trade-off between achieving controllability and endowing flexibility