Construction procurement by Dutch municipalities

Abstract

Over the last decade the European Union (EU) has had a strong impact on the way public organisations introduce market philosophies in their policies. The EU directives on procurement, the battles against cartels, the globalisation and harmonisation of markets, all lead to extra attention to the procurement practice of public agencies. This paper focuses on the procurement practice of one of these public organisations, the municipalities in the Netherlands. Statistical data suggest that Dutch municipalities prefer limited tendering procedures, and seem to avoid public tender procedures. This paper reports on research into the reasons for such preference. Analysis of municipalities' procurement and tendering practice uncovered an intricate mechanism for maintaining project control. Municipalities implicitly use the prospect of future assignments to restrain contractors' misbehaviours. By doing so municipalities reduce uncertainties and risks. Contractors' demeanour becomes more flexible, cooperative and quality orientated because of this mechanism. Through the use of this mechanism the municipality-contractor relationship has developed to a kind of co-makership relation. This phenomenon is categorically overlooked in the standard market paradigms. Bending the procurement and tendering practice towards more public tendering is expected to make project control more troublesome