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Procurement progress12th of March 2013
ECJ’s correspondent in the Netherlands Nico Lemmens examines the implications of the recent government coalition agreement and a new tender act for government institutions.
Both with the recent coalition agreement between the Dutch social democrats and the liberals, and the introduction of a new tender act for government institutions, the new Dutch cabinet Rutte II has taken at least two remarkable steps.
With the new tender act the government wants to prevent what is seen as unfair competition for small and medium sized companies. In many cases the clustering of contracts is attractive because of economies of scale. In the tender act clustering is discouraged. Now, using procurement policy as an instrument to achieve targets in other policy areas is not unusual.
Disturbance of competition
Corporate Social Responsibility is another such area. This kind of procurement policy introduces a new competition arena into the market. Nothing wrong here. However, discouraging contract clustering is a disturbance of competitive relations. It puts large companies (who can handle large, clustered contracts) at a disadvantage. In this respect the Dutch government is overstepping the mark.
This is only one remarkable step. The following extract is from the new coalition agreement:
‘The strategic HRM policy will aim at continuous quality improvement, making flexible the government organization and reducing the number of coordination layers.’
Who could possibly oppose this? But then, see what we find further on in the document:
‘By opening up the lowest wage scales, flex workers in the lower echelon of the labour market (such as cleaning and catering personnel) can be employed again. In this respect the government will set a good example…’
Since the beginning of this century, a strong trend towards outsourcing has been developed in the Netherlands. Outsourcing is seen as a major instrument to make organisations flexible. Procurement policy (insourcing instead of outsourcing) is here used as a means of labour market policy: protection of flex workers in lower wage scales.
Apart from the fact that the government appears to contradict itself (flexibilisation versus insourcing), it misses an enormous opportunity here. Instead of insourcing, the government should outsource its facility services, precisely in the interest of flex workers.
However, outsourcing should be based on long term multi service contracts, thereby giving facility service companies the opportunity to create fixed and full time jobs. By doing so, the Dutch government would serve well the ‘lower’ echelon of the labour market, the taxpayer, the government organisation itself, the trades unions, and the facility services industry.