In the realm of public procurement within the European Union (EU), Dynamic Purchasing Systems (DPS) are becoming a workhorse for delivering value for money across the 27 states. In Finland, over 90% of tenders are now done through DPS systems as they digitise their workflows and focus their skilled buyers on supplier management and contract monitoring activities.
The DPS was introduced in the 2014 procurement directives. They can be a powerful tool for enhancing efficiency, flexibility, and competitiveness. DPS offer a new approach to procurement that streamlines the process, reduces costs, and fosters greater competition among suppliers.
Understanding Dynamic Purchasing Systems (DPS)
Dynamic Purchasing Systems are procurement mechanisms designed to simplify and expedite the acquisition of goods, services, or works by public authorities in the EU. The DPS process is governed by the (classic) EU Directive 2014/24/EU. This directive underpins the harmonisation of public procurement regulations across all member states, promoting transparency and fair competition. In contrast to conventional procurement procedures, the Dynamic Purchasing System (DPS) stands out for its flexible and continuous nature. It enables suppliers to participate continuously and offers a seamless entry point for new suppliers to join the system at any point during its duration. To put it simply, suppliers have the flexibility to engage with the system at their convenience, even if they initially missed the application deadline. This represents a significant departure from traditional procurement methods
Key Features of the DPS
- Open and Ongoing: As outlined already, the DPS is open for suppliers to join at any time, providing a more accessible entry point for businesses, especially small and medium-sized enterprises (SMEs). The dynamic nature of DPS allows for the continuous addition of qualified suppliers. They can apply as often as they like until they are added. For instance, they may need to set-up a consortium (especially SMEs) to meet entry requirements.
- Product and Service Variety: DPS is versatile and applicable to a wide range of goods, services, and/or works. This flexibility allows public authorities to procure everything from office supplies to complex construction projects through the same system. As outlined already, Finland in particular has centred its entire procurement strategy around the DPS. In Ireland to date, DPS have been deployed on low complexity goods and services.
- Competitive Pricing: By fostering a competitive environment, DPS encourages suppliers to offer competitive prices and better value for money. This benefits public authorities and taxpayers alike. The DPS offers the prospect of a high supply / low dependency model. In competitive markets with many suppliers, the contracting authority can encourage participation from many suppliers, driving value for money.
Additional features
- Electronic Procurement: DPS is managed electronically, which reduces paperwork, minimises administrative burdens, and enhances transparency through the use of online platforms – e-tenders in the case of Ireland.
- Framework Agreement: They operate under a framework agreement, outlining the terms and conditions governing the procurement process. This agreement is established upfront, providing a clear and predefined legal framework. The scope of what the DPS is used for has to be published at its instigation and cannot be added to during its operation so in this respect, it is a more flexible version of a framework.
- Transparency: Transparency is a fundamental principle of procurement and the DPS really demonstrates this as it is open to participation and maximises competitive opportunities. Public authorities are required to maintain comprehensive records of all procurement activities to maintain compliance with EU regulations.
Benefits of a DPS
The benefits derived from DPS are manifold. Some of the key ones already mentioned include increased competition driving value for money. It is also SME friendly as they tend to find DPS easier to access and participate on. This contributes to economic growth and job creation for these SME firms. It can also encourage the development of consortiums of SMEs which can increase competition in areas that larger organisations dominate. Some of the other practical benefits include:
- Efficiency: They reduce the time required to procure goods, services, or works. It simplifies the procurement process, eliminating the need for repetitive tendering procedures. Tenders can be run more quickly with fewer forms / documents.
- Cost Reduction: The reduced administrative burden leads to cost savings for both public authorities and suppliers. There are clear benefits for organisations running high volumes of standalone works competitions.
Applications of Dynamic Purchasing Systems in EU Public Procurement
Dynamic Purchasing Systems are used across a broad spectrum of public procurement needs across the EU. Some of the areas DPS are commonly used include but are not limited to:
Construction and Infrastructure Projects
Public authorities often utilise DPS for the procurement of construction and infrastructure projects. This includes building maintenance, road construction, and public facility development. Minor works, traders and design team services can also be procured using DPS.
IT and Technology Services
DPS is ideal for sourcing IT hardware, software, and related services. It enables public entities to stay updated with the latest technology solutions. It also maximises competition and the ability of central bodies to leverage buying power against the global conglomerates that dominate this space.
Professional Services:
Legal, consulting, and other professional services can be efficiently procured through DPS, ensuring that public authorities have access to qualified experts. Very often, public buyers do not drive sufficient competition for professional services. Ireland is significantly more expensive than EU norms and this is due in part to the presence of many multinational firms in Ireland that are less price sensitive. A DPS and a focus on encouraging competition helps mitigate dependency on large, expensive firms and allows public authorities adopt a horses for courses approach to meeting their requirements.
Healthcare Services
DPS is valuable for procuring healthcare services, such as medical equipment, diagnostic services, and emerging requirements like telemedicine solutions. A DPS more readily opens public bodies up to global players in these areas.
Office Supplies
Public entities regularly rely on DPS for the procurement of office supplies, stationery, and equipment, ensuring a smooth workflow. These categories are dominated by resellers of products sources in China. A DPS helps to control the supplier margin applied to global commodities by low value added resellers.
Energy and Environmental Services
DPS is a valuable tool for procuring energy-efficient solutions, renewable energy sources, and environmental consulting services. This area is one that benefits from competition as it is going through a period of rapid expansion and has a lot of new entrants. Setting the entry criteria at the right level acts as a quality control to ensure the right level of expertise is available from the panel. Thereafter, the mechanism of a DPS drives value for money.
Challenges and Considerations
So far, we have highlighted the benefists of DPS. If Finland has moved to centre their national approach around them, a question arises as to why their adoption in Ireland and other EU states hasn’t been quite as bold.
One reason is the Some of the reasons include administrative burden. There is watering and feeding required in return for the flexibility provided. Another reason is the requirement to ensure quality control on admitting new suppliers remains vigilant. New suppliers must meet the required qualifications and standards to maintain the integrity of the DPS.
Another reason is some authorities struggle to deploy staff with the right level of training to get the benefits of having a DPS system in place. Trained staff are needs to ensure there is transparency and equal treatment of suppliers throughout its lifecycle. They are also needed to ensure data security is managed appropriately throughout.
Conclusion
Dynamic Purchasing Systems have emerged as a transformative tool in EU public procurement. Overall, their open, flexible, and competitive nature streamlines the acquisition of goods, services, and works. As a key component of EU procurement regulations, DPS fosters innovation, cost-efficiency, and transparency. By continuously adapting to changing needs and welcoming new suppliers, DPS ensures that public procurement remains agile, efficient, and responsive to the evolving demands of the European Union member states.
Useful additional material with practical examples can be found in this document published by the European Commission. A summary of the current regime is available here.
