Worrying new research by TBFY partner Openopps, shows that public tenders across Europe are becoming increasingly uncompetitive, with 25% of tenders receiving only one bid. Of concern is that the trend toward uncompetitive single-bid tenders is increasing – by 44% between 2016 and 2017. The total estimated value of these uncompetitive contracts has grown from €41trn to more than €100trn* in the same period.

Falling bids, average bid numbers for tenders across Europe. (Source: data extracted from ted.europa.eu).

The lack of competition is also shown by the average number of bids being posted by suppliers for each contract. In 2012, the average number of bids for each tender was nearly four, in 2018 the average number of bids has been less than three, a fall of 27%. While this may appear to be good news for lone bidders, uncompetitive tendering does not deliver good value for consumers, and is a possible indicator of cronyism.

But why are we seeing this movie from highly competitive towards less competitive tenders?

We don’t yet know, but a significant ambition at TheyBuyForYou is to apply cutting-edge analysis and to open procurement data to gain improved insight into underlying causes of this and other undesirable supply chain phenomena. With greater computing power available to us, we’re able to draw correlations between low numbers of bids and key attributes of the tenders being published.
For instance, we already know that there is an inverse correlation between the falling average number of bids and an increase in the value of a contract (see chart below). However this correlation is less pronounced than we would expect. We also see a similar inverse correlation between the number of single bids and the value of a contract.

Average numbers of bids by thresholds of contract value, 2012 – 2018. (Source: data extracted from ted.europa.eu)

Future analysis could look at whether the amount of work required to respond to a tender is a factor, or whether the quality of the language used in tender documents correlates to poor response rates. We will also look at the timings of tender responses, looking not just at the time provided to respond to tenders but also when tenders are published, such as during popular holidays like Christmas.

This is just the very beginning of our research, our aim is to use the data that we gather to highlight where problems are occurring and suggest remedies that European governments may adopt to improve their procurement. From clear insights on how to attract suppliers to bids and potentially providing early warning of bids that may prove to be uncompetitive, we aim to provide a suite of tools and mechanisms that will improve the efficiency of public markets across Europe.

However, the data we can extract from these public notices is often poor and data on contracting is particularly inconsistent. In order to develop the tools that can resolve some of these pressing issues, we will have to undertake significant work on improving and augmenting this data. Our aim is to apply improved analytical techniques to not only understand what is driving the rising lack of competition, but also to provide Governments with tools and analytics that will reverse that trend.

For further information on this issue please see OpenOpps founder, Ian Makgill’s blog post.

* All analysis was conducted using the TED data (ted.europa.eu).