OECD: Toolkit for Resilient Public Procurement Strategies

5 Address Market Failure (6)

Existing Guidance 3. Market Research Phase 4. Supplier Qualification and Frameworks Phase Actors Image Credits Government agencies, procurement Actors team, supply chain experts, market Procurement team, legal advisors, research analysts, industry experts. quality assurance experts, compliance officers. Activities — Conduct market research Activities to identify new suppliers. — Develop supplier qualification — Explore emerging markets and criteria (e.g., financial stability, niche suppliers. quality certifications). — Use databases and directories — Review potential suppliers to gather information on against criteria and conduct potential new suppliers. screenings. Toolkit for — Verify compliance with regulatory Resilient Public and ethical standards. Procurement Strategies to Minimise Risks of Supply Disruption © OECD 2024 24 STRATEGY 2. DIVERSIFICATION OF SUPPLIERS Foreword Acknowledgments 5. Request for 6. Request for Proposals Phase Information Phase About the Toolkit Actors Actors Procurement team, legal Reinforcing Resilience through Innovative Procurement team, inventory department (for contract terms), Procurement Strategies control specialists, technical finance department (for budget experts, stakeholders from user alignment). departments. Activities Resilient Public Activities — Prepare and issue calls Procurement Strategies — Prepare and issue RFIs to to selected suppliers. shortlisted suppliers. — Clearly define submission

7. Evaluation and 8. Negotiation and

Selection Phase Contracting Phase Existing Guidance and Frameworks Actors Actors Procurement team, monitoring Procurement team, legal Image Credits team, evaluation committee, department, finance department, managemen, relevant supplier representatives. government agencies. Activities Activities — Negotiations with selected — Evaluate proposals against suppliers to finalise terms criteria such as cost- and pricing. effectiveness, quality, and — Address any outstanding issues diversity benefits. or concerns related to contracts. — Negotiate with top candidates — Draft and review contract to clarify terms and conditions. agreements, including provisions — Select suppliers based on for monitoring supplier Toolkit for evaluation outcomes. performance. Sign contracts Resilient Public with suppliers. Procurement Strategies — Set up supplier performance to Minimise assessment mechanisms. Risks of Supply Disruption © OECD 2024 25 STRATEGY 2. DIVERSIFICATION OF SUPPLIERS Foreword Examples Acknowledgments About the Toolkit Small Business Subcontracting Reinforcing Resilience through Innovative Program Procurement Strategies Program / Diversification of Suppliers / United States Link Resilient Public Any contractor receiving a contract with a value greater than Procurement Strategies the simplified acquisition threshold (700.000 USD, 1.500.000 USD for constructions) must agree in the contract that small business, in the Japanese Public Procurement Strategy Strategy / Diversification of Suppliers / Japan Existing Guidance and Frameworks Link Image Credits Japan uses supplier diversification as a part of its public procurement strategy by supporting local SMEs and encouraging the participation of a wide range of suppliers. The Japanese government has initiatives in place to facilitate easier access for smaller companies to bid on public contracts, thereby ensuring a diverse and competitive supplier base. Additionally, Japan does not preclude the diversification of international suppliers by treating the participation of foreign companies in public tenders in the same way as domestic companies. Toolkit for Resilient Public Procurement Strategies to Minimise Risks of Supply Disruption © OECD 2024 26 STRATEGY 2. DIVERSIFICATION OF SUPPLIERS Foreword Acknowledgments About the Toolkit Handbook on Supplier Diversity in Europe Reinforcing Resilience through Innovative Handbook / Diversification Procurement Strategies of Suppliers / European Union Link This Handbook aims to summarise the years of learning so far and to Resilient Public provide a platform from which to move forward. It seeks to answer the Procurement Strategies questions that the authors are so often asked, such as “Why should we care about supplier diversity?”, “What can we do to implement it?”

5 Address Market Failure (10)

Existing Guidance and Frameworks ion Image Credits n t io Ex na am pl es rdi Co o Toolkit for Resilient Public Procurement Strategies to Minimise Risks of Supply Disruption © OECD 2024 44 STRATEGY 5. ADDRESS MARKET FAILURE Foreword Context Acknowledgments A procurement strategy addressing market failure involves designing and implementing purchasing practices to mitigate the negative impacts About the Toolkit of market inefficiencies and ensure the availability of essential goods and services. Market failure occurs when the free market is unable Reinforcing Resilience through Innovative to allocate resources efficiently on its own, often due to issues such Procurement Strategies as monopolies, information asymmetry, externalities, or public goods. A procurement strategy tailored to address these failures aims to correct these inefficiencies and promote a fair, competitive, and sustainable marketplace. Resilient Public Procurement Strategies Key elements include promoting competition, ensuring transparency, addressing externalities, supporting public goods, risk mitigation,