The previous articles in this series addressed a question that can be answered in euros. What a price reduction delivers, from what volume a tool pays for itself, how large the additional effect is.
At year-end, the part that cannot be answered in euros belongs in the picture, and it co-determines whether a project is workable.
Buying groups and their members are accountable to third parties, in several places at once.
The auditor reviews regularity. Advisory and supervisory bodies ask about the basis of award decisions. Buying groups organized as cooperatives are additionally subject to statutory review by their auditing association. For publicly funded procurement, the funding provider is added.
None of these parties asks about the savings rate. They ask how the decision came about.
A procurement procedure handled in a system leaves a record. It shows which suppliers were asked, which documents they received, which bids came in, against which criteria they were evaluated and who decided.
The same information can be reconstructed from an email trail and a spreadsheet. The difference is not whether it is possible, but what it costs and whether the reconstruction still works after staff turnover.
Whether and to what extent such a record carries evidential value in a dispute is a legal question we do not answer. The organizational value exists independently of it. It lies in every review running faster, in a procedure becoming repeatable, and in it not depending on one person's memory.
For a central office working for twenty or fifty legally independent member companies, a second point is added. What has to be evidenced is not only the procedure but also the separation of information between participants. And the same rule applies here. A separation that is in place but cannot be evidenced does not help at the moment somebody asks about it.
The more interesting part is that documentation is not only proof towards third parties.
A supplier who knows the rules of a procedure can price accordingly. Anyone expecting another round of follow-up after submission holds a reserve back. Anyone expecting the incumbent to win in the end puts in the care of an obligatory bid and no more.
The contrast here does not run between negotiating and not negotiating. A second bidding round or a negotiation step are permissible elements of a procurement procedure. What matters is whether they are announced, the same for everyone and documented transparently. An announced procedure with three rounds is predictable. A procedure in which individual suppliers get a further opportunity afterwards and others do not is not.
Complete documentation therefore takes on an economic function beyond the duty to provide evidence. It makes the procedural rule credible, and a credible rule lowers the mark-up for uncertainty. Proof towards auditors and governing bodies is in that sense a by-product.
None of this enters the calculations in this series. Neither the benefit of information separation nor the benefit of documentation is included, both are set at zero.
The reason is the same one for which we do not accept savings claims without a stated reference basis. A competition law breach is an event with low probability and very high damage. An expected value for it would not be a calculation, it would be a number that produces the desired result. Anyone applying it makes the entire calculation attackable.
That does not mean the point is small. For some organizations it is the very reason to consider a shared platform. It belongs in the decision. It does not belong in the business case.
Isn't a well-kept folder enough? For a single procedure, often yes. The question arises with fifteen categories a year, over several years, with changing responsibilities.
What should we record as a minimum? Who was asked, which documents and deadlines all participants received, which bids came in, against which criteria they were evaluated, who decided. And for joint procurement additionally, which visibility settings applied at the time of the procedure.
Does this apply to buying groups that are not cooperatives? The auditing association falls away, the other parties do not. Auditors and advisory boards ask regardless of legal form.
This concludes the series for this year. Fourteen articles, all from the same study, written in the autumn because the number this industry works with did not appear verifiable to us.
The full study runs to nine chapters plus an appendix with every assumption, all calculation paths and the examined sources verbatim. It is built so that every figure can be recalculated and repeated with different assumptions.
→ To the white paper
At year-end, the part that cannot be answered in euros belongs in the picture, and it co-determines whether a project is workable.
Who asks questions in a buying group
Buying groups and their members are accountable to third parties, in several places at once.
The auditor reviews regularity. Advisory and supervisory bodies ask about the basis of award decisions. Buying groups organized as cooperatives are additionally subject to statutory review by their auditing association. For publicly funded procurement, the funding provider is added.
None of these parties asks about the savings rate. They ask how the decision came about.
What a procedure leaves behind in a system
A procurement procedure handled in a system leaves a record. It shows which suppliers were asked, which documents they received, which bids came in, against which criteria they were evaluated and who decided.
The same information can be reconstructed from an email trail and a spreadsheet. The difference is not whether it is possible, but what it costs and whether the reconstruction still works after staff turnover.
Whether and to what extent such a record carries evidential value in a dispute is a legal question we do not answer. The organizational value exists independently of it. It lies in every review running faster, in a procedure becoming repeatable, and in it not depending on one person's memory.
For a central office working for twenty or fifty legally independent member companies, a second point is added. What has to be evidenced is not only the procedure but also the separation of information between participants. And the same rule applies here. A separation that is in place but cannot be evidenced does not help at the moment somebody asks about it.
The link between documentation and bid price
The more interesting part is that documentation is not only proof towards third parties.
A supplier who knows the rules of a procedure can price accordingly. Anyone expecting another round of follow-up after submission holds a reserve back. Anyone expecting the incumbent to win in the end puts in the care of an obligatory bid and no more.
The contrast here does not run between negotiating and not negotiating. A second bidding round or a negotiation step are permissible elements of a procurement procedure. What matters is whether they are announced, the same for everyone and documented transparently. An announced procedure with three rounds is predictable. A procedure in which individual suppliers get a further opportunity afterwards and others do not is not.
Complete documentation therefore takes on an economic function beyond the duty to provide evidence. It makes the procedural rule credible, and a credible rule lowers the mark-up for uncertainty. Proof towards auditors and governing bodies is in that sense a by-product.
Why we set this benefit at zero
None of this enters the calculations in this series. Neither the benefit of information separation nor the benefit of documentation is included, both are set at zero.
The reason is the same one for which we do not accept savings claims without a stated reference basis. A competition law breach is an event with low probability and very high damage. An expected value for it would not be a calculation, it would be a number that produces the desired result. Anyone applying it makes the entire calculation attackable.
That does not mean the point is small. For some organizations it is the very reason to consider a shared platform. It belongs in the decision. It does not belong in the business case.
Frequently asked questions
Isn't a well-kept folder enough? For a single procedure, often yes. The question arises with fifteen categories a year, over several years, with changing responsibilities.
What should we record as a minimum? Who was asked, which documents and deadlines all participants received, which bids came in, against which criteria they were evaluated, who decided. And for joint procurement additionally, which visibility settings applied at the time of the procedure.
Does this apply to buying groups that are not cooperatives? The auditing association falls away, the other parties do not. Auditors and advisory boards ask regardless of legal form.
The next step
This concludes the series for this year. Fourteen articles, all from the same study, written in the autumn because the number this industry works with did not appear verifiable to us.
The full study runs to nine chapters plus an appendix with every assumption, all calculation paths and the examined sources verbatim. It is built so that every figure can be recalculated and repeated with different assumptions.
→ To the white paper