Риск и управления рисками в сфере государственных закупок: основные определения

 In terms of managing technological risks the case studies demonstrate a rather conventional approach: procurers try to reduce risk through early stage intelligence gathering (and pre-studies in some cases) and shift it as much as possible to the supplier through the request of guarantees or the payment modalities agreed. No specific contracts were used in the form of cost reimbursement or incentive contracts, as mentioned in the literature.

The difficulty for complying with standards and regulations (as in the case of the ethanol fuelled trucks) was a mixture of technical and organisational risk. Organisational risks were reported in many cases due to lack or volatility of standards (this was mainly in the case of environmental projects, where technologies are in a fluid status and oil prices change significantly) and there were also risks in social acceptance and compliance. Personal data was a specific case indicating that all services need to be anonymised to avoid such societal risks. Absorptive capacities seemed to play a less relevant role. The ICT and construction sectors were less influenced by this type of risks. Organisational risks increased considerably when the amortisation was foreseen in a longer term horizon (again in waste management). Procurers and public authorities were in most cases ready to carry the standards and legal risks in particular for the environmental and public administration applications, where the public gain was visible and commercial profitability less so. A particular organisational risk is one that derives from the interaction and coordination of many actors (SURFnet, waste management, bigger housing projects), where obligations were again tried to be resolved contractually. However, given the incomplete nature of contracts, this remains a major challenge for risk management. Early involvement and explicit discussions with stakeholders are an imperative for risk management; however only in certain case studies was this mentioned as an explicit practice. As a general remark one can state that organisational risks are reported, mainly in the form of legal and political risks; in most cases they were (often implicitly) carried by procurer/political personalities. In half of the cases were societal risks suggested (i.e. a risk that citizens would not accept the innovation); in the cases where they were important the risk could fully (citizens considered as buyers) or partially (citizens as users) jeopardize the project. In those cases, the political decision makers carried this risk.

Market risks occurred both from the demand (insufficient articulation of the need for and ability to adopt innovation) and supply side (lack of good bidders, supply chain insufficiencies), but appeared to be of lower concern when negotiating the procurement contract. To minimise demand side risks users were (when possible) consulted early and in certain cases they were in a position to indicate the solutions acceptable to them (as in the case of the Hammar district). The demand risk in the case of the ethanol-fuelled trucks was the determinant factor, which was apparently not sufficiently taken into consideration and jeopardised the project. Finally the effect of prices (elasticity of demand) and income are very relevant factors, which were affected by the credit crisis and there were not

  

anticipated. In the case of waste management the willingness of future users to cooperate was identified as a risk and was dealt with through awareness raising. Supply side risks were only seldom reported, supply chains operated and only in exceptional cases suppliers were not interested but this was partly due to market imperfections (as in the case of the asphalt cartel in Sweden). In short, market risks were partly demand and partly supply driven; demand seems to preoccupy the procurers, supply the contractors.

Financial risks were present everywhere but were also those easier to deal with because there is the highest experience with them. The banking sector providing loans has often suggested solutions for the financial risks. As a consequence they were easy to quantify and share. This was visible in the Public-Private Partnerships and Privately Financed Initiatives. Financial risks in the case of environmental projects were carried mainly by the public sector; in cases in which market prospects are good the supplier appears to be ready to carry the cost.

Finally turbulence risk were mostly associated with changes in technology sometimes also with regulation thus overlapping with organisational risks. Turbulence risks were only thought through in cases where similar experiences pre-existed; spill over risks almost never considered.

Risk management in most cases was reported as built-in ex ante by accessing additional information through an early involvement in information gathering, pre-procurement studies and expert involvement. Monitoring, awareness raising and training were also used in several cases although it seems that they were mostly ad hoc or ex post and not explicitly planned in connection with the procurement. Risk sharing was always present in the contract negotiation but not using explicit tools. No case reported a systematic overview of risks and how they should best be addressed but in all cases the risks were taken into consideration, even if in a cruder way than in a systematic conceptual approach. Nor was a risk facilitator identified in any case (although experts may have played this role implicitly in some cases). In short: the political will played a major role in the cases studied, the tools used for identifying and assessing risk were mostly conventional and the cost of risk management can hardly be calculated. Nevertheless, although often implicit and not quantifiable in all cases interviewees reported that they had a very positive learning experience in risk management.

 

 

1.5   Conclusions for the management of risk in the procurement of technology

The literature review, the conceptualisation and the 12 case studies have helped deal with two preconceptions about the use of public procurement as instrument to promote innovation: the hurdles imposed by the Procurement Directives and the potential connection of the procurement of innovation with national protectionism. The cases show that it is possible to procure innovative products and services in compliance with the Directives and there are cases where foreign suppliers win the bids. Although this does not eliminate a potential preference for national companies it demonstrates that this is not always the case.

The first preconception, that the European Community Directives on Public Procurement¹ hamper real innovation to be developed through public procurement, can be severely qualified. Already in the Fraunhofer study (Edler et al., 2005) there is an extensive description how innovation procurement can take place in the current legal framework. The cases identified in this study simply confirm that procurers who wish to organise such a process are not only able to do it but they can use a variety of processes without infringing the directives. Although in some cases there may be need for clarifications or initiatives the current framework can be used for stimulating innovation procurement.

The second preconception, namely the concern that procurement of innovation would necessarily favour national suppliers, did not materialise in the studied cases. In the cases of the ethanol-fuelled trucks, the Vaxtkraft Project, the GigaPort Next generation and the Rio Bridge foreign companies and foreign subsidiaries were awarded procurement contracts. Obviously, the selection of cases does not suffice to demolish the protectionist argument and more often than not the suppliers are national companies. However, the cases do demonstrate that public bodies, once dedicated to procure innovation they may (and sometimes do) open up to foreign suppliers. Thus, one may even reverse the argument and claim that in contrast to standard products and services, the conscious demand for innovations in public procurement may occasionally facilitate cross border investments and solidify rather than fragment the Internal Market.

But there is still a long way to go and significant problems to overcome before a large European internal market for the procurement of innovation is created. As pointed out in the conceptual analysis the real challenge remains the change of mindsets and the adoption of a new culture. More than that, the cases suggest that risk taking and innovation seeking need to be embedded in the strategy of procurement and the culture  of the procurers. For that, the whole array of procurement procedures can and should be mobilised to bring in innovation. Depending on the type of innovation asked for, this can be done in the traditional procedure by formulating functional specifications and allowing variance and/or it can be supported by sophisticated procedures such as competitive dialogue. In all those different procedures, risk management remains a cornerstone and its future development and application is the most important element that may trigger a change in the future. Discussing the issues, suggesting management tools, disseminating good practices and addressing risk management are all part of a new approach, which, it is hoped, will eventually (even if gradually) lead to changing mindsets.

 

 

1.6 Conclusions for the procurement of innovation

Procurement of innovation has high social returns on investment; however, because it involves risks and uncertainties the volume of investment in innovation procurement is sub-optimal. But in selected sector and through the utilisation of the tools promoted by the amended Directives there is now visible progress.

Procurement of innovation is growing in Europe and, when successful, it is beneficial:

Individual success stories, the creation of specialised agencies in some member states, the role of platforms and lead-used initiatives at national and European level as well as the cases reported suggest that there is increasing interest and practice in the topic. Targets are often met; by-products and spillovers leading to higher social return on investment than expected were observed. As to the latter point, in several cases, the benefits were visible for the supplier's profitability, productivity and in selected cases social achievements. In addition, three cases which started as pure public procurement triggered an expanding market.

Certain sectors and countries lead the way: The cases identified were in compliance with the literature, as they are mainly in areas with high diffusion potential, namely ICT and the energy-environment complex. It also seems that there are many cases known in the Nordic countries, the UK and the Netherlands. There is no systematic evidence for that but there is a strong feeling that in some countries there is a history of technology procurement (Nordic), in others recent policies are encouraging and facilitating it (UK, Netherlands, Germany), whereas in most member states procurement of innovation is an exception - or at least less visible.

There is no pre-defined set of conditions as the only ones, for which procurement of innovation is appropriate: Procurement of innovation is possible in all ranges of budgets, types of actors, projects and innovation. It is not exclusively used for larger, medium or smaller projects only; it can be designed and implemented by any type of public actor interested in procuring products and services that do not yet exist in the market. Suppliers  can also be of any size or nationality. In bigger projects the contractors are larger consortia; many well-known multinational companies were among them in the case studies; more often than not (but by far not exclusively) the supplier (or the consortium leader) were national companies or local subsidiaries of multinationals. Bigger companies and SMEs, national, foreign and multinational companies can win tenders for procurement of innovation. Finally all types of innovation can be addressed. At that stage the innovations in the procurement process are mainly incremental or the based on integrating complex projects. Demonstration and diffusion are important components of the innovation process. But this does not preclude procuring radical innovations as some examples demonstrate.

There are no pre-defined approaches of implementation. All types of procurement (direct, catalytic, cooperative) can be used and many accompanying support tools or incentives can be combined with procurement to increase the likelihood of success or to target higher spillovers. Many procedures and ways for intelligence gathering can be used: breaking down the procurement into more stages, engaging in dialogue, hiring experts and consultants

Procurement of innovation can prove very useful but it is neither a panacea for innovation policy nor an easy task for procurers. Despite growing evidence and potential to enhance competitiveness, procurement of innovation is still risky and not generally applicable. There are tradeoffs and they have to be respected and carefully weighted before a decision to go for it be taken. The various techniques used (intelligence gathering, breaking down the procurement into more stages, engaging in dialogue, hiring experts and consultants) all request time and funds. Lock-ins are possible. Hence a well-defined "go-stop" procedure helps to take the right decision. For these decisions experience matters. Learning occurs and once public officials get acquainted with procurement of innovation they are more willing to repeat it, as during the process they familiarise and learn to confront rather than avoid risk.

As the most important element for this "stop-go" decision is the appraisal of risk and the most appropriate way to deal with it the following section focuses on conclusions regarding risk management.

 

 

 

 

 

 

 

INNOVATIVE RISK MANAGEMENT, INC.

 

Welcome to the first issue of Innovative Risk Management's newsletter. This newsletter will be focused on you, the warehouse building owner or property manager. It will contain articles to help you understand and manage your risk. It will also contain tips and checklists to help you lower your costs of operation by reducing your exposure to loss. This first issue focuses primarily on the property risks at your warehouse building. And designed to give you insight into how to control your risk from this type of exposure.

 

 

PORTABLE FIRE EXTINGUISHERS

 

Introduction

Portable fire extinguishers represent the first line of defense against fire discovered in its initial stages. By having extinguishers in good working order, of a proper type for the class of fire, and in the hands of persons trained in their use, it is possible to control the vast majority of those fires that are just beginning. Nonetheless, the fire department should be notified immediately upon the discovery of any fire. Only then should the decision be made as to whether or not employees should fight the fire themselves.

In the evaluation of your portable fire extinguisher protection, each of the following areas should be addressed:

1. Type of extinguishers (proper class for hazard).
2. Distribution (adequate number of units).
3. Installation (properly mounted, easily seen, and accessible).
4. Maintenance (inspection program, servicing,

tagging).

5. Training of personnel in the use of the equipment.

 

Classes of Fires

There are four major classes of fires.

 

Class A        Ordinary combustible materials (wood, paper, cloth, rubber, and most plastics).

Class B        Flammable-combustible liquids, gases and greases.

Class C        Energized electrical equipment.

 Class D        Combustible metals (magnesium, sodium, titanium, etc.).

 

Classification and Rating of Extinguishers

It would follow that fire extinguishers are given the same classification as the type of fire for which the extinguisher is to be utilized. The classification consists of a letter that indicates the class of fire on which an extinguisher has been found to be effective, preceded by a rating number that indicates the relative extinguishing effectiveness.

For example, a 4-A extinguisher should extinguish approximately twice as much ordinary combustible material as a 2-A extinguisher. The higher the numeral preceding the class marking, the more extinguishing agent that is available to fight the fire.

Selection of Extinguishers

The first thing to consider is the type of material to be extinguished. Extinguishers for protecting against Class A hazard should be selected from among the following: pressurized water, foam, loaded stream, or multipurpose dry chemical.

Extinguishers for protection against Class B and C hazards should be selected from: carbon dioxide, halogenated agents, dry chemical or dry powder.

Extinguishers and extinguishing agents for protection of Class D hazards should be of the types approved for use on the specific combustible metal being extinguished. Some of the more common extinguishing agents for Class D fires would include "Payee G-1" powder (fyr-fyter) or MET L-X powder (Ansul).

The National Fire Protection Association Standards and Codes (NFPA 10) should be consulted for descriptions and suitability of the extinguishing agents for the specific combustible metal encountered. Your IRM Representative or local fire department may be of assistance.

Hazard Classification Light Hazard - Where the amount of combustibles or flammable liquids present is such that fires of small size may be expected.

Examples are offices, schools, churches, and places of assembly.

 

Ordinary Hazards - Where the amount of combustibles or flammable liquids present is such that fires of moderate size may be expected. These might include mercantile storage and display areas, automobile showrooms, service stations, parking garages, light manufacturing occupancies, warehouses not classified as extra hazardous, school shops, etc.

Extra Hazard - Where the amount of combustibles or flammable liquids present is such that fires of severe magnitude may be expected. Occupancies such as woodworking shops, auto repair shops, warehouses with high-piled stock of combustible materials and with processes such as flammable-liquid handling.

Installation

The location of extinguishers should be marked and readily accessible at all times. For extinguishers having a gross weight of 40 pounds or less, the distance from the floor to the top of the extinguishers should not exceed five feet. For extinguishers having a gross weight of more than 40 pounds, this distance should not exceed 3.5 feet.

Proper spacing and placement recommendations are contained within the NFPA standard number 10.

Maintenance

Fire extinguishers should be inspected annually, at a minimum, by a qualified fire extinguisher contractor,. Also, you should be performing self-inspections on a monthly basis.

NFPA 10 should be consulted for specific maintenance requirements for various types of extinguishers. Extinguishers should also be hydrostatically tested if there is any evidence of corrosion or damage. Qualified fire extinguishers contractors follow NFPA 10 as a standard guideline

 

 

PROPERTY CONSERVATION

Automatic Sprinkler Systems

 

A very important part of your private fire protection is the automatic sprinkler system. This system offers two major advantages. First, the automatic sprinkler system provides 24-hour fire protection for your facility. Secondly, the automatic sprinkler system, if properly maintained and rated, can provide a reduction in property insurance costs.

To protect your investment, your automatic sprinkler system must be properly maintained and tested for reliability. This includes following appropriate maintenance intervals, alarm testing, two-inch drain testing, and testing to insure that the automatic sprinkler system is not inoperable. Failure to document maintenance and testing could affect your automatic sprinkler system rates and even void coverage.

For your convenience, guidelines are included herein that address recommended practices for the inspection, testing, and maintenance of sprinkler systems. Inspections, testing, and maintenance should be performed by a competent outside sprinkler contractor. However, there are certain aspects of self-inspection and some testing that can be performed by a qualified person on your own staff.

 

Additionally, the following suggestions are offered:

1. Document central station alarm testing (date, time, name of central station representative).
2. If you have a central station supervised system, when testing, a two-inch drain test should be performed and documented after each central station test. The central station inspector's test and the two-inch drain test are conducted virtually at the same time, but are two separate tests. A sheet for documenting this testing follows at the end of this article.
3. Perform and document the two-inch drain testing after the sprinkler system is restored following any repairs and/or modifications.
4. To assure valve security, all control/gate valves should be chained and locked in the open position.

Any time a sprinkler system is out of service, this is defined as an impairment. Should your system become impaired for any reason (such as for emergency repairs or modifications), you may be required to notify one or more of the following organizations:

• Your local fire department
• Your fire alarm company
• Your insurance agent and/or insurance company
• (ISO) Insurance Service
• Office, Inc.
 

Your IRM Loss Control Representative can assist you in setting up the correct notification procedure. It is recommended that any automatic sprinkler system emergency repairs or modifications be performed by a qualified insured sprinkler contractor. Remember, proper testing, care and maintenance of your automatic sprinkler system assures reliability of the system and helps to protect your sprinkler rates.

 

National Fire Protection Association The following testing and maintenance requirements will provide you with an overview of those areas of your system that should be tested and maintained by your automatic sprinkler contractor and your maintenance staff. Keep all records of tests and maintenance on file. A sign near the system-control valve, indicating where records are kept, is advisable.

Inspecting, Testing, and Maintenance References Three texts are recommended for sprinkler system maintenance employees.

 

PREMISES LIABILITY

How You Can Avoid It

 

Premises liability - your liability for accidents that occur on your premises is keyed to four basic factors. Although different states have different requirements, the four basic elements are shown below:

1. Actual or constructive knowledge of some hazardous condition on the premises by the owner/operator.
2. The condition must pose an unreasonable risk of harm.
3. The owner/operator does not exercise reasonable care to reduce or eliminate the risk.
4. The owner/operators failure to exercise reasonable care was the proximate cause of the accident.

First and foremost, you must have actual knowledge or constructive knowledge of some hazardous condition on your premises. This means that you knew or, in the exercise of ordinary care, should have known of the unsafe condition. Constructive knowledge can be proven if someone in your employ is notified of the dangerous condition, even if they fail to report it. However, if you have neither actual or constructive notice, the injured party cannot meet their burden of proof.

In a recent case, the Texas Supreme Court rendered that in a premises liability case, the existence of actual or constructive knowledge of a premises defect is a threshold requirement. An owner/operator does not owe a duty to correct a defect which it is not and should not be aware.

Secondly, the condition must pose an unreasonable risk of harm. In other words, the condition is dangerous and represents a potential for injury.

The third element requires that you exercise reasonable care to reduce or eliminate the exposure. This does not mean that you can absolutely eliminate the risk in every occasion. There may be instances where the owner/operator can only reduce or manage the exposure for some period of time. For instance, if an ice storm causes buildup of ice in parking lots and sidewalks, the owner/operator may put out salt or gravel and also warn invitees of the dangerous condition with signs. If these steps are accomplished on a timely basis, the owner/operator likely has met his legal burden although the condition is still present and still dangerous.