Public Values in Procurement

Abstract

This chapter outlines the importance of considering procurement strategies from the perspective of public values. It explains that public values are dynamic and have different interpretations depending on the situation, the context, and the stakeholders that perceive these values. As the governance models that are in place in an organization can influence the public procurement function and which values need to be ensured and safeguarded by procurement professionals, the three basic governance models which are relevant to public procurement (Traditional Public Management, New Public Management, and New Public Governance) are described. This is followed by a discussion of what value tensions, dilemmas, and conflicts are and how they add to the complexity of public procurement and can make safeguarding public values a balancing act. This chapter ends with a description of different coping patterns that help deal with value conflicts by either reducing or engaging in the complexity that is caused by the value patterns in a public procurement organization and the procurement process.

FormalPara Learning Objectives

After studying this chapter, the reader will be able to:

• Understand the concept of public values, various types, and their pluralistic character.

• Describe the three main governance models that are relevant to public procurement and safeguarding public value.

• Understand public value decision-making in the three phases of the public procurement process.

• Recognize that complexity in public procurement has increased over time.

• Understand the difference between a value tension or dilemma and a value conflict.

2.1 Introduction

Public values reflect what society believes are important values. A public organization can therefore strongly benefit from considering procurement strategies from the perspective of public values. In this book, the term public value is used to refer to a multitude of conceptualizations of procuring works, supplies, or services in which societal expectations are met. The concept of public value is sometimes also referred to as social value or societal value. Public value is associated with public interest, normative public values, managerial public values, economic value, market failure, publicness, integrative publicness, and public supplies. If a private value reflects an individual interest, it can only be deemed of public value if there is a collective benefit.

In this chapter, the definitions and interpretations of the term public value are discussed in Section 2.2. Section 2.3 shows that public values are dynamic and open to interpretation depending on the context in which they are identified, such as a country, industry, or period of time. Section 2.4 describes the three main governance models from the field of public administration. Section 2.5 explains how today’s societal challenges affect the relationship between the public buyer and other stakeholders. Section 2.6 addresses that value tensions are inevitable in public service delivery and discuss value dilemmas in the different phases of the procurement process. Finally, it is explained how one can cope with these conflicting values in Section 2.7.

2.2 The Concept of Public Values

Public organizations have a specific responsibility toward public value, which by their nature they are accountable for. Contemporary public management conceptualizes public value as that which is created or added through the activities of public organizations and their managers. As explained in Chapter 1, public organizations try continuously to govern developments in society. The resolutions, choices, and actions of public organizations regarding the governance of these specific societal developments are laid down in public policies. To execute these public policies as well as their own operations, public organizations procure works, supplies, or services.

Another aspect of public value is the difference in the scope of ‘customers’ to which public values need to be delivered as opposed to private values. Public organizations deliver value based on what citizens and their representatives have mandated them to achieve (Moore, 2000). The ‘public’ in public value refers to one or more ‘publics’ who are the locus of any potential impact and whose interests are the foundation of the value proposition (Cresswell et al., 2006). This means that public organizations are accountable to many different stakeholders in society, from public to private, societal and market parties. These stakeholders all bring different value interests which adds to the complexity of public procurement. Conversely, a for-profit organization takes their lead from their customers and a non-profit organization focuses on the needs of their donors.

However, in practice what is considered a public value or private value is still difficult. A value is not solely public or private, and private organizations may also strive for public value (Van der Wal, 2008). There are some values that are more common for public organizations such as efficiency and reliability, and corporate social responsibility or financial return for private organizations. There are also some shared values, such as accountability, honesty, and experience; however, the interpretation of these values by public or private organizations may be different. For example, the distinction between ‘process accountability’ for the public sector (accountability is equated with transparency) and ‘output accountability’ for the private sector (delivering certain standards or quality levels).

Differences in interpretation also occur within the public procurement agencies between different professions. For example, a technical management department will look at sustainability from the point of view of water drainage and danger of flooding, an urban planning department from the point of view of greening and space for electric charging stations, and a social welfare department from the point of view of participation and social cohesion. The difference in interpretation adds to the complexity of public procurement and therefore the dynamic context in which governmental decision-making occurs. The demarcation between public and private values also differs from country to country, which further adds to the intricacy of interpretation (De Graaf & Paanakker, 2014).

Finally, the concept of value pluralism refers to the fact that not all values can be achieved at the same time (De Graaf & Paanakker, 2014). Public values can be incompatible. The pursuit of certain values must inevitably comprise or limit the ability to pursue certain other values. For example, innovation often takes more time in the preparation phase and is considered less efficient. Public values can also be incommensurable. There is no single currency or scale with which to measure conflicting values. For example, time efficiency is measured in labor hours and quality in load bearing capacity. The ‘measurability’ can take different timeframes, for example, sustainability is about the life cycle of products and usability is a current issue. Furthermore, it is important to note that public values are subjective. Values may also have different interpretations; beauty is, for example, often considered to be ‘in the eye of the beholder’. And therefore, if a conflict occurs regarding the beauty of a particular building design, no rational assessment can be made. Consequently, it is up to the policymakers and public managers of public procurement agencies to balance different or contradictory public values during the different phases of public procurement.

Hence, public values reflect what society believes are important values. One could also define public values as a consensus on the principles on which government activity should be based. For example, that governments should act transparent. This means that public values can be considered as standard guidelines for the rights, benefits, and prerogatives to which citizens should (and should not) be entitled, the obligations of citizens to society, the state, and one another, and the principles on which governments and policies should be based (Benington, 2011). This means that public values are not only about the output itself but also about the process of the delivery and responsibilities of the actors involved.

Distinctions are made between three types of public values: procedural values, performance values, and product values (De Bruijn & Dicke, 2006; De Graaf & Paanakker, 2014):

• Procedural values relate to the way the public sector should act and which standards of government action should be met. Procedural values relate to the quality of the process, such as integrity, transparency, and equality, and are also referred to as the ‘rules of the game’. Procedural values can often be recognized in codes of conducts of various international public organizations.

• Performance values are generally associated with effectiveness and efficiency, for example, in time and money, while procedural values relate to the quality of the process, such as integrity, transparency, and equality.

• Product values consider both the concrete (tangible) outputs, by directly offering works or supplies or indirectly by providing services such as the provision of reliable infrastructure, as well as the outcome related to the broader impact on society such as reliable health services. It is important to include both the output and the outcome because there is a growing demand for long-term thinking about how we can secure needs both for now and for later generations and the impact on society.

2.3 Complexity of Operating in the Public Domain

The exact set of public values and the interpretation of these values changes as a response to manifold societal transitions, including globalization and urbanization, population aging, climate change, and digitalization. For example, sustainability targets could lead to a growing focus on circularity, while international threats could lead to a higher need for cybersecurity. In some countries people are increasingly moving out of the city, which leads to an increasing need for flexibility in building policies to respond to these changes. Another example is a growing demand for long-term perspectives on housing and food for later generations through sustainable and circular solutions.

These developments affect the tasks of public organizations in the public value process (Bryson et al., 2014) and with this the focus on and direction of values. Due to fiscal pressures, socio-economic demands, and changing political priorities, the process of public service delivery is changing. In a public management context, politics always determine the core values that are being pursued. Public organizations translate these values into policy platforms, policy initiatives, and public programs. To execute these policies and programs, public organizations deliver public works, supplies, or services.

Professionals in public domains are crucial for rendering effective public services, but in current neoliberal times, their acts are contested, and their autonomy is weakened (De Graaf et al., 2014). Trends like globalization, privatization, and servitization have changed the relationship of public authorities with society and market entities. Liberalization and privatization have created a network of more interdependent actors. To deliver and secure the new set of public values, public organizations increasingly need the knowledge and skills of bot specialized market players and social partners. Therefore, public organizations often search for a partner to collaborate with. The different private and societal values that these collaborating parties bring make public procurement more complex. Public organizations are particularly influenced by these movements since they can be seen as the executive party of leading politics (Entwistle & Martin, 2005).

There is an ongoing debate about the appropriate role of government in the field of public management and whether public values are safe in private hands. The results of these debates often emerge as public procurement policy. One of the most important results was a reaction to public sector downsizing and privatization a few decades ago. Many services were contracted out and major public-private partnerships were formed. For example, in construction, the fully integrated Design, Build, Finance, and Maintain (DBFM) contracts in which a private consortium of suppliers, engineering firms, and facility management companies were asked to build, maintain, and operate school buildings, roads, and other social and economic infrastructure which used to be managed by public authorities. Although certain operational responsibilities are outsourced or shared, it is important to remember that the public buyer always remains social-politically responsible for the public good. This must be translated into the public value proposition. To act socially responsible one must, for example, think about the life cycle costs of specific works, supplies, or services and realize that the design of a technology determines to an important extent how it will be produced and be used, what maintenance will be required, and how the product is to be demolished.

Alongside the increased involvement of private parties, citizens and other stakeholders are becoming more actively involved in the co-creation of public values and bring in their own interpretation of values. If you participate more closely with users, you may also encounter intrinsic motivations or pragmatic interests, such as where to place the trash cans and lamp posts. As a result, it is no longer sufficient to only pursue the traditional procedural public values such as legitimacy and transparency and performance values such as efficiency and effectiveness. Product values such as sustainability, circularity, and ‘smart’ must now also be pursued. Additionally, the ongoing definition of value has resulted in a broader societal reconceptualization of prosperity. This, in turn, formulates public values, that is, what society believes to be integral to the process of delivering certain products or services whose provision is considered the responsibility of the government.

2.4 Three Basic Public Governance Models

The governance models that are in place in an organization can influence the public procurement function. Governance can be understood as the use of institutions, structures of authority, and collaboration to allocate resources and coordinate or control activity in society or the economy (Klakegg, 2009). This influences which values need to be ensured and safeguarded by procurement professionals and how these organizations can accomplish this. From the field of public administration, three basic governance models can be identified which are also relevant to public procurement: (1) Traditional Public Management, (2) New Public Management, and (3) New Public Governance. Safeguarding public values in the context of procurement can be considered a matter of balancing these three basic governance models to create an optimal mix of administrative justice, effective social security, efficient use of public means, and collaboration with private and societal partners.

These different governance models may be deployed at different organizational levels, departments, or domains, as the specific objectives at each unit may be distinct, however they are always interrelated. For example, a higher-level governance plan, such as the ambition to reduce CO₂-emissions by 30%, can impose constraints on a lower organizational level, for example, by only purchasing electric company cars. Hence, governance frameworks provide the boundaries and rules in which the procurement professional can freely act to produce value for the various actors. In the next section, the values, rules, and norms of each governance model are discussed.

Traditional Public Management

The Traditional Public Management (TPM) governance model emerged as a response to the challenges of industrialization, urbanization, the rise of the modern corporation, faith in science, belief in progress, and concern over major market failures. TPM emphasized policy, legal rules, and has an administrative management focus based on centralized and legitimate authority, rules, procedures, and legislation. TPM values hierarchy and is dominated by values that ensure the quality of the process, indicating that values such as loyalty, equality, and lawfulness should be pursued.

TPM governance models assume a situation where there is a hierarchical relationship between the government and the supplier and where the government is potentially able to enforce the safeguarding of public values. An example of this would be if the government determines the level of performances, for example, 90% of all trains should arrive on time, and fines the service provider if this is not the case (De Bruijn & Dicke, 2006). This creates a common frame of reference as to what public values are, demonstrating that they are important. One solution dominates: a strong government translates the values into clearly delineated standards and formulates clear rules for protection of these standards. Practice has shown, however, that these frames are sometimes ambiguous and there is limited room for adapting to changing needs. It can also lead to sub-optimal solutions. For instance, the service provider could realize 90% only by running less trains.

New Public Management

New Public Management (NPM) emerged with the policy shift from Keynesian economics to neoclassical economics. This caused a transfer of assets and activities to the private sector through mechanisms such as public sector downsizing, privatization, contracting out, public-private partnerships, and concerns with government failures. This centered around a belief in the effectiveness and efficiency of markets, a belief in economic rationality, a push away from large, centralized government agencies toward devolution and privatization, and an emphasis on public value.

NPM prioritizes market values and has a formal contractual focus based on legal contractual arrangements, arms-length transactions, and bargaining. NPM demands that public organizations change their attitude toward the market and society at large, in that they must move away from their former role as service providers and instead see themselves as service brokers (Boivard, 2007). The market approach is dominated by business-oriented values of effectiveness and efficiency. The basis for strategy is profit maximization. Market mechanisms include the provision of public services through splitting the buyers of services from the suppliers and introducing elements of competition through contracting out services to a mix of private companies, voluntary organizations, and quasi-autonomous national government organizations (Cornforth, 2003).

Governments use market forces to protect public values rather than opposing and trying to mitigate such forces. Incentive structures are used to achieve policy objectives especially using markets. One example of this mechanism is that of energy producers who can differentiate themselves from their rivals by offering ‘sustainable’ energy. Privatization, then, tends to be accompanied by increased visibility for the companies involved and an increase in the overall transparency of the sector. By laying down special conditions in the tender, governments can then safeguard the values that they pursue.

New Public Governance

A more interactive, inter-organizational and indirect form of governance, commonly referred to as New Public Governance (NPG), has been unfolding over the last decade. This new emphasis on public value emerged as a response to the fragmentation, structural devolution, single-purpose organizations, and performance management caused by the NPM governance model. NPG focuses more on building a strong and unified sense of values, trust, value-based management, and collaboration. Team building, involving participating organizations and improving the training and self-development of public servants, has an important place in these reforms.

While NPG has by no means replaced TPA and NPM, it has introduced a whole new set of principles and mechanisms of network-oriented governance that supplement those previously in place. With NPG, the mechanism for achieving policy objectives can be different for each situation. This approach can be understood as selecting from a menu of alternative delivery mechanisms based on the perceived value for money. This often means helping to build cross-sector collaborations and engaging with citizens to find unanimous objectives. The government may facilitate the creation of an institutional structure for these negotiations—for example, by promoting efforts to encourage consumers to organize themselves into representative bodies. From an instrumental perspective, the government might design procedures or rules for these negotiations. For instance, who is to take part in the negotiations, when the negotiations are to take place, and how the agenda will be drawn up. A government can carry out the design of these processes themselves, have them designed externally, or invite the negotiating parties to make a proposal for their design. What is of the essence here is that all parties agree about the rules, thus creating a ‘negotiated environment’. The flexibility in this approach allows for a tailored procurement arrangement.

2.5 Public Value Tensions in Public Service Delivery

The blurring of traditional boundaries between public and private provokes questions regarding democracy, legitimacy, and accountability, or in other words public responsibility. The increased collaborative nature of public service delivery—through contracts or by co-creation—changes relationships, tasks, responsibility division, and the nature of public service delivery. One of the most persistent and widely shared critiques of the popular public-private partnerships concerns the lack of accountability. Public value management has a distinctive understanding of the challenges of efficiency, accountability, and equity. TPM and NPM have clear answers to safeguard these values. In both TPM and NPM, a greater emphasis is placed on the procedural notions of the democratic process, rooted in formally elected officials, shifting the focus of administrators’ actions to the creation of that value. TPM has an administrative management focus based on centralized and legitimate authority, rules, regulations, procedures, and legislation, while NPM has a formal contractual focus based on legal contractual arrangements, transactions, and bargaining.

The increase in network governance models that originate from the NPG perspective is driven by the continuing criticism of traditional forms of governance, such as hierarchies and markets, which are, respectively, too rigid and too reactive. However, networks—like public-private partnerships and co-creation—often lack the accountability mechanisms available to the state, are difficult to steer or control, and are difficult to get agreements on what outcomes and actions should be taken. One of the reasons for this is that it can be difficult to understand and determine who is ‘in charge’, relying instead on autonomous units operating in a setting of demand uncertainty with high interdependence in complex tasks. A network governance model tries to overcome these problems by using social mechanisms rather than authority, bureaucratic rules, standardization, or legal recourse. Because in networks the emphasis is on a horizontal rather than a vertical organizing principle, one organization does not have a superior-subordinate relationship with the other. New Public Governance therefore focuses on building relationships based on interpersonal trust, mutuality, and reciprocity rather than building formalized structures that ensure public values.

2.6 Value Dilemmas in Procurement Processes

It is expected that different value dilemmas will arise during different phases of public service delivery, and trade-offs between procedural values, performance values, and product values will need to be made. Managers will be called to account for process as well as outcome, as well as for individual incidents and aggregate patterns observed at each stage of public value creation in the procurement phases. Hence, it is important to apply public value thinking in the different phases in the process of procurement.

In practice, it is often assumed that once the buyers’ subjective values are expressed in, for example, the weighting of selection or award criteria, then the rest of the process can be regarded as a rather value-free and rational administrative exercise. However, this is often far from the case and tensions invariably arise between the simple embedding and the original idea behind often applied multi-criteria decision-making models: to learn more about one’s values during the process. In the following sections a few value dilemmas will be explained based on three procurement situations: (1) the make-or-buy decision, (2) purchasing strategy as part of the prepare phase, and (3) contract and relation management as part of the perform phase of procurement.

Make-or-Buy Decision Values

When preparing a tender, an important step in the procurement process is determining the need and to what extent it is necessary to use suppliers to fulfill this need or if the organization can make the works, supplies, or provide the services themselves. This is called the make-or-buy decision. This step revolves around whether conditions are suitable for contracting and whether public values are safe in private hands.

The general dilemma between dependence and responsibility fuels the debate on public values in various sectors, such as health care or infrastructure: are public values safe in the hands of private suppliers that operate under regular market conditions? If new values, such as circularity, innovation, and sustainability are to be adopted, a different way of thinking about tendering is needed at the front end. Who—public or private—can best identify which values are appropriate? Legal exigencies can lower market competitiveness, thereby diluting the advantages of contracting relative to in-house service delivery. Regarding circularity, policy-related elements should be considered: is it possible to share instead of buy? Is it possible to extend or postpone the purchase? Is it possible to fulfill certain policy goals with the purchase (e.g., stimulating job creation, innovation)?

If procurement goals are innovation and efficiency, then contracting with a private supplier may be more desirable, because private employees operate with higher-powered, compensation-based, and profit-oriented incentives than civil servants. If the goal is more government control over service provision, then internal production may be preferred, because civil servants’ motivations are typically better aligned with the government’s mission. Another issue is determining whether service and market conditions favor certain opportunistic behavior. In some situations, private parties cannot fully predict all possible future scenarios and contracts are typically underspecified or incomplete, allowing opportunistic suppliers to exploit contracts to their own advantage at the expense of the contracting authority’s goals. To minimize such opportunism, the public organization must incur transaction costs by clearly specifying the values sought in performance measures, writing more detailed contracts, monitoring suppliers’ performance, and enforcing sanctions when necessary.

Public and semi-public organizations enter into public-private partnerships for reasons of long-term benefits such as improved value for money and to create added value. Proponents of public-private partnerships emphasize the ability of private market parties to deliver services more efficiently. In the short term, this leads to benefits such as time and cost savings, higher quality of service, lower administration costs, and risk transfer. They emphasize that the heterogeneous nature of these networks, alliances, or partnerships is inherently flexible as these networks are shaped by different dimensions of hierarchy, formality (e.g., regulation), and cooperation. Opponents complain about the reduction of the ability of governments to adapt to changing needs of buyers and users as a result of long-term contracts.

Make-or-buy considerations in outsourcing need to be based on the degree of private involvement which then influence the choice of contract. For integrated contract forms in public-private collaborations, part of the contract is sub-contracted to a private market party. Internal aspects (organizational structure, finances, policies, knowledge, experience, and capacity), external factors (political, societal, and market environment), and project factors (money, time, quality, influence, complexity, and risks) influence these considerations (Kuitert, 2021). Stakeholder preferences and democratic processes, for example, establish the values to be optimized in service delivery. Public law sets the boundaries within which public managers must operate, thereby permitting, authorizing, or requiring a range of actions. Organizational arrangements (also) define the capacity, resources, and transaction costs for managing service delivery contracts. The characteristics of service markets influence which contracting tools and suppliers are best suited to achieve stakeholder values. It is this complex interplay that makes public procurement a challenging task, see also Example 2.1.

Example 2.1: A Make-or-Buy Decision Dilemma

An important dilemma in relation to the make-or-buy decision concerns the legitimization of public procurement versus trust-based collaboration. This dilemma is a result of the need for more frequent collaboration to execute today’s complex public services to the level of legal standards that public organizations should adhere to. Supplier collaboration takes time because relationships need to be built. However, one cannot build on earlier collaborations because of the law prescribing new procurements to meet equity and non-discrimination. Furthermore, it is not allowed to just extend a successful buyer-supplier collaboration. To collaborate, values such as trust, collegiality, honesty, transparency, and understanding each other’s interests are essential. Hence, the contractual relationship between buyer and supplier is still more common than other more relational connections. The legalization of procurement therefore competes with the desire to collaborate based on trust.

Supplier Selection Values

Public service delivery processes can be filled with tensions between operational, strategic or policy requirements since different stakeholders might hold different opinions on what type of performance is more important (cost performance vs. value performance) and what should be done to improve performance. For example, when procuring coffee machines, the budget holder might think the price of the delivered product is most important, while the users find taste of the coffee most important, or sustainability officers could argue that sustainability and social aspects are more important. Therefore, the procurement process is not straightforward or easy. In fact, including values such as sustainability and social criteria add complexity to an already complex situation.

The purpose for entering a partnership with a supplier (either public or private) influences the way it is approached. While setting up this process, a buyer needs to make many decisions that are loaded with value dilemmas, including specifying suppliers’ obligations and tasks, defining the contract’s renewal provisions, and specifying its incentive and performance-measurement systems. These strategic purchase decisions include an explicit choice on elements such as the degree of private involvement in the supply chain, the tender approach, and the risk allocation (Brown et al., 2006). These decisions influence the level of flexibility during the delivery of the public value: fragmentation of the supply chain increases the buyer’s ability to steer, while integration increases the supplier’s ability to steer.

There are different forms of risk (e.g., financial risk, demand risk) that must be parsed and addressed. The goal of risk identification, allocation, and negotiation is ‘assigning risk to the organization that best understands and can manage and control the risk and maximizes public benefit’ (Clifton & Duffield, 2006). One of the main reasons for creating public-private partnerships in the past decennia has been the shifting of risk (and therefore cost) from public organizations to the private sector. This led to new insights into which risks would be safe in private hands, such as ‘just in time delivery’ of certain materials, while others, like permits or stakeholder communication, appeared to be more difficult to manage by private actors. Practice has shown that as public procurement becomes more focused on value rather than price, supplier selection becomes increasingly complex. This complexity can be addressed by finding the appropriate balance of risk allocation, as this ensures a greater accountability for the services delivered and their conformance to public expectations. Example 2.2 shows how purchasing decisions can lead to specific value dilemmas.

Example 2.2: Purchasing Strategy Dilemmas

The following examples show how specific purchasing strategy decisions can impact different value dilemmas (Brown et al., 2006; Clifton & Duffield, 2006; Naoum & Egbu, 2016):

• Asset specificity: For public organizations, asset-specific services can privilege suppliers that win the first contracts, thus constraining future competition.

• Ease of measurement: Refers to how easily and successfully public managers can assess the quantity or quality of services. As with asset-specific services, difficult-to-measure services make governments vulnerable to unscrupulous suppliers. In these circumstances, managers could even be wise to avoid the market altogether through internal service delivery.

• Risk allocation: When outsourcing responsibility, the role of the buyer changes and therefore their role in ensuring and safeguarding public values. More specifically, in public-private collaborations, the performance-based integrated contract forms are partially the responsibility of a private market party through a sub-contract. The different types of responsibility, for example, contractual responsibility and organizational responsibility, need to be managed in a more explicit way than in traditional models since different types of logic and values need to be integrated.

• Integration of the value chain: Opportunities for enhanced value and improved long-term service outcomes may be achieved by the introduction of alliancing concepts into public-private partnerships. Proposed governance structures provide greater project flexibility and offer the potential to improve societal interests and to avoid some of the weaknesses inherent in the supply chain. However, this also opens possible dilemmas between restricting and flexibility.

Contract and Relation Management Values

In monitoring and guiding the execution of the contract, public organizations focus on managing the contract in which a balance between procedural values, performance values, and product values is sought. Here, quality assurance can be used to check whether the public procedural, performance, and product values agreed upon in the needs definition and contract negotiation are being met. Sometimes this involves concrete key performance indicators (KPIs), sometimes it involves more subjective discussions about methods of action and other informal ways of safeguarding values.

When tasks are transferred to market parties through procurement, safeguarding public values becomes extra complex. This is because the public organization limits its direct influence on results and process. A contractual relationship is never equal: there is always a buyer who ‘controls’ and a supplier who ‘delivers’. Public parties are limited to establishing a set of functional requirements, leaving solutions to the private party. This is a strict division of roles and responsibilities, compared to partnering which is precisely about encouraging parties to bridge the conflicting interests that are central to their exchange relationship. Hence, due to false equality, a contractual relationship can make a truly equal collaboration more difficult. Therefore, public actors are increasingly looking for a more appropriate role in the implementation phase.

2.7 Coping with Conflicting Values

For public organizations, adhering to the collective of public values is key. Growing value pluralism, however, makes addressing public value while also managing values of external partners ever more challenging. Value conflicts can easily arise, as public values are not interchangeable, comparable, or even necessarily compatible with each other. Multiplicity in value systems could result in conflicts both within the public organization and between public, market, and societal stakeholders in the supply chain. The ‘public value balancing act’ is thus both relevant within the public buyer organization and in collaboration with other actors in the supply chain (Kuitert, 2021). Tensions between values can have positive and negative effects. There can be not only functional conflicts but also dysfunctional conflicts or constructive conflicts. Therefore, tensions are not necessarily a problem, except when they are mismanaged. True conflict only arises when a situation in which contradictory values converge is not properly managed.

The purpose of and necessity for balancing the different value systems in the internal and external supply chain is the creation and maintenance of sustainable value for the organization and its stakeholders, or in other words safeguarding public values (Kuitert et al., 2019; Too & Weaver, 2014). This section describes several ways of coping with these potential value conflicts by either reducing or engaging in the complexity that is caused by the value patterns in a public procurement organization and the procurement process.

Reducing or Engaging Complexity

How value pluralism is approached determines to a large extent how value conflicts are dealt with in terms of safeguarding public values. There are two main perspectives on value pluralism: (1) the more defensive reduction of complexity in values through rational-technical either/or trade-offs and (2) the more proactive approach to complexity with a both/and view (Kuitert, 2021; Schillemans & Twist, 2016; Thacher & Rein, 2004). This distinction relates to how decision-makers view the commensurability of values as depicted in Table 2.1.

Table 2.1 Overview of different approaches to the complexity of public procurement (Kuitert., 2021) 

The reducing complexity approach is based on the classical economic view and includes supporting a process whereby a single value system becomes dominant in an ‘either/or’ perspective. This is only possible when one believes that values can be commensurable. To justify their trade-offs in decision making, actors first identify the relative importance of each value, for example, social welfare, and then make a decision that maximizes the ‘master’ value, for example, by using cost-benefit and multi-criteria approaches (see also Chapter 6). This perspective is considered to be based on a very rational-technical and defensive attitude.

From an engaging with complexity view—originating from a social value view—public actors may consider trade-offs to be inevitable and impossible at the same time. This means that actors should embrace the conflicting nature of value, adopt a paradoxical view, and aim to optimize the balance between conflicting values. To adopt the incommensurable perspective on value pluralism, actors need to actively embrace conflict, accepting the co-existence of competing extremes by means of confrontation and transcendence. This means actively adopting a ‘both/and’ decision-making approach rather than an ‘either/or’ rational-technical decision approach.

From a reducing complexity perspective, public actors, when faced with value conflicts, are likely to either opt for decoupling or compromise when responding to value conflicts. Decoupling is the separation of conflicting elements, either in time—by first addressing one and then the other—or in space—by placing elements in different compartments. A public organization active in the construction industry can, for example, place procurement tasks in the spatial domain in two compartments: the development of new buildings or infrastructure assets into one compartment oriented at the engineering and larger construction market, and the maintenance and renovation into a more service management and facilities management compartment. Compromises in these activities can be made by setting minimum standards—think of CO₂-emission standards—adopting new behavior or by negotiating existing behavior. From a ‘both/and’ perspective which engages complexity, public actors can combine value systems by addressing conflicts and transcending them through synthesis. Actors are encouraged to weigh up for themselves how a new balance, not a compromise, can be found between the conflicting demands.

Timing and Level of Coping with Conflicting Values

Coping strategies are key organizational responses to value conflicts. The perspectives of reducing and engaging with complexity are not mutually exclusive and can be combined, but several questions emerge: Where in the organization and when do you deploy your actions? How can you make use of values that are around you when dealing with the relevant value conflicts? Considering both the procurement situation and the actors involved creates more flexibility in coping. By ‘changing’ the actors involved and/or the situation, the value dynamics also change, and other response strategies can be applied. For a more flexible approach when dealing with value conflicts important in complex dynamic environments, it is therefore important to look at ‘when’ or ‘by whom’ the coping should be deployed relative to when or where the conflict arose. Reacting directly to who is experiencing the conflict is not always the most effective way to deal with a value conflict as the conflict that occurs is dependent of the situation and the actors involved. For example, when applying for approval from a specific (internal) committee, one can approach this committee earlier in the process to make them aware of the initiative you are taking. One could also involve somebody in the project that is very experienced when it comes to the decision process of these kind of committees to be better prepared.

Different actors have different places in the network and are involved in different phases of delivering public service contracts. For example, administrators are more involved during the preparation phase, while project managers usually operate in the execution phase. These actors bring their own value palette, and the confluence of value palettes influences how a value trade-off or attempt at balancing occurs. For example, if there is a conflict between the value of sustainability and efficiency, efficiency will probably take precedence due to the strong influence of budgets. However, as coping is relative to where the conflict occurs in time, it is possible that at a later stage an actor becomes involved who places a higher value on sustainability or another value that supports sustainability, such as innovation. The balance between values changes and therefore other considerations are made. This is called a coping pattern, such as ‘deferral,’ visualized in Figure 2.1.

Figure 2.1

Values in relation to the Deferral coping pattern

Value dynamics change as the situation and the involved stakeholders change, and so does the way a value conflict is handled. A new coping pattern appears when one considers coping as relative to the conflict. In the context of construction procurement (Kuitert, 2021), four coping patterns have been identified on the temporal axis: Deferral, Prolongation, Anticipation, and Coincidence (see Table 2.2). Public buyers can leverage the time axis by bringing considerations forward (earlier, bringing forward) or pushing them back (later, push back). Deferral, a kind of postponement, is an example of a movement on the time axis that pushes back the action relative to the moment of potential conflict. Time may then solve the conflict due to external or internal factors, like the example in Figure 2.1 on sustainability, efficiency, and innovation. Prolongation refers to prolonging the involvement of certain actors in multiple phases of a procurement process. Intermediaries who perform boundary spanning activities is an example, while anticipation brings actions forward. This means that you could, for example, involve certain actors earlier in the process when there is still a lot of solution space to integrate their needs, so they won’t be resisting later in the process. An example is the involvement of an assessment body such as a tender board: although it holds a dominant position in the tender phase, in the preparatory phase where they are not formally responsible, they could be more inclined to think creatively, such as what values to include in the contract.

Table 2.2 Coping patterns on the temporal and spatial axis

This same study (Kuitert, 2021) revealed four coping patterns at the spatial axis: Prevalence, Relegation, Aggravation, and Coincidence. The spatial axis can be exploited by escalating (top-down) or degrading (bottom-up). Prevalence uses hierarchy to cope top-down with conflicts that occur at lower hierarchical levels of the network or partnership. This is often seen as something bad, a last resort, or a form of escalation, but an alderman with a strong intrinsic motivation for certain values could, for example, lead to a lot of institutional support for a project. With a bottom-up coping pattern, the coping is executed at a lower level than the conflict occurs. The use of pilots to step outside the system word and avoid bureaucratic conflicts in the case of relegation can be considered as such a bottom-up coping pattern. One can also cope with value conflicts at the same level at which the conflict occurs, for example, by using conditions and criteria for projects or subsidies for solar panels. This is called Aggravation, situations in which the coping occurs at the locus of the conflict while utilizing the value systems of higher network levels. Coincidence allows different actor groups to come together and run parallel trajectories. This makes uncommon collaborations possible and can both impact the temporal and the spatial axis.

Table 2.2 gives an overview of the different characteristics and a few examples per coping pattern.

Figure 2.2 shows how the different patterns are visible on the temporal and spatial axis of an organizational procurement situation. The ‘movements’ of the coping that these patterns represent, ‘when’ or ‘whom’ the coping (perspectives of reducing and engaging with complexity) should be deployed relative to when or where the conflict arose, provide public managers with flexibility in dealing with value conflicts. No size fits all, tailoring is needed. This tailoring can be done by changing the direction in time or space, moving across and/or within the phases or levels, and adopting different response strategies to value pluralism.

Figure 2.2

Coping patterns on the temporal and spatial axis

2.8 Summary

This chapter discussed the topic of public values in the context of public procurement. Public organizations increasingly operate in public-private partnerships and co-create value in networks. This makes public procurement a dynamic context in which public decision-making occurs even more complex. It is explained that values can be placed on a scale from public to private and that values are dynamic and have different interpretations depending on the situation, the context, and the actors that perceive them. Hence, public values are sector, culture, and time specific. The chapter explains that as society holds public organizations accountable for both the ‘means’ and the ‘ends’ in the process of delivering public values. They therefore need to account for the process, output, and outcome of procurement processes and consider procedural, performance, and product values when making decisions. This can cause value tensions, dilemmas, and conflicts. In the different phases of public procurement, value decisions are made that impact the way public buyers can steer or are dependent on private parties and other societal stakeholder to deliver public services. Safeguarding public values often becomes a balancing act because public organizations must act in an environment in which value pluralism causes conflict. Yet, this value pluralism is also part of the solution. Two different views on creating and capturing value represent different approaches toward complexity of value pluralism: (1) the more defensive reduction of complexity in values through rational-technical either/or trade-offs and (2) the more proactive approach to complexity by engaging with complexity based on a both/and view. This chapter concludes that depending on where a conflict arises in the phase of public service delivery or the level of the project or service that needs to be procured, different coping patterns can be formed.