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Improving Computer Hardware Procurement:Governments Are Enforcing Vendor-Neutral Contract Specifications
Closed government computer hardware procurement practices are illegal and are costing taxpayers hundreds of millions of dollars. Brand specification inhibits market competition, raises prices for computer equipment, limits choice and hurts consumers. Worldwide governmental organizations are recognizing the problem of brand-name specifications and are beginning to put an end to the abuse.
The European Commission noted in a 2004 study that the application of its new procurement rules has reduced prices by approximately 30 percent.
The following governments have taken steps to stimulate competition in technology procurement:
Argentina (September 2004)
- The Argentine Government just released new Technological Standards for Public Administration (ETAPs). Prior to the release of the new ETAPs, only a single microprocessor supplier was identified by the National Government in procurement tenders. AMD has now been added as a microprocessor supplier.
Austria (January 2005)
- Austria’s Bundeskanzleramt released guidelines that forbid the use of brand names in public tenders as well as other parameters, such as clock rate, that are not directly related to performance. Instead, the Bundeskanzleramt designates that technical specifications should include a general use-based description of the computer, the type of processors it requires and guidelines for benchmark procedures.
Belgium (June 2004)
- The Belgian Government released improved procurement guidelines indicating the use of trademarks in technical specifications for computers is illegal because of the adverse impact on fair and open competition.
Brazil (March 2005)
- Since 2003, AMD has mounted several successful legal and administrative challenges for government procurement tenders that specified microprocessors manufactured by a single company and excluded AMD products. Because of these challenges, state and federal tenders for computing products increasingly include fair and open specifications that encourage competition. In addition, the Federal Ministry of Planning is working with AMD, Intel and other technology companies to produce new technical standards for computing products that will encourage competition while ensuring best value for government purchases.
France (March 2004)
- The Ministry of Economy, Finances and Industry in France issued a memorandum which instructs public purchasers of IT equipment to use unbiased technical specifications in tenders. The guidelines prohibit the use of brand names as well as “minimum frequency requirements.” The Ministry suggested that agencies use benchmarking as a viable alternative to frequency requirements.
Germany (December 2004)
- The German Federal Government published on the website of the Federal Ministry of Economy and Labor a specific guidance for procurement authorities. The document states that "German and European procurement law prohibit(s) the mentioning of brand names in description of required performance." The document goes on to say that the "mentioning of a specific brand name (e.g. supply of a computer with a processor of the brand xy) is always illegal."
Ireland (September 2005)
- Ireland’s National Public Procurement Policy Unit (NPPPU) of its Department of Finance stipulates that “…contracting authorities must avoid the use of restrictive technical specifications…Technical specifications must not refer to a specific brand, source, trade mark, patent…which would have the effect of favoring or eliminating certain undertakings or certain products.” Instead, the NPPPU stipulates the use of performance-based benchmark methodologies.
Italy (January 2005)
- In its October, 2004 newsletter, CNIPA (Italy’s government agency with responsibility for procurement policy) updated its procurement guidance, endorsing Sysmark 2004 for desktop PCs. CNIPA also published Notebook and Server Guidelines to prevent language that would limit competition in procurement bids.
Japan (April 2005)
- The Secretariat to the Inter-Ministry/Cabinet Consultative Committee on Information Technology System Procurement issued a memorandum reminding each government ministry and agency to abide by the “Guidance for Preparing Specifications Related to Procurements for Computer Products and Services” which states that IT procurement must be implemented in a manner that maintains transparency and fairness and secures fair competition.
Sweden (March 2004)
- Sweden’s NOU (the central government agency with oversight for government procurement policy) issued a memo to all government agencies stating that specific products or brand-names may not be used in procurement specifications. NOU further directed agencies to base technical specifications for products on objective performance standards when possible and refrain from issuing technical specifications that could benefit one product or brand to the exclusion of others.
United Kingdom (August 2005)
- The Office of Government Commerce (OGC) published an EU Procurement Guidance document which stipulates specific rules for the tendering of computer hardware. These rules demand that the “requirements for microprocessors must exclude any reference to brands (e.g., Intel, AMD), manufacturer-specific processor architectures, trademarks, technology-types or other potentially discriminatory descriptors.” Additionally, specifications must “exclude any reference to minimum processor clock-speeds” as well as a minimum Front Side Bus speed or minimum cache memory size as “such specifications do not directly relate to performance.”
United States (April 2005)
- The U.S. Office of Management and Budget released a memorandum to all chief acquisition officers, chief information officers and senior procurement officers in the government requesting that they use objective benchmarks and performance measures for contract specifications, and adhere to the Federal Acquisition Regulation (FAR) requirements restricting the use of brand names.
AMD is committed to working with governments around the world to combat unfair and often times illegal procurement practices in order to improve competition, promote product innovation, and save taxpayers money. To learn more, go to www.amd.com/procurement.
To download a PDF of AMD’s procurement achievements worldwide to date, click here.
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