Spending Public Money Wisely

Public procurement has been in the spotlight this month, and for good reason. We like to think our taxes are being well spent. As Jeff Kennett put it:

"If people want to mess up their own money, that's fine, but when people are spending public money, they have got to be accountable."



Having achieved savings of 30% under current procurement rules, the EU is now looking for additonal savings through new procurement policies. Even the 5% improvement estimated to be made through e-procurement translates into very large savings, when you consider the numbers involved:

• Total public sector procurement across the EU15 countries is EUR 1,500 billion
• Total spend is equivalent to the GDP of France
• Total spend is more than the annual global sales of the automotive industry

Greater use of competitive tendering has been a big contributor to savings achieved thus far. The number of invitations to tender doubled between 1995 and 2003, and currently stands at 113,000 notices per annum.

One of the new EU proposals likely to cause a stir is the introduction of a standstill period of, say, 10 days, between publication of a contract award and the date of signature. The idea is to give aggrieved parties (ie, losing tenderers) the chance to challenge a decision before it's actually signed, so there's a greater chance of finding a pre-contractual remedy. Under the proposal, contracts signed during the standstill period would be wide open to challenge for a period of 6 months.

The $70 Million NDA

What's the value of a good NDA? About $70 million if your name is Scott Van Dyke. In 2003, his company, Anglo-Dutch Petrolem, won a $70.4M damages claim against US oil giant Halliburton and Scottish oil exploration and development firm Ramco. This month, with a Texas court ordering it to hand over various assets, Ramco is struggling for survival.



In a nutshell, Halliburton and Ramco had both signed up to an NDA with Anglo-Dutch, supposedly to help it develop oilfields in Kazhaksthan. Van Dyke had been searching for Noah's Ark in Turkey during the 1980's when he met Turkish president Turgut Ozal, who later introduced him to the Kazhakstan opportunity. Halliburton and Ramco were found to have breached the NDA by providing confidential Anglo-Dutch information to another company, Golden Eagle, who used it to grab control of the project. At the end of all this, Anglo-Dutch was left out in the cold, with no interest in the oilfield.

Don't let anyone tell you NDAs have no value.

Check Less, Improve Compliance?

With the FSA's deadline for contract certainty looming, Lloyd's is putting a positive spin on its latest initiative to "streamline the way insurance contracts are checked, produced and issued." The goal, of course, is to produce insurance documentation without any mistakes, and to issue that documentation to the customer before (or very soon after) inception.



The current (self) assessment of contract certainty amongst Lloyd's Managing Agents is 80%. That sounds OK, except that it means 1 in 5 deals flowing through the Lloyd's market is currently failing the contract certainty test.

The proposed solution? Simple, really. Check less.

It's hard to argue that slashing the number of QA checks from 170 to around half that number won't reduce the slip rejection rate. But whether this will improve the speed, quality and certainty of documentation is much less clear.

Death by Laptop

For those of us enjoying the benefits of laptops and mobile storage gadgets, it's easy to overlook the risks. But as a recent article in Law Technology News ("Death by Laptop", May 8th, 2006) points out, the risks are high, and the consequences of ignoring them rather scary. They cite two headline grabbing incidents to drive the point home:

• Thief nabs backup data on 365,000 patients from a Providence Health Systems employee's car, and
• Laptop stolen from employee of Fidelity Investments with data on 196,000 Hewlett Packard workers.

Which got me thinking about the risks of keeping highly confidential contracts and agreements on a personal laptop, and the consequences if it falls into the wrong hands. For lawyers working on confidential M&A deals, the fallout could be disastrous. For government contracts it's a recipe for public scandal. It doesn't take much imagination to conjure up other scary scenarios.



It does, however, bring into focus one of the benefits of web-based systems, where your confidential data lives on a server, safely out of range of the average laptop thief. You can still use your laptop to login and do your work, but if you happen to leave it in a taxi, or under the bar, your worst case scenario is the price of a new machine. Much better than waking up the next day to find yourself as front-page news.