Wednesday, 4 December 2013

Working with Local Government Procurement - our guest post on Procurement Insights EU

The following article featured as a guest post on the excellent Procurement Insights EU blog.  It outlines some of the challenges we have faced whilst working with local government, for which we were invited into Parliament to discuss with MPs - more to come on that later!

Life remains tough for small, innovative companies trying to secure UK public sector business by Alun Rafique 

“In order to give Customers using the Framework a balance between choice of suppliers and best value, following completion of the evaluation of tenders a maximum number of five suppliers will be awarded a position on the Framework. It is therefore vital that Tenderers can offer each of the five modules detailed on the following page.  As referenced previously in this ITT it is anticipated Customers will elect to procure one or more modules or may choose to purchase a complete solution incorporating all of the five modules.  It is therefore essential that Tenderers can offer all of the five modules to meet the requirements of those customers looking for a complete solution. Any Tenderer who cannot offer one or more of the elements listed above in 3.1 will be removed from this procurement process.”

The above is a quote from an invitation to tender by the UK public buying organisation (PBO), Eastern Shires Purchasing Organisation.

The modules, which represent a complete e-procurement solution, are e-tendering, e-evaluation, e-auctions, e-contract management, and e-vendor management.  As stipulated, Tenderers have to offer all 5 modules or face being disqualified as a potential supplier. Unfortunately, it is this “all or nothing” approach that represents just one of the many obstacles that Small- Medium Enterprises or SMEs face in the pursuit of public sector business.

More to the point, the stipulation that Tenderers have to deliver all 5 modules, will eliminate or seriously impede the ability for the majority of SMEs to participate regardless of the superior capabilities of the modules they are able to provide.  While I believe that this is an unintended consequence of a short-sighted approach, it nonetheless amounts to what could only be viewed as a discriminatory practice that will limit the pool of potential suppliers to the detriment of all involved – including the government itself.

Despite the government’s attempt to introduce reforms that would address the above challenge, the task for SMEs remains a difficult one.

In this context, I would like to take a moment to share with you the experience of my company, Market Dojo.

Market Dojo successfully applied for a grant from the Technology Strategy Board to develop a product to assist public procurement professionals with e-Sourcing activities.

While this support was greatly appreciated, once fulfilled we were for all intents and purposes on our own from that point onward.  In essence and despite the government’s recognition that MarketDojo’s negotiating tool for running e-auctions and electronic request for quotations warranted financial support as it addressed “a particular problem area where frameworks have traditionally underperformed,” the method for actually utilizing our solution is hindered by the above mentioned all or nothing edict.

Simply put, and has demonstrated by the government grant, we believe that our product – and the complimentary products of other SMEs – can collectively save organisations a lot of money.

Even though we have made some progress in the public sector, having landed three government contracts, the private sector still represents the company’s best and most reliable opportunity for continued growth and long-term success. This leads one to wonder why SMEs are worthy of government funding but not considered to be worthy partners?

There are of course financial consequences associated with this disconnect.

For example, while both the transport team at Bedford Borough Council and Shropshire County Council have benefited greatly from their relationship with MarketDojo, Worcester County Council’s adoption of a more traditional contracting strategy meant that they ended up paying £2750 per e-auction, instead of the £500 for five that Market Dojo would have provided.  This difference amounts to Worcester paying 27 times the price that neighbouring Shropshire County Council is paying per e-auction.

A further complication in terms of government achieving a best value outcome is the tendency on the part of local councils to interpret European Union tendering regulations differently from one another.  Some interpretations as I have discovered, can lead to councils paying far too much for a less effective solution as a result of inflexible scoring mechanisms for evaluating tenders.  In one instance it was suggested that if we redesigned our system to better mirror the specifications of the tender, we would have a better opportunity of winning the contract.  Unfortunately, such an alteration would in reality eliminate the very functionality that led to the significant savings that were realized by both Bedford and Shropshire Councils.  This again makes one wonder what it is that the government is attempting to accomplish, as there seems to be a greater emphasis placed upon following arbitrary regulations as opposed to driving greater value from procurement.

Needless to say, the combined outcome of all that I have covered above has led to a common complaint that far too many public sector procurement people hide behind rigid processes and procedures.  This in my estimation, prevents public sector bodies from realizing maximum value for money in that they ultimately discriminate against SMEs and the innovative solutions they can provide.
A picture (or in this case UK Tender) is worth a thousand words!

A picture (or in this case UK Tender) is worth a thousand words!

 

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