We wrote here about the trade-offs that we see in public procurement. Whether it is the balance between “policy through procurement” initiatives and more basic value for money, or the trade-off between flexibility and anti-corruption based processes, many aspects of government buying require consideration of those factors.
For each of the trade-offs, we are going to look in more detail at the nature of the potential conflict, then suggest some steps that public procurement professionals can take to minimise the potential for real issues and problems. The nature of these trade-offs means that there are no magic solutions, but there are ways to reduce the risks. Today, our first trade-off.
Rigour versus speed
In our overview, we said this:
“We need to simplify public procurement, shorten the time taken to run procurement exercises, reduce the cost for bidders and buyers. Yes of course, that all sounds great. But the potential trade off there is a loss of rigour in the process, that might lead to other issues (from increased corruption risk to poorer value for money)”.
Whilst statistics are not always reliable, the evidence suggests an average time of something just over 100 days to run a public procurement exercise. Some take much longer, running into many months and even years. The costs to the contracting authority and to the supply side are considerable, and can be disproportionate particularly for contracts that may be just above the EU threshold. Generally, it does not cost 100 time more to run a €100 competition as it does to run a €1 million.
Lengthy processes can have other negative consequences. We have seen examples where the process took so long, the fundamental requirement changes before the contract was finally let. Changes in the people involved in the process can also lead to a lack of focus or knowledge, and that is more likely to longer it takes.
The latest European procurement directives reduced the minimum elapsed times that authorities must allow for the bid process. We have also seen other generally positive initiatives – such as the push to adopt “lean procurement” in the UK – that are aimed to speed up the process and make it more efficient. The new regulatory requirements to have documents available when the contract is first advertised should also help to avoid unnecessary delays later in the process.
On the other hand, if speed is pursued at all costs, there are other risks. If time is not taken in the pre-procurement stage, then we may see fewer suppliers bidding, or even being aware of the contract opportunity, or it may be the “best” potential suppliers are excluded. There may not be time for bidders to really make sure they understand the requirements or to put together the best possible proposal.
Compressing the bid period also greatly increases the chance of serious potential suppliers deciding not to bid. That is exacerbated if the tender is issued in the summer or just before Christmas! “If you issue a tender in August with a rapid turn-around, we’re much more likely to “no bid” simply because half my team are on leave”, the Head of Public Sector consulting at one of the largest firms in the market told us recently.
Then there are risks around the robustness of the process. If evaluation processes are rushed and corners cut, there will be more likelihood of the wrong supplier selection decision or later challenge.
Addressing the risks
Here are our suggestions to help contracting authorities balance these trade-offs between speed and rigour.
– Every procurement should be run efficiently. That means good project management; ensure the right resources are in place, and plan realistically how long each phase will take.
– It is vital to get the evaluation process, team and governance lined up and planned well in advance. We have often seen the issue of approvals holding up the final award decision – “the Board only meets every 2 months so we have to wait for their sign-off…”
– Take a risk-based approach to the timescales, looking at how complex or non-standard the requirement s, the risk of selecting inappropriate suppliers and so on. Understand the nature of the contracts, how many suppliers are in the market, and use that to determine how much time will be needed to run a robust and successful process.
– Don’t rush or skimp on the early market engagement, in particular if the requirement is unusual, innovative or there is a limited supply market. Time spent at that stage is likely to save time later in I the process and helps to make a successful contract more likely.
– Allow a reasonable time for suppliers to respond, proportionate to the complexity and risk of the requirement and the tendering process. Be aware of holiday issues.
– Good eSourcing software helps to make tendering process more efficient and effective. If you are not suing it currently, consider doing so – it does not even require large capital investment now as the capability can be bought on a “managed service” basis.
– If time is tight, keep it simple. You don’t have to ask 50 different questions in the tender – you could just choose the three key areas and focus on those. A simple tender will need less time for both suppliers to responds and evaluation.