Good Practice
NAO on Commercial & Contract Management – Be An Attractive Client

At the end of last year, the UK’s National Audit Office issued a very useful document titled “Commercial and contract management: insights and emerging best practice”. We did provide an initial overview of it here, and now we are into a more detailed review of its content and findings. For each area the NAO has covered, we will look at their content and then give any additional analysis or thoughts we would add to the mix. Today, we will take a look at the sixth of the NAO insights (as they call them) – Be an attractive client.

Most of the insights make a lot of sense but this is a very important point, particularly as this is something that very few public sector organisations or procurement people would have thought much about until very recently. Indeed, the same is probably true of most private sector bodies too. The traditional approach was to put out a tender requirement, and see who applied. But as the NAO says here, “short-term or ill-considered decisions influence whether suppliers want to work with government”.

Suppliers have a choice as to whether they work with government, and have to get something out of it themselves. But buyers often think about short-term advantage, or simply do things that work against effective competition. For instance, “doing things quickly puts at risk long-term commercial sustainability”, as NAO says. The result can be a market that is thin and lacks real competition – and there are too many of those in critical supply areas to government.

Making sure the complexity of bidding processes is appropriate to the opportunity, keeping suppliers informed during procurement exercises, thinking carefully about risk and acting fairly during the whole end-to-end contract process are other factors that can help to make the contracting authority an attractive proposition for the market. Much of this is about understanding “what motivates and drives the supplier” – put yourself in their shoes is what we say when we run training courses for buy-side staff.

NAO also points out that the issue around fairness can have legal and operational consequences. The disastrous tender for West Coast Rail was in part down to confusion in terms of information provided to different bidders, and lack of clarity as well as a “level playing field”.  Limitations in data also contributed to the UnitingCare shambles (although there were other failures there too).

Public Spend Forum Comments

As we say, this is another area of absolutely critical importance to many areas of government procurement. But there is sometimes an arrogance in organisations and in procurement staff (public and private sector, we should emphasise, and particularly in larger organisations) that assumes suppliers are just sitting there waiting, desperate for our work. That is rarely the case.

Every organisation, certainly for its more strategic spend areas, should seek to be a “customer of choice”. And when we look at some of the most sensitive issues and contracts in the public sector, (whether that is rail franchising, defence equipment, rehabilitation or employment services), we often find that either markets have only a limited number of providers, or indeed the whole market is being created because of and by the public contracting authority. In both of those cases, being an attractive client to encourage more competition is vital.

The point about time is well made too. Providing enough for suppliers to bid, do their due diligence and so on is one of the simplest aspects of this issue yet one that is often disregarded by the buyer. However, this is another case where we need to highlight the impact that politics and politicians (and indeed other senior stakeholders) can have here. This failure and indeed others that fall under this heading are rarely just down to the procurement / commercial staff.

We’ve seen very rushed and poorly constructed procurement exercises driven by “the Minister wants this done by the Party Conference” – and there are equivalents in other sectors outside central government.  There are no easy answers here, but this is another “training need” for that wider and important community which has a significant impact on commercial performance.

 









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