Procurement Technology: What Public Sector Organisations Should Look For

Time is up for the consultation on the UK Green Paper, Transforming public procurement. The time to look for commercial solutions begins. A White Paper will now follow, with more concrete recommendations that should lead to a fundamental overhaul of public procurement. What should the White Paper contain in terms of guidance, and what, ultimately, should be the criteria governing public sector authorities and agencies when choosing procurement technology? Are they any different from the considerations taken by private sector organisations?

Some of the challenges specific to the public sector are discussed in our free white paper, which you can download here.

Public sector organizations, being entrusted with taxpayers’ money, are constrained by publicly mandated regulations (at national and local levels). And because they manage large sums of public money, they must be open to greater scrutiny, hence they must be more transparent in their procurement processes. The public sector has more complex motivations and objectives than the private sector. This has always been implicitly the case, but more recently this has been given further legal expression. In the UK, public sector organizations are now obliged to take social responsibility into account in any procurement project. A private sector company may take corporate social responsibility seriously and therefore consider the interests of employees, the local community etc., but ultimately its principal stakeholders are shareholders, whose principal interest is the company’s ability to drive profits now and in the future.

For these reasons, there is no such thing as “UK PLC” – a nation state is far more than a private company, so don’t expect a “bonfire of red tape” any time soon, whatever the political rhetoric. The obligation to act transparently applies in particular to any evaluation of bids, an obligation that “is based on a raft of case law which can still make the adherence to the regulations quite complex”. Selection and award criteria must be crystal clear.

That said, any streamlining of processes could and should enable a broadening of the supplier base, opening opportunities to organisations large and small that can demonstrate value based on economic and other criteria. This is one of the main thrusts of the Green Paper.

The proposal is that information should be published on a centrally managed data registry to ensure quicker procedures and to reduce any delay involved to contract commencements where challenges are launched. In future, contracting authorities will be required to implement the Open Contracting Data Standard as a means to upload and maintain data, and this data would be accessible by all public bodies for analysis at contract and category level. They would also need to store and maintain extensive data on supplier performance.

Above all, this means that public sector authorities and agencies will need to implement contract, category and supplier management software solutions that are truly fit for purpose. As well as meeting the relevant standards, this should include analytics capabilities allowing public sector bodies to test contractual commitments rapidly and effectively, as has been the experience at the UK Ministry of Justice.

Dynamic purchasing systems (DPS)

The Green Paper also proposes legislating for a new commercial tool, a DPS+. A dynamic purchasing system is similar to an electronic framework agreement, except that new suppliers can join at any time and it is run as a completely electronic process. Dynamic purchasing systems are used exclusively by public sector organizations. They save time and money by being a quick and easy way to access goods, services and works, in the past through an OJEU-compliant route, now replaced in the UK by the new Find a Tender service.

DPS+ extends the concept in that new suppliers will be able to join at any time with no maximum duration and this will apply to all types of procurement, not just common goods and services. Basically, any supplier that meets the conditions for participation will be admitted, and their qualifications scrutinised immediately rather than later in the process. A contract award must be published when any contract is awarded.

At JAGGAER we have been involved in DPS implementations for some time and discussed the benefits in recent articles – so we are delighted at the news that the UK government intends to build on this approach.

Find out more about JAGGAER in the public sector here.