UK Government’s Planned Procurement Changes

Mathew Baxter is CEO of echelon consultancy group, in this latest feature he writes about the UK Government’s planned procurement changes.

As part of the consultation process on the government’s planned procurement changes, we submitted a short summary response gleaned by collating feedback from our housing provider best practice forum, the Asset Management Improvement Partnership (AMIP) and its contractor and supplier equivalent (CAMIP). Feedback was not overwhelmingly positive from the sector but obviously tweaks are to be expected on a document that is pre-white paper.

The overarching premise of the proposed regulations is to make the process of procurement less bureaucratic and standardise it across the sector. Currently there are different regulations across different sectors, so for example if you are a public sector organisation undertaking procurement you will follow regulations designed for that specific purpose.  The aim of the proposed changes is to make it more cost effective and easier to access contractors and suppliers through a single digital platform for supplier regulation which is designed to ease things significantly.

For all current procurement processes except the “Open” procedure, every contractor engaged in public procurement must go through a pre-qualification process which is essentially supplying the same info over and over again, a repetitive process requiring the contractor to give company name, turnover etc repeatedly.  The big plus in the proposed changes is that the contractor will only have to submit this once a year, which will cut down on admin considerably.  Additionally, there is a big emphasis on speeding up the review and challenge process so if suppliers are uncomfortable and feel they need to challenge the procedure or feel aggrieved about how they have been treated, rather than submit to the fairly convoluted and expensive process as it is currently. which is off-putting or possibly even unfeasible, they can go through a sharper and faster process.

Bidders can be excluded on previous performance, which at the moment is difficult.  This, although a laudable proposal, will require refinement to ensure that the exclusion process is used objectively. For example, if contractor x is working on a current contract and failing to hit KPIs would that be grounds for exclusion for a new contract?  Might the contractor then blame its suppliers for any failings?

The five different procurement processes currently available (restricted, competitive dialogue, competitive procedure with negotiation, innovation and design contests) are to be replaced with a single ‘competitive flexible procedure’.   Again, as a streamlining concept making the process less rigid and easier for suppliers and bidders it’s excellent, but the proof will be in practise.  In theory it gives more bandwidth to do things sensibly and proactively with the emphasis very much on suppliers throughout the process, encouraging engagement with the market and ideally driving risk out of procurement.  The concept is fantastic but will need very clear guidelines about where that will start and stop.  The government needs to consider the risks around creating more divergence.  Collapsing all these different procedures into one appears far simpler but there is a danger of giving people rather too much freedom.   There will be no case law so will the first contractor that fails to win a competitive tender immediately challenge it?

The open procurement procedure will remain and that brings with it the danger that it will be overused as an alternative to a new and potentially complex process which is what the industry saw in 2016 with the last round of changes.  The open single stage tender process was used inappropriately because people defaulted to the familiar.

Another new procedure being proposed, not directly as a result of Covid but as a nod toward an emergency situation, is a fast track process that avoids a protracted procedure and allows contracts to get moving quickly.  This is ideal for a limited tender procedure when you are struggling to get to market quickly when commodity markets are low or you have failed to get any bidders using the other methods.

The terminology has been altered significantly, also.  The Hackitt report talked about the pitfalls of focusing on cheapest price and here the new terminology is an “most advantageous tender” rather than an “most economically advantageous tender” which moves the focus from cost as the most prominent factor.

In terms of frameworks, effectively the idea is around creating a new and broader dynamic purchasing system that will be known as DPS Plus.  DPS tends to be used mostly for goods and the idea is it will become more user friendly for services and contracts.  A DPS Plus has to remain open and anybody can apply to join it at any time.  In my opinion this is not ideal for construction but would maybe be more suited to materials.  Currently the longest you can procure a framework for is four years without the ability to add or deduct contractors, with the benefit that you can draw work off quickly by direct award or mini competition.  The new open framework appears to be a halfway house between a framework and a DPS, with the flexibility of being able to add or deduct people and a period of eight years rather than four but with the first three years closed.  This has received a mixed response from our contacts in the sector, but what has been universally approved is the statement in the new regulations that charging a fee is only possible on works being awarded rather than membership and that any charges have to be proportionate.

In conclusion, in my view a refreshingly common sense approach is being adopted.  The most transformative idea as far as I am concerned is the single central database of suppliers and contractors but this is an enormous IT task to be undertaken and again it will be interesting to see how this is practically delivered.  The document is a quality discussion piece with some brave and provocative proposals alongside a healthy dose of reflection and interrogation about where the industry must improve.

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