dxw’s response to the Transforming Public Procurement consultation

Unless there’s some teeth to the new proposals, there’s a risk they’ll end up as window dressing and nothing much will change

Like lots of suppliers who work with the public sector, we’ve been taking a look at the Green Paper on Transforming Public Procurement.

dxw has some history here, in working to make life easier for both suppliers and buyers of digital in government. We led a supplier revolt against the unsuccessful Digital Services Framework. And in 2017, we carried out the Great British Digital Armchair audit which set the scene for discussions about how to make opportunities on the Digital Outcomes and Specialists framework easier to understand and respond to.

The Government’s aim in this Green Paper is to overhaul public procurement and create more opportunities for innovative and smaller companies to win business. From our perspective as a digital agency though, there doesn’t seem to be anything that signals a big change.

Support for small to medium enterprises (SMEs)

Anything that makes it easier for SMEs to get onto different procurement frameworks is a good thing. It provides buyers with more options, and stimulates innovation, competition, diversity, and growth.

The stated commitment to more open processes, simplification, and transparency is welcome. But what’s more important is how this plays out in practice. Beyond the overall statements of positive intent, we can’t see very much in the proposals on tangible help for smaller businesses.

The proposal to consolidate the regulations is sensible but in itself doesn’t add much value to suppliers, who don’t face into them directly. So we don’t expect our day to day experience to be much different as a result.

Changing buyer behaviour

Just over a third of current spend on the Digital Marketplace (one of the main routes into government for digital suppliers) is with SMEs. However, overall compliance with the existing rules on government procurement which already require many of the things set out in the proposals like transparency on contract awards, is poor.

Buyer behaviour is a real issue for SMEs. The government must mandate individual buyers to do the right thing within the rules and monitor compliance. We’d hope to see a more active enforcement role emerge as the new arrangements are put in place. In the case of digital, this would probably fall to the Government Digital Service or Crown Commercial Service. There’s also an important role here in empowering buying organisations to be more open and transparent by promoting and talking about best practice in agile procurement.

Making it simple for suppliers

Government needs to do the hard work to make it simple for suppliers in terms of how the procurement process works. This also makes life easier for buyers for whom procurement is, more often than not, off putting and time consuming. The Digital Marketplace does this pretty well. It’s not perfect, but it would be good to see this kind of approach applied more widely.

Complex procurement processes tend to favour incumbents and larger organisations. They’re more likely to have the knowledge and resources needed to work through weighty tenders, and it’s easier for bigger companies to manage long and uncertain sales cycles. This presents a real barrier to entry for smaller businesses where the opportunity cost of bidding can be significant. It’s precious time that would otherwise be spent doing client work.

The time and effort required from a procurement exercise should be proportionate to the contract size. For an SME, the cost of preparing bids is always a factor so buyers will miss out on the right supplier if the process is too onerous. The amount of effort required to bid on a £50k project is often on a par with a £1m contract.

We’d like to see much more openness from contracting authorities about their overall priorities and plans, as well as during the procurement process. Some buyers already publish roadmaps of upcoming projects and this is really useful. But for the most part, there’s a lack of direct access to buyers to gain real context and too much is left to guesswork (if you’re not the incumbent). It should be possible to use new tools to allow these conversations to happen, and move beyond fairly limited questions and answers around individual bids.

We’re finding that it’s becoming increasingly common for buyers to leave out budgets when advertising opportunities. This makes it difficult for suppliers to judge how to pitch their bids, or know if it’s worthwhile engaging in the process at all. We know that budgets are tight and the public sector needs to show value for money. But it’s easier and more efficient for suppliers to shape their bids to provide this value if buyers are open about their budget range.

We welcome the proposed ‘should cost model’ for ‘complex projects’. We think this should apply to projects of all sizes. Buyers need to have a view on the size and complexity of the work to be able to make the right procurement decisions. Intelligent buyers make procurement much simpler. If more data is published on awarded contracts, this should make it easier for buyers to benchmark and explain their budget position.

Open vs closed systems

The signalled move towards more open and dynamic purchasing systems is positive and should make sure suppliers aren’t frozen out of a particular market for years. Frameworks that remain closed for 4 years, however, will still limit opportunities for newer organisations to access work and add value. We quite often see arbitrary renewal/application dates for frameworks that don’t account for the individual growth trajectories of SMEs or innovation happening in the market.

How decisions are made about the type of frameworks used for different sectors will be important. We’d like to see open and dynamic systems as the default, with sound arguments presented for any movement away from that. A 4 year long closed framework might be appropriate for sectors that require significant capital or infrastructure investment by suppliers, deep contextual knowledge, or relate to critical national infrastructure. But wouldn’t work for faster moving markets like digital.

Factoring in past performance

An increased focus on considering the previous performance of suppliers should help to avoid repeating costly mistakes. This is good to see, but will need to be applied consistently to have real impact and include the major suppliers to government. We would like to see more detail about how this would be measured in reality to avoid the risk of suppliers, especially SMEs, being unfairly penalised for policy or organisational failures on the part of the buyer.

There’s the ability to bypass past performance in ‘crisis’ situations, along with other procurement rules, so this won’t prevent some of the failed contracts we’ve seen as part of the response to Covid.

When looking at past experience (as opposed to performance), it’s important to avoid falsely restricting access to a particular market. The requirement for sector specific experience isn’t always necessary and can create a closed marketplace, sometimes deliberately so. Marketplaces should both reward sector experiences and encourage new talent and ideas. In our case, it’s often the same digital expertise that’s needed. The client has domain knowledge and our ways of working are designed so we pick this up quickly when working with them.

Measuring social value and environmental impact

The proposal to include wider economic, social, and environmental benefits as part of the evaluation process isn’t new, though its implementation has been patchy so far. Making things like social value and environmental impact more important is, of course, a positive thing. It’s likely to be harder for SMEs to demonstrate as much impact as larger companies, so how this is measured should reflect the contract value and supplier size.

Transparency

The commitment to greater transparency, if it’s done well, will make things better and help to keep everyone accountable.

More transparency about what’s being bought by public sector organisations makes it easier for suppliers to adapt to meet the needs of the market. Feedback on the reasons bids fail should be mandatory to help suppliers to innovate and increase competition for future work. The openness that’s been brought through the Digital Marketplace has been really helpful in this respect. The lack of feedback when bidding under some other frameworks isn’t helpful.

In conclusion

We welcome the desire for more transparency and greater dynamism in public procurement. There is huge value to be had from that. But buyers in government are already not meeting their commitments under the existing system (as recent high profile court cases attest). Unless there’s some teeth to the new proposals, there’s a risk they’ll end up as window dressing and nothing much will change.

It’s easy to become cynical when we’ve seen many similar efforts at grand plans to reform government procurement over the last few years. Government makes regular commitments to support SMEs but while there has been some progress, the market is still dominated by the same players with 1 or 2 new entrants. Obviously the devil is in the detail but if these reforms can build on and accelerate the progress we’ve seen in the last few years, perhaps they don’t need to be revolutionary.