Demystifying the Procurement Act

After two years of education, training and awareness – and a five-month postponement – the Procurement Act finally came into effect in February. And while the flurry of pre-Act deadline tenders suggested local authority procurement teams were somewhat reticent about the new demands, the tenders created post-Act confirm that many procuring authorities are already embracing some of the changes offered by the Act.

As Jen Roberts, Head of Bids at Idox explains, while there is no need to panic – if an authority wants to stick with tried and tested procurement models offered by existing frameworks, that’s fine – however it is worth noting that several aspects of the new Act, from social value to transparency, business engagement to long-term contract management, will provide local authorities with a far more flexible approach to procurement and ultimately better outcomes for the taxpayer in the long run.

Introduction

The extended build up to the introduction of the Procurement Act has provided local authority procurement teams with ample opportunity to benefit from extensive Cabinet Office training focused on the goals and demands of the new procurement model. With an emphasis on delivering value for money and maximising public benefit, the Act heralds a new era of transparency designed to enhance the supplier/ procurer information flow to improve integrity and, where practical, remove barriers to participation.

While training and information resources have been rigorous and extensive, each procuring authority inevitably faces diverse challenges, from budgets to experience and staffing levels to cope with the demands of the Act. As a result, not all will feel ready to apply their learning in all procurements until they are fully confident with their obligations under the Act. The good news is that, at least for the moment it is not obligatory. 

Procuring authorities looking for Commercial Off the Shelf (COTS) solutions can continue to use frameworks such as VAS or G-Cloud 14 for new procurements and re-signs for the lifetime of those agreements. Taking this approach will provide authorities with the space and resource to explore new procedures such as the competitive flexible procedure for more bespoke product and software procurements, ensuring their teams are fully confident in the new legislation before adopting these approaches for all procurements. 

Embracing the positives

While the level of change included within the Act may seem daunting, it is important to note that it consolidates many of the existing practices and regulations that existed under the four previous procurement rulesets (PCR 2015, Utilities Contracts and Regulations 2016, Concession Contracts Regulations2016 and the Defence and Utilities Contracts Regulations 2011).  The result is one clear set of regulations and rules, supported by the flexibility and transparency that will enable buying authorities to spend public money more effectively. 

Change will be a marathon, not a sprint. While the Act does certainly include some mandatory changes, the emphasis on flexibility seeks to encourage buyers and suppliers to reconsider the way they do business to foster better outcomes over time. Some of these key changes include: 

• The Central Digital Platform: Designed to streamline processes and improve data transparency, the new Central Digital Platform is now the single location where all notices are published, and suppliers can store their high level SQ data. Removing any level of repetition in the bidding process will break down barriers for a wider range of potential vendors, including SMEs, to increase competition across markets. The platform will become a single view of all emerging and current opportunities, awarded contracts and even contract performance data, enabling buyers, suppliers and members of the public to understand how public money is spent, how well vendors are performing and to plan for future procurements further in advance, driving innovation and value for money at every turn. 
• A new evaluation criteria: Moving from MEAT (Most Economically Advantageous Tender) to MAT (Most Advantageous Tender) may seem counterintuitive in an Act that champions value for money. However, again this change is about providing buying authorities with the flexibility to design what value means to them and their communities. The new criteria do not prevent buying authorities from weighting towards price, it encourages the consideration of aspects beyond direct economic value such as Social Value. It is also a chance to explore different evaluation mechanisms such as Price Per Quality Point, more recently seen in central government tenders. 
• The competitive flexible procedure: While not designed for the procurement of COTS solutions, this new procedure is designed to encourage innovation amongst suppliers when responding to more bespoke local government challenges. Buying authorities can flexibly design a procurement process that is proportionate to the opportunity and may include new value driving stages such as negotiation and Best and Final Offer (BAFO). 
• Transparency and control: We recognise that a key concern for buying authorities is the additional administrative burden associated with drafting a raft of additional notices such as pipeline, contract performance, contract change and payment compliance notices, not to mention the new assessment summaries. However, this data will ultimately create the pot of gold within the Central Digital Platform, an insightful dataset that will help buyers and suppliers deliver more innovative, higher quality services to the public. Assessment summaries simply formalise the existing requirement to provide meaningful feedback to bidders to drive continuous improvement. This more structured and standardised mechanism will promote fairness, drive up standards and minimise unnecessary time spent on potential challenges. Finally, contract performance transparency will hold suppliers to account, ensuring maximum value from every pound of public money spent. 

Explore social value assessment measures 

We are already seeing buying authorities placing an increased emphasis on social value in tenders released since the Act.  In addition to expanding the proportion of evaluation criteria allocated to social value, local authorities are now urged via the National Procurement Statement, to think more carefully about what social value means to the local community. 

Rather than seeing social value in isolation, buying authorities are beginning to connect their social value requirements to the procurement at hand in a more meaningful way, asking suppliers to demonstrate how their specific product or service will deliver social value. For UK based businesses in the IT sector for example, it may not be reasonable to expect a supplier to directly employ local people on a remote software implementation. However, it would be perfectly reasonable to expect their business to directly contribute to the UK economy or environment in other ways such as their overall investment in the UK employment economy, commitments to sustainable software development, or even how the software they are offering could enhance the lives of the communities who access it.  

For example, for local government, land and property, Idox is exploring the geospatial experience and environmental data of Exegesis (an Idox company) to support biodiversity net gain legislation within planning to ensure our solution delivers social value as well as efficiently processing a building application. Looking ahead, this emphasis on social value will likely feed into product and service development roadmaps for suppliers, resulting in more a socially conscious software profile in the UK, which is interesting. 

This shift in emphasis places new demands on suppliers to demonstrate how, where and when a contract will meet social value criteria.  But that is just the start. As local authorities become more sophisticated in assessing areas of social value that meet both local and national goals, the onus will be on suppliers to consider how they, and their products / services, can support those social value objectives in a meaningful way.

Encourage business leads to undertake pre-tender market engagement

Pre-market engagement was always available, but now it is actively encouraged! 

Understanding your business case, creating a defined problem statement and determining whether the challenges can be addressed, how and for what budget are vital components of a successful procurement. Procurement teams are advised to encourage business leaders and department heads to embrace this pre-tender activity, talking to the market, providing input into requirements and evaluation criteria to ensure realistic expectations and the ultimate selection of a solution that addresses the real-world problem or challenge they need to solve. In the new world of the Act, with greater flexibility in terms of evaluation criteria and the competitive flexible procedure, this pre-market engagement may even influence the shape of the tender process or the weight buying authorities choose to give to pricing or quality, the possibilities are endless. 

In addition to involving and empowering department heads to drive the procurement based on a considered vision, it’s also important to include a good subset of people both in setting requirements and on the evaluation panel once you proceed to tender. Procurement teams don’t necessarily understand the products being sourced, or the reality the problems the business faces, while technology teams may focus on security, technical or data requirements and risks. End users may be focused on continuing to work the way they do today and be reluctant to embrace change, however their day to day buy-in will be intrinsically linked to return on investment. Engaging a diverse range of stakeholders internally can make a significant difference in ensuring the procurement process delivers a workable, adoptable and valuable solution.

Consider long-term contract management

The new levels of transparency inherent with the Procurement Act are a huge gain to local government and, in turn, the taxpayer. Contract performance transparency and the debarment list will play a vital role in enabling buying authorities to attain value for money. The visibility of vendor performance will provide new levels of rigour: any organisation failing to deliver on a regular basis could end up on the debarment list, preventing them from bidding for public business. Even without a debarment, the transparency demanded by the Act will ensure that all procurement teams have visibility of a vendor’s on-going performance throughout contracts, information which is key to making good procurement decisions.

To ensure buying authorities maximise the value of transparency it is important to consider long term contractual management before the tender process – and that also means understanding the level of commitment required on both sides. A successful software implementation, for example, requires the authority to put in place the right project team up front, to ensure Business as Usual (BAU) continues to be supported through back-fill and, if needed, data cleansing processes have been achieved or at least considered. Timeline penalties such as delay payments may not be an achievable metric unless both parties can commit to deliverables that are contingent on one another. 

Again, pre-tender market engagement will enable authorities to clarify requirements and make sure they are deliverable, leading to the creation of realistic contracts and key performance indicators. This will reduce the risk of underperforming vendors unable to meet performance targets and lead to the acquisition of more successful solutions. 

Conclusion

While at first sight, the Act certainly brings significant change for buying authorities and suppliers, there is no expectation that the full impact of the changes will be faced immediately. Indeed, the Cabinet Office and procurement experts expect the full breath of the change to be a marathon not a sprint. We are likely to see changes by way of procurement policy notes as the new procedures are tested, while the Central Digital Platform will continue to be developed. It is expected that the full vision of the Act may take up to five years to achieve. 

There are two vital points to understand: firstly, there is no need to make any immediate changes in every procurement. Procurement teams can leverage existing procurement routes such as frameworks for new business and re-signs until they expire, while opting to explore the new mechanisms when they feel ready, where it makes sense. Secondly, the Act is not just about improving the procurement process but actually implementing and gaining benefit from the investment. By decoupling ‘buying’ from ‘delivering value for money’, the emphasis shifts. No procurement achieves ROI unless it is deployed, adopted and accomplishes intended results. 

The whole emphasis of the Act is to help local authorities to understand exactly what they are buying, what it can deliver and make it far more likely that it will deliver. Suppliers also have vital role to play in supporting the new the procurement expectations. Idox is already part of the direct award frameworks, G-Cloud and VAS, and our experienced and skilled bids team has undertaken extensive training and education to ensure we are prepared and aligned with these changes. Idox is committed to working closely with procuring authorities as they navigate the new procurement processes.

Connect with our expert procurement team and ensure your local authority is ready for the new legislation. Contact your Account Manager or visit our webpage: How to buy.