Dominic Browne 16 October 2018

Procurement problems

The latest Highways/FiTZ INDEX survey has revealed deep concerns within the sector about the nature of procurement, especially its ability to foster innovation, take on and share risk, bring in new entrants and support SMEs.

However, while there is a feeling procurement itself is not evolving there are signs the sector itself is ready to take steps to drive change.

Less than one in five members of the roads sector (19.8%) feel that procurement satisfies its needs and only a third feel public sector strategies are evolving towards more satisfactory outcomes, the survey has revealed.

The majority of respondents (54.3%) disagreed or strongly disagreed that ‘procurement in the highways sector is fair for non-Tier One suppliers and for new entrants’. No one strongly agreed with the statement. And 79% strongly agreed or agreed that ‘procurement has, intentionally or otherwise, actually driven more risk averse behaviours from suppliers over the last five years’. No respondent strongly disagreed.

There was ambivalence over whether public sector procurement strategies evolve from one contract period to the next, and are progressing towards more satisfactory shared sector outcomes. Few respondents had strong feelings one way or another, but 39.5% disagreed or strongly disagreed – an exact third (33.3%) strongly agreed or agreed.

The survey asked: ‘Do you feel your organisation is willing to embrace a new model of service delivery – such as the Project 13’s Enterprise Model – as opposed to the traditional client contractor model?’

Encouragingly, close to half the respondents (45.7%) said yes to such a major change. However almost one in ten (9.9%) said no and 44.4% were unsure. The fact that so many remain unconvinced of the potential for change leaves questions for the whole sector to answer.

As part of the survey, respondents were asked to suggest changes that need to be made to improve procurement in the sector. Common themes developed around the large cost, and lengthy time involved in the process and a lack of transparency preventing more genuine collaboration. Respondents also suggested that action needed to be taken to help new entrants and SMEs compete for work and provide more innovation in the market. A lack of skills and clarity over desired outcomes in the public sector was also raised a number of times.

The FiTZ INDEX reveals emphatic agreement that current practice is driving the wrong behaviours, and achieving the wrong results, Brian Fitzpatrick writes:

The continued prolific use of frameworks, with stringent qualification criteria, means the same companies utilise financial muscle and track record to qualify, restricting new entrants and smaller organisations trying to bring in fresh thinking to the sector.

The Project 13 initiative has an ambition to move away from transactional, cost driven procurement, but whether it will perpetuate the status quo is a key question in the minds of many.

The Government now needs to lead serious reform in procurement – two thirds of respondents said the public sector should be responsible for driving change. 10 points for more effective procurement arise from the 2018 Index:

1.   More, and less onerous, pre-qualification for SME’s

2.   Identify price (not cost), and value over tick box bureaucracy

3.   Constrain the number of contracts bigger companies are allowed to bid for and/or win

4.   Retain the commercial and technical involvement of the client. Collaboration never means giving up accountability

5.   Bring the customer and end user need more to life in tenders and the way their satisfaction is measured

6.   Fewer frameworks, more alternative procurement models, more variation in remuneration

7.   Don’t reward failure, if a company bids low and cannot keep its promises, punish them

8.   Standardise design and construction solutions to avoid re-inventing the wheel every scheme

9.   Procurement professionals need to be accountable too. Less management and more collaboration with technical colleagues.

10. Measure the outcomes of tenders, incorporating that knowledge into the next set of documents.

 

This feature first appeared in Local Government News magazine.

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