How public sector procurement can get better

Pub­lic sec­tor pro­cure­ment is an ongo­ing and major chal­lenge for nation states every­where, account­ing for one third of gov­ern­ment expen­di­ture, accord­ing to the Organ­i­sa­tion for Eco­nom­ic Co-oper­a­tion and Devel­op­ment. Coro­n­avirus exposed gov­ern­ments that favour nar­row pro­cure­ment process­es over time­ly out­comes or don’t fol­low due process at all.

It’s no coin­ci­dence that a leader in gov­ern­ment pro­cure­ment, South Korea, has one of the low­est death rates from COVID-19; open, shared and con­tex­tu­al data means it can pro­cure and dis­trib­ute per­son­al pro­tec­tive equip­ment (PPE) and tests effec­tive­ly and fair­ly.

As the world emerges from the first phase of the pan­dem­ic, the cho­rus for a social­ly just and sus­tain­able recov­ery grows loud­er and trust­ed pro­cure­ment must play a cen­tral role. The Insti­tute for Pub­lic Pol­i­cy Research (IPPR) rec­om­mends cen­tral gov­ern­ment, local author­i­ties, and metro may­ors build con­sid­er­a­tion of the use of data for local pub­lic good into pro­cure­ment guide­lines.

“Com­pe­ti­tion pol­i­cy alone is not the answer; ways to pool, share and use data must be devel­oped so it can be used for pub­lic ben­e­fit rather than pri­vate prof­it,” says Rachel Statham, senior research fel­low at IPPR Scot­land.

To achieve trust you have to pub­lish data in a way that’s clear and usable by every­one

Trust in gov­ern­ments is falling, accord­ing to the Edel­man Trust Barom­e­ter, which most recent­ly ranked the UK in 27th place, just above Rus­sia. Nation­al Audit Office (NAO) find­ings that UK gov­ern­ment con­tracts award­ed dur­ing the COVID-19 pan­dem­ic were opaque, undoc­u­ment­ed and par­tial is like­ly to dent cit­i­zen trust fur­ther, the NAO warns. “While we recog­nise these were excep­tion­al cir­cum­stances, it remains essen­tial deci­sions are prop­er­ly doc­u­ment­ed and made trans­par­ent if gov­ern­ment is to main­tain pub­lic trust that tax­pay­ers’ mon­ey is being spent appro­pri­ate­ly and fair­ly,” it says.

In par­tic­u­lar, the NAO high­lights dif­fi­cul­ties that accrued when UK gov­ern­ment agen­cies didn’t plan in advance and pur­chased PPE at the last minute. A myopic pro­cure­ment per­spec­tive cou­pled with an annu­al spend of £350 bil­lion spells trou­ble, says Neville Can­non, senior direc­tor ana­lyst at Gart­ner. “What could have helped was trans­paren­cy and open data. Rather than a nar­row focus on pro­cure­ment, a deep and con­tex­tu­al look at sup­ply chain man­age­ment would have flagged up short­ages ear­ly on,” he notes.

Focus on contextual procurement lifecycle

Kevin Sam­ple, senior con­sul­tant with health­care sup­ply chain man­age­ment spe­cial­ist GHX, says: “Health­care providers had no view of what PPE they had or what they need­ed and no abil­i­ty to fore­cast demand, mean­ing sup­pli­ers couldn’t scale up accu­rate­ly.” Real-time knowl­edge isn’t only impor­tant dur­ing a pan­dem­ic, says Sam­ple, it is best prac­tice. “Rather than being reac­tive organ­i­sa­tions, pub­lic agen­cies need a fore­cast mod­el, then sup­pli­ers aren’t put in the posi­tion of choos­ing which orders to ful­fil and clients to pri­ori­tise,” he adds.

COVID-19 pro­vides an oppor­tu­ni­ty to reset pub­lic sec­tor pro­cure­ment and recon­fig­ure an exer­cise that tra­di­tion­al­ly bal­ances risk and val­ue, says Can­non. The pan­dem­ic dis­rupt­ed nor­mal prac­tices and con­ti­nu­ity of ser­vices was pri­ori­tised over look­ing after the econ­o­my, a dis­rup­tion that’s cre­at­ed a new con­text for pro­cure­ment. “Local author­i­ties bought cloud-based appli­ca­tions to enable staff to work from home and learnt the val­ue of doing things in a total­ly dif­fer­ent way,” he says. Con­se­quent­ly, many are review­ing their real estate to see what can be released to bal­ance the books.

Ways to share data must be devel­oped so it can be used for pub­lic ben­e­fit rather than pri­vate prof­it

Using data con­tex­tu­al­ly and through­out pro­cure­ment life cycles, includ­ing mon­i­tor­ing and mea­sure­ment of ser­vice deliv­ery, would help achieve the rec­om­men­da­tions of West­min­ster think tank Reform.  A pri­ma­ry crit­i­cism con­tained in its 2019 review of UK pub­lic sec­tor pro­cure­ment was: “Too many resources are invest­ed in the con­tract­ing-out phase of the pro­cure­ment cycle, at the expense of con­tract man­age­ment, result­ing in an imbal­anced pro­cure­ment cycle and a lack of effec­tive mon­i­tor­ing for out­sourced ser­vices.”

Assess­ing pro­cure­ment needs in con­text, accord­ing to real-time data and cur­rent cir­cum­stances, is some way off. But the manda­to­ry use of the Open Con­tract­ing Data Stan­dard does assist trans­paren­cy of pro­cure­ment and some agen­cies share best prac­tice.

The Gov­ern­ment Dig­i­tal Ser­vice (GDS) is a pro­tag­o­nist: G‑Cloud set up frame­work agree­ments that let agen­cies buy cloud ser­vices with­out hav­ing to run full ten­der or com­pe­ti­tion pro­cure­ment process. Best prac­tice has since expand­ed into the government’s Dig­i­tal Mar­ket­place and October’s Dig­i­tal Buy­ing Guide, which uses inter­na­tion­al exem­plars to show how to pro­cure IT in an open, fair and effec­tive way.

Extend competitive dialogue to diverse demographics

“Pro­cure­ment reform at the GDS is aimed at sus­tain­abil­i­ty, fair­ness and open­ing up mar­kets,” explains Natal­ie Tay­lor, man­ag­ing direc­tor, pub­lic sec­tor, at Foundry4 con­sul­tan­cy. Spread­ing gov­ern­ment spend­ing and extend­ing com­pet­i­tive dia­logue across dif­fer­ent busi­ness­es and demo­graph­ics stim­u­lates the econ­o­my and pro­motes fair­ness.

“As well as open­ly pub­lish­ing all con­tracts and ten­der oppor­tu­ni­ties on a dig­i­tal plat­form, it’s impor­tant to open up frame­work agree­ments to small­er and diverse play­ers,” says Tay­lor.

While all con­tracts award­ed and ten­dered on the Dig­i­tal Mar­ket­place are pub­lic domain and adhere to open data and con­tract­ing stan­dards, they lag behind the South Kore­an gov­ern­ment pro­cure­ment mod­el in one impor­tant respect: there’s no dig­i­tal dash­board for cit­i­zens to check sup­pli­er per­for­mance and val­ue deliv­ered after the pro­cure­ment event. Such details can­not be accessed with­out resort­ing to a Free­dom of Infor­ma­tion request.

The lack of tech­ni­cal exper­tise in mak­ing and man­ag­ing pro­cure­ment deci­sions is anoth­er con­tin­u­ing con­cern. Despite efforts to upgrade com­mer­cial skills in the Gov­ern­ment Com­mer­cial Func­tion net­work and Crown Com­mer­cial Ser­vice, Reform notes: “The Pub­lic Accounts Com­mit­tee has a long-stand­ing con­cern about the abil­i­ty of the civ­il ser­vice to not only draw up con­tracts, but also to man­age them.” The net result is pub­lic sec­tor pro­cure­ment across cen­tral and local gov­ern­ment remains frag­ment­ed and opaque.

“It can be com­pli­cat­ed to do busi­ness with gov­ern­ment”, sug­gests Simon Payne, client direc­tor at pro­cure­ment spe­cial­ist, Prox­i­ma. “It’s a com­plex land­scape to nav­i­gate with a high cost to entry for some. If you want to ten­der for cen­tral gov­ern­ment con­tracts, you have to be reg­is­tered on mul­ti­ple sys­tems. Con­tracts ten­dered on OJEU (Offi­cial Jour­nal of the Euro­pean Union) are designed to ensure an open, trans­par­ent and fair ten­der process”. This is crit­i­cal­ly impor­tant but the com­plex­i­ty can mean that deci­sions take months or even years.

Disruption brings opportunity to recast tender process

Payne believes a post-Brex­it world pro­vides the oppor­tu­ni­ty to rewrite ten­der pro­ce­dures and pro­duce more equi­table and trust­ed out­comes. At present, OJEU rules pre­vent the use of social val­ue as an eval­u­a­tion cri­te­ria unless it’s direct­ly relat­ed to the goods or ser­vice pro­cured. “In future, social val­ue could be hard­cod­ed in sup­pli­er eval­u­a­tions, whether being car­bon neu­tral or pay­ing the liv­ing wage, and sup­pli­ers’ track records eval­u­at­ed through open data,” he says.

Using dig­i­tal tech­nolo­gies, such as blockchain, a dis­trib­uted, immutable ledger, offers a fur­ther oppor­tu­ni­ty to embed trust with­in pro­cure­ment life cycles as an unal­ter­able record of sup­pli­er his­to­ry and buy­er pro­ce­dure cre­ates a trust­ed con­text for all par­ties.

The Food Stan­dards Agency pilot­ed blockchain for reg­u­lat­ing pro­cure­ment chains and dis­cov­ered addi­tion­al ben­e­fits of shar­ing data across ecosys­tems. Shar­ing trust­ed data could help sup­pli­ers mon­i­tor inven­to­ry usage and fore­cast demand bet­ter, a key pro­cure­ment weak­ness exposed dur­ing the pan­dem­ic.

The dis­rup­tions of Brex­it and COVID bring oppor­tu­ni­ties to recast pub­lic sec­tor pro­cure­ment with a fresh focus on data and con­text. But refram­ing pro­cure­ment lan­guage is impor­tant too. As Foundry4’s Tay­lor con­cludes: “There is a gap between trans­paren­cy and gain­ing trust; to achieve trust you have to pub­lish data in a way that’s clear and usable by every­one.”

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Reform procurement through connected, clean data

Com­pre­hen­sive, up-to-date, and pub­licly acces­si­ble data is vital, not only to man­age gov­ern­ment pro­cure­ment bet­ter — but also to reform it, argues Spend Net­work. The gov­ern­ment data ana­lyst spe­cial­ists are on a mis­sion to cap­ture data from every gov­ern­ment con­tract in the world and open­ly pub­lish it.

At present, pub­lic sec­tor pro­cure­ment con­tract data is patchy, incon­sis­tent and some­times incor­rect: only 4.5 per cent of ten­ders are pub­lished with an esti­mat­ed bud­get; over 86 per cent of con­tracts don’t fea­ture an end date; and sup­pli­er data is hard to iden­ti­fy and aggre­gate, often record­ed as acronyms, or brand and project names, accord­ing to Spend.

Good data would put gov­ern­ment agen­cies on the front foot, let­ting them iden­ti­fy the best sub-con­trac­tors for a con­tract, pre­dict ten­ders that only attract sin­gle bids, and spot fraud and col­lu­sion. Instead of focussing on over-pro­tec­tive mea­sures that sti­fle inno­va­tion or under­es­ti­mate the impact of fail­ure, data should be used to shed light on the actu­al risks asso­ci­at­ed with con­tract­ing, argues the data spe­cial­ist.

NHS Scot­land is sav­ing mon­ey and increas­ing patient safe­ty through data-dri­ven pro­cure­ment and inven­to­ry man­age­ment and by link­ing the con­sump­tion of prod­ucts to indi­vid­ual patients. An inven­to­ry man­age­ment sys­tem enables items to be bought in bulk and stored cen­tral­ly and lets each health­care provider run a Top-Up Ser­vice, order­ing stock by scan­ning bar­codes from a smart­phone.

“The sys­tem allows real-time record­ing of pro­ce­dures and increased trans­paren­cy of what is being used”, explains Eliz­a­beth McSor­ley, modal­i­ty lead, Inter­ven­tion­al Radi­ol­o­gy at NHS Greater Glas­gow and Clyde. “Reports, gen­er­at­ed at the click of a but­ton, can be tai­lored to the exam­i­na­tion, con­sul­tant or item used. We have con­fi­dence in main­tain­ing accu­rate patient records as items are scanned at the point of use,” she says.

The soft­ware from health­care soft­ware spe­cial­ist, GHX, com­bined with glob­al data stan­dards (GS1) and input from clin­i­cians in acute envi­ron­ments, is also set to improve NHS Scotland’s capa­bil­i­ty to man­age COVID-19 con­sum­ables. Mak­ing pro­cure­ment auto­mat­ed, intu­itive and joined-up pro­vides data about con­sump­tion and makes the entire sup­ply chain vis­i­ble, in turn sup­port­ing improve­ments to patient care and staff safe­ty.

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