Saturday, 14 May 2011

The government procurement conundrum: a possible solution

Governments are duty bound to spend their taxpayers' money wisely. This means that procurement processes must be sufficiently fair, open, clever and conducted with due probity to ensure that only most competitive and competent suppliers win tenders. This is right and entirely understandable.

However, this appears to have led to an exponential growth in the procedures used to achieve these goals. Pre qualification questionnaires, framework contracts and tenders themselves are becoming so extensive that only large organisations (with the capacity to employ specialist bid staff) or small / medium sized organisations (which hire in specialist bid writers or who can 'spare the time' to fill in the huge forms) are bidding.

This is skewing the market and is, I would argue, putting in place inflationary pressures. The result is often, despite the best & most worthy intentions of government procurement staff, the purchasers are often either paying over the odds or contracting with sub optimal providers, or both. (There is also a growing body of evidence that the thresholds and requirements being placed upon bidders, such as having disproportionate levels of indemnity insurance, is compounding matters, and skewing the market even further.)

I have blogged about this in several places before such as here and here. And now it seems we have a government that has woken up to this conundrum and wants to do something about it. (See report of a meeting with the PM and Francis Maude here). Hurrah!

But... what is to be done?

There is much talk of doing away with PQQs and Frameworks - and opening all tenders to all bidders. Aside from the likelihood that this will take some time to achieve (and can the economy wait while this happens?) - is this goal even possible?

The danger is that government bodies seeking to procure a new service will put out an open tender and then be inundated with bids. This will slow decision making down and stretch procurement resources to breaking point. Also the providers will spend possibly even more time writing these bids.

A possible solution:

When the government body has clarified its requirement in terms of what service or change it is seeking assistance with achieving, it should publish four documents:

  1. A clear statement of the requirement (with some information about the context)
  2. An outline budget for how much they wish to spend (this would seriously help bidders do quick calcs and work out if this job is for them or not)
  3. A statement of what the successful bidder will be expected to have or be (eg 'sufficient' indemnity insurance rather than specifying a particular level, 'good health and safety practice', rather than requesting an 'off the shelf' H&S policy etc) 
  4. An invitation to bidders to submit no more than two sides of A4 as to why they should be invited to submit a fuller bid

This will keep the process of assessing bidders down to a minimum for the government agency. It will make it very clear to all the potential bidders whether they should or should not bid. Whilst it will be tricky to boil their outline bid down to two pages, the best providers will be able to do this, I would contend.

What do you think - would this work? Would such an approach match the needs of all those involved and create a more level playing field where the real winner will be the taxpayer?

Would anyone like to test this method through some sort of controlled trial? (Ben Goldacre has written an excellent piece about the critical importance of such trials in today's Guardian: click here.) As I have said before - the whole field of procurement seems distinguished by its lack of any evidence based practice. (But in the spirit of the scientific method, I would be more than happy to have my theory disproved...)

And if you do use this method already (or something very similar) - I would love to hear the details about well it works. Please share.

And... if this is a new method, and it works well, please just remember you read about it first here... Thanks.

1 comment:

  1. Thanks for your piece advocating common sense in the RFP process. The client / supplier alignment conundrum seems destined to get more complicated. It has become a walled-garden exercise run on an administrative basis - the procurement process is now more important than the desired outcomes. In consulting, the desired outcomes can’t always be clear, otherwise outside advice might not always be needed.

    It seems to me that organizations need to make the buying of knowledge services an executive capability. The executive group must be engaged in and responsible for the briefing, then held accountable for the quality of the outcomes delivered by suppliers.

    Do you think this might help make the process a tiny bit less complicated?