In 2010, Sir Philip Green’s Efficiency Review lambasted the public sector for squandering tax payers’ money by failing to emulate the rigorous purchasing practices of the private sector. Outraged at the feckless ineptitude Sir Philip exposed, many leapt on his bandwagon, but we at Panacea offered a robust defense of the beleaguered public sector manager. In a letter to the Prime Minister and a series of articles to the business press, we pointed out that current EU procurement legislation denied the public sector recourse to the common sense policies and decision-making processes Sir Philip propounded.
Our work with local authorities, such as Camden and Haringey councils, meant that we were acutely aware how seemingly laudable policies designed to create level playing fields and encourage cross-EU trade hamstrung attempts to cut costs. The costs of compliance to the supplier were reflected in the inflated rates public sector buyers were obliged to pay, and often the price of enacting cost efficiencies outstripped the savings. Worse, EU rules locked government bodies into three-year plus contracts with suppliers, despite inevitable changes to their requirements, the market or the contractors’ circumstances.
EU lawmakers did acknowledge that the rules needed to change. Well before Green’s review, Brussels had created the Dynamic Purchasing System (DPS) contract, in an attempt to create greater flexibility and scope for the public sector to buy competitively.
Onerous tendering procedures were often outside the scope of any but the largest contractors, effectively squeezing out small or medium sized competitors. The DPS sought to address this by enabling businesses of all sizes to join or leave a contract at any time, but it was stymied for many years because it required buyers to advertise each requirement on the Official Journal of the European Community (OJEC) before gathering competitive quotes or placing an order. So, for example, in a DPS contract for language services, a request to translate an urgent letter had to be advertised on the OJEC for weeks before competitive quotes could be sought and the order placed. This made the DPS’ buying process more costly and time-consuming than many of the goods or services it was intended to provide for; as a result the DPS contract was hardly used.
Thankfully, changes to the EU procurement law in 2015 mean that public sector buyers no longer have to advertise each DPS call-off or order on the OJEU. As such, they can now purchase commonly available goods and services more competitively from a broader and more flexible supplier base. Indicative quotes are no longer a requirement prior to a provider competing for real work, and the four-year limit on the term of a DPS contract has also been removed. As a result of these changes, tendering is far simpler and more cost effective, opening the door to more small-to-medium-sized companies.
To take full advantage of the DPS and the potential savings it represents, the entire contract needs to be managed by robust online software, like Panacea Software. This streamlines the end-to-end process for buyers and providers, from tendering a contract through to supplier evaluation, to raising requests or sharing requirements, managing competitive quotes and placing orders. It provides a simple, transparent process for all parties and, crucially, mitigates the risk of relying on a small number of suppliers for vital services in difficult economic times.
Buyers are able to make the most of the available supply-chain, taking advantage of changes in technology or improvements in working practices. Importantly it gives the public sector greater opportunity to ensure that best value is achieved throughout the lifetime of, sometimes, lengthy contracts.
So far, the response to the new-look DPS has been enthusiastic and many government bodies are already using it to procure a wide range of goods and services. Sadly, many are still tied into their multi-year contracts, but they are at last allowed to operate a little more like businesses and so have a chance to redress some of the criticism they faced in Green’s review.
Far from being cavalier, so many of our clients in the public sector have already proved to be diligent, entrepreneurial and innovative in finding and making massive efficiency savings in response to dramatic budget cuts. These small changes to an obscure procurement law have given them a welcome means to source the best provider at the best price for more of the services they provide for us all. As one of our clients, Camden Council, put it:
And what of Sir Philip Green? Was he the right person to review how the public sector manages its procurement? I will let you draw your own conclusions.