Post Brexit, consultations continue over efficiency changes to the public sector procurement process. However, until we are informed otherwise, the EU procurement regulations remain inherent within UK legislation.
No matter whether or when changes are introduced (or whether you are in the public or private sectors), one thing that will not alter is the fact that service and project fitness for purpose, delivery speed, and safety (minimum risk) are inextricably linked to one another. Adjust one and another is likely to be impacted.
This is all the more true with strategic procurement, where project values are often higher and much more complex. The ramifications of an accelerated procurement process are often greater should that process become misaligned, and the risks manifesting themselves on the commercial, reputational and legal front are ever present.
With public sector procurement in particular, challenges from unsuccessful suppliers are all the more likely if there is any perception of ‘corner cutting’, which, in turn, inadvertently leads to a lack of equity and fairness in supplier evaluation during the procurement process.
So, is it possible to legitimately speed up service/project procurement, while also maintaining fitness for purpose of the solution, and staying safe?
Why Might You Need to Speed Up the Procurement Process?
There are times when a project just has to be completed ‘yesterday’. There have certainly been plenty of examples of this for the government during the pandemic over the last couple of years – think Track and Trace or the Nightingale hospitals. Maybe you are under pressure from your senior management team to move at pace. It’s possible that economic or political predictions necessitate an accelerated procurement process to take advantage of costs that will go up or resources that will be lost.
The Importance of Managing Risk When You Speed Up the Procurement Process
Despite the increased potential risks, there may be times when you will be tempted to chase the perceived benefits of a faster procurement process. When this happens, it’s important to have a plan in place to mitigate those risks.
The risks of accelerated procurement primarily fall into four categories:
- Risk of the demands of the task ahead not being fully understood by participating stakeholders
- Suppliers not fully understanding the demands of the task ahead
- Process ‘corners’ being cut
- In the public sector, unsuccessful suppliers suing for what they perceive to be unfair procurement practices
Through our experience of working on over 500 strategic relationships, we know these risks well. And, with the average likelihood of project failure reported to be between 56% to 87%, the stakes are high. Therefore, while the following six ways to speed up your procurement are available, it is vital to always ensure that you are able to evidence fairness and equity in the procurement process.
This means doing your bit to minimise any accompanying material risks through the maintenance of detailed documentation for every key decision and action, so that audit trail evidence is available should the court system become involved at some point.
Six Ways to Achieve a Faster (and Safer) Procurement Process
The following six ways to speed up procurement are listed in order of fastest first:
Method 1. Extend or modify an existing contract during its term
The fastest way to get to the other end of procurement is not to go through the procurement process at all. The option of extending (or modifying) your existing contract is worth considering if you are actually happy with your existing supplier (and they are happy to continue working with you).
Regulation 72(1)(c) outlines three conditions, all of which must be fulfilled in order to modify your contract:
- the need for modification has been brought about by circumstances which a diligent contracting authority could not have foreseen;
- the modification does not alter the overall nature of the contract; and any increase in price does not exceed 50% of the value of the original contract or framework agreement (including any intervening change variations added to the original contract price).
There are other grounds available under Regulation 72 for extending contracts, including:
- Regulation 72(1)(a) – If the proposed variation has been specifically provided for in the contract.
- Regulation 72(1)(b) – where a change of contractor cannot be made for economic or technical reasons.
- Regulation 72(1)(e) – where the modifications are not substantial.
Remember to thoroughly document your reasoning and award the contract notice within 30 days to minimise the risk of a challenge.
Just because you are extending your contract, it does not mean you have to live with those elements of your relationship that you are unhappy with. Use this opportunity to do two fundamental things:
- Undertake a thorough review of supplier performance to identify where good things are happening and where improvements can be made; and
- Produce an appropriately researched document to define the parameters of your new project, including outcomes and objectives. Ask your suppliers for their input through a focused due diligence exercise, much like in a traditional procurement process, to get them involved in the project from as early a stage as possible.It would also be appropriate to go out to the market to gather additional perspectives to benchmark your supplier’s responses (and costs) against. If your supplier cannot provide appropriate value for money during the contract extension, by implementing the desired accelerated (but safe) procurement, exit and transition processes, you can put an alternative strategic supplier in place that is more likely to deliver the value for money you’re seeking.
Essentially, while utilising your existing supplier relationship it’s important to identify ways to optimise its inner workings to achieve the results you’re looking for in a more expedient way – often by reaching out to others in the market. And, should your investigation into the achievability of this goal show that your current supplier is coming up short, you’ll already have the research required to find a supplier better suited to the job.
Method 2. Use document templates
The whole procurement process can be accelerated through the use of tried and tested templates for all of your documentation, from capturing requirements to creating the ITT and managing bid evaluations.
In order to reduce risk, however, you’ll need to clearly articulate the updated business outcomes and objectives you want to achieve, and then reverse engineer the adaptation of these templates to personalise them to the project and parties though a considered library of documents you can call upon to cut through a lot of the early stage time-consuming processes.
The trade-off of reverse engineering standard documents brings an increased risk of the lack of clarity, agility and alignment to your business outcomes. But if your project can handle this, then it may be a useful starting point.
Method 3. Direct award a contract due to extreme urgency or absence of competition
Limiting your choices to a single supplier and awarding them a contract without a full procurement process may be faster. However, it also has certain inherent risks attached to it.
A lack of competition may mean your supplier is in a stronger bargaining position than normal (which may well lead to inflated costs), there is little price incentive, and you run a greater risk of the supplier you choose not being the best one for the job (and without adequate benchmarking, this may not be apparent).
The regulation of relevance here is Regulation 32 which can be used if any one of the following applies:
- 32(a) – If you receive no tenders or no suitable tenders when you use normal tender procedures.
- 32(b) – If there is just one supplier in the marketplace. This may be for technical reasons or for IP rights.
- 32(c) – If there is extreme urgency, but only if the reason for this extreme urgency is both unforeseeable and cannot be traced back to client reasons or timing.
Method 4. Use an existing framework agreement
By its very nature, the framework agreement route is a faster way of engaging a strategic partner. The supplier is often financially pre-qualified, the contract is largely preformed and there may even be a pricing structure in place. However, there are issues with what is primarily a one-size-fits-all approach to strategic supplier relationships for complex services…
…predominately with more complex projects and solutions, it’s because one size usually does not fit all. Every major/strategic project is largely unique, every complex relationship is unique, the organisational outcomes you are looking to achieve from the successful implementation of the project are unique. So, while a framework agreement can save you time, it’s vitally important to reverse engineer the business outcomes expected from the project and adapt that framework to your specific needs to better assure you end up with a fit for purpose service/solution.
- DO your homework – read through the framework documentation to familiarise yourself with it, as each framework will have quite different rules and you need to ensure that they suit your requirements.
- DON’T make the mistake of assuming that opting for a framework means that it’s all done for you. For your strategic supplier partner to understand the nuances of your needs, you must have an operational due diligence process the supplier can follow and a contractual roadmap to achieve the outcomes you aspire to.
Method 5. Defer supplier due diligence but include special terms in your contract
Due diligence undertaken by suppliers on your expectations and requirements is a vital part of any strategic procurement process. It enables your supplier to take a long hard look at what you wish to achieve, the information you’ve got to share, and their – and your own – capacities and capabilities to formulate a solution and deliver on its promises.
And procurement people note: you’ll often see a clause your legal (or commercial) department will put into tender documentation for bidders to respond to, that (paraphrasing) states words along the lines of “the supplier warrants it has all of the information necessary to fully understand the requirement of the contracting authority”. There are three fundamental points to be aware of with this type of statement.
- First, your outcomes and objectives must be completely and clearly articulated (i.e. how the solution and/or project will be used in the organisation and the clearly articulated benefits expected from its use) so that they make practical sense to a practitioner in that field.
- Second, if these are clear, they will allow specialist practitioners (suppliers) to ask you the ‘right questions’ to gain clarity about your expectations and identify the appropriate commercial and fitness for purpose risks in their solution for enabling these outcomes for your organisation.
- Third, if you have a short response time for the tender and/or your procurement department is tardy in providing clarification answers to the bidders (or the answers from your procurement department are too brief to provide the supplier the clarification necessary), there is a high likelihood that if the successful supplier subsequently finds out information about the project during its implementation that, due to the short timescale of the response and/or the lack of clarity, it wasn’t reasonably able to identify during the tender process, it is likely you won’t be able to contractually hold the suppler to account for some fixed cost aspects of the project.
And, while it would usually be advisable to ensure that your supplier conducts its due diligence pre-contractually, if the time constraints of the project simply will not allow for this – as it can be a lengthy process if done correctly – it is possible to legitimately defer supplier due diligence until the post-contract phase of the relationship.
However, should you choose to go down this ‘post-contractual-supplier-due-diligence route, it is important to incorporate special terms within your agreement which will allow you to (a) award the contract in two phases and (b) transition to an alternative supplier should a significant issue be discovered in your supplier’s post-contract due diligence.
You will want to gain the benefits of expedience with as few of the downsides as possible, therefore, these special terms are an absolute must.
Method 6. Call for competition using standard procedures with accelerated timescales
The time you provide for a supplier to submit their considerations can often be underestimated. See ‘Method 5’ above and the section entitled “And procurement people note…”.
While there are mechanisms in place for allowing you to reduce the deadline for responses, be careful not to squeeze them too far. For any services that are driving organisational change, or may be complex to exit and transition, the absolute minimum time you should give your suppliers is two clear weeks, though three to four weeks is a more realistic minimum time frame to use.
And that is on the basis that your outcomes and objectives for the service are crystal clear and have been fully articulated so that expectations between both you and the supplier have less chance of being misunderstood and/or misaligned.
The reason is simple: restrict suppliers too much and fewer will wish to respond, thus limiting your pool of supplier talent, and less well-thought-out, less diligent responses will be returned, thus increasing your risk of not being able to hold the supplier to the contractually agreed price.
From a technical regulation perspective, reduced submission time frames for the four main procurement procedures can be handled as follows:
- Open Procedure (Regulation 27(5)). This allows for the time limit to be reduced to no less than 15 days. It should be remembered that open procedure is for projects of minimal complexity and, therefore, it is not one we see very often in the relationships we support and guide.
- Restricted Procedure (Regulation 28(10)). The two stages of this procedure (SSQ and ITT) can be reduced from 30 days each to 15 days and 10 days respectively. But do be wary of reducing it down that far.
- Competitive Procedure with Negotiation (Regulation 29(10)). Once again there are two main stages in this procedure, both of 30 days and they too can be reduced to 15 days and 10 days respectively. Of course, you can also negotiate with your suppliers after receiving the ITT but the thing to remember here is clarity, up front, on what exactly is negotiable.
- Competitive Dialogue. While there are no prescribed accelerated timescales (30 days for the SSQ stage), you are allowed to design the rest of the Competitive Dialogue procurement as you want. This flexibility can lead to delays if it is not planned and resourced effectively, but for complex and strategic procurements it is, in our view, the best procedure. We’ll be showing you how you can design a Competitive Dialogue procurement to take only three weeks longer than a Restricted procedure in a future blog. You can read more on what Competitive Dialogue is here or you can download a free copy of our ‘Using Competitive Dialogue’ white paper.
Faster rarely means better, but it can be achieved with acceptable levels of risk compromise if handled in the right way and providing the operational and commercial impacts of those risks are clear to both yourselves and the bidding suppliers.
When you look to speed up your procurement process, make sure that you take all of the legitimate steps to ensure you are still conducting the process with fully transparent fairness and equity. Accelerating the process has the potential for raising questions about whether your procurement has been achieved at the expense of value for money, whether the right supplier was chosen, and whether any disputes from unsuccessful suppliers have merit. It’s important, therefore, to do the right things so that although you are accelerating the process, you aren’t giving the impression of ‘rushing’.
Public sector procurement is highly systemised, so work within the system, utilise the regulations available to you and always be mindful of the need to evidence your successful supplier selection based on the end-to-end process, so your justification for decisions and actions can be independently audited where appropriate. This audit trail will be invaluable should the procurement process be challenged and the court system becomes involved.
In essence, the risks of expediency are very real, but if handled with care and respect, it is possible, under the right conditions, to conduct a faster procurement process with minimal risk impact to your relationship and project.
Find out more…
Watch our on demand webinar for further information on how to fast-track strategic procurements in a crisis.
Please note: This brief is designed for public sector procurement. They have rules to abide to which can slow the process down but there are ways to help speed up the process. Note that faster doesn’t always mean better!