The changing world of procurement

 Writing for Defence Online, James Pettitt, European Sales Director at Commerce Decisions, looks at the potential impact of changes to procurement reform on strategic defence procurement projects. Commerce Decisions are Official Event Sponsors at DPRTE 2020.

Across the globe, procurement reforms are driving a diverse range of behaviours. But what are the consequences of these changes for strategic defence procurement projects? With the sector supporting over 100,000 jobs across the UK and a defence budget rising to almost £41.5 billion by 2020/21, understanding the impact of these changes is more important than ever. Here we consider some of the key trends:

  1. Greater transparency, fairness and openness in public sector procurement. An open and fair approach to competition, robust reporting and clear audit trails protect even  the most complex and technologically advanced military procurements from any legal challenges.
  2. The desire to obtain better value for money from public sector procurement. For example, the introduction of procurement ‘pathways’ that facilitate better buyer-bidder communication, prior to and during the competitive stages of the procurement to refine the requirements and scoring criteria. This has been evidenced by various UK public sector bodies, including the UK MOD, introducing new methods of combining financial and non-financial evaluation criteria to select ‘value for money’ solutions.
  3. The appetite to address social, community and local economic benefits as part of the procurement process. Both the UK Social Value Act and the Canadian Industrial and Technological Benefits (ITB) Policy have supported project teams in incorporating social value criteria into their procurements. The ITB policy leverages defence and security procurement to create jobs and economic growth, requiring companies that are awarded defence contracts to undertake business activity in Canada equal to the value of their contracts. This will only become a bigger topic worldwide, as the desire to ‘do the right thing’ locally through smarter procurement gains traction.
  4. The demand to embrace new technology – the use of electronic systems to underpin the procurement process is proven to save time and cost and to reduce risk, and as a result, they are being widely adopted globally.  In particular, technology to support complex procurement is seen as critical, where the risk is high and the budgets are significant.  Sophisticated solutions can also deliver the benefits of embedded best practice and thought leadership, such as value for money calculations and analysis.
  5. The need to reduce the administrative/legal overhead and legal risk associated with public procurement. The clarification and streamlining of rules around tendering processes and requirements for debriefing and standstill periods are examples of this practice.

What behaviour has this procurement reform driven?

  • A much greater appetite for legal challenge of public sector competitions by industry.
  • Many public sector buying organisations have focused, maybe disproportionally, on reducing procurement process legal risk, even at the cost of ‘buying the wrong thing’.
  • Buyers are caught between conflicting demands. For example, the desire to make the procurement process more efficient and drive cost savings from suppliers has driven buyers to consolidate spend into fewer, larger, contracts.
  • Bidders have become more sophisticated in their analysis and solution optimisation during the bidding process, helping them to maximise their chance of success.
  • Confusion amongst bidders about how to include social value criteria in their submissions and how this will be tracked and measured in line with other factors.

For more information about any of these themes, please contact us or visit the Commerce Decisions website.

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