The Queen’s Speech outlined a paradigm shift for procurement – but the challenge is yet to come

As public sector procurement emerges with a fresh focus, Proxima's John Collington explains what the changes mean in practice
Queen reading Queen's Speech 2019 PA

Public sector procurement has been placed under the microscope in the past year.

As the pandemic took hold at the beginning of 2020, public sector procurement teams were forced onto an emergency footing as they rushed to bring in products and services that were essential to our national fight against the virus.

The Government’s response to the pandemic has hinged on the smooth functioning of the civil service’s inner mechanics, and under the watchful eyes of media, politicians and the public, these mechanics have been pushed to their limit. At times, beyond their limit.

While lessons have certainly been learned, public sector procurement is now emerging stronger and with a renewed focus and fresh philosophy behind it.

In the Queen’s speech last week, procurement reform featured as one of Government’s key priorities for the next session of parliament, with the Procurement Bill highlighting a plan to fundamentally reshape how the public sector works with its suppliers. Aside from a smattering of mentions in the past ten years, procurement has enjoyed nothing near the level of attention that we saw in the Queen’s address.

With this fresh focus, public sector procurement is now on a path to establishing a more efficient and effective means of working that has value-delivery at its core.

Procurement’s paradigm shift

The Procurement Bill outlined in the Queen’s speech will draw from the Government’s procurement Green Paper which closed consultation in March 2021, and which we argued would usher in a transparent and efficient era for public sector procurement.  

In his ministerial foreword to the Green Paper, Lord Agnew acknowledged that pre-existing EU directives on procurement, which had been transposed into UK law, had led to a procurement system “bogged down in bureaucratic, process-driven procedures.” This new direction will now offer the public sector the opportunity to create a procurement system that “delivers for our communities and our businesses.”

Perhaps the most telling change outlined in the Green Paper is the removal of a single letter in the Government’s overarching guidance on supplier selection: the acronym MEAT will become MAT.

Where officials were previously compelled to select the Most Economically Advantageous Tender, translated as the cheapest, they will now be required to choose the Most Advantageous Tender, measured by a broad range of different performance indicators including cost, environmental benefit, community benefit and innovation.

This move is similarly reflected in the Green Paper’s spinning of a new ‘golden thread’ which will tie together high-level policy priorities with the practicalities of procurement. These policy priorities include similarly value-driven measurables such as new business creation, new jobs, supplier diversity and tackling climate change and waste.

These moves represent a fundamental shift in the public sector procurement function.

These moves represent a fundamental shift in the public sector procurement function. When the Procurement Bill is implemented, procurement has the opportunity to become a more outward-facing area of Government with a new focus on delivering value to the country and its communities rather than simply cost-savings for the public purse.

What does this mean in practice?

While the renewed focus on value-creation is certainly a positive move, public sector procurement teams will require a major overhaul in process if this is to become a reality. Here is where the challenge lies.

For all the conceptual plans laid out, procurement teams will require new skills, structures and mindsets to deliver on them.

Civil servants will need to be trained in how to gauge the lofty goal of value-creation. New programmes will need to be rolled out for civil servants to shift away from the MEAT mindset to MAT and to place more value-driven objectives front-of-mind.

The task before the civil service is therefore in large part a skills development one. Procurement leaders in the civil service must ensure they do not underestimate this element of the task if they want this new era for procurement to be more than just a vision.

Selecting value driven suppliers

The formula that underpinned the MEAT method of selection was a simple one – price made up 60% of the decision, and quality 40%. As the procurement function now shifts to a model focusing on value-delivery and diverse suppliers, selection will require more complex consideration.

Decision-making here will be splintered into a range of more intangible deliverables and objectives. One specific project we came across recently had over 150 ‘community benefits’ built into the contract which will have to be managed on an ongoing basis to ensure the successful delivery of the project. This made the selection of appropriate suppliers a far more complex and multifaceted process.

New frameworks will need to be established and formalised in order to accurately measure the successful delivery of procurement projects. This will play a major part in allowing different departments and teams across Government to choose the right suppliers with a consistent selection process behind the decision making.

Driving value through procurement

The past year has highlighted the need for efficiency and agility in public sector procurement, as well as the potential for procurement to deliver value to the country.

As the UK recovers from the pandemic, Government has now outlined a commendable vision to reform procurement and ensure it is delivering to its full potential.

However, the challenges that lie ahead are complex, and it now lies with civil servants and public sector buyers to make this commendable vision a serviceable reality.  We believe the ability and willingness to make this change is there.

Click here to read more insights from Proxima.

Or download their report - Social Value: Public and Private Sectors - here

Read the most recent articles written by Proxima - Suppliers’ hopes and fears for The Procurement Reform Act


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