Why opening up procurement matters to the UK public sector
Rob Levene, managing director of Bloom, explains why opening up procurement is important to the UK public sector.
Procuring products and services by the UK public sector is big business. The central government procurement budget is estimated to be worth £40bn. So it is no surprise that procurement is a subject that generates a great deal of attention and public scrutiny. And now, despite our day jobs, we have to contend with the uncertainty of Brexit, increased pressure to reduce the deficit and relentless pressure on our frontline services.
That is why now, more than ever, procurement teams across the country are faced with complex and difficult decisions on how to spend their budgets wisely. And who to work with to achieve the outcomes the public sector needs and expects.
Bloom (formerly known as NEPRO Ltd) has gone from a start up in the north east four years ago to now being the leading provider that local government turns to for procuring their professional services needs, according to Porge’s 2016 research. As delivery partner of the Nepro neutral vendor solution, Bloom has been able to open up procurement opportunities for suppliers and buyers, whilst still providing buyers with control, transparency and a compliant route to market – saving buyers who run competitions an average cost reduction of 19%.
So what does opening up procurement really mean and what are the benefits to those who procure professional services in the UK public sector?
Accessing a dynamic supply chain
Many of the traditional frameworks have a closed number of suppliers they can work with and have burdensome criteria. This prevents many suppliers signing up to them. In fact, the National Audit Office (NAO) revealed that more than 43% of departments rely on single tenders or existing contracts, meaning that contracting authorities are creating limited competition when procuring consultants.
Our compliant solution gives buyers access to over 2,000 suppliers made up of both large and small businesses. It also has 12 new suppliers added to its community every week meaning that buyers have more choice than ever before.
Give buyers access to suppliers they didn’t have before
The government has set a target that 33% of procurements should be with Small and Medium Enterprises (SMEs) by 2020. With nearly 5.4 million small businesses in the UK, SMEs are the backbone of the UK economy, playing a crucial role in stimulating economic growth. In fact, 70% of procurement projects through Bloom are delivered with SMEs, many of which did not have access to other frameworks before.
We believe that opening up procurement for SMEs enables the public sector to drive growth back into the local economy, which is a key aspect of the Social Value Act and another great way for buyers to add value in the procurement practices.
Simple & efficient route to market
But managing the procurement process between buyers and suppliers is not without challenges. The Cabinet Office had pledged to cut procurement times from 220 to 120 working days for all but the most complex goods and services. But despite the recent reform agenda, government procurement is still too often bureaucratic, lengthy and opaque, according to Reform.
This is why buyers need to be able to run competitions in a quick and effective way, reducing the cost in the process. Buyers also need to have complete real-time control and visibility of their procurement so they can reduce scope creep and ensure outcomes are met.
Opening up procurement drives value in the supply chain
All of our suppliers are procured based on outcomes. This means that a project is costed up based on the outcomes first and not inputs (time and materials), which many traditional frameworks are set up to do. The NAO highlighted that only half of Cabinet Office procurements in 2014-15 were based on outcomes, which means there is huge potential to adopt this approach more widely.
Ben Gummer MP, minister for the Cabinet Office and paymaster general, revealed The Government Transformation Strategy in February 2017. Whilst focusing on digital transformation, there was a strong rallying call for a step change in public sector procurement “to ensure that user-centered, design-led, data-driven and open approaches are commonplace in contracting by 2020”.
This openness is something that we support, especially when combined with real-time control, which remains key for the public sector.
The benefits of opening up procurement are clear to see as they directly link to increased competition in the market place, which drives down costs and fosters an environment, that delivers better value and outcomes for all.
Rob Levene is managing director of Bloom, originally known as NEPRO Ltd. It aims to change how the world procures professional services. Bloom specialises in procuring professional services for the UK public sector.