Lessons in procurement from Wales

Eighteen months since the creation of the National Procurement Service in Wales, Director Sue Moffatt discusses the challenges of making major changes to how public procurement is delivered.

Transformation of public procurement isn’t actually about process, says Sue Moffatt. It’s about people.

She believes that by creating a National Procurement Service “to drive collaboration in common and repetitive spend” while focusing on Wales’ procurement policy statement, the region is doing something “quite different.”

The aim is to drive Welsh suppliers, and stimulate the economy, by reducing the barriers for them to compete for public sector contracts: “We’ve got good processes. We’ve got good management information and we’re sharing that management information, and we’ve got good stakeholder engagement.”

NPS Wales buys on behalf of 73 organisations. It’s now fully staffed, and has a standard operating model. Cash savings of £6.1 million were achieved in the 2014-2015 financial year against a target of £1.86 million.

A standard methodology has been agreed with the Welsh Audit Office to recognise cashable and non-cashable savings.

In the beginning
On the establishment of the NPS, she reflects: “I think in the beginning nobody thought it would actually happen. It was a bit of a shock to a lot of the organisations who realised they wouldn’t be doing a procurement just at a local level; it was going to be more national.”
Having a stakeholder engagement model where the stakeholders are the delivery group, and the category forms decide the best approach, is more inclusive rather than just saying: ‘Here’s the framework we’ve let. You’re going to use it.’”

According to Moffatt, there is a high level of accountability. “We spend
£5.5 billion across a large public sector,” she explains. “I’m responsible for £2.2 billion of common and repetitive spend and the savings target is 3 per cent per annum spend under management.”

While the NPS is part of the Welsh Government, Moffatt reports to an independent board with an independent chair. The board is made up of chief executives from every sector and, in turn, reports to a procurement board which is directly accountable to the Minister for Finance and Government Business, Jane Hutt.

She adds: “The level of scrutiny around performance and delivery means that you have to make good progress and strong accountability and you have to have a consistent approach – and the level of challenge and scrutiny on everything we do at a national level is unbelievable.

“It’s not transformational but good business process and the ability to report is key to what we do.”
The NPS is now seeking to conduct a quarterly spend analysis exercise over the whole of the Welsh public sector. On-contract and off-contract spend on projects connected to the service will also be examined.

She remarks: “We report monthly using the supplier spend and quarterly using the organisational spend on both our savings and on compliance. That is a massive transformational and cultural change because organisations don’t like people seeing what you are delivering.”
Moffatt likens the proverb ‘hear no evil, see no evil, speak no evil’ to the traditional views she has encountered.

“Buyers have a reputation of not listening and actually blocking the business from getting what they need,” Moffatt notes. “The larger suppliers won’t be honest and tell you if your approach to market is actually not sustainable or if you are going to deliver a contract that is not value for money – but they can see the opportunity to increase their revenue through contract change notice.”

She adds: “There’s a huge amount of fear among SMEs to either call out the behaviours of the prime contractors for fear of being penalised or [they] are scared that they won’t get future business if they come to you as a contracting authority.”

Driving change
Moffatt is challenging those using the ever-evolving public procurement system to engage more with suppliers, be open to taking risks, and not to repeat behaviours of the past.
Procurement is “just a process” – whether it’s paper driven or electronic. She elaborates: “It is just a list of questions and answers and processes associated with them which are basically: What do we spend? Who do we spend it with? Do we have a contract? How do we let the contract? What are the rules and how do we pay?

“And that’s before we even get into the strategics of higher management, relationship management and contract management.”

Moffatt says that there is now a much bigger drive to include contract managers in the procurement process so “they understand what is in the contract before it sits in the drawer and gathers dust.”

If trust is built into the service delivery operation, it can actually impact on the ability to keep providing public services due to the amount of money that can be lost in the public sector.

Market engagement is just one of the ways in which suppliers are kept involved: “In Wales, what we actually do is put a pin notice out three to six months before we put the OJEU [Official Journal of the European Union] notice out.”

Supplier events are also conducted across the country and a Business Wales service is run by the Government mainly to help SMEs improve the way in which they tender. The Sell to Wales portal ensures that suppliers get alerts.

Moffatt reflects: “I think the worst thing for SMEs is that they find a tender has gone out and they’ve got a very short timescale to respond. And when it comes to things like joint-bidding or forming consortia, if they want to bid for bigger opportunities, they don’t actually have time to work through those relationships so they can put an effective bid in.”
She says that behaviours must be changed “in the way that we do everything” in order to help change the behaviour of suppliers.

And while some stakeholders were initially very anti-NPS, Moffatt says some of those organisations are “buying into nearly everything we do.” As the landscape changes, the focus now is moving towards a “what more can the NPS do” outlook.

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