Procurement in a nutshell – innovation in procurement

In this update we have sought to summarise the paper’s key inclusions and have identified the potential impacts that its recommendations could have on your procurement processes.

Despite focusing specifically on procurement in local government, the report’s suggestions could prove useful to all contracting authorities.

What is the purpose of the report?

The LGA identified the ongoing need for contracting authorities to achieve the best possible value for money, and the highest standards of service, as being vital.

In light of this recognition, the report focuses on procurement approaches and strategies which should provide the best possible outcomes in the current economic climate.

Solution-based procurements

A key recommendation of the report is that contracting authorities should consider the use of “pre-commercial procurements” whereby they outline a specific issue and invite competing suppliers to propose alternative solutions.

This requires a more iterative procurement process, which can involve potential suppliers being paid to develop their proposed solutions.

The paper suggests that such solution-based approaches can be useful in ensuring that the most effective and financially viable outcomes for addressing the identified issues are achieved.

As regards the best approach to conducting such procurements, the paper recommends that:

• Desired outcomes and unmet needs should be defined in the most open way possible;
• Potential suppliers should not be constrained in their approach to the issue; and
• Wide consultations involving various stakeholders and interested parties should be used.

The report refers to Innovation Partnerships, which were introduced by Regulation 31 of the Public Contracts Regulations 2015 and appear to offer a framework for more innovative procurement. It is noted, however, that no local authority appears to have used this new process yet.

Contracting authorities should be less risk averse

Another suggestion put forward by the report is that contracting authorities should “reject the comfort of existing solutions” in the hope that this will lead to more effective outcomes.

With regard to this, the paper emphasises the view that “the risk of trying a new thing, through an innovative process, is small compared to maintaining the same ineffectual approach”.

The paper makes various suggestions as to how to achieve such an approach within a contracting authority. These include:

• The need for strong “top down” leadership encouraging new approaches to procurement; and
• Focussing on the benefits associated with adopting a different approach to procurement.

Why is this important?

In the current economic climate, effective procurement is essential in ensuring that contracting authorities are able to function whilst also achieving the best possible value for money.

In light of this, despite focussing specifically on procurement in the local government sector, the paper provides a useful insight into the different approaches which can be taken in order to ensure that the most successful procurement processes are achieved.

Consequently, the report is useful in providing contracting authorities with ideas allowing them to achieve the most suitable approaches to procurement to meet their needs.

How can I find out more?

If you have any queries on the issues raised or on any aspect of procurement, please contact us via our procurement hotline on 0191 204 4464.