Tenders Direct Blog

Comment from the experts at Tenders Direct.

“Innovation in Procurement” the next new buzz phrase?

Posted by Tim Williams on September 25, 2009

John Denham, the Communities Secretary who is responsible for local government, yesterday held a meeting with innovation and procurement experts from the private sector, academia and the public sector.

Mr. Denham started the meeting by saying that “Councils have proved they can be efficient….” well I think that’s news to most taxpayers, who would like to see a considerable improvement in the efficiency of their local authority. He went on to say that “given the economic climate their £42 billion buying power must be made to work harder,” in contrast to the earlier hollow praise I think that’s something we can all agree on.

Mr Denham set out three new approaches that his officials belive that councils should consider:

  1. think more carefully about how to use the buying power that big budgets bring – as big players in several markets or as early adopters of fledgling or innovative markets;
  2. think about how collective buying power can be used to secure greater efficiencies and get future benefits with that money. For example when Government agrees housing contracts they now require apprenticeships to be offered to as part of that deal; and
  3. change the culture of government contracting so it asks industry to find value for money solutions rather than tender for pre-determined products.

In my view the third of these approaches is probably the most powerful and, if widely adopted, would reap the greatest savings. As an example from our own business, we are frequently asked to bid for the provision of web-based electronic tendering systems. We’ve been providing these systems for almost 10 years and so we don’t think it’s unreasonable to assume that we have learnt a thing or two about what works and what doesn’t work. Yet, when we get the invitation to tender it almost always includes a very detailed specification, not just of what the client wants to achieve, but also how we should do it. How does the client know? What experience have they got of running a website, or an electronic tendering system? We often hear talk of ‘outcome based specifications’ but I don’t think I have ever genuinely seen one.

The civil servants at the Communities Department included some examples of procuring for solutions, i.e. asking the suppliers how best to solve their problem, rather than telling them how they would like it to be solved. Two solutions that I think are worthy of a wider audience were as follows:

  • Each year, HM Prisons (HMPS) threw away about 60,000 foam mattresses and pillows, with the majority sent to landfill or disposed of as clinical waste. Instead of continuing with contracts to buy new mattresses they challenged suppliers to find a way to deliver zero waste, recycle all its mattresses and pillows not classified as hazardous, cut hazardous mattresses by 2 per cent per annum and bring costs down. After 30 tenders HMPS signed (in March) a contact which uses innovative new mattress covers that will reduce turnover and all but eliminate the need for clinical waste disposal. No mattresses will be sent to landfill, instead they will be recycled into useful products. Importantly, HMPS is projected to save in the region of £5m over the life of the contract, well ahead of the 2012 target
  • Durham County Council set up a food procurement project to cut the costs, improve the food and cut the carbon footprint of their distribution. Instead of pre-deciding how to meet those objectives, they asked suppliers how to do it. As a result, food has improved, costs have been cut, local businesses got involved leading to around 12 000 fewer deliveries – that’s 12 000 van journeys saved. Reducing carbon emissions in a local area is the fifth most popular LAA indicator. LB Lewisham calculated that 70 per cent of its carbon emissions were produced by its supply chain;

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