Procuement Policy Update

Dr Sue Hurrell,

Special Project Manager

Value Wales

Wales Procurement Policy Statement

Agenda

The context

Lower Value Advertising

Community Benefits

Joint Bidding Guide

SQuID

National Procurement Service

New EU Directives

What’s next?

• 3.1m people (1 in 20 of UK’s population)

• Workplace GVA per head is around 3/4 UK average

• Annual procurement expenditure over £4bn

• Over 90% of Welsh suppliers are SMEs

• “Opening Doors Charter”- 2006

• 52% public contracts to Wales-based suppliers

• What’s the benchmark?

The Welsh Context

4

Welsh public sector

• Welsh Government (plus WGSBs)• 7 local Health Boards and 3 all-Wales Health Trusts• 22 local authorities, 4 police and 3 fire authorities• 8 Universities and music/drama college• 14 colleges

• National Procurement Service• NHS Shared Services Partnership• Regional and sectoral consortia

Caught in the crossfire

Maximise economic benefit

Pile it high and buy it cheap

Centralise and control

Devolve closer to the business

Manage reputational riskBe proportional and

efficient

Specify in detail

Promote innovation

Maintain exit routes and competition

Partnering

Policy background

• McClelland Review “Maximising Impact of Welsh Procurement Policy”

• Wales Procurement Policy Statement (WPPS) - Dec 2012:• Strategic

• Professional Resources

• Economic, Social & Environmental impact

• Community Benefits

• Open, Accessible Competition

• Simplified, Standardised Processes

• Collaboration

• Supplier Engagement & Innovation

• Measuring & Impact

Wales Procurement Policy Statement

• WPPS announced by the Minister for Finance December 2012 bringing together all Welsh Government’s procurement policies

• Expectations and commitments• Delivering value for money AND wider social, economic and

environmental benefits to Wales • Widespread commitment to adopt key policy approaches such as

community benefits, SQuID and Sustainability Risk Assessment (SRA)

• All 22 LAs confirmed adoption plus NHS & HE/FE• Minister monitoring closely & made clear adoption is not optional –

may consider legislation/regulation if necessary

Procurement policy in Wales

Develop new policies collaboratively

Pilot before implementing

Train as many practitioners as

possible

Enshrine in formal policy statement

Seek formal adoption

Monitor uptake and review

The Welsh Government has no legislative powers for procurement

Community Benefits

• CB = using social clauses to build socio-economic benefits into contracts targeting disadvantaged people furthest from job market

• Maximises provision of local training and employment opportunities and the use of local supply chains

• Programme for Government commitment • ‘Tackling Poverty’ Action Plan• CB approach built into the local Government Compact and being

embedded into projects within the Wales Infrastructure Investment Plan (WIIP)

• Applied to 80 projects worth over £4 billion. Of the first 24 projects worth £321m:-

• 443 people helped into employment and training;• 12,782 weeks of training provided;• 82 % has been re-invested in Wales - £86.5 million directly on salaries to

Welsh citizens, and £189 million with Wales-based businesses, 85% of which were Welsh SMEs

SQuID

• Supplier Qualification Information Database• Simplifies & standardises questions

• Risk-based tool for buyers to select the best questions (squizard)

• once-only data entry…less duplication of effort…save time/money when bidding

• Launched by Minister for Finance Feb 2012

• Built into e-tender tools provided through ePS• 31 orgs used it & suppliers banked 131k answers for future re-use

• Widely adopted across Wales and was recently commended by the Federation of Master Builders

• Significant impact in the construction sector: Welsh contractors now win 80% of all major construction contracts & framework places awarded through sell2wales –up from 30% prior to SQuID

• Electronic SQuID on Sell2Wales being developed –

Low Value Advertising

• WPPS specific requirement for public bodies to advertise all contracts above £25k on www.sell2wales.gov.uk

• Ensuring public procurement contract opportunities are open to all is a Programme for Government commitment

• Growing - 78% of all contract notices now being for lower value opportunities

• Greater visibility of contracts & involvement of smaller & more local businesses in delivering public contracts

• SMEs now win 55% of the overall procurement expenditure across Wales, with Wales-based businesses winning 52%

• Sub-contracting advert facility on Sell2Wales (was Tier One)• Further monitoring will continue utilising S2W reporting functionality• New Procurement Advice Note (PAN) will be issued shortly

The Joint Bidding project

• Welsh Government, Wales Council for Voluntary Action and Wales Cooperative Centre funded guide to joint bidding

• ServQ awarded (advertised) contract to research and develop the guide

• One guide for both the buy and sell sides• 18 short pdf chapters, with practical tools, forms, case studies etc.• Available on-line in English and Welsh

www.wales.gov.uk/jointbidding

The Joint Bidding guide

• Minister launched new Joint Bidding Guide in October 2013• For buyers and suppliers to promote consortium bidding as way of

providing greater access to public sector contracts for smaller businesses and Third Sector organisations

• Addresses commitments in the Wales Procurement Policy Statement and the Microbusiness Strategy Report

• Good response by procurement staff and organisations representing businesses and third sector organisations

• Suitable “demonstration projects” now being identified following which lessons will be shared

• Training for buyers will be delivered as part of the new Value Wales Training Contract

Questions for buyers

• Look at organisational processes etc. Do they make joint bids hard? • Can I make future opportunities visible earlier?• Analyse the requirement – does it lend itself to joint bids? If so, say

so.• Do I understand the market?• Are timescales realistic?• Think through how I’d assess a joint bid fairly against a single bid –

are the questions worded correctly and how will they be scored fairly?

• How do I manage risk?

Messages for supply side

• Pre-forming a consortium – what are my organisation’s goals, strengths weaknesses and hence opportunities to collaborate?

• What sort of consortium should we set up?• Could I fall foul of competition law?• Should we bid for THIS opportunity? (next slide)• How do we develop a collaboration agreement?• How do we manage risk?• How do we develop a joint estimate and pricing?

Types of consortium

Special Purpose Vehicle

MembershipUsually the core consortium partners

Hold Assets

Board of DirectorsDrawn from the members

Employ staff

Draw downfunding

Bid for contracts

Lead BodyThis organisation will draw down the required start

up funding, leases, premises and employ staff

Lead Body Board of Directors/MembershipThe Lead Body is accountable to its own Board of

Directors and Membership

DeliveryPartners

Delivery Partners

Steering GroupMade up from all

the delivery partners

Hub Service Model

Delivery Partner

Delivery PartnerDelivery Partner

Opportunity Assessment

Key Area 1Consortium’s Market Position

Score(0 to 5)

Exposed(Y/N)?

1 Is this opportunity a good fit with our Consortium's goals? 2 Will winning enhance our Consortium's reputation and market positioning? 3 Will winning open up new market opportunities for our Consortium? 4 Are any members of our Consortium known to the key decision makers? 5 Does any member of our Consortium understand the imperative need or problem driving this opportunity?

6 Do we know the Opportunity's evaluation criteria and how they will be weighted? 7 Do we know the proposal time frame? 8 Do our Consortium's features and benefits give it a distinct competitive advantage? 9 Can we compete if price is a major factor in selecting the winning Bid? 10 Do any of our members have successful track records with similar opportunities? 11 Does our Consortium have differentiators that improve its odds of winning this opportunity?

12 Does the Consortium know who the other competitive bidders are likely to be? 13 Can we win against a good competitor if it is currently in post? 14 Will winning this opportunity give our Consortium future business advantage over its competitors?

Sub Total (out of 70 marks) Key Areas 1’s % score = (Sub Total/70 marks) x 100% %

Opportunity Assessment

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Market Position Bidding Resource Delivery Competence Commercial Issues Risk Planning

Example Scoring

Must improve Good Excellent Maximum

Trust

Trust Statement (each person in the meeting to mark out of 5)Never

Rarely

Sometimes

Often

Always

1 I feel a high level of trust in this ConsortiumWhy?

1 2 3 4 5

2 There is a high level of trust between the Consortium membershipWhy?

1 2 3 4 5

3 I believe this Consortium helps me get my needs metWhy?

1 2 3 4 5

4 I believe I help my partners to get their needs metWhy?

1 2 3 4 5

5 It is easy for me to express my needs to my partnersWhy?

1 2 3 4 5

6 I believe my partners trust meWhy?

1 2 3 4 5

7 I believe I behave in a trustworthy mannerWhy?

1 2 3 4 5

8 I believe my partners behave in a trustworthy mannerWhy?

1 2 3 4 5

National Procurement Service (NPS)

• National Procurement Service (NPS) launched Nov 2013

• Hosted by the Welsh Government and governed by the National Procurement Service Board, NPS will incorporate WPPS principles

• NPS will deliver collaborative contracts and frameworks across the Welsh public sector covering some 20-30% of total public sector expenditure (common & repetitive spend areas)

• Will drive fair and open competition for all suppliers across Wales, identifying supply chain opps for smaller suppliers

• Will adopt Fair Payment Charter for Wales and ensure prompt payment down supply chain

• Expected to deliver £25m efficiencies p.a. once fully established

• For more info - http://npswales.gov.uk/?skip=1&lang=en

New EU Procurement Directives

• Directives been revised and updated – several consultations taken place

• WG worked closely with UK government over last 2 years to ensure Wales views are reflected

• New rules in line with WG procurement policies and will help strengthen our work in Wales

• EU Commission due to adopt/finalise early 2014

• UK Government want to transpose faster than the 2 year deadline to realise economic benefits – in 7 months

• New rules estimated to take effect towards end of 2014

• Lord Young review into making procurement more accessible for SMEs – legislation will not apply in Wales.

New EU regs –SMEs and third sector

• Simplifying selection – proportionate approach, less paperwork

• Mandatory acceptance of self-declarations, self-cleaning

• Limitation on requirements for bidding and ensuring conditions are justified to encourage joint bidding

• Limiting number of lots suppliers can bid for to avoid larger suppliers winning all lots

• Adopt or justify approach to splitting contracts into lots

• Asking tenderers for indication of % sub-contracting

• Capping turnover requirements

• Direct payment of sub-contractors (optional provision)

New EU regs – Innovation

Innovation strongly encouraged in new rules - aligned with WG’s aims to increase innovation and engagement with suppliers, key changes include:-

• Pre-tender dialogue with suppliers encouraged

• market consultations encouraged

• Increased use of outcome-based specifications encouraged

• New Innovation Partnership procedure & Competitive Procedure with Negotiation will encourage dialogue with suppliers

• Acceptance of variant bids will encourage innovative offerings

• Whole life costing will be strongly encouraged

New EU regs – eProcurement

• Mandated use of electronic procurement in new rules

• In line with the work of the ePS in Wales (formerly xchangewales), - key changes include:-• Mandatory electronic contract notices, electronic tenders and

electronic access for suppliers to documents

• Switchover to full electronic procurement – ie contract notice and expressions of interest through to tender - within 30 months of transposition

• Reduced timescales for expression of interest and tender return

• Impact on suppliers – WG’s Economy, Science & Transport Dept alerted so can work with suppliers to ensure they are e-enabled

What’s next?

• Procurement Fitness Check results for LAs & reviews to start in NHS, FE & HE

• Spend analytics results

• Project Bank account pilots

• Business Wales – offers support for suppliers & provides tendering adviser services

• Access all best practice information and WG policies on 3 x PRPs: www.prp.wales.gov.uk

Thank you

Any questions?