A “cradle to grave” approach to procurement

The central change introduced by the Procurement Act is a move to a “cradle to grave” approach. This includes pre-market engagement, through to termination, and everything in between. And there is a much greater emphasis on strong contract management, from the initiation and through the life-cycle of the service delivery.

The Procurement Act is designed to meet four central objectives:

1. Delivering value for money
2. Maximising public benefit
3. Sharing information
4. Acting – and being seen to act – with integrity

Creating an example of good practice for all organisations

While the Procurement Act is focused only on public procurement, it will be seen as an indication of how the government and regulators regard good practice and should act as a push for better procurement practices across all organisations. In particular, it creates an environment of sound business practices toward smaller businesses who may find themselves disadvantaged by standard larger firm processes. The tick-box approach often adopted favours larger companies, even when the scale of procurement or specific specialisms required should not make this a requirement.

Principles and obligations driving transparency

Amongst the clauses a number of principles and specific obligations emerge.

Most notably these include:

• Greater transparency in publishing notices of intention to procure goods and services, to allow more equitable access by a wider range of participants
• Ongoing supplier management through defined key performance indicators that create transparency in measuring effectiveness. Specific requirements for larger contracts
• Introducing proportionality in competitive tendering procedures to reflect the different nature and scale of specific contracts
• Changing the wording to say that award of contracts will be made to the “most advantageous tender”, removing the word economically to allow for a broader range of performance measures
• A legal requirement to separate contracts where possible and practical to positively support the inclusion of small and medium sized suppliers and reduce economic barriers to inclusion
• Prompt supplier payment terms based on 30-days and with bi-annual compliance checks
• A central platform as a repository for useful information and benchmarks that are accessible to all areas of government allow for continuous learning
• The requirement to ensure the organisation can manage, process and report on supplies and against contracts effectively

Conclusion

The requirements of the Procurement Act are a positive step forward. Both public sector organisations and potential suppliers should embrace the changes. There is an opportunity for flexibility while accepting the need for accountability, effective decision-making and proper record-keeping.

Good business practices allow for commercial success while being kind to people and to the planet. Building trust between organisations is essential to achieve this and the Procurement Act underpins this.