Our Local Authority / Urban Interest Group discusses procurement

June 19 2018

Notes of a discussion around the topic of procurement — a session at the 13 March 2018 meeting of the LAUIG, held in Birmingham and kindly sponsored by Foundation Members Mott MacDonald

Larger authorities usually have at least one recognised innovation and technology leader in their teams – not necessarily specifically in a traffic management team – but smaller authorities do not. This can lead to smaller authorities missing out on ITS innovations which would benefit them.

The general appetite among authorities for innovative procurement such as joint procurements or pre-commercial work with suppliers seems to be quite good. At a guess 25% are genuinely interested in doing procurement in new ways and this tends to be the bigger authorities with better resources. Smaller authorities are really crying out for help and advice in this area.

Governance issues are more something people hide behind than a real barrier. They only form true barriers when you want them to. But another view is that officers have good reason to hide behind these supposed barriers because a negotiated procurement is more likely to go wrong, and in an authority which is stronger on blame culture than on innovation culture this can have serious outcomes for individuals. In other authorities it could be that people are neither risk averse nor resistant to innovation, they may simply be following established work routines with no encouragement to suggest changes.

It is quite possible to use a framework contract but do the pre-market engagement in a different, better, more innovative way. Make sure that suppliers are aware of what you are trying to achieve before the procurement process starts, so they can think about innovative approaches. Prescribe the functionality not the technology, this is still an issue in many Local Authority procurements. Procure an end outcome but do not specify the methodology.

Local Authorities’ procurement departments are bigger suporters of traditional procurement than are transport departments, so the former can stymie the latter. Lack of cooperation between the transport technology experts and the procurement experts will have negative effects. Crown Commercial offered to help by listening to issues and pronounce on whether a suggested process is legal or not.

Excessive paperwork is a barrier to SME access to this market as is the insurance levels specified which often have no reasonable relationship with the value of the work the SME is delivering. Blanket insistence on various quality management registrations etc without considering individual contracts can also be a blocker to SME participation in the market.

Some companies on the frameworks are not interested in tendering for the smaller jobs and this combined by the conditions functionally excluding SMEs can mean that using the frameworks may only yield, say, three tenders. Using the framework arrangements in these circumstances is unlikely to deliver either good value or technical innovation. Some companies get on the frameworks because they have the resources to comply with the process – indeed may have set up a section of staff specifically for this purpose – but they do not necessarily want any but a few large contracts. It could help SMEs if they were proactive in bringing themselves to the attention of these contractors to win more work as subcontractors. By keeping in close contact with these large firms, SMEs may even be able to influence them towards bidding for smaller, less routine work.

The typically long supply chain and slow payment cycles are bad for overall costs to the clients and for the cash flow of the small subcontractors at the end of the chain. Concerns about cash flow keep some SMEs from participating in the first place.

It was generally agreed that it is in theory good for Local Authorities to work with local innovative SMEs but it can in reality be hard to get these into the procurement processes for all the reasons given above. But, also as per the above, there are ways of achieving this if the desire to do so is genuine. Crown Commercial is committed to support such processes and welcomes requests for advice and guidance.

 

The ITS (UK) Local Authority / Urban Interest Group
Chair – Steve George, SGTI Honorary Secretary – Gavin Jackman, Aimsun
With many thanks to Mott MacDonald for hosting the event

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