Nexus – Tyne and Wear Passenger Transport Executive – An Excellence in Innovation Case Study

This is another in our series of reports covering entries from the recent GO Excellence in Public Procurement Awards. They are chosen from categories for which Peter Smith was a judge, so they were studied very carefully, and each one is featured based on how interesting we felt it would be for our readers, rather than on whether it won the award (although in this case it did).

Nexus, the Tyne and Wear Passenger Transport Executive, is providing a bespoke door-to-door transport service for disabled residents on behalf of five local authorities. About 3,000 individuals use the service to help them lead fulfilled and independent lives. It is a brand new approach and product, called Taxicard. Instead of paying companies to provide a service, contractors are actually converted into concessionaires which bid to be part of the scheme and brand; they pay a fee for the rights, which in turn brings wider benefits to their businesses. It is sustainable as a high-quality service and at the same time, risk and cost are transferred away from the public. We chose to highlight this case study based on its pure procurement innovation and to show how a procurement team adapted to the changing structure of a market and its demands.

The wider taxi market had evolved very quickly in Tyne and Wear over the previous decade. Increased competition and consolidation into large operating companies or collectives meant there was scope for a public body to leverage the situation in a more effective and efficient manner that would achieve savings.

As the award submission says “Nexus believes that public procurement should be intelligent to the advantages competitive markets offer in order to drive down cost. In this case the degree of competition between large and well-managed taxi companies presented the opportunity to move to a concession model.”

We met up with the procurement team, and asked why they thought their innovation was worthy of award entry. John Fenwick, Director of Finance and Resources for Nexus, told us:

“Taxicard is an example of how we have been able to avoid cuts to local transport in Tyne and Wear by working closely with local councils and seeking efficiency in everything we do. By using this model we are saving £230,000 over three years while maintaining the same standard of service.”

Nexus had to overcome two main challenges in adopting the new procurement. Firstly, to instill confidence in customers that they would receive the same level of service through the new concessions. Secondly, to ensure concessionaires would maintain and operate robust software systems for transaction handling so that neither the user nor taxpayer would be exposed to loss.

To achieve the high level of service required Nexus evaluated tenders on a balance of 20 percent on value of income and 80 percent on quality. The balance was the reverse of many public procurement exercises where price dominates, but it was achievable owing to the concession model that Nexus adopted. Nexus also required tendering companies to give on-site demonstrations of their software packages in a live environment.

It is a great achievement that the first year of operation has demonstrated savings in line with the predictions, and customer satisfaction levels have remained high. We asked John about the wider relevance of this result.

“What we have done challenges a prejudice about public sector procurement – the belief that because we set out to provide a public service the whole cost must lie with the taxpayer. By identifying the benefits which Taxicard offers to its providers we turned the traditional approach on its head and saved money as a result; there is a lesson there for other parts of our organisation and perhaps for other public bodies large and small.”

The success of the scheme has led to work now being under way with other authorities to explore the introduction of concession-based procurement for similar transport services. this is one aspect we fell is particularly interesting here - turning a conventional procurement into something that might even one day be a revenue earner rather than a cost. Are there other  spend areas where this thinking might be applied, we wonder?

In this case though, we congratulate Nexus and finally we asked what winning this award brings to them.

Nexus“Nexus is a procurement-driven organisation and these awards are a welcome opportunity to test what we do against the best in the country and see how close we are to best practice.”

 

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