Public Procurement Policy – Avoid Onerous Contracting Practices

The Crown Commercial Service has issued an interesting Procurement Policy Note to finish the year. Usually these PPNs are very much related to technical procurement regulatory issues, although they often have practical implications for public procurement professionals.

This PPN though is titled Onerous Practices in Procurement and Contracting and gets more into the “good practice” sphere, although it does not go into much detail. But it does highlight some key points that all public contracting authorities are expected to follow, with an overall theme of being open to bidders and removing barriers to market participation. It provides some good reminders but it is a slightly curious document to come from the policy team; we wonder what has inspired its publication now? Is it some sort of response to the recent National Audit Office guide?

Anyway, the six points covered, which also give some useful links to more detailed guidance, are:

Conducting effective pre-market engagement  “Pre-procurement engagement with the market (including talking to potential suppliers) is now expressly permitted under procurement law”. Well, of course it is. But perhaps people need reminding, it does take a while for the news to get through to Bassettown District Council or Grantshire Police.

Ensuring accurate and reliable data is available to suppliers “during a procurement, and throughout contract delivery, particularly where this relates to forecasting volume, managing demand and managing performance”.  Another “well, duh” moment perhaps but a good point here – “Poor quality data can disproportionately affect risk transfer in the contract” particularly if the contract is being transferred to a new supplier.

Awarding contracts on the basis of value for money  “i.e. the best mix of quality and effectiveness for the least outlay over the period of the use of the goods or services bought”. Yup, got that. It is not just price, and supplier selection should be based on total lifecycle costing where appropriate.

Putting in place appropriate mechanisms for identifying and managing risks “avoiding a blanket approach, carefully considering risks inherent in the contract and discussing with suppliers pre-procurement. The approach should be proportionate”. So don’t introduce unnecessary requirements that simply restrict the field of potential suppliers.

Using the guidance developed to support the Model Services Contract, to establish limits of liability in contracts For some reason, this point is expanded in much more detail than the others, getting into aspects such as consideration of the likely commercial risks of each contract to be let and the proposed approach; tailoring liability provisions in contracts relative to the requirement, its value, and its complexity, and the use of Deeds of Guarantee and Performance Bonds. Like the last point, it seems to be encouraging (quite rightly) buyers to think carefully about risk and avoid onerous provisions that restrict market competition.

Adopting a collaborative approach to managing change in contract delivery “by working with the supplier early enough to resolve issues such as quality of service delivery, volumes, performance requirements or key performance indicators, and pricing or payment mechanisms, without creating unmanageable risks for either party and in line with established contract management tools ...”

Good stuff anyway; and you can read the whole document here.

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Voices (2)

  1. Ian Heptinstall:

    And I see that horrible phrase “Pre-procurement” also makes an appearance.

    This implies they still see ‘procurement’ not as a holistic end-end process of engaging with and influencing the supply base, but as the bid-order-pay process. Didnt Francis Maude have the same mindset?

    They should read your recent piece by Dick Russill.

  2. Ian Heptinstall:

    And where do they think you can ever get an accurate forecast from? Maybe in an Ideal World, but in a Real World millions are wasted each year by companies trying to better predict the future.

    Surely what is needed is good enough data on future requirements, a selection and contracting process that embraces uncertainty, and robust execution that easily adjusts delivery to actual demand?

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