Every year, PAI hosts a conference on issues and opportunities in the field of Public Procurement. This year’s conference, “Practical Challenges in Public Procurement”, was held in Dublin’s Davenport Hotel and boasted speakers from the Civil service, the legal sector and academia.
Edward Quigg, founding partner of Quigg Golden, opened and chaired the morning by listing some important dates of late: The US Presidential election, the Brexit vote, Ireland beating the All Blacks, and of course, the EU Regulations for Procurement coming into effect on 18 April.
The keynote address for the conference was delivered by Paul Quinn, the CEO of the Office of Government Procurement (OGP) and the Government Chief Procurement Officer. He broke down the new streamlined system for Government procurement, which has five main hubs: The OGP, Health, Local Government, Defence and Education. The new system has an in-built “strong feedback loop” created by bringing policy and operations together.
One priority of the Government in its procurement is to “deliver efficient service in a sustainable way”.
It is important that things are done in a sustainable way – both environmentally and for markets
There is also a focus on SME participation in the tendering processes. With E-Tenders, contracts and awards are now much more transparent and easily accessible, no matter the size of the company. All procurement must be moved over to e-procurement procedures by 17 April next year. He noted that this move may be hard for some public bodies, but it will be worth it. In the end, it will “drive social inclusion, enable SMEs in business, and deliver green contracts”.
In all, Mr Quinn noted that while the new regime may have a light touch, this is a good thing. It will drive efficiency in the State. He made comment to the OGP’s Meet the Buyer event. This is a cross-border event that he likened to “Speed dating for business”. The OGP also do a “huge amount in the education and awareness space.”
Michael Morgan, Project Manager for the Education Shared Business Services (ESBS) within the Department of Education and Skills, shed some light on the move towards e-invoicing in the procurement sector. He noted that e-invoicing will be the norm by Q4 of 2018.
At the moment, most procurement processes use paper invoicing from supplier to buyer, and that leads to certain delays. The option of email can be introduced, “which shortens the process a little, but doesn’t always deliver all the potential savings”.
The benefits of e-invoicing are many and varied. Including:
- Increase in the speed with which payments are made;
- Real-Time data delivery;
- Reduced costs;
- The amount of information that can be gathered about from the data shared makes it easier to do analysis and collate it; and
- Use of discounts is possible.
Using an example from the Irish public sector. The Department of Education and Skills has 18 regional bodies, across approximately 900 sites. These sites use varying finance management systems. The Department processes roughly 300,000 invoices per annum, mostly by paper or email. Between May and November 2016, they received 9,000 e-invoices; in six months, they had moved 5% of their total invoices to e-invoicing. By 2017, they aim to make that number 100,000 e-invoices.
He next spoke of PEPPOL. This is a network that allows direct communication between suppliers and buyers, to exchange documents like e-invoices. It’s an open standard, publically available, and it is driven from EU.
Michael Morgan advises:
Digitise first, then look at PEPPOL
Gary Clifford, from Bangor University, delivered a case study from Welsh local councils, where his team developed and deployed a system of “green, lean and mean procurement”. The project’s aim was to help these local authorities procure better, from a national and a regional perspective.
What his team saw was the authorities being proactive, and wanting to be at the forefront. From a personnel point of view, they wanted to condense their procurement capabilities to deliver a good procurement result). They would also always feel a responsibility to the local community.
Under the guidance of Winning in Tendering, these local authorities streamlined their procurement processes from conception to end. This included working together and dividing their spending into categories which would then become collaborative across the three bodies.
Beforehand, they found that a lot of time was spent on the transactional process, but very little on contract management or development side. In that, there was a huge duplication of work, and a lack of communication.
The originally-identified 30 “spend areas” were summed down to 6 areas, which all three bodies had access and availability of. In the end, the £10m cashable savings were evidence of the success of the new streamlined approach.
Patrick McGovern “hit some of the highlights on where, from the legal perspective, trouble may loom”
Patrick McGovern spoke next, a relative caveat to the practical discussions that had proceeded him. He noted that the new Regulations had been, as Mr Quinn noted, transposed on time, and that the interlocked Remedies were forthcoming.
He asked procurement officers to be careful, for a competition law point of view. He said, despite the fact “that it’s a noble intention, it could still lead to trouble.” If in doubt, the best option is to actually read the regulations. “Do not rely on summaries”.
He drew attention to the mandatory exclusion clause, commenting that there would be “a lot of trouble in those mandatory exclusions” for public bodies.
While there is no accepted definition of what constitutes an “abnormally low tender”, awarding bodies must reject tenders if they are abnormally low due to social factors (labour costs etc).
This is a significant change under the directives. Ultimately it must seek explanations, for purposes of fairness. This boldens up the social dimension of contracting. It is non-exhaustive and awarding bodies must be on the ball to ensure fairness. Regulation 84, which outlines the responsibility of the awarding body to prepare reports on contracts “almost in real time” will most likely be observed in cases such as this.
He echoed Mr Quinn again in reminding the attendees that the OGP recommends that reasonable time be allowed for contracts. “Take that into account instead of trying to pare everything down to the bare bones of what is legally permissible,” advised Mr McGovern. “Be succinct, be efficient.”
After a short morning break, the room was split into groups to participate in facilitated table discussions led by Edward Quigg, Pauric Marray and Gary Clifford.
Edward Quigg then resumed the podium to give a run-down of the workshop discussions. He commented that they were “Very active discussions, and there are no right or wrong answers”.
Some themes explored in the workshops are outlined below.
Common pitfalls in procurement
If the technical descriptions do not adhere to the rules set out in Reg 42, as a procurement officer, you should revert to whoever drafted technical descriptions.
If you receive a response that is 1) a better way of achieving your goals but 2) outside of your evaluation criteria, unfortunately, it is too late. To avoid this happening, do some market research; build in an allowance for variance and get some proper guidance.
Unsuccessful bidders have 30 days to be a challenge if they are unhappy with the result of the award.
Framework agreements and Setting Award Criteria
This discussion group focused on factors of award criteria.
At all times, a RWIND[i] tenderer should be able to understand what you’re asking for.
The award criteria must be linked to subject matter of the contract.
You have a duty to ensure competition.
Innovation is limited to how well you can explain it in the documentation.
Strategic procurement in practice
All groups discussed a top-down model. They thought that the best course of action was to assess their operations, and do their research, within the organisation and in the marketplace.
Gary Clifford left the attendees with the question:
Are Frameworks lazy procurement?
Dr Ama Eyo began the final presentation of the afternoon with a cry of:
“Predictions predictions predictions”
The truth is, nobody knows what real effects Brexit will have. Dr Eyo also commented that those who tell you that they do should not be trusted.
Under the current framework, the UK are formidable in the EU. There may not be too much cross-border procurement worldwide, but there is a large number into/out of the Republic of Ireland.
In the wake of Brexit, Dr Eyo predicts that there will be a move to by-local policies. While she doesn’t believe it will become a recognised practice to “keep it local”, it may become an (un)recognised practice. This, ultimately, would be a difficult situation for companies in Ireland whose procurement happens between Ireland the UK. This includes the services market, as well as the good market.
However, there has been no immediate. The UK is open for business. But be cautious, “change will come”.
While a Brexit would present an opportunity for the UK to substantially change its procurement procedures and legislation, Dr Eyo is sceptical as to whether or not that will actually happen to any great extent. However, it may be “tidied up” to emphasise things that are useful, and to get rid of things that are not.
[i] RWIND is an acronym for the term “Reasonably well-Informed and normally diligent”.