Making Spend Matter Toolkit - Implementing Strategic Procurement Frequently Asked Questions (FAQs 4)

The following FAQs provide responses to common questions around Implementing Strategic Procurement, one of the themes explored by the Making Spend Matter partners as part of the optional transfer activities.

For more details on Making Spend Matter and how you can take a more strategic approach to public procurement see Making Spend Matter and our Making Spend Matter Toolkit.

To view a designed copy of our FAQs see the Implementing Strategic Procurement FAQs (PDF) [1MB] .

1. What is the 'Strategic Approach to Procurement'?

The core purpose of Making Spend Matter has been to transfer a spend analysis methodology to six cities, and to use the evidence derived from it to adopt a more 'strategic' approach to procurement. By 'strategic', we largely mean using procurement as a means of addressing wider economic, social and environmental challenges.

Since the amendments to the EU Procurement Directives in 2014 Member States, regions, and cities have been encouraged not to just use procurement as a mechanism for buying goods and services, but instead use it as a lever to address wider economic, social and environmental challenges. A 'strategic' approach is the realism of such encouragement, so using procurement as a means of creating jobs or mitigating environmental concerns, for example. It means using procurement to address the challenges a city may face.

The first three stages of the 'strategic approach to procurement' are largely about governance and strategy and developing the evidence base through spend analysis and advanced spend analysis (see FAQ 1), and through developing a Strategic Procurement Plan (see FAQ 2) and a Social Value Procurement Framework (see FAQ 3). Stage 4 is more about how that strategy is realised and implemented practically on individual purchases of goods, services and works through the 'cycle of procurement'.

2. What is the 'Cycle of Procurement?

Traditionally the process of procurement has often been viewed as a transaction. A municipality will want to buy a good, service or work and a business provides responses to questions around how they would deliver that good, service, or work and how much it will cost. The business providing the best price and quality will then be procured to deliver it. However, in order for the 'strategic approach to procurement' to be effective, the process needs to shift from one of a transaction to a relationship, with practical implementation of Stage 4 of the 'strategic approach' throughout the 'cycle of procurement'.

Four steps to the 'cycle of procurement':

1. Commissioning - this is where municipalities design the good, service or work they are looking to procure. Here they should be

thinking about how the outcomes of the Social Value Procurement Framework are potentially linked to what they are looking to purchase and also how the process can be adapted to support SMEs to bid, for example.

2. Pre-procurement - this is where municipalities make the market aware of the good, service or work they are looking to purchase and any wider outcomes they are looking to achieve through the process. It may also include direct engagement with the market.

3. Tendering - this is the actual procurement process itself, where potential suppliers are asked to demonstrate how they will deliver the good, service, or work, how much it will cost, and how they will contribute towards wider outcomes. This is also where bids are evaluated.

4. Delivery - this is where the successful supplier delivers the good, service or work contract, and also delivers and monitors against the agreed wider outcomes.

3. How can the Strategic Approach be Implemented in (Step 1) Commissioning?

There are five ways in which the 'strategic approach to procurement' can be implemented during Commissioning:

Service user engagement - this can be implemented through actively engaging citizens and service users in the design of goods and services, for example through public consultation or engaging with users on the design of a service that they are going to benefit from. This activity can be particularly prevalent in the provision of health and well-being services.

Cross-departmental relationships - this can be implemented through making the responsibility for the process go beyond procurement officers. There needs to be active engagement of those who are designing the good or service (commissioners) and those who have knowledge of local economies, the market, and the challenges facing localities (those working in economic development for example).

Early market engagement and innovation - this can be implemented through developing more effective relationships with the market prior to a tender process. Municipalities can, for example, use the expertise and knowledge of the market to support the design of the good or service. In addition, local authorities can also seek innovation from the market through pre-procurement engagement and through buying for outcomes rather than a specific product.

Lotting and thresholds - this can be implemented through adopting practices which enable a greater diversity of organisations to bid. Municipalities can, for example, break large contracts down into smaller lots which opens the market

up to SMEs and social enterprises, in particular. Municipalities can also introduce specific conditions for contracts below specific thresholds, for example making it a requirement that three SMEs have to bid for opportunities below €50,000. There is more information on this in FAQ 5 on SME engagement.

Social value weighting - this can be implemented through introducing weightings into decision making criteria that go beyond cost and quality. For example, Municipalities can weight responses around social value as 20% of the overall decision. There is more information on this in FAQ 6 on social and environmental criteria.

4. How can the Strategic Approach be Implemented in (Step 2) Pre-Procurement?

There are two ways in which the 'strategic approach to procurement' can be implemented during pre-procurement:

Information provision - this can be implemented through effectively communicating the process and opportunities to the market.

Municipalities can set up portals which enable organisations to be alerted to relevant opportunities and which make them aware of how procurement is undertaken, with a particular emphasis on social value requirements. There is more information on this in FAQ 5 on SME engagement.

Meet the market events - this can be implemented through engaging with the market as part of the process. Municipalities can arrange events, for example, where interested organisations come together to discuss a specific opportunity. This can also be effective in developing relationships across organisations which are important for sub-contracting arrangements. There is more information on this in FAQ 5 on SME Engagement.

5. How can the Strategic Approach be Implemented in (Step 3) Tendering?

There are two ways in which the 'strategic approach to procurement' can be implemented during tendering:

Social value questions - this can be implemented through asking specific questions as part of the tender process around social value. These questions can link to the types of social value activities which an organisation is already undertaking and activities that they will undertake specifically in relation to the opportunity they are tendering for. There is more information on this in FAQ 6 on social and environmental criteria.

Qualitative and quantitative evaluation - this can be implemented through adopting innovative approaches to evaluating tender responses. This can include the utilisation of quantitative metrics to explore the potential impact of social value activities, for example. There is more information on this in FAQ 6 on social and environmental criteria.

6. How can the Strategic Approach be Implemented in (Step 4) Delivery?

There are four ways in which the 'strategic approach to procurement' can be implemented during delivery:

Legal and contractual terms - this can be implemented through being more robust about how social value commitments are detailed in contracts. They should be a condition of the contract, with suppliers expected to deliver against them, and monitor against them, with penalties for non- compliance.

Social value brokerage - this can be implemented through supporting suppliers to deliver social value commitments. In this, they can broker relationships with employment and apprenticeship providers, for example and with voluntary and community sector organisations.

Monitoring - this can be implemented through actively monitoring the outputs delivered by suppliers. This can include exploring the extent to which social value commitments have been delivered, and the wider impact of such activities on beneficiaries and wider economic, social and environmental outcomes. There is more information on this in FAQ 1 on advanced spend analysis.

Supplier networks - this can be implemented through developing relationships across suppliers delivering goods and services. Networks can be set up that enable suppliers to share practice and learn from each other. The focus of such networks could be around social value, for example.