Management
references and seek reassurance on the quality of their work. It is quick and easy to find suppliers on the system and new suppliers can be added to the list at any time. LPP supports buying organisations by identifying local suppliers and working with them to get them added to the approved list. Buying organisations can also work with LPP to provide feedback on the performance of suppliers. In addition, the DPS is helping the public sector to meet its target of 33 per cent of spend to be with small and medium sized enterprises (SMEs) by 2020. The European Commission’s definition of an SME is an entity engaged in economic activity that: employs fewer than 250 people and has annual turnover less than or equal to £39 m; or has a balance sheet total of less than or equal to £33 m.
Each year, the government spends about £45 bn on goods and services supplied by non-public sector organisations. The SME target covers both direct contracts with SMEs and spend through supply chains. According to the Department for Business, Innovation & Skills, there are currently an estimated 5.4 million SMEs operating in the UK. A National Audit Office (NAO) report published in March 2016,1 looked at government spending with SMEs and reported that £4.9 bn is the government’s reported procurement spend directly with SMEs in 2014-2015, but that the number of SMEs working on government contracts is unknown. However, despite improvements in access to government contracts, SMEs still face barriers. The NAO report identified these as: struggling to find contracting opportunities; not having the resources to complete lengthy tender documentation; and risk averse public sector commissioners. If set up with the objective of opening access to SMEs, DPS offer an opportunity to support both SMEs and larger corporations to bid for public sector business. A DPS is an electronic system used by a public body to purchase commonly used goods, works or services. As a procurement tool, some aspects are similar to those of a traditional framework agreement, but its most significant feature is that new suppliers can join at any time. It is an ‘open market’ system designed to provide buyers with access to a pool of potential suppliers and to maintain competition within a market sector. Would-be participants do not have to wait for a framework agreement to be renewed before they can tender to supply, which is the case with traditional frameworks.
September 2015. The second DPS for minor building works launched in early January 2016 and by August 2016 had attracted more than 200 suppliers, 88 per cent of which are classified as SMEs. A DPS for building and engineering and apprenticeship training providers followed in 2017.
The DPS process was introduced into public sector procurement in 2004 in recognition of the expansion of electronic procurement, its potential for optimising the use of public funds and with a view to widening competition for public sector contracts. The process was revised and updated in 2015 for simplification and to increase the use of DPS.
The Public Sector Directive 2004 lays down EU rules for awarding contracts for public works, supplies and services. It aims to ensure that the contracting process is fair and open to bidders from anywhere in the EU and covers most public contracts other than for utilities (water, transport, energy and postal services), telecommunications, service concessions (such as operating an existing car park) and certain defence and security contracts. A DPS can be developed as a procurement process that actively encourages the use of SMEs. It can offer the flexibility of an open list and can attract SMEs for smaller contracts where requirements are not being grouped by contracting authorities to reduce administration costs. This creates opportunities for smaller, local businesses to compete for public sector opportunities.
With this in mind, LPP is in the vanguard of encouraging the public sector to embrace the new system and to see what advantage it can bring for suppliers large and small, public sector buyers and tax payers. The contracting authority (in this case LPP) is permitted to split a DPS into lots, such as by geographic region or financial threshold, as long as they are clearly identifiable. This is seen as a method for supporting SME participation and engagement. The greater the number of lots included within the DPS, the more manageable the list of suppliers to invite for competition as part of phase two will be. The contracts the suppliers are invited to bid against will also be more suited to their capabilities.
Opportunities
LPP tested the water with its first DPS – for language services – at the end of
January 2018 •
www.thecarehomeenvironment.com
DPS works particularly well in the provision of estates services. Buyers, particularly in the estates maintenance field, have a pool of preferred suppliers. If those suppliers have followed the DPS process successfully, the buyer can be sure that they are recognised as being of a suitably high standard. Local providers can apply to get on to the DPS at any time during its period of validity and the award of individual tenders can be quicker than under some other procedures; the minimum time limit for return of tenders is 10 days. A DPS should be a win-win situation for both buyers and local businesses and further DPS opportunities will be developed over the coming months.
Reference 1. National Audit Office. (2016) Government’s Spending with Small and Medium-sized Enterprises. [
www.nao.org.uk].
TCHE
Edward James
Edward James, workstream lead, Estates, Facilities and Professional Services Workstream, NHS London Procurement Partnership, has worked in NHS project management, turnaround and procurement. He has a degree in business, a masters in strategy and procurement management and an LLM in public procurement law and policy (for which he specialised in dynamic purchasing systems). Ed is a member of CIPS and a Prince 2 practitioner. He leads the team specialising in collaborative procurement for the public sector in the estates, facilities and professional services fields.
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