Public Procurement Practice in Northern Ireland
NICVA commissioned research into procurement for the Voluntary Community Sector (VCS) /Social Enterprise (SE) sector in Northern Ireland (NI) due to anecdotal concerns regarding barriers to tendering. This has been a perennial problem with specific guidance and legislation designed to remove barriers and enable VCS/SE organisations to tender.
This research empirically tests some of the concerns that have been expressed in relation to contemporary procurement practice in NI. It then makes the following conclusions and recommendations.
Too much Focus on Price:
The evidence shows that price has been given a higher prominence in the awarding of contracts in recent years than in previous years. This is particularly the case with smaller project budgets. This is despite the EU Directive 2014/24 which states that contracts should be assessed on overall cost effectiveness, quality, environmental and social aspects, trading and delivery conditions. The concern is that the NI public sector may not be delivering maximum impact by failing to sufficiently consider the wider benefits a procurement may deliver.
Those that do bid will find their margins being squeezed and if the downward pressure continues there is a risk it will impact negatively on their ability to reinvest or be innovative, whilst some could go out of business completely.
Research is needed to monitor the weightings being allocated to price on all public sector contracts but particularly small scale projects. Moreover, over half of the tenders reviewed (55% of the 156) did not include budget information, which is contrary to best practice.
Commissioners should be aware of the full cost of goods and services being procured and ensure that tender documents include budgets setting lower as well as upper limits. If there are reasons why budgets cannot be included these should be stated.
Insufficient Emphasis on Quality:
The evidence shows that quality is being weighted lower than in previous years. The percentage of bids rating quality as 50% or greater of the marks has decreased from 100% before 2012 to 78% in 2015. However at the same time the public sector is emphasising its need to see improved quality.
The public sector should ensure that the weightings in tenders reflect the importance of quality of goods and services being procured.
Onerous Experience/ Expertise Requirements:
Experience requirements can vary significantly across central and local government. Experience criteria should only be included if critical to delivering a quality service. They should not be included as a way of reducing the number of people or organisations that can apply. Instead the focus should be on measuring the outcomes to be delivered. In new service areas, it is essential that commissioners engage with potential providers to understand what the experience requirements are that are essential to the delivery of the service, before including them in the tender requirements.
Restrictions on the timeframe of experience (e.g. 3 years) mean that while some companies may have very relevant experience just outside of this timeframe it cannot be used. In addition, in some areas work can be so specialist that contracts only get tendered on an irregular basis and by restricting experience it reduces the number of organisations who can bid. As a result organisations that may be able to deliver the work are prevented from tendering.
Levels of Insurance Required:
There is a huge variation in the insurance requirements set in tenders of the same value for service type contracts.
Tender specifications should include only appropriate levels of insurance for the value and type of service being procured.
Complexity of Tender Responses Required:
Central Government Departments and Public Agencies generally require more complex responses than tenders published by Councils, regardless of the value of the tender. The level of complexity in the response requirements needs to be proportionate to the value of the contract.
The public sector is moving ahead with Payment by Results (PbR) however it is clear that it is not suitable for all service areas. The level of financial risk and the amount of working capital required from PbR may prevent voluntary sector organisations from bidding for contracts regardless of their ability to deliver the desired outcomes.
Research and piloting work is required before it should be used and potential providers need to be engaged to assess their capacity to deliver PbR. The skills/expertise of those commissioning the work also needs to be assessed with regard to their ability to develop the tender.
Based on the tenders reviewed social clauses are not being included in all procurement contracts in Northern Ireland. This therefore does not give VCS/SEs the opportunity to demonstrate the full value they can potentially provide.
Tenders being developed for the VCS/SE should recognise the wider economic / social benefits they bring and these should be evaluated as part of the tender assessment process.
It is important that those in the VCS/SE sector are aware of opportunities well in advance to make it easier for them to respond to tenders. However it is also important that they are fully engaged with on larger or more complicated procurements. While there is evidence that this is carried out for some contracts (for example those with DEL / PHA) it is not happening for all.
Pre tender consultation needs to be a two way process, where not only can the sector learn about the public sector’s needs, but vice versa and that the tendering process takes the learnings from these into account.
A number of high profile cases have diminished the confidence of some in the VCS/SE sector in the public sector commissioning / procurement process in NI.
Learnings need to be taken from these and applied to future cases and work is needed to profile best practice cases. This is required to not only build confidence in the procurement system, but to educate others in intelligent commissioning/ procurement.