The EU has had a fairly significant impact on public procurement in the UK, both in terms of regulation and practice. In this blog, we look at what procurement post-Brexit might mean and what procurement professionals should be doing in response to the vote.
Goodbye to OJEU?
For the last 40 years, EU legislation has had an increasing impact on procurement. Not just on legislation and procedure but also on synchronisation of products and their specifications. Perhaps the most visible representation of the EU’s impact on procurement has been the OJEU process for the procurement of works worth in excess of circa €100,000. Some have criticised OJEU as overly bureaucratic and time-consuming. The contrary view is that it enables competition to flourish EU-wide, extending the market for tenders to potential bidders dramatically and advertising opportunities publicly.
Plus ca change…
OJEU has certainly informed UK public procurement regulations and the current legislation is directly derived from EU policy. The regulations don’t suit every industry or every type of procurement, of course, and it’s hard to know exactly how much cross-border procurement has been generated. However, post-Brexit, many British firms will still want to bid for work on the European mainland and there will still need to be some kind of public-facing means of advertising tenders. This is essential for maintaining fair, transparent and efficient public procurement.
A desire to maintain opportunities?
OJEU and EU policy has been to remove barriers to entry for potential suppliers and vendors. It’s certainly helped smaller businesses access more opportunities and, despite accusations of process paralysis elsewhere, there has been a boost to competition and agility.
We think that it’s unlikely that a whole new version of the UK’s procurement regulations would be created from scratch. Whatever emerges, it’s likely that it will be largely the same in nature, though perhaps somewhat cut-down or adapted, for particular industries or requirements for example. One consistent criticism from those looking at sophisticated, service-based procurements is that the ‘box-ticking mentality’ doesn’t lend itself to complex requirements or innovative solutions.
Procurement post-Brexit needs flexibility
What that means for procurement managers, is a need to maintain their flexibility. They should look for eProcurement, eTendering and/or eBidding platforms that give them the flexibility to add or adapt procurement models, not just give them OJEU templates out of the box. Additionally, there is a good chance that UK procurement will also look further afield than the EU to establishing new procurement guidelines for global trade or with specific partners. This will also increase the potential for additional procurement process models and requirements.
Having the right tools to face uncertainty
We suggest that, apart from the constant need to maximise efficiency, change is the only thing that organisations can be certain of. Procurement professionals, especially in the public sector, need to keep their options open. Flexibility is crucial.
Flexibility will ensure you’re in a position to respond to the structural changes that Brexit might bring to your market(s). It will also help you continue to develop your activity to maximise the benefits of eProcurement, eTendering and eBidding for your organisation.
Process flexibility: When selecting an eProcurement platform, buyers often look for the system that meets their exact needs and penalise systems that offer them building blocks rather than fixed processes. In a world where the procedures followed are limited to OJEU, that’s fine. However, if you’re unsure what procurement processes and models you’ll need – or want – to follow in the future, you need a system that can adapt existing processes as well as being capable of adding completely new ones.
Technology flexibility: There is a significant chance that Brexit will create a need to work with a wider range of cross-border partners. In order to be positioned to respond to this, you are likely to need to increase the range and partners interacting with your procurement processes. In order to support that, you need to offer flexibility in terms of usability, browser support and integration – you can’t afford to be limited by a platform that only supports specific browsers, requires specialist training to use or that cannot integrate with external data sources.
Engagement flexibility: Procurement systems need to support wider engagement in guided procurement processes. It’s neither efficient, nor practical in most situations, for all purchasing activity to be funneled through the procurement department. Procurement teams should be looking to set-up guided purchasing where they set up the parameters (within the procurement platform) and staff across the organisation can choose what and when to purchase. In healthcare, for example, this means enabling frontline staff to select the specific products they need from e-Catalogues.
Contract terms and management: Another area to consider is the trend for shorter contract terms. On the face of it this might seem like a good idea – increasing the frequency of re-tendering and making suppliers less comfortable. However, in practice, it makes for less strategic relationships and encourages suppliers to front-load contracts and deliver the bare minimum in order to achieve their margin. Longer contract terms with proper measurement, monitoring and break clauses for poor performance, allow for a more win-win approach.
Automation and efficiency: Brexit represents a potentially seismic change to many aspects of business and commerce in the United Kingdom. It could be seen as an opportunity to push through changes to the norms of procurement. Perhaps Brexit is a chance to encourage – or even mandate – the adoption of better techniques, technology and approaches: automation, anti-corruption, frameworks and engagement models, data-centric processes, use of PKI and more. Automation, for example, represents a massive opportunity for increasing throughput and efficiency. Procurement Leaders research found that – aside from purchase order management – no area of the process was more than 50% automated.
If you want to see a system that can give you more flexibility and support a step-change in process efficiency, contact Nextenders to arrange a demo.