Priorities for the Public Sector

The introduction in April 2000 of the UK Office of Government Commerce (OGC) as part of the Treasury reflected a concern to achieve greater efficiency in public sector procurement and the delivery of large-scale projects and to secure best value for money through best practice techniques. One of OGC's main strategies is 'to achieve effective competition for government business by simplifying access to the government marketplace'. It provides a flow of procurement guidance and advice to government departments, agencies and local authorities, and has clear messages about the factors that authorities are required to take into account when awarding contracts. These messages are essential considerations for anyone hoping to win contracts in the public sector:

• The key priority for authorities is to identify the best value for money, not just the lowest price. The concept of value for money is defined by OGC in general terms as 'the optimum combination of whole life costs and quality to meet the user requirement'. With respect to services and consultancy, the definition can be rephrased as 'meeting the user's requirement with the best quality of service at the right price'. In long-term service contracts, authorities are encouraged to seek continuous improvement in value for money as part of the public sector best value regime, which came into operation at the same time as OGC.

• Like contract specifications, bids are expected to focus on outputs and outcomes - ie meeting required levels of quality and performance and delivering the benefits that the contract is intended to achieve.

• Authorities need to see realistic and convincing proposals for resourcing the contract, managing its delivery and developing a constructive team working relationship with client personnel.

• Bids should show an understanding of the client's business objectives and an awareness of the importance of risk management in contract performance.

• Depending on the nature and scale of the contract, public sector authorities may require service providers to work within the terms of the best value regime, which entails consulting service users, reviewing services against customer satisfaction surveys and undertaking programmes of continuous service improvement.

Suppliers should:

• be committed to continuous improvement;

• work closely with local authorities in managing longer-term contracts;

• share the benefits from improvements in efficiency and effectiveness over the life of a contract;

• be prepared to adopt an open-book approach in complex contracts;

• provide managers who are experienced or trained to understand the local authority environment;

• together with local authorities, protect the legitimate interests of staff during transfers and monitor the effects of TUPE (Transfer of Undertakings (Protection of Employment) Regulations) and the local government pension scheme regulations when re-tendering.

(from the Summary of Key Recommendations, Report of the Local Government Procurement Taskforce, June 2001 - the taskforce is an independent unit whose members are drawn from across the public and private sectors, set up in 2000 to review local government procurement in England)

Guidance from clients

The guidance that OGC offers public sector authorities can help contractors gain a deeper insight into the view clients take of procurement relationships and their perceptions of quality of service, value for money and public-private partnership. Most of the material produced by OGC is freely downloadable from its Web site (www.ogc.gov.uk), including Tendering for Government Contracts: A guide for small businesses, published by OGC together with the DTI's Small Business Service. This informative booklet contains a comprehensive reference list of government purchasing departments and contact details.

In June 2002, OGC and the Small Business Service jointly published a booklet called Smaller Supplier... Better Value? aimed at procurement professionals in the public sector and produced in the context of the government's 'Think Small First' initiative. The booklet is intended to raise awareness of the value for money and other advantages that small firms can offer and to explore the issues that can make it difficult for them to win public sector contracts. The EC defines small and medium-size enterprises as independent businesses with fewer than 250 employees, and either an annual turnover of less than about 25 million or a balance sheet total of less than about 17 million.

The older guidance notes produced by the Treasury's Central Unit on Procurement (CUP) are now being revised and brought up to date. Procurement Guidance No. 3 (Appointment of Consultants and Contractors) was issued in April 2002 (Version 2), superseding earlier CUP material, and is essential reading. Contractors will find it useful to acquaint themselves also with the principles behind the Gateway process, which reviews central government procurement projects at critical points in their development and delivery, OGC's Successful Delivery Toolkit and the PRINCE2 project management method. In addition to material produced by central government, individual authorities may produce guidance to inform prospective bidders about their procurement policies and contracting procedures.