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FEATURE1 April 2011

A new deal?

New government procurement rules are designed to open up public sector work to smaller suppliers. Christian Doherty takes a look at how they will affect research agencies.

If the British government is to have a chance of being vindicated in its spending cuts, it has to create the conditions for the private sector growth that it hopes will fuel the economy. Particular emphasis has been placed on improving the lot of smaller businesses, which contribute half of the country’s GDP – with measures included in this year’s budget to lower corporation tax and business rates, and cut red tape.

For research agencies one of the more eye-catching moves has been the announcement by the Cabinet Office of new rules for government procurement, to widen access to public sector work. The changes have been trumpeted as a way of opening up billions of pounds of government work to small firms and independent providers.

It’s about time too, as far as many in the world of research are concerned. When Research touched on the issue of procurement before last year’s election, we had a flood of responses from frustrated researchers tired of the hoops they had to jump through just to be considered for public sector work.

“Research companies worry that procurement is going to be done by somebody who knows nothing about market research”

Alison Drury

Top of the list is the removal of pre-qualification questionnaires ( PQQs ) for public sector contracts under £100,000. Along with that there is a commitment to allow firms to submit their pre-qualification data just once for all procurements in common commodities, putting an end to the rigmarole of having to provide the same data time and time again. The government also announced the launch of its Contracts Finder website, which will publish procurement and contracting information in one place.

But while the changes are designed to remove barriers to smaller suppliers, there are fears that they will do little to help providers of value-added services like research if the procurement process doesn’t learn to take into account the nuances of such activities.

Points of view
The Office of Government Commerce told Research it was too early to comment on the detail of the new system, but researchers have shown no such reticence.

“The issue the research companies need reassurance on is the worry that procurement is going to be done by somebody who knows nothing about market research,” says independent researcher Alison Drury, who has had distinctly mixed experiences of tendering for public sector contracts.

“In my experience, often the types of questions that you’re asked are unrelated to research, and the scoring of those questions outweighs any possible scoring you’re going to get for demonstrating that you are an expert researcher. We’re talking about things to do with financial viability, due diligence, health and safety, equal opportunities.”

“Scoring systems are not necessarily as clear and transparent as people think they are”

Kate Thompson

And while the removal of PQQs aims to reduce box-ticking and encourage small firms, some researchers fear that it could have the opposite effect. Kate Thompson of McCallum Layton sees two flaws with the approach. “One is that any government body is going to need to know that they’re dealing with appropriate suppliers and contractors, which means they are going to have to check, whether we like it or not, that we have the appropriate health and safety policies, data security, all of these sorts of things that we might consider as hygiene factors,” Thompson said.

Her second criticism is that opening the field up to a greater number of competitors will paradoxically reduce the chances of SMEs tendering successfully.

“Ultimately, the benefit of a PQQ stage is that the buyer can whittle down to maybe half a dozen appropriate potential suppliers [before inviting full bids]. If you’re one of half a dozen, you feel that you could be a potential winner on the project, and as a result you’re more inclined to do it than if you think you will be up against 200 agencies going for each of these projects.”

But many researchers are convinced that doing away with PQQs is the right move. “It’s a big step forward, although it’s a pity that it’s only central government that proposes to do this,” says independent researcher Gill Wales. “It looks like local government intend to carry on using it.”

In Wales’s view anything that reduces red tape will benefit smaller businesses who are stretched for time and already struggling to meet the requirements of bidding for public sector work.

“The rules are there to encourage people to participate. You may not think so because of the red tape, but that’s what they’re there for”

Richard Gibson

Spending taxpayers’ money
However, the very nature of public sector procurement means that the process will require greater levels of control and assurance than those found in the private sector. This is taxpayers’ money, after all. Richard Gibson is an account director at BuyingTeam, an independent procurement consultancy that works with both buyers within and suppliers to the public sector. “The reason those rules are there is to encourage people to participate. You may not think so because of the red tape, but that’s what they’re there for,” he says.

“They also exist to create a fair and transparent and open marketplace so that if somebody challenges a process, the awarding authority can go back through it and prove that they’d been fair and transparent all the way through.

“And the thinking goes that if you remove certain features of that process, you could argue you’re actually making it less fair by making it more open to transgression by the contracting authority and accusations that business has been awarded where it shouldn’t be awarded.”

For Kate Thompson the issue extends beyond access and paperwork. Her apprehensions go right to the heart of selling research services to the government. “My particular concerns are over scoring systems – that they’re not necessarily as clear and transparent as people think they are,” she says. “People will design these scoring spreadsheets and think that they’re terribly objective because they’re done in a spreadsheet and they’re done on marks out of ten for this, that and the other.”

“The key thing is to get the research objectives nailed down at the start. Sometimes things do go out that aren’t clear about what the organisation is trying to do”

Mike Walker

Thompson, in common with many researchers, has doubts about the way tenders are scored in the public arena. “I’ve seen a number of these things where it’s not as clear and transparent as perhaps it might be what the research buyer needs to get out of the process, and the way that the scoring system is set up is not necessarily going to generate a result that will point to the best supplier for that project.”

Mike Walker is vice chair of Laria, the Local Authorities Research and Intelligence Association. His organisation aims to improve communication and understanding between the two sides – part of which means improving how public sector procurement officers write briefing documents.

“The key thing is getting the research objectives nailed down at the start,” he says. “Because it is true that sometimes things do go out that aren’t clear about what the organisation is trying to do with research. We hold training events for those commissioning research to help them understand how to construct a brief, the ethical guidelines and so on.”

Building relationships
Indeed local government may offer a useful example of how to improve the system. “On the whole there tends to be far more of a relationship between people who understand buying research at a local level and those who want to commission it,” Walker explains. “The people who want the research commissioned will usually work with the procurer to work up an appropriate brief in order to get the job done.”

Alison Drury believes that while a perfect system may not be possible, building links between buyers and suppliers is the next best thing. “Some local authorities have ‘meet the buyer’ events, and very occasionally they think to include research in that. We welcome that because it means you can actually go and meet the person that you might in the future be doing business with and have a conversation with them, at a time when there isn’t a tender on the table and nobody can accuse you of speaking to somebody you shouldn’t be.”

But when it comes to spending taxpayers’ money, rules are rules, and best practice dictates that the person requesting the service and the person doing the actual buying must be two different people, at least for projects above a certain threshold.

And there’s no getting away from the fact that the government – rightly or wrongly – is looking at everything through the prism of cost reduction. Having worked with the new regime for nearly a year, BuyingTeam’s Gibson points out that despite the stated intentions of these reforms there remains a contradiction at the heart of government policy.
When the coalition came in, it set about reorganising procurement by taking advantage of volume to drive better deals – aggregating contracts into larger bundles and driving down prices through volume discounts. “The obvious conflict with that is that there aren’t many SMEs that are able to fulfil more aggregated and bigger government business,” says Gibson. “So in the last three months ministers seem to be thinking, ‘Hey, I’ve got a lot of constituents who work in SMEs and I need to make sure that I’m protecting them.’”

The Cabinet Office has said the changes are only the first step. Whether it can succeed in helping SMEs win smaller jobs at the same time as achieving economies of scale from the big boys remains to be seen.