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The challenge of pre-market engagement in procurement

Perhaps the most challenging part of any procurement process is pre-market engagement.

This is the period before you invite submissions from suppliers and it gives you a valuable opportunity to:

• Identify your outline requirements clearly
• Involve partners, staff and potential suppliers early
• Refine your business case and budget
• Select your procurement route

Pre-market engagement is becoming increasingly important to public sector procurement as government demands budgets deliver better for less. This is leading to a major change in procurement culture in many Whitehall departments, local authorities and other bodies.

To give one example, the Department for International Development’s (DFID) commercial advisor in Afghanistan, John Belza, told a conference in July 2014 how his department is pushing its procurement teams to communicate better with suppliers before it creates tenders. As a result, each business plan they create now has to include evidence that staff have talked to suppliers in detail.

As the Chartered Institute of Purchasing & Supply’s Supply Management website reported, Belza told the annual DFID conference:

“[We intend to give suppliers] a day of presentations so they can ask questions as a group to clarify part of the terms of reference so we get an understanding of exactly what we are trying to achieve out of this. It’s engagement all the time. It’s also enabling the suppliers to challenge us about aspects of what we’re putting forward, in the terms of reference.”

Belza believes that closer communication at the pre-market stage is key to changing the culture of both his department and of its suppliers. By involving suppliers in the process of developing a business case, it encourages them not to deliver contracts regardless of whether they think they will work. Instead it gives them a chance to shape procurement projects that are effective, achieve their aims and reflect well on the suppliers themselves.

While it’s clear that good pre-market engagement strengthens the procurement process, it is not always given the effort and resources it needs. In the Cabinet Office’s Procurement Policy Note – procurement supporting growth (Action note 04/12), it was noted that public sector organisations tended to rely on the competitive dialogue procedure to engage with suppliers, “instead of engaging in thorough pre-market engagement to understand the market and supplier offerings prior to going to market.”

So what are the challenges preventing the public sector from engaging meaningfully with suppliers at the pre-market stage? A post on the Public Sector Law Blog identifies a number of major factors.

1) Concern among purchasers about the extent that consultation is permitted under procurement rules
2) The sheer variety and extent of goods and services being procured, often by those with limited knowledge of each sector and no relationships with suppliers
3) A lack of resources that leads to panic buying without devoting time to pre-market engagement
4) Too little understanding off the pressures and drivers on the supplier market
5) Unnecessarily complex procurement procedures, combined with regulations that insist that most procurements must be completed within 120 days.

Solving these issues, therefore, requires cultural change – including clarity about what consultation is permissible, combined with simplified processes and better training for both staff and suppliers. It also requires organisations to find more flexible and efficient ways of communicating with suppliers, often within tight time frames. Many public sector organisations are making great advances in these areas, particularly by using technological procurement solutions that make it easier to build relationships with suppliers and get them involved throughout the pre-market engagement process.

In our next post, we’ll be taking a close look at one major method of meeting the challenges of pre-market engagement – collaborative procurement using the Cloud. To learn more now, download our free guide, Collaborative Procurement and the Art of the Possible.

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