Whilst 2017 has seen some changes in what is important to buyers, 2018 looks like a period of greater flux. Successful bidders will have to navigate their way through some big issues, some or all of which will impact their bidding activity and success rates. Here’s Managing Director Andrew Morrison’s predictions on trends for next year:
1. Brexit – the ongoing uncertainty may lead to shorter contracts being tendered. Also, for those bidders who currently have a high proportion of EU national labour and/or are heavily affected by exchange rate fluctuations affecting their costs, there will be a need to articulate how they will cope in uncertain times. Brexit will also mean a return of powers to the UK. Depending on the length of the ‘transition period’, we may see tenders for new public sector work coming onto the market.
2. Grenfell – one of the legacies of the June 2017 disaster is likely to be a changed emphasis within tender evaluation, especially where risk and health & safety are involved. Expect to see more prescriptive technical specifications, more active client supervision of contracts, greater involvement of residents in procurement processes and a higher quality/technical to price evaluation ratio. First report from the Grenfell Inquiry is due out around April.
3. General Data Protection Regulation (GDPR) – comes into force on 25th May 2018. Buyers will want to ensure that their suppliers are fully compliant with the Regulation. The Regulation is very extensive in its scope and there are hefty penalties for breaches. Leaving compliance to the last minute is not a sensible option.
4. Efficiencies Guarantees – At one time it was enough for bidders to explain what efficiencies they hoped they would achieve. Now, sophisticated buyers are asking bidders to put their money where their mouth is by guaranteeing the efficiency savings with paybacks where these are not achieved.
5. Co-production – As public sector budgets come under more pressure, co-production between buyers and bidders (including at times some element of service user representation) may gain more traction. Whilst some bidders think this is lip service to consultation, the opportunity for buyers and bidders to agree common outcomes and sense check solutions usually leads to better outcomes for all involved. Appreciate the jury is probably still out on this one.
6. Dynamic Purchasing Systems (DPS) – There are many cases where a DPS provides more choice and greater efficiencies than a ‘one-off’ tender exercise where a bidder is appointed to a long-term contract. As an example of the efficacy of a DPS, local authorities in London have a constant need for temporary accommodation. This is usually sourced from the private rented sector, often through a contract with a letting agent who establishes lease agreements with local landlords. Traditionally, an authority awarded a fixed term contract to one (or a few) service providers. However, many have now put a DPS in place – this allows multiple providers to join during e.g. the first 3 years of a 4 year contract. The local authority specifies the minimum technical / quality standards the letting agent and properties must meet. They often also state the price bands they will pay within. The beauty of the DPS is that bidders who meet these standards can join bringing competition and an increased pool of properties to help meet the local authority’s needs.
7. Added Value and Social Value – Added Value has to be evidenced and monetised – what is the actual monetary / time value of the Added Value? Social Value is looming large in all sectors – not just in the public sector where we have seen it for some years, it is now also appearing with increasing frequency in private sector Requests for Proposals. Merely regurgitating the CSR from your Annual Report will not be enough – what new Social Value / CSR will you introduce as a direct result of winning this contract?
8. Redundancy / Recruitment – There are dichotomies both within bidding and between bidding and procurement. Bid staff with rail sector experience will continue to be in high demand for large infrastructure projects such as HS2, the Edinburgh Trams Extension and the final stages of Crossrail. However, we are also seeing more and more organisations laying off in-house bid staff in favour of interim, freelance or outsourced bid resources. November seems to have become the new January for staff being made redundant – we have received a number of approaches in the last few weeks from bid staff laid off in November. Conversely, experienced procurement staff are in high demand, especially with Brexit looming. Many companies are looking to purchase from UK based companies in cases where they previously sourced goods and, sometimes, services from abroad. The weaker exchange rate and the trade tariff uncertainties will see more buying of UK based goods and services and this is driving some of the current demand for experienced procurement staff.