4.3 New public management critiques of socio-economic procurement
4.3.1 Identifying decision-points in the procurement cycle
Those not inculcated into the procurement profession often use a number of different terms interchangeably to describe the broad spectrum of activity involved. The most common of these are commissioning, procurement and purchasing. Up until this point, I have used procurement as a blanket term encompassing all of these activities. However, within the procurement profession these different terms have specific meanings and so some clarity is important for positioning the discussion within this policymaking domain.
Aggregating the different components of the procurement process also obscures where decision-making points lie, and therefore the ability to identify what assumptions are influencing the choices being made. Becoming specific about all the steps where different decisions could be made and/or decisions could be made differently is central to opening up thinking about possible alternative approaches, and therefore to this thesis. A useful starting point for this exercise is the procurement cycle, as procurement processes are generally organised at the broad level using this overarching tool. A generic procurement cycle diagram is shown in Figure 4 (Source: NSW Government n.d. a).
Figure 4: A typical procurement cycle
Most public sector agencies and entities would make some adaptations to this according to their specific circumstances, but with minimal impact on the overall steps in the process. In practice, there is also some overlap between stages and activities - but for the purposes of advancing the discussion, the classification here is sufficient. The cycle is divided into three broad stages that cover the spectrum of activity involved in buying goods, services or works. The stages and activities are: planning – analyse business needs, analyse and engage the market, finalise the strategy; sourcing – approach the market, select suppliers, negotiate and award the contract; and managing – implementation, contract management, renewal.
Commissioning is another name for the planning phase of the cycle and as
such the concerns at this stage are primarily with big picture, strategic issues – such as needs identification, specifying relevant policy objectives, and developing
an integrated and nuanced best-value proposition for the activity. However, the reality is that procurement teams are often under-resourced and as a result the commissioning phase is rarely utilised to its full potential (Ready for Business interview). Starting too late in the overall process is a common issue, and this limits the ability to properly work through options for what is actually needed (e.g. is it more street cleaning machines, or a new type of paint that gum doesn’t stick to). In some cases, the needs analysis may simply be copied across from the previous contract with no updating or further input. Lack of consultation, internally and externally, around what may be possible in relation to socio- economic objectives for a particular activity is also common. To minimise any potential influence of process or outcome, contact with prospective suppliers is restricted at this stage – as this is equated with achieving neutrality. Initial research into supplier capabilities is often undertaken via desktop research or – as Citymart identified through its market research (see Chapter 6) by relying on existing knowledge and networks. These factors lead to the inclusion of narrowly specified goods, services or works in contracts that leave little room for variation or innovation.
What is usually referred to as procurement is undertaken during the sourcing
phase. The focus at this stage is on detailed market research into available
solutions and supplier capabilities, designing the specific tender and contract conditions, and negotiating the award of the contract. The impacts on socio- economic procurement are perhaps most obvious at this stage as a suite of NPM- tools are often relied on to deliver transparency and neutrality. It is usual for a procurement department or team to have a series of generic templates that are used as a starting point for developing the Request for Tender and the Tender Evaluation processes that are core to this stage. Examples of how these issues translate into practice include: designing contract deliverables around specified outputs, rather than outcome statements; the close specification of award criteria, and use of pro-forma Schedules to capture responses to Requests for Tender; a narrowly defined value proposition, with price weighted heavily as a key determinant; the inclusion of generic supplier qualification requirements, not
tailored to the specific contract; and the inclusion of standard risk management clauses, which can be overly onerous for the purpose. Limited contact with prospective suppliers is allowed at this stage, but must usually be confined to responding to specific queries related to the tender content or process. Any responses given are then made public, to ensure transparency and that no advantage is gained.
Purchasing is generally equated to the managing phase and as such is highly
technical in focus. At this stage the concern is with upholding the contract award conditions, ensuring the outputs and outcomes purchased are realised, and providing input to the next cycle based on experience gained with the current contract. Regular contract management reviews are the main tool used during this phase. But the reality is that even when reviews are managed as more than simple ‘tick-box’ processes, the focus is often on micro-managing input costs and low-level outputs – with little attention being given to the bigger picture, including performance around horizontal policy objectives. Monitoring delivery against socio-economic objectives is notoriously difficult and procurement staff are often unequipped to make judgements as to performance in these areas (Burkett & McNeill, 2017). Capturing input to be used in the planning phase of the next contract is also often limited, and useful knowledge can be lost when key team members leave or move to other roles.
As this discussion outlines, NPM-style procurement policies, systems and tools can limit thinking about where and how socio-economic procurement strategies could be used. However, shifts occurring in the public sector offer openings for considering how the challenges for socio-economic procurement could be re- positioned within broader policy frameworks. More holistic notions of what constitutes best-value, for example, and also the emerging NPG frameworks open up opportunities to integrate socio-economic procurement strategies into social innovation assemblages and to harness their potential for addressing complex public issues.