Procurement can be difficult for smaller public sector bodies that may lack a wealth of buying expertise or resources.
Speaking at the YPO World of Procurement conference, Mike Fairbotham, associate director of procurement and logistics at Yorkshire Ambulance Service (YAS) shared his top tips for smaller buying organisations.
1. Stay legal
Many purchases made by smaller public sector bodies will be under the OJEU threshold, but that does not mean regulations don’t apply, said Fairbotham. It is also easy to confuse internal procurement rules, for example delegating levels of authority and signing off spend, with EU procurement regulations and UK procurement law.
One of the most common pitfalls, said Fairbotham, is artificial disaggregation, where a contract is broken up to pass it under OJEU threshold levels – for example breaking up a three-year contract into three one-year lumps. It’s quite common but utterly illegal.
“There’s some scary stuff that actually goes on here, the number of times I’ve been told by a supplier, ‘Just give me two purchase orders rather than one and that will be fine because that will put us under the threshold.’ A lot of the time it’s because they don’t think it’s illegal.”
2. Use your procurement tools
Buyers should get into the habit of sourcing three quotes for every RFQ, one of the simplest form of procurement, said Fairbotham. Other tools include frameworks, from which goods and services can be bought directly or they can form the basis of a miniature tender, and catalogues.
At YAS, Fairbotham said they use procurement cards as a “break glass in case of emergency” fallback. “If everything is going to hell in a handcart key people have these things and they can break it out and buy whatever they need to to get things back on track again.
“[But] use them in pockets, don’t give them out like sweeties else your maverick spend will go through the roof.”
3. Learn the difference between cost, price and value
“You should know the difference between cost, price and value, because your suppliers will,” said Fairbotham. He also warned buyers to expect to be sold to on an emotional level. “Ultimately its preparation, know your stuff,” he said.
Part of this means doing your market research, which can be as simple as an internet search. “Google is a wonderful tool,” said Fairbotham. “A stakeholder told me he was going to single source, he could only go to this one supplier for this piece of risk management software. The first thing I do is go onto Google and type ‘risk management software’ and get 50 hits.”
4. Think of total cost of ownership
Buyer should also think about the total cost of ownership for purchases, including any end-of-life costs. While he was working in defence procurement, Fairbotham said the disposal of assets was accounted for during the contracting phase.
“You do that with the knowledge that you’ll pay that cost, but at least it makes it transparent, it makes it part of the bid rather than everybody forgets about it and then in year nine out of 10 you have to find another £50,000 to get rid of this thing.”
5. Articulate your requirements
“I’ve been there when you open your tender packs and everyone's responses are completely different and none of them are what you asked for,” said Fairbotham. A very high number of clarification questions during the early tendering stages can serve as an early warning sign that you haven’t articulated what you wanted.
6. Build your relationships
The relationships you build will help you fix problems that may arise and increase your potential for more work and better deals in the future, said Fairbotham. “I think I always get a better deal from those people I have honest conversations with and get on better with.”
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