Case Study: Overhauling the Government’s competitive dialogue procurement process to slash timeframes and cut costs

The challenge

The Government’s procurement process for competitive dialogue is used in the award of large complex contracts, where there is a need for detailed formal discussions of all aspects of the required specifications with potential suppliers.

The process was recognised as overly bureaucratic, wasteful and time consuming for all parties. As John Collington, Head of Procurement for the Efficiency and Reform Group recently stated the process is ‘too long, too complicated and too costly’.

As a result, the Cabinet Office’s Efficiency and Reform Group (ERG) challenged Unipart Expert Practices to work in partnership with HM Revenue & Customs (HMRC) PaceSetter* team, and the UK’s technology trade association ‘techUK’ (formerly ‘Intellect’), to establish opportunities for improvement within Central Government procurement. To add to this already testing brief, a timeframe of only six-weeks was stipulated for shaping a new approach to competitive dialogue procurement through the introduction of Lean principles.

With a tidal-wave of long-term contracts set for renewal in 2011, the benefit of reduced dialogue timeframes and outcome-focused processes were seen as critical to help facilitate significant cost reductions and improved efficiencies for Government and its suppliers.

How we helped

With only six weeks to deliver results, it was critical to mobilise an effective and high performing team from the outset. A project charter, agreed by key stakeholders, provided the required clarity, focus and behavioural transparency.

Effective engagement with numerous internal and external stakeholders was key to the team’s approach and prevalent throughout the project. The introduction of Lean principles facilitated analysis of current procedures, and subsequent devising of effective recommendations to refine and standardise processes.

Understanding Internal Processes and Needs

The team needed to create a high-level picture of the existing procurement process and so undertook a SIPOC workshop in two Government departments (The Foreign & Commonwealth Office and the Department for Work & Pensions) to examine the Suppliers, Inputs, Process, Outputs and Customer. At the same time the team completed a Voice of the Customer exercise, which provided a more detailed understanding of the needs of internal stakeholders.

From the high-level SIPOCs, three Value Stream Maps were created – the first based on generic Office of Government Commerce (OGC) guidelines, the second from FCO and the third from DWP. These maps would compare theory with real-life. By highlighting exactly where value is added, in the eyes of the customer, the team established areas of opportunity to eliminate waste and reduce variation.

The voice of the supplier

A significant part of the team’s work was to understand the suppliers’ perspective. As anyone who has ever tendered for a ‘competitive dialogue’ contract will know, the process is costly and time consuming for prospective suppliers as well as the government. A representative group of major suppliers estimated that the average cost of tendering for a competitive dialogue procurement was £15,000 – and most suppliers would be unsuccessful.

Opportunities and Recommendations for Improvement

By analysing the procurement process and engaging with internal and external stakeholders, the team discovered dozens of opportunities for improvement. Working in partnership with ERG, the team categorised each opportunity into one of five identified core themes. The team then analysed each opportunity group in a structured way, logically reviewing the data, to move from ideas and beliefs, to facts. Evidenced-based decisions could then be made with a high degree of confidence.

The five key areas of opportunity were:

Process Selection

It was found that in many cases a competitive dialogue procurement was not needed under OJEU rules and that a different lower procurement route could have been employed. The implementation of a robust method of identifying the suitable procurement route for all procurement activity, based upon Lean principles, will prevent misuse of the competitive dialogue procedure.

Capability

The introduction of “Licensed” Procurement Practitioners will provide support to departments at times of high demand and ensure a more consistent approach, and supplier experience, is delivered across government.

Process Design and Management

The introduction of Visual Management to proactively manage procurement projects will eliminate stagnation points in the process and ensure suppliers and procurement departments have clarity on timescales and deliverables for each phase.

Pre-OJEU stage

The application of Lean principles will ensure that the right resources are available in the right place at the right time and that sufficient market analysis has been undertaken to allow the rest of the process to be as effective as possible.

Bureaucracy

A cautious, risk-averse approach would be replaced by more proactive risk-management practices in order to eliminate unnecessary (and non-value adding) documentation, approval, and governance processes.

Benefits

Effective engagement and the application of Lean principles to the problem made the process demonstrably better, faster and cheaper: 

  • The ability to reduce timescales by 70% was demonstrated 
  • Annual savings in Government spending on the competitive dialogue process alone is predicted at £12m 
  • Suppliers’ costs will be reduced by £53m, with an aggregate saving of £67million per annum. 

To achieve these levels, radical change in the way procurement is undertaken is necessary. Alongside the application of Lean principles and visual management to support the five core themes, a further recommendation was made for the creation of an intense and focused environment where stakeholders come together in the right place and at the right time and have clear direction on the desired outcomes. 

Working together, Unipart Expert Practices, HMRC and Intellect have demonstrated the benefits of bringing an industrial partner’s knowledge and Government experience of operating together to work in partnership