A route-to-market is a strategy that determines which distribution channels you use to deliver a product to your target customers.
Most programmes operate with an intelligent customer function on their side. Thus, they have a good awareness of the kind of work they need an external supplier to be doing.
Typically, the role of the Procurement function boils down to two things:
- Identifying the best commercial vehicle for delivering that piece of work.
- Executing the relevant procurement process.
To get the best procurement outcomes, we think government procurement should be approached in the following order of steps…
1) Are there existing supply arrangements in place?
Firstly, the procurement professional must identify whether the work that needs doing is new work or a continuation of existing work. If the former, you can skip this step and move to step 2. If the latter, there may be offboarding / exit costs associated with leaving that supplier. In addition, there may be transition costs, i.e. the period of overlap between outgoing and incoming supplier.
A non-solicitation clause that flows down to the subcontractors and employees of your supplier may also form an obstruction in leaving a current contract. This clause prevents the client from engaging with an employee of the supplier for a set time (usually 6-12 months) following the date of which the agreement is terminated or expires.
This high cost of change can be a large barrier in leaving a current contract. As a result, many contracts are often extended beyond the initial term. However, if these costs are significant it is worth evaluating whether a fresh procurement is likely to improve costs.
The Government is legally obliged to ensure fair competition amongst the supply market for the services it needs. Thus, fresh procurements and short-term contracts are more common. This puts each supplier on an equal footing and prevents monopolies from forming.
2) Find an appropriate CCS framework
If existing arrangements can’t be extended for legal or operational reasons, available frameworks can be searched on CCS frameworks – the biggest public procurement organisation in the UK. Frameworks support simpler and more commodity-based transactions. They make the procurement process easy as they allow an organisation to cut out much of the costs and leg-work associated with procurement.
Nevertheless, there are limitations to frameworks. For example, frameworks only have a fixed number of suppliers. Let’s use Technology Services 2 as an example. This framework allows buyers to procure ICT services from strategy and service design through transition to operational deployment.
There are 147 suppliers listed for this service. If a supplier hadn’t opted-in before the September 2017 start date, then they would be permanently locked out of Technology Services 2. Furthermore, the Framework award for Technology Services 3 isn’t until April 2021. Therefore, if a supplier missed the deadline in 2017 it would be a four-year wait before they could opt-in to the updated framework.
When identifying if a particular framework is suitable for your needs, it is therefore always wise to look at the supplier list. This is so you can assess if the set of suppliers do the work you are looking to award.
What’s the alternative?
The Dynamic Purchasing System (DPS) is an alternative framework that is available for contracts for works, services and goods commonly available on the market. It is similar to an electronic framework agreement, but new suppliers can join at any time. This means that suppliers are not locked out for the duration as they are with traditional frameworks. Furthermore, there are no restrictions on the number of suppliers that can join a DPS.
3) Consider an OJEU procurement process
OJEU (Official Journal of the European Union) is the publication in which all tenders from the public sector which are valued above a certain financial threshold, must be published. When a contract is over this financial threshold, currently €135,000, European law must be followed. Thus, strict timescales and other rules become a mandatory part of the process.
OJEU is typically used to procure larger and sometimes more complex business collaborations. It is a highly complex and drawn out process that can take up to 6-9 months to complete. As a result, the Government will usually try and avoid this process. Using a framework is the preferred method as it is easier and quicker. Thus, in reality, OJEU is only really used on serious awards above £50 million spend.
There is a lot to consider when selecting a route-to-market. We have described the steps that a procurement professional can go through to assist their programme stakeholders. Check out our G-Cloud offerings here and follow us on LinkedIn and Twitter to keep updated on future announcements.