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Francis Maude's statement that he is scrapping onerous Pre Qualification Questionnaires (PQQs) to help support and encourage SMEs to win public sector contracts is welcome news and I think he's onto something. He has announced a number of measures including no central Government procurements PQQS for contracts under the value of £10,000 as well as the creation of SME product surgeries, which will help integrate more SMEs into the process.

Bias should not be part of any tendering process and especially where public funds are involved. The problem is not so much that many tenders are biased to big companies; more that they are biased against small companies. Mostly we tend to think that the prime issue is the workload to respond is too high (or takes too long as Mr Maude points out). For example, we looked at a tender last year that asked us to price over 30,000 products and included items they hadn't bought for five years.

But I think it runs a bit deeper. The issue is not so much that OJEU creates the issue and that it is the European Union's fault, but rather it is the interpretation and application of the regulations by the buyers which creates the problems. This relates not only to the complexity and size of the tender but to the increase in the risk of challenge when the process is poorly thought through and the tender documentation is poorly constructed.

Let's go back to Francis Maude's point about PQQs. What is the point of a PQQ? It should be about filtering out suppliers who are not going to meet your needs and including those that can. It is all about capability. The trouble is that this invariably gets translated into ‘show us your policies for training, CSR, diversity, Health and Safety, accounts for the past five years' and so on. Big companies have got loads of material on this so it's fairly straightforward. However, for a small innovative company - which might make an excellent supplier but who may be a new business - they don't have all these policies written up. Instead of the contracting authority excluding them for not having this stuff, why don't they work with them to put it in place, assuming they have the capability to deliver what's needed?

Most PQQs are backward looking. They want to know how long you have been trading, how many employees you have, how big your turnover is. They are biased toward size - but does this have anything to do with the service they are contracting for? From my experience - often no.

It might seem incongruous, but the Government's desire to improve access to SMEs is fully supported by DHL, one of the world's largest private sector companies, with over half a million employees. Why is this?

Our experience in operating NHS Supply Chain for the past four years has been telling as we've integrated the old PASA and NHS Logistics functions to create a commercial, customer focused organisation. We've found that in order to create access for small innovative businesses we've had to make life simple for them and for us. We've used ‘pilots' as a way of getting their inventions into the NHS without needing to implement OJEU until we've seen if customers are going to use them. We have also been ruthless in thinking about the questions we ask in our PQQs and tenders. What are we going to do with the answer to this question, we say? Can we evaluate a supplier's response? If we don't know, then we don't ask.

As a bidder for public sector contracts, I am now seeing a huge difference in quality between the tenders that public bodies run. We're currently working on a PQQ which runs to 68 pages and to which we will append 22 further documents to explain all our policies and procedures. It has even got seven further pages explaining the scoring method. It is a big job for an organization of our size - for an SME it must be a non-starter.

So, we should absolutely remove bias from the tendering process, but it is not OJEU and the Public Contract regulations that cause the problem. It seems to me that the problem lies mostly with buyers asking questions that have no relevance to the eventual performance of the contract - that they can't assess properly and which place erroneous weight on scale or track record, and ultimately impede the progress of SMEs in the bid process.

The PQQ is a useful step in the process to find capable suppliers and we don't want to end up trading more SMEs for poorer performance or value. We also don't want new companies or small companies deterred for bidding for any sized Government contracts, so by all means Mr Maude, scrap the PQQ for small purchases but we also need to overhaul the bigger ones. More guidance and training should also be provided to buyers right across the public sector so that they issue tenders which are fit for purpose.



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Written by Roger West   
Monday, 14 February 2011 00:00
Last Updated on Sunday, 03 April 2011 18:40
 

Comments  

 
0 #4 Neil Shine, Director
Chelwest NHS
As Peter Hunt says, a good article indeed, and one that has finally attempted to tackle what should be a pressing issue in Public Sector procurement practices; however I don't think the suggestions go far enough, from either the writer or Francis Maude.
As someone who started out pursuing a career in law and has entered the world of procurement following a career change, I feel especially able to deal with the 'quality' and policy requirements stipulated in most PQQs; however, someone with my background is hardly typical within most SMEs. Furthermore, the 68 page PQQ which requires dozens of further attachments, to which the writer alludes, has in my experience over the last couple of years become the norm rather than the exception. I can say with confidence that that very few, if any, of my colleagues would be capable of producing a response that would meet the requirements of most PQQs today, and I suspect this would be the case for most SMEs.
The role of education in procurement needs to be a two-way street. Public Sector buyers certainly appear to require educating in how to produce a PQQ that achieves their evaluation aims without excluding a vast number of potentially excellent suppliers; similarly, the competence of SMEs in responding to PQQs also needs to greatly improve. How this education is to be provided, however, presents a challenging question. When many SMEs are already finding their turnover is decreasing due to decreased Public Sector spending, and profit margins are being tightened in an attempt to win those few opportunities that do become available, how many SMEs are able to afford extending their training budget, which is probably already being spent on industry specific accredited training, on tendering training? Again, I would suggest that the costs would be prohibitive for the majority.
I have attended a number of ‘meet the buyer’ events within the London Borough I work in that I felt were instructive. Costing nothing more than a few hours out of my day, I was certainly able to improve my company’s procurement processes on the basis of information I picked up on these events. I would also suggest that better access to fundamental IT training for SMEs would go a long way to addressing many of the issues thrown up by responding to a PQQ. What is certain is that nothing will be achieved without some constructive dialogue between public sector procurement specialists, and representatives of private sector industries.
I have recently responded to a couple of particularly onerous PQQs, which required responses amounting to well in excess of 100 pages (in hard copy, the files that were sent were well over an inch thick). In following up the progress of these responses, I learn that the buying organisation has in both cases outsourced the evaluation of the responses due to the volume of responses received and hours of work required in evaluating them. While that may sound encouraging from the point of view that companies are still willing to tackle these PQQs, does this sort of practice really achieve the governments aims of improving the efficiency and cost effectiveness of public sector procurement? I would suggest not.
 
 
0 #3 S K SONI,
At long last someone has woken up to note that there are SME in this country. I have been completing PQQ for the last four years and find it frustrating when respond is that you do not explain properly or you have not got the number of employees. Tell me how do you show employees if you have not got the contract. It is all done as "jobs worth" exercise.
I congrulate Francis Maud who is brave to stand up to these bureaucratic policies.
 
 
0 #2 Peter Hunt,
Good article and well argued, albeit I think the solution is a little idealistic. Being a provider of procurement training & development I'd be the first to endorse education as a solution... however, I'm more inclined to think that if PQQ's are a valid step (which I agree they are), then lets go the guideance & template route rather than training to improving them - limit the PQQ to securing answers to the critical question set out above, namely, 'what questions do I need answered in order to identify the suppliers with the capability to meet my needs'?. The evidence & policies (if required) can then be signposted in the PQQ but submitted at the ITT stage.
 
 
0 #1 David Boulding,
We have been writing high-end mission critical software used worldwide (used by Network Rail, London Underground, BAA etc) so we know what we are doing. We sell through a third party who makes all the profit (out of us). We'd like to work for the Govt. direct but the PQQ is far too complicated and time consuming for us to bother applying. We're too small to have the resources to have time to do all the paperwork. If it could be made simpler so we could tender directly it would be wonderful.
 
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