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Presentation, SIGMA Public Procurement Workshop, Dynamic Purchasing Systems, Turkey, 10 April 2018


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Presentation of the workshop on Public Procurement, Dynamic Purchasing Systems, held in Ankara on 10 April 2018. Presentation made by Mr. Paul Smith, SIGMA.

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Presentation, SIGMA Public Procurement Workshop, Dynamic Purchasing Systems, Turkey, 10 April 2018

  1. 1. © OECD Public Procurement Workshop Dynamic Purchasing Systems Paul Smith, YPO, UK Ankara. April 10th 2018
  2. 2. Agenda • Introduction to YPO • Overview of Dynamic Purchasing Systems • When to use a DPS • System Overview
  3. 3. Introduction to YPO
  4. 4. About YPO Established in 1974 Owned by 13 Local Authorities in North of England Wholesale and Framework Central Purchasing Body Wholesale Business is largest supplier to UK Education
  5. 5. About YPO £750m of spend (€850m / ₺4,200m) Funded through margin (wholesale) and rebate (frameworks)
  6. 6. Key Spend Categories • Energy • Vehicles • IT and Software • Temporary Labour • Food and Catering • Insurance • Business Travel • School supplies • Stationery • Cleaning products • Office and Classroom Furniture • Food • IT • Sports Equipment
  7. 7. YPO and Dynamic Purchasing Systems • Extensive DPS experience • First DPS under PCR2015 regulations in UK • Largest user of DPS by UK CPBs
  8. 8. YPO DPS Categories • Fixed Price Gas and Electricity • Low Carbon Heat and CHP • Low Carbon Electrical Micro-Generation • Aggregates, Asphalt, Ready-Mix Concrete and Topsoil • Courier Services • Solid Fuels • Low Energy Lighting Systems
  9. 9. YPO DPS Categories • Vehicle Telematics and Journey Recorders • Enforcement Agency Services • Road Marking and Surfacing • Early Years Furniture • Building in Use Support Services • Building Envelope • Ground Maintenance Services • Buildings Internal Fitout and Maintenance
  10. 10. Overview of Dynamic Purchasing Systems
  11. 11. DPS - Background A dynamic purchasing system (DPS) is a procurement procedure that a contracting authority (CA) may use to purchase certain goods, works or services. The procedure is set out in Article 34 of the Public Procurement Directive 2014 and is implemented by Regulation 34 of the Public Contracts Regulations (PCR) 2015.
  12. 12. DPS - Background A DPS is a completely electronic process comprises two distinct phases: • A request to participate phase (admission phase) where suppliers apply to be admitted to the DPS by submitting a response to the specified "selection criteria/SQ"; and • A tender phase where the Contracting Authority invites suppliers on the DPS to submit tenders for a specific contract. It is essentially set up using the “restricted” procedure. Contracting Authorities choosing to conduct a DPS procedure has increased following the simplification of the process with the PCR 2015.
  13. 13. 2006 vs 2015 Regulations • When the regulations were amended from the 2006 version to the 2015 version the rules around a DPS were updated and simplified; 12 16/04/2018 2006 Regulations 2015 Regulations Open Procedure Modified Restricted Procedure Maximum duration – 4 years No maximum duration Simplified OJEU notice to advertise a new opportunity No Simplified OJEU notice required
  14. 14. General features of a DPS • Contracting authorities may use a DPS for commonly used purchases the characteristics of which, as generally available on the market, meet their requirements. • The DPS shall be operated as a completely electronic process, and shall be open throughout the period of validity of the purchasing system to any economic operator that satisfies the selection criteria
  15. 15. General features of a DPS • The DPS may be divided into categories of products, works or services (similar to “lots”) • In order to procure under a dynamic purchasing system, contracting authorities shall follow the rules of the restricted procedure. • All the candidates satisfying the selection criteria shall be admitted to the system, and the number of candidates to be admitted to the system shall not be limited
  16. 16. DPS vs Framework agreements - The Differences • Unlike framework agreements, there can be no limit on the number of suppliers admitted to the DPS: all suppliers who meet the stated criteria must be admitted and be invited to tender. • Unlike framework agreements, a DPS is an "open system": suppliers can apply for admission to the DPS at any time during the validity of the system and the contracting authority must evaluate the application against the same criteria as established. This means a supplier that is initially unsuccessful can re-apply if it later meets the criteria. • There is no time restriction on the length of a DPS unlike a framework
  17. 17. Benefits of a DPS • A DPS supports small businesses to compete for work. Suppliers may join it at any time during its period of validity. This allows smaller organisations to compete where they may not otherwise have sufficient resource to submit a full tender within a deadline. • It offers a buying organisation maximum flexibility to pursue competitive tendering exercises - ensuring bidders are not disqualified from competing on mere technicalities leading to disqualification. • DPS can run for as long as the contracting authority wishes, whereas frameworks are restricted to 4 years, reducing the associated administration associated with repeat tendering • Advantages for a CPB of opening up a supply base in new geographies
  18. 18. Benefits of a DPS • Increased competition due to an ever increasing supply base to enable cost savings to be made. • There is no requirement to submit any form of award notice to OJEU following the setting up of the DPS, or when new suppliers are added to the DPS – only after an award has been made- again reducing the level of required administration. • DPS offers the potential to reduce tender timeframes allowing for quick responses to changing procurement requirements • Supportive of innovation by allowing new market players access to tender opportunities.
  19. 19. Downsides of a DPS • The DPS can be admin heavy dependant on the amount of suppliers that wish to join. Each submission requires evaluation meaning the DPS may be burdensome in markets with an oversaturation of suppliers. • The authority is required to evaluate suppliers requests to join within 10 working days of receipt (can be extended to 15 where justified) which increases the risk of non-compliance where evaluation extends beyond these time frames. • All opportunities under the DPS must be competed i.e. Direct Award cannot be made to individual suppliers.
  20. 20. Publish request to participate/admission stage *30 days with contract notice Supplier submission Evaluate submissions – no initial set timescales Admit suppliers onto DPS Voluntary 10 day standstill period DPS Process Flow Chart – STAGE 1 Request to participate/admission stage stays permanently open until expiry of DPS Evaluation of submissions following the initial publication stage must be evaluated within 10 working days of the individual submission. This period may be prolonged to 15 working days in individual cases where justified. Repeat
  21. 21. Publish specific CA requirements and invite all suppliers admitted to the DPS at that point to submit a tender *10 days minimum Supplier submission Evaluate against specific award criteria *no set timescales Award Call-off Contract Voluntary 10 day standstill period Contract Award Notice *Published 30 days from notification of award or can batch quarterly if high volume of call-off’s DPS Process Flow Chart – STAGE 2
  22. 22. Why and when should you use DPS?
  23. 23. Market Characteristics Suitable for DPS • Difficult to bulk buy / achieve economies of scale • Local bespoke offering / local businesses • High levels of innovation and new market entrants • Price sensitive markets • Large volume of suppliers • Large volume of transactions • Capacity issues / market shaping opportunities • Low barriers to entry for supply markets
  24. 24. • Difficult to bulk buy / achieve economies of scale – due to the length of time a DPS remains available and the potential for re-submission in the event of a rejection, the ease of inclusion (measured in required resource to submit bids) encourages variety of suppliers (from large providers to small businesses) to submit a request to participate. Organisations who will require only small call-offs of goods can take advantage of smaller suppliers, who are more likely to be willing to tender for such a requirement as opposed to global suppliers who would be interested in bulk selling opportunities. • Local bespoke offering / local businesses – DPS is likely to support the engagement with small businesses, who have facility to offer tailored solutions to bespoke organisational needs. Suitable, also if organisations want to support local business and local community. • High levels of innovation and new market entrants – a traditional framework would not be suitable for markets where there is a high level of innovation or new market entrants during the term of the framework. A DPS allows for these developments.
  25. 25. • Price sensitive market – meaning that the demand for goods or services moves significantly up or down in response to lower or higher price, e.g. if price for box of cereal goes up, less people will be buying it. DPS embraces large number of suppliers, therefore there is a better chance of achieving lower price. • Large volume of suppliers – meaning that organisation can take advantage of the competitive nature of the supplier market without limiting the scope of competition. Possibility to choose from potentially many options available and achieve best possible Value for Money. • Large volume of transactions – A large volume of transactions may imply that the items affected by the procurement process are for every day use. The DPS unifies large volumes of transactions down into a single, manageable process to allow the transactions to be approached in bulk.
  26. 26. • Capacity issues / market shaping opportunity – where there are capacity issues, DPS will help to ensure that there are a sufficient supply of different / alternative types or options of goods or services. A DPS opens opportunities to a wide rage of providers therefore similar products or close substitutes become available to meet such capacity issues. • Low barriers to entry for supply markets – when new suppliers constantly enter the market e.g. due to nature of goods being homogenous and goods are substitutes for each other. DPS enables gathering all potential providers on one platform for the achievement best value for money.
  27. 27. Additional points to consider • DPS can only be used by organisations which can facilitate e-tendering system – it enables suppliers to join DPS swiftly and cycles are much shorter in terms of submission. • DPS should be used when there is a room to drive the price down • DPS should be used for “commonly used purchases […] generally available on the market” - The rules do not specify how this should be interpreted. It is likely to depend on the specific type of goods, works or services covered by the DPS. The DPS will normally be suitable for largely “off-the-shelf” requirements which can be closely specified in advance. One-off, or heavily bespoke and / or highly complex requirements are unlikely to be suitable.
  28. 28. System Overview
  29. 29. DPS Supplier View
  30. 30. DPS Supplier – expressing interest
  31. 31. DPS Supplier- starting a response
  32. 32. DPS Supplier – starting a response
  33. 33. DPS Supplier – Answering Questions
  34. 34. DPS Supplier – Answering Questions
  35. 35. DPS Buyer- Front Page
  36. 36. DPS Buyer – within the round
  37. 37. DPS Buyer - Evaluation
  38. 38. DPS Buyer – Further Competition
  39. 39. Summary • DPS can be a useful tool in achieving good procurement outcomes in certain markets. • They offer more flexibility than a traditional framework but with more on-going management • The PCR 2015 regulations have seen them broadly adopted in the UK 38 16/04/2018
  40. 40. © OECD Thank You