5. VIEWS ON THE ORDER: CHALLENGES AND CONCERNS
5.1 Authority perspective
The research has revealed that whilst authorities and suppliers believe the Order will improve procurement and client-contractor relationships, they also have a some concerns – largely relating to how they will be respond to the additional requirements brought about by the Order.
Many authority participants emphasise the growing complexity of the procurement process and the implications this will have for skills and capacity. Some suggested the need for official guidance on certain aspects. They are particularly concerned about the complexity of making a value for money decision based on an evaluation of non-financial considerations.
“This (workforce management) is not often an issue in bidding; we can ask how they’ll manage, what meetings, etc. – but how do we interpret all this? (authority)
“In some markets the workforce abilities are much the same – you have to differentiate by looking at how workforces are managed – this is something that’s not easy for authorities to make a judgement about” (supplier)
As can be seen from Figure 13 below, the survey results also indicate that authorities are worried that the Order may increase the time and complexity involved in tender evaluation. Authorities also have concerns about the additional skills that will be required for evaluating tenders as a result of the Order and the knock-on cost implications. However, it is worth noting that a number of authorities responding to the survey believe that the Order will allow them to achieve greater better value for money when procuring.
Figure 13 How do you believe that the new Order is likely to affect your authority?
Source: DTLR survey, 2001 (Authorities Q16)
Many participants agreed that quality evaluation requires a multi-disciplinary team. They suggest that in addition to the professional buyers, the accountants and the lawyers, there must be someone with a comprehensive grasp of all the technical issues involved in the service and someone with up-to-date experience of front-line operations.
Both authority and supplier participants consider that evaluation methodologies are evolving, albeit slowly and that the Order should encourage some authorities to review their approach in line with best value, if they have not already done so. However, several participants (both authority and supplier) express the view that budget concerns might continue to dominate and limit the scope for considering broader procurement issues, such as how workforces are handled.
“We will now try to formalise workforce issues into the evaluation methodology; there’s a link to demonstrating continuous improvement under best value” (authority)
“The methodology will evolve – the authority needs to decide what workforce issues are important and use some sort of scoring” (authority)
Whilst some of the larger suppliers expect to gain from wider evaluation as they have strong approaches to workforce issues, they are unsure of whether authorities have the expertise to make judgements. One supplier even suggested that a system of independent tender evaluations should be established to ensure a fair deal for bidders on quality issues.
Several authority participants expressed concerns over their capacity to evaluate workforce matters in procurement. The discussions also revealed that some suppliers are sceptical about the way authorities approach procurement and are concerned authorities may set arbitrary standards for workforce arrangements: some thought the process may simply translate into a couple of extra tick boxes, with no impact on service delivery. A minority of suppliers believe that most authorities will continue to put cost considerations first.
“The effort involved (in looking at workforce matters) is not justified for all contracts” (authority)
Both authorities and suppliers recognise that effectively evaluating workforce matters as part of the procurement process will present a challenge for authorities. Both supplier and authority participants expressed a belief that authorities, in particular, need additional skills and guidance in order to deal with the increased demands of considering workforce issues during procurement.
“Better guidance is needed if Councils are to be encouraged to use the Order; for example, equalities are fine in principle but how can we monitor and what action can we take if a “wrong” result occurs? Is it best value for a contractor to fulfil a quota if quality then suffers? (authority)
“It’s extremely difficult for a client to monitor whether good workforce practices contribute to quality of service; I would query whether a client is capable of making such an assessment; and certificates like IiP mean very little” (major supplier)
“Closer working between HR and procurement is required” (authority)
A small number of authority participants at the group discussions called for further and better guidance on various aspects of procurement. Discussions suggested that there is a need for some basic "endorsed approaches", which can be incorporated into a very wide range of training options and tailored to the needs of individual authorities and indeed specific project teams. There was support for the idea of onthe- job training a group of people who are actively engaged in one or more real live procurement projects.
The survey evidence shows that authorities are somewhat divided as to the effect the Order may have on prices charged by suppliers and levels of competitiveness between external suppliers or against in-house. This is perhaps unsurprising given that the legislative changes were very recent at the time of this research, and so it may be hard for authorities to gauge long-term effects at this stage.
5.2 Supplier perspective
Some supplier participants expressed concern about the risk of simply being asked a lot more questions during the tendering process without authorities having given careful consideration to the practical implications of non-financial factors. These participants suggest that authorities need to develop evaluation criteria relating to workforce matters that are clearly and identifiably linked to the performance of the contract, and base their criteria on them.
“There’s a danger that the Order will simply lead to more questions, rather than better evaluation” (supplier)
It emerged during the discussions that suppliers might benefit from attending courses to raise their awareness of the local government market, the regulations and constraints under which it operates, and its decision-making processes.
In terms of the expected impact of the Order, the suppliers surveyed were broadly in line with authorities: clear majorities are concerned that the Order will increase the time and complexity of evaluating tenders/bidding, the skills required for these processes. Suppliers believe there will also be implications for cost.
“The cost of bidding is already a major issue for contractors; the Order might increase it; to balance this, a good contractor would welcome the opportunity to demonstrate good workforce handling” (supplier)
Like authorities, suppliers were evenly divided over whether the Order should promote or impede their competitiveness in relation to other commercial suppliers or in-house teams. These results are shown in Figure 14. This is slightly at odds with earlier results showing that high proportion of suppliers agree/strongly agree that being able to demonstrate certain workforce issues will allow them to compete more effectively. One reason for this could be that whilst suppliers will be at an advantage in terms of demonstrating good working arrangements, this somewhat negated by the additional effort and cost involved, meaning that overall the Order may not, necessarily make them more competitive.
Figure 14 How do you believe that the new Order is likely to affect you and other organisations in our sector?
Source: DTLR survey, 2001 (Suppliers Q15)
5.3 Information and support: authority perspective
In line with the views expressed during the group discussions, the survey suggested authorities have some concerns about the additional requirement of evaluating tenderers’ workforce arrangements. To address this extra work, authorities seem to favour a number of different approaches for obtaining information or support. Most commonly, they propose drawing on public sources of information (e.g. internet or library) or seek advice from other organisations. For more detail see Figure 15.
Figure 15 Evaluating information about suppliers’ workforces and related employment matters may call for skills and resources, which you do not currently allocate to procurement. How do you expect to deal with this?
Source: DTLR survey, 2001 (Authorities Q19)
5.4 Information and support: supplier perspective
Echoing messages from group discussions, the survey suggested that some suppliers are anxious about what will be required of them in the future when bidding for local authority contracts. However, just over half (28/53) indicated the new Order would present no problem in terms of resources. In responding to any additional requirements, brought about by the Order, it seems most likely that suppliers will consult their human resources department. Some suppliers may also refer to public sources of information or seek advice from other organisations. For more detail see Figure 16.
Figure 16 Providing information about your workforce and related employment matters may call for skills and resources, which you do not currently allocate to tendering. How do you expect to deal with this?
Source: DTLR survey, 2001 (Suppliers Q18)
By comparison with the authorities, the suppliers appear more likely to consult their personnel departments for advice on this matter and to have a greater willingness to take on more people to meet the additional demands of responding to requests for workforce information.
5.5 Small and New Suppliers
Several participants expressed concern about the impact of the Order on smaller organisations and new entrants to the market, even though the accompanying Guidance reiterates "the aim of Ministers to encourage Small and Medium Enterprises and in particular small community businesses".
“Small businesses may be relatively costly but can give better quality – as they are closer to their staff – the Order may actually help them” (authority)
In line with the survey evidence, both authorities and suppliers at the group discussions suggested that the Order might make it harder for smaller and new suppliers to compete. As with the authorities, suppliers seem the most divided about the potential impact of the Order on the ability of small and new organisations to compete: 12/53 suppliers think the Order will enhance their ability and 20/53 suppliers think it will reduce their ability to compete. They may be disadvantaged, not only, because of the additional cost/time involved in bidding, but also because they may find it hard to demonstrate good practice in staff management if they are required to produce policy documents, formal registrations and track records, etc. This is because small companies with few support staff may have less documentation in general, although their workforce practices and general management expertise may be perfectly satisfactory.
“Bigger firms are better at presenting (both face to face and on paper) and new entrants may be disadvantaged by the scope of questioning” (supplier)
Two participants suggested that small and new suppliers might offer the best value deal in many cases, especially in social care and in any service where individual tailoring of the service is essential. In discussion, several participants agreed that the key to buying from such firms is to set up a specification and evaluation criteria that can exploit those potential advantages and recognise the additional difficulties they may face in meeting tendering requirements. Participants recognised that the challenge is to achieve the opposite outcome, i.e. to enhance opportunities for smaller suppliers.
“A lot depends on what the authority is seeking; as new markets emerge better guidance may be needed – else new or small businesses will get frozen out” (authority solicitor)
Markets are a big influence – we need to take risks with new companies and not rely just on those with a track record” (authority)
5.6 The Bidding Entity
The consideration of workforce matters raises the question of whether procuring authorities should consider the employment record of only the "bidding entity" as distinct from the entire organisation which may lie behind it. Some local authorities argued that the client authority should distinguish between a holding company or policy-making HQ company, and operating companies that are engaged in similar functions to those in the current tender.
Some authorities also suggested it can be difficult to differentiate between the policies and practices of a bidding entity and those of an associated or parent company. The general view is that parent companies vary enormously in the influence that they may exercise on a supplier, in relation to employment they may well set corporate standards which subsidiary companies have to observe. The question here is should a procuring authority look at the workforce arrangements of the bidding entity and/or its parent company?
It was generally agreed that it is important for authorities to discover what are the standards and policies, which are centrally controlled, and what freedom the operating companies have within them. However, participants agreed that it is always essential to focus on the bidding company and specifically the people who are being put forward to manage the authority’s operations on site. These are the people who will determine the style of local workforce management.
“A parent could intervene and change things significantly – this is a risk to the authority – but a parent is also a comfort – e.g. through financial strength; it’s important for the authority to understand the market, so they can assess the importance of the parent” (supplier)
“There’s a big need for guidance on how to approach the information – the “relationships” aspects – both parties would probably welcome such guidance” (authority)
Published 6 August 2002
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