How much money could the Government save if central departments improved the efficiency of their tender processes?

A joint blogpost by the ODI and Spend Network

This is the second part of Spend Network’s and the Open Data Institute’s drive to identify potential public sector savings by analysing data on procurement and spending. Here, we examine the tenders completed in a given period and the size of the procurement team to see which departments are the most efficient.

nullAre procurements as efficient as they might be? CC0

Last year, Spend Network analysed the duration of tender processes throughout Europe and discovered that the UK has the third longest tender process, coming behind both Greece and Ireland. When comparing the UK to the European average, this amounted to £22bn bound for UK businesses being delayed. However, this research did not examine the cost to the government due to increased staff costs associated with longer tenders.

In this piece of research, we want to investigate the difference in the number, complexity and duration of tenders completed in a given period by the 17 central departments of the UK government. By first finding the average number of days it takes to complete a tender across all departments, we will then be able to calculate how much could be saved if all departments’ tender processes were reduced to the current government average.

We will also investigate the size and cost of each department’s procurement team to calculate the person-day cost per procurement. We will use this to see whether investing in a procurement team affects completion time for tenders, and whether having smaller or larger teams makes the tender process more or less efficient.

How will we do this?

First, we will analyse tender durations, by linking details of the announcement of European tenders exceeding the TED (Tenders Electronic Daily) threshold of £111,676 to information on contract closures. For UK tenders, we will identify the issuing departments. We will then work out the average duration of tender processes for each department and average tender timeframe across UK central government. Complex tenders will be identified by examining contract award notifications; these will then by excluded from the analysis.

Through Freedom of Information requests, we will determine the size and staff costs of departmental procurement teams to work out the person-year cost for each department.

By analysing the number of completed tenders, the average duration to complete tenders and the complexity of each department’s tenders, we hope to to build a picture of the efficiency of procurement processes in each department.

Finally, we will compare procurement teams of differing sizes and costs between departments to see how this affects tender durations.

Limitations

It may be difficult to compare like with like. Some purchases will necessitate long procurements due to their very nature, such as new rail systems or power stations. We will attempt to avoid this issue by selecting a group of routine but similar contracts, eg building maintenance, consulting or insurance.

Some departments may not be able to provide details of the size and staff cost of their procurement team, as they may not have a team specifically devoted to procurement or they may have outsourced their procurement work. We will compile as complete a picture as possible of procurement work in each department.

We like to work openly, so please feel free to let us know your feedback on our methodology. Please send your emails to [email protected]