25th May 2016

The 2015 Public Contracts Regulations (PCR) were introduced to harmonize the procurement laws of EU member states. Yet, by skipping new mandatory preliminary steps, some organisations are failing to reap all the benefits.

When new EU PCRs were ratified in 2015, there was a view that this was yet more complicated procurement legislation to consider.

In fact, the introduction of the new mandatory requirement to undertake market research prior to issuing the contract notice can save you significant time and costs.

The new rules are intended to encourage more businesses to participate in supplying the public sector to improve competition, to create greater transparency, ensure international bidders are treated equally and reduce unnecessary spend on the tender process.

However, many UK public sector organisations see the new preliminary stages of market research as a burdensome addition to an already potentially complex and lengthy process.

Prior to the introduction of the new regulations, many organisations did not conduct market research, believing it was better to ‘cut to the chase’, thinking they were saving themselves unnecessary effort that wouldn’t bring them any benefits.

In truth, market research is an extremely important and valuable part of the tender process and it always has been. The new regulations simply make this a mandatory requirement rather than recommended good practice.  Organisations that choose to skip this crucial stage are not only acting illegally but they are lulling themselves into a false economy.

It is only through this initial phase that you can truly understand the type and level of investment needed. In addition, the data gathered can help dramatically narrow your scope of appropriate suppliers. Through the issue of a much more comprehensive contract notice and the selection of the most appropriate procurement procedure, you can reduce the overall length of the tender process. And, in some cases, market research reveals that no new procurement is necessary at all.

New EU directives: transparency and benefits

The main aims of the new regulations are to create a more transparent procurement process that ensures equal treatment and avoids conflict of interests. It ensures that case law and recognised good practice is now enshrined in the legislation.  And, it is also intended to improve competition by attracting smaller businesses, such as SMEs, to apply to work with public sector organisations.

To make the process more-straight forward, framework agreements are available. A framework agreement provides a PCR-compliant mechanism for procuring goods, services and works in the public sector. Utilising the correct framework can ease an organisation smoothly through the procurement process, taking much of the effort away.

For many though, the real bugbear of the new regulations it this additional preliminary market research stage. This critical first step in the procurement process is being overlooked all too often because it is seen as inhibitive to the procedure.

Why market research is such a valuable first step

In order to maximise the benefits and comply with the new regulations, preliminary market research must be conducted prior to the issue of a contract notice. Rather than see this stage as a barrier to procurement, it’s vital that organisations recognise market research for its true value.

Market research is a powerful tool. It brings your market knowledge up to date, reveals new trends and innovations and highlights potential suppliers you may not yet know. Most importantly, it forms an internal review and in some cases can present you with information that could save you the effort of moving any further along the procurement process.

It is too simple to assume that, because a system or software platform is no longer performing at maximum levels, you need a whole new one. Perhaps it is only an update that is needed, or a small addition to what you’re currently using. How will you know if you don’t do your research?

Until you have a clear picture of your current status as an organisation, you can’t possibly know whether you actually need to procure anything new. Thorough research is the only way to get the clarity you need. In a surprising number of cases, changes to internal processes can make the difference you require with no procurement necessary.

If your internal research identifies a solid business need for procurement, you will also already have a good idea of what you need. Then, you can turn your research to the supplier market.

This early stage, before you enter the formal tender process, allows you to casually research potential suppliers without having to conform to the legal language and protocol of procurement. You can be candid and far more relaxed, because at this stage, you are only doing your research.

Once you start talking to potential suppliers you will not only gain full understanding of their products and services, you will also be able to map out indicative costs. If, for instance, you’re looking at software, the initial purchase will only be the start. What about the long-term view, including updates, support and maintenance?

Making market research easier

No organisation can understand fully what they need until they understand where they currently stand. If knowledge is power, market research is the switch.

If the prospect of conducting market research is simply too daunting or time consuming, consider engaging a third party with specific market knowledge to do it for you. Again, as you’re not yet embroiled in the legal tender process, you have far more freedom to collect all the information you need to make informed decisions.

Search for a company with knowledge of both your business needs and the market you want to access. Good companies will have already experienced and perhaps worked independently with the main suppliers, they will know the strengths and weaknesses of products available, and be able to arrange demos for you.

If you want to minimise procurement spend, comply with legislation and perhaps save yourself the disruption of entering the process altogether, here are some questions you must be able to answer:

• Why are we doing this?
• Is this our only option?
• What is the likely cost?
• Do we need to go through an EU compliant process?
• What is the best procurement approach?
• Have we done enough to satisfy regulations?