As we move into a new year, it’s time to look forward to how the procurement landscape can be expected to change. While tendering trends regularly change based on innovation, updated rules and regulations or simply buying preferences, recently Brexit and COVID-19 have been making their presence known in public-sector tendering. As their impact continues to be felt (COVID accounted for more than 10% of the total value of public sector contracts awarded in 2021) and procurement spending looks to increase, there are a host of trends which are likely to influence bids and tenders in 2022.
While the Social Value Act in 2012 asked public authorities to, rather vaguely, ‘consider’ the social value contribution of bidders, in January 2021 the UK government’s Social Value Model made social value a mandatory aspect of all central government contracts following the publication of PPN 06/20 in September 2020. Social value is now weighted at a minimum of 10% for central government public sector tenders and can therefore make a real difference in the evaluation of bids.
As the Social Value Model becomes more entrenched, tenders will need to consider COVID-19 recovery, tackling economic inequality, fighting climate change, equal opportunities and staff wellbeing. Around £49 billion a year of public spending will potentially be influenced by social value, and as the 10% weighting acts as a minimum, social value based on clear, tangible benefits for the local community will continue to play a large part in tenders and winning bids. It is certainly a topic that we see across most of the tender submissions we complete on behalf of our clients.
Net zero and carbon reduction plans
Following the ‘Glasgow Climate Pact’ to speed up the pace of climate action and the UK government’s pledge to achieve net zero by 2050, achieving net zero and demonstrating plans for carbon reduction is one of the government’s top priorities for 2022. The publication of PPN 06/21 in June 2021 also shows how seriously bidders should take the move towards net zero. Bidders are expected to take steps to understand their environmental impact and carbon footprint relevant to each contract and support this with a clear carbon reduction plan. Like social value, plans should be based on realistic objectives and a commitment to sustainability.
We’re already seeing the effects of this, as recently the National Highways created a new 50-strong division for Environmental Sustainability as part of its drive to achieve net zero carbon across England’s motorways and major A-roads. Carbon reduction plans towards net zero by 2050 will be central not only to future road investment strategies, but also public contracts as bidders will be asked to seriously consider environmental goals.
The pandemic brought many challenges for businesses, but it also highlighted the need for robust risk management procedures as supply chain challenges and uncertainty prevailed. While all bids should identify and mitigate potential risks for both the buyer and the supplier as early as possible and as a matter of course, with ongoing uncertainty due in part to COVID and Brexit, concerns over wider supply chain reliability is a key consideration for buyers. Buyers want to know that the supplier can consistently deliver the service and are prepared for all eventualities, for example through service level agreements with three backup suppliers.
Demonstration of clear procedures for mitigating and managing risks at all stages is essential for this coming year: resilience is the watchword.
While you need a clear strategy for dealing with potential supply chain risk, it’s important to know your supply chain well too. Tenderers are expected to know not only their suppliers’ code of conduct but also their standards and certificates, previous performance-based metrics and their traceability. Fully vetting your manufacturers, shippers and suppliers and ensuring they have realistic protocols and policies in place that align with your company values and approach aids a better functioning and more sustainable supply chain, while also engendering trust in your own company. Buyers aren’t only working with you, they’re working with your supply chain, and it helps to know that you only work with trusted, reliable partners. No one wants to lose a contract or damage their reputation because it turns out one of their suppliers doesn’t operate ethically.
The past two years have dramatically changed the way we work as working from home became the norm for many people and companies were forced to find new ways of operating (primarily due to the pandemic). While a boiler installation cannot be done digitally or from home, digitisation and an increased focus on cyber security have become more important for companies and buyers. Investing in and enhancing your cyber security will not only keep your data and devices safe, it’ll reassure buyers that their data and transactions are secure.
Digitisation, meanwhile, increases efficiency and makes record retrieval easier, which is of particular importance for buyers. Increasingly, real-time access to management systems and portals, for example, form questions in tenders as buyers desire more connection and visibility. The ability to report and audit KPIs effectively and react to any issues quickly is an ongoing consideration in tenders, and in 2022 IT capability and security looks to be a continuing expectation. Investment in up-to-date cyber security and IT systems to deal with disruption and offer support can only help form the basis of a solid, winning bid. You will also likely see the Cyber Essentials certification as a mandatory requirement from many contracting authorities.
Public spending investment
In 2021, 2,200 public bodies awarded 66,000 contracts worth £124 billion. Compared to 2020, the number of published public sector opportunities increased by 46% and procurement spending increased by 7%, with the majority coming from Central Government. Thanks to the £4.8 billion Levelling Up Fund, suppliers outside London had the greatest growth as investment in local infrastructure took priority.
Along with central government’s commitment to spending at least 33% with SMEs, there are 16,000 service contracts worth £19 billion in total expiring in 2022 with many likely to be re-procured. Government looks to continue with their ‘levelling up’ plans and spending to match those, which is good news for the public sector: there are many opportunities to expand and grow this year, even as we face challenges.
Tender writing support
To discuss how Executive Compass can support you to tender for a contract opportunity in 2022, contact our team today and we will be happy to discuss our range of services.
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