The pros and cons of dynamic purchasing systems
Ian Fishwick of Innopsis argues that, while the DPS model is imperfect, the government should be commended for trying new procurement ideas
At the Cabinet Office SME Panel, many of the small businesses that are represented are very keen on the more widespread introduction of dynamic purchasing systems (DPS).
In general, they do not like the use of frameworks as they almost all get extended to their four-year lifetime – sometimes even longer – and therefore it effectively locks small businesses out of that sector of the market if you are not one of the original suppliers on the framework.
The problem with reducing the length of frameworks is that it drives up suppliers’ bidding costs even further, as you are forced to bid more often. DPS models offer a potential solution, because new suppliers can join the system throughout its life, provided that they meet the minimum selection standards.
They have also proven successful in a number of categories of spend, but their use in ICT procurement has been limited to date. A recent report by the Local Government Association argued that DPS systems have their place, but that they are best for commodity products such as taxi services or, in our industry, products such as public switched telephone network (PSTN) lines. The complication for most purchasers is that, in order to use a DPS effectively, they need to be very prescriptive about the specification of products and services they require
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Innopsis has worked with NHS Digital to create RM3825, the dynamic purchasing system for the health and social care network.
One problem we faced was what to do when a supplier can only supply services once they achieve compliance, and different suppliers achieve compliance at differing times over what may be a period of several years.
In short, we needed to find a way to allow suppliers to join in when they are ready – and a DPS achieves just that.
My personal view is that it the DPS model is not perfect. A DPS does not allow direct awards in the same way that the G-Cloud or the RM1045 Network Services framework permit. I appreciate that many companies are wary of direct-award contracts, as they see it as an easy way to renew the incumbent supplier. However, I think there is a role for them. Do we really want to force every customer to place a tender for absolutely everything, regardless of value?
I’m not sure my ideal world – a DPS that can also handle direct-award contracts – currently legally exists. But Crown Commercial Service is to be applauded for breaking new ground and seeking to extend the use of DPS to meet the needs of its users.
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A total of 3,505 firms are on the latest iteration of the framework with the government claiming more than 90% are SMEs