Many within Procurement have heard of Dynamic Purchasing Systems (DPS), as well as rumours of the good, the bad and the ugly. Whilst there is no disputing there are Regulations to govern the how and what, they don’t detail the why.
So, what are the benefits of setting up a DPS?
- Firstly, a DPS is more flexible than a Framework and often makes it easier for providers to do business with the public sector; they are not locked out of potential work for a four-year period if they don’t meet all the selection criteria on day one. This is the reason it is the recommended route by the Federation of Small Businesses.
- More providers on the DPS (each category within a DPS)
- Wider range of providers on the DPS (not your usual suspects!)
- Fresh insights and solutions to your requirements
- More competitive pricing
- Raise levels of quality
- The validity period is not limited to a maximum of 4 years; therefore, you do not need to complete a new Framework/DPS regularly. This saves time and resources from both the Contract Authority’s point of view, as well as the providers
- Splitting a DPS into categories (by type of requirement, size of the contract, or geographical place of delivery) could be arranged to ensure niche providers and SMEs (Small and Medium Enterprises) have the maximum opportunity to compete. This means you can have a much larger DPS in place, but then not have to run further competition to the whole list of providers – you can just go to the ones in the relevant category
- It can also streamline the procurement process for regular purchases, as providers don’t have to demonstrate suitability every time. Due to stage 1 of the process, Contracting Authorities are still able to ensure minimum standards and requirements are met, whilst driving cost savings through increased competition(tune in to next week’s blog to read more about setting up a DPS, and the relevant stages)
- The contract monitoring process is another area that benefits, as all providers are on the same contract with the same specification and KPIs
As mentioned, a DPS is very similar to a Framework, however, there are a few key exceptions:
- The first is that new providers can join at any time, with those that fail under previous Rounds being able to reapply at another point in time. This means a DPS is more flexible and encourages a wider market range.
- Unlike Frameworks, a DPS and the subsequent call-off competitions must be fully electronic, i.e., you must use an eTendering system and not email.
- Direct awards are not allowed under a DPS.
NOTE: there are flexibilities for contracts that fall within the Light Touch Regime.
As the Public Contract Regulations currently stand, a DPS is only to be set up where the works, services and goods are commonly available, meaning not everything can be set up via a DPS. The Regulations do not specify how this should be interpreted, but a DPS will normally be suitable for largely “off-the-shelf” requirements which can be closely specified in advance. One-off or heavily bespoke and/or highly complex requirements are unlikely to be suitable (there is no case law to determine further guidance on this).
There are of course some challenges when setting up a DPS:
- The biggest challenge I have found is the lack of understanding (both by internal stakeholders and the marketplace) of what a DPS actually is, how it will work and what providers need to do to apply. This can be mitigated by engaging early on in the process.
- The underestimation of the administrative resource needed to set up and run a DPS – the provider list needs to be effectively managed in terms of expectations so that any good working relationships aren’t lost.
- Not all marketplaces are suitable for the introduction of a DPS – if it is limited in terms of the number of providers, or stagnant in terms of new providers, then a traditional Framework may be a more appropriate route.
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Tune in next week for Part 2 of the DPS excitement! In the meantime, 4C has lots of experience in public sector procurement and advising on strategic routes to market, Dynamic Purchasing Systems and upcoming changes relating to the Procurement Bill. To find out more about how 4C can help your organisation, please contact Mark Ellis.
