Understanding the Public Services Industy

Public Services Industry Review
procured on a local basis. Defence and DWP tended to be managed and procured centrally.
Transport is a mix of central and local procurement.
These strands drive differences in procurement models and procurement culture, potential
for standardisation and scale economies, decision making process, use of consultants,
maturity and supply side competition, degrees of engagement and openness to small
companies and third sector involvement. It was felt that there are often unhelpful and
unnecessary differences between these markets in terms of the procurement processes,
such as pre-qualification questionnaires, which often vary between different markets and for
different services within the same market, creating unnecessary duplication.
Concern was raised by respondents on different requirements in different PSI markets; for
some least cost is most important, for others service delivery. Further concerns were raised
by a few respondents that the increased use of prime contractor models makes it harder for
smaller organisations including many third sector providers to compete.
Q7. What specific changes would you like to see in the way the government procures
services which might promote competition and/or productivity in the PSI?
Many respondents commented on the success of the UK PSI, but suggested a number of
potential improvements. Private and third sector respondents felt that a key way to promote
competition in the PSI would be to simplify processes. Documents and contracts are often
overly legalistic, difficult to read and unclear, so further standardisation and central support
for commissioning teams would be helpful. It would also be beneficial to learn the lessons
from previous procurement exercises; this should enable reductions in costs of sales, time
scales of procurement and resource requirements. There should be greater focus on the
achievement of outcomes, rather than inputs or even outputs to encourage innovation.
There was also support for flexible service level agreements with balanced responsibility
that encourage innovation and reward for over-performance. PSI providers also suggested
that earlier engagement and dialogue would help to scope the PSI services.
A number of respondents suggested that Commissioners could make more effective use
of data, using segmentation to gain a deeper understanding of their client’s needs. Such
data and market intelligence should be shared among commissioning bodies, such as PCTs
and local authorities. Market intelligence should lead to transparency on future market
developments thereby increasing bidder interest.
Q8. What can the government do to improve access to overseas markets for UK companies
operating in the PSI?
UK firms operating in the PSI believe there is a dual role for industry and the UK
government to promote the interests of UK companies internationally.
Through greater information sharing with the PSI, respondents’ consider that the
government would be in a stronger position to articulate the successes and benefits of UK
company PSI participation to the international community. The main areas where the UK
government could help are identified as:
•
broadening the knowledge of overseas administrations on the role played by UK
companies in developing public services;
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