THE word austerity has been firmly fixed to Government spending over the past eight years, and yet public bodies in the UK spend more than £260bn a year buying goods and services from business.

Within North-East England, local government alone spends a total of £2.6bn a year through public procurement, with much more coming from the NHS, universities, colleges, schools, housing associations and others.

In a region like the North-East, with relatively few large private sector businesses making spending decisions, winning contracts from these organisations can be hugely important to the growth of local firms.

The question is therefore regularly raised as to how to increase the proportion of that spending that stays within the region.

European procurement rules are often named as the stumbling block that makes it difficult to do anything different to have an impact on this.

With Brexit on the horizon, the North-East England Chamber of Commerce has partnered with the public procurement team at Womble Bond Dickinson to take the views of local businesses and procurers on the challenges as they see them on the ground, and draw together some practical solutions to address these issues.

Kathrine Eddon, head of procurement at Womble Bond Dickinson, said: "We're delighted to be working with the Chamber, building up a picture with North-East procurers and suppliers on the challenges and opportunities for them in running and bidding for contracts under the current procurement rules.”

The response from the businesses consulted was generally not to ask for the rule book to be ripped up so that contracts could automatically stay local. Many local firms competing for work from the public sector in the North-East already supply the public sector elsewhere or have ambitions to do so, and such a move would place big limits on their potential to supply outside the region.

But businesses do want to see changes that will give them the best chance to compete and ensure that if they can produce the right quality at the right price, no barriers will prevent them winning the work.

This can lead to tension with certain aspects of public procurement practice – concentration of jobs into large framework contracts, placing a heavy emphasis on past experience of similar work, or complex and lengthy processes that mean companies who have sizeable bidding teams have a natural advantage.

Jeff Alexander, director at Surgo Construction, said: “For a number of years we have been advocating a balanced approach to procurement by public sector and other bodies.

“The benefits of buying local in economic and social terms should be considered carefully when choosing a procurement route.

“There are some excellent construction companies based in the region who continue to recruit and train their own staff and support a large local supply-chain and we believe that this resource could be supported through procurement practice.”

Nevertheless, some creative approaches have been shown to be successful in increasing the opportunity for local firms to demonstrate they can be competitive.

An effective recent market engagement process resulted in four local firms out of a total of five suppliers being appointed to a recent furniture contract by the North-East Procurement Organisation (NEPO).

That has increased the number of jobs and training opportunities provided.

It has also led to new waste and recycling practices and support for local communities - for instance by providing play and lunch schemes in school holidays.

Overall, 72 per cent of contracts tendered via the NEPO portal in the first half of the current financial year were won by North-East suppliers.

This demonstrates that current rules do not need a drastic overhaul to have the desired effect.

Some small tweaks may help, but the more significant factor is making sure the best practice that already exists becomes commonplace.

Ms Eddon said: "A positive we took from the discussions is that a lot of the issues identified by suppliers can be addressed within the scope of the existing rules, provided the full range of possibilities these rules offer is utilised by public sector procurers when structuring and running their tender processes.

“For instance, pre-market engagement with suppliers can be a crucial tool in helping procurers design specifications and procurement processes that take advantage of latest innovations - something that benefits both procurers and suppliers.

"A big challenge to doing that, of course, is procurement teams being given the resources they need to do that."

With pressure on public sector budgets, some procurement teams have not been able to invest the time and resources they would have liked into more innovative approaches.

There is a recognition from those who took part in the survey that doing so would likely have a positive impact over the longer term.

The question as always is whether resources can be freed up to enable this.

Paul Tute, managing director of Boomerang Consultancy, said: “Some of the action needed will involve greater up front work by procurement teams, or spending more money initially.

"But we’re confident it will lead to better value and therefore savings for the region’s public sector in the longer term.

“Making that happen requires bold leadership, but the size of the opportunity for the local economy is big enough to make it worthwhile.”

PANEL: The changes we want to see

Entering the public procurement market

Encouraging more good businesses to consider supplying the public sector.

At present, many decide not to bid for public contracts because they perceive it as low priority or not worthwhile.

Better communication of opportunities, a more flexible approach so the process matches the type of contract, reducing up-front work required for smaller opportunities, and avoiding unnecessary repetition when bidding for multiple contracts will all support this.

Developing supplier relationships

Businesses often feel it is difficult to develop good relationships with public sector bodies, that would help both sides to understand how to work together more effectively.

This could be improved by improving the data available to procurement staff on the local supply market, taking up more opportunities to consult with the market before procurement projects are started and giving public sector staff more opportunity to attend business network events.

Improving the quality of delivery

Many suppliers feel that the often formulaic procurement process makes it harder for them to deliver the same quality service that they can give to a private sector client.

To change this, there could be more focus on procurement methods that encourage innovation, how social value can be generated, and a wider recognition of the benefits to procurers and suppliers alike of providing meaningful feedback to bidders on their submissions.