Reshaping the Procurement Approach

A change in the traditional focus of procurement from a singular linear purchasing process towards an end-to-end iterative, situation specific service provision process.

Public sector procurement practices are based on the fundamental principles that procurement must be fair, open, and transparent. This is founded on the premise that public procurement must be designed in a way to prevent corruption, ensure equality, and avoid bias.

Unfortunately, from these principles of fairness, openness and transparency rose a myriad of rules, processes, policies, and templates that became more and more complicated over time. Mistakes would lead to trade complaints and lawsuits, and so more rules would be added, more contingencies, more processes layering on top of one another to reach where we are today – a robust process that can be rigorously defended but takes an enormous amount of time and resources to achieve results (that can sometimes be less than optimal).

Balance this against the world we live in, one of exponential change where new technologies are reaching critical adoption in record times, where governments are challenged to solve wickedly complex problems, and where disruption is a constant reality. We have shifted from discrete problems with fixed answers to holistic messes that require innovative approaches and collaborative solutions.

At our recent Seminar Series event on Agile Procurement and Governance, we invited Emma Reedy from Transport for NSW to speak to an audience of procurement practitioners about how she led the ‘On Demand Transport’ project to do something different and innovative in an environment very much used to being bound by complicated procurement practices.

The On Demand Transport Journey

We have all seen and experienced;

  • The advancements in technology, data availability and smart phone apps,
  • The emergence of new entrants such as Uber, Bridj and Lift.
  • In NSW we are experiencing population growth which comes with increased congestion and more crowding on large parts of our public transport network

It is quite evident that these disruptors have a significant impact on the overall transport landscape.

In Transport for NSW we procure the services and manage the contracts for all transport services in the state. Simply doing what we have been doing over the last 7 -10 years, tweaking and improving our service contracts by adopting perceived industry best practice, simply isn’t good enough anymore and will not deliver a fundamentally better transport system.

So, with that in mind, in late 2016, Transport for NSW launched the ‘On Demand Transport Program’ and we were tasked with identifying and testing new and creative ways to deliver transport services – on demand. We wanted to see if we could improve customer outcomes, drive efficiencies in the network and achieve better value for money.

We knew what the problem was, and we knew what outcome we wanted to achieve, but we were also brave enough to admit that we didn’t know the solution. So, we took it to the market with a request for ‘expression of innovation’ process.

We had to prove to the industry we were willing to take a risk

In terms of the process, we stated from the outset that this RFEOI would be conducted in a markedly different way to the traditional manner.

The only way to get a different result is to be different.

We knew if the industry was going to be brave and develop innovative solutions we had to show them that TfNSW was changing and willing to take a risk. We worked closely with Andrew Marsden and the OCM team to develop a robust, outcomes focussed strategy aimed at using the market to generate innovative ideas. We knew we had to open up the market and make the process attractive, so we set clear goals and clearly articulated the outcome we were trying to achieve. We set a very tight but achievable timeframe – and stuck to it!

‘We truly engaged with the market’

There were no templates and no precedents. We wanted to cut the bureaucracy without cutting integrity and enable innovation.

Establishing a strong foundation for the future

One other thing we wanted to do, was establish the foundation for a strong partnership with the proponents. Contrary to the beliefs of some – there is life after procurement, usually in the form of ongoing, long-term contract management, performance management and service delivery. In my case, I did the procurement, I did the transition of the contracts and I am now managing all the contracts that were awarded through this process as well as trying to evaluate the pilot…so the full lifecycle.

It is critical to have a robust relationship with providers, particularly in the new and innovative space that we are in. The process we developed, and the fair way in which it was conducted, increased market confidence that Transport was in this as a genuine partner – we had skin in the game – and the contract framework we implemented further supported this.

The overarching message here is design the procurement process and contract framework with a view of the total process, not just the immediate problem.

We started with the basics

We re-wrote the procurement documentation to make it easier for proponents to develop proposals, rather than make it easy for us to evaluate. We removed all the ‘nice to haves’ and retained all the ‘must haves’. Rather than setting out all the rules and restrictions in the front of the document, we tipped it on its head and talked about what we wanted to achieve and what was in it for participants first. We brought the good stuff to the front!

We intentionally avoided prescribing solutions. We removed the returnable schedules and gave the market the freedom to develop proposals in any format they chose. The RFEOI was short and simple. It was only 15 pages long, easy to read and was designed to make a statement – we want to do something different. And to the surprise of everyone, providing this freedom allowed the market to develop well-constructed, focused, easy to read and easy to evaluate proposals.

We gave proponents every chance to develop quality proposals

We truly engaged with industry and provided an opportunity to test their ideas in interactive sessions before formally submitting them.

We wanted to give proponents the best chance at developing high quality proposals focussed on end-to-end solutions that could be deployed quickly. We conducted 38, one and a half hour sessions over a four-week period. These confidential, one-on-one feedback sessions were extremely valuable to proponents, and us, as it provided insights into the types of proposals we could expect. More importantly it also showed us that proponents needed a forum to find and collaborate with potential partners who provide services they needed to help them develop end-to-end solutions.

There were clear probity protocols established around this process. We made it clear both for the TfNSW stakeholders who were on the panel, and the proponents, what the rules of engagement were. We didn’t want the process to commit or limit anyone to a position and nothing discussed in the sessions went towards the formal evaluation process.

Following this process, realising what we’d get, we got together with our lawyers and OCM to come up with a way to bring parties together, still working within the rules, and quickly planned and held an industry collaboration event three weeks before closing the EOI. Proponents could either pitch their idea to the group or just listen and observe. We had proponents stand up and pitch their ideas in their entirety. There was a buzz in the room – the market loved it and partnerships were formed that night – some of which were successful in being awarded contracts to deliver pilot projects. The result was 66 proposals from 43 national and international proponents with some of the best responses we have ever seen in a market process, resulting in 11 contracts awarded. We received positive feedback from the market and we have since adopted elements of this process in other major procurements.

We had cut bureaucracy without cutting integrity and enabled innovation.

So, what did we learn?

I can’t tell you this all happened without challenges. I heard many times reasons why we couldn’t do something. Usually people pointed at probity or wanted us to follow a one-size-fits-all, overly risk averse process.

You can never lose sight of the criticality of probity in any procurement process. BUT, probity shouldn’t be used as a reason not to be agile and creative in how you procure – and too often it is. Probity and procurement processes have to be tailored to meet the specific need and your probity advisor can help to ensure integrity is maintained, just as OCM did for us.

We made sure the procurement process enabled us, not constrained us, and Transport for NSW is reshaping the way it approaches procurement processes on the back of our project.

We learned that if you create the right environment the market will thrive and deliver innovative solutions which in our case will fundamentally change the way we deliver transport services in NSW.

And finally, the big lesson here is to be agile in your approach. If things weren’t happening as expected, we developed creative solutions along the way – such as our collaboration event – we didn’t have it in our original procurement strategy because we didn’t know we needed it.

  • Don’t assume your process will evolve as expected – continually monitor and adjust as required.
  • You can be agile and adjust your process while still operating within procurement guidelines