Wales' £11.4 billion public procurement market is increasingly moving beyond a traditional focus on price as buyers look at the wider economic, social and community value that can be generated through public spending.
Grahame Steed, Director of Public Policy and Research at BiP Solutions, said the evolution of procurement means value can increasingly be viewed in much broader terms than simply securing goods or services at the lowest possible cost.
Speaking to Business News Wales ahead of Procurex Wales in Cardiff on 11 November, he pointed to what appears to be a relatively small change in procurement terminology as an indication of that wider shift.
Previous procurement rules referred to identifying the “most economically advantageous tender”, while the Procurement Act introduced the concept of the “most advantageous tender”.
For Steed, removing the word “economically” – effectively taking the “E” out of the definition, represents something more significant than a change in language.
It reflects the ability of public bodies to consider the broader value that can be created through a contract, including potential benefits for communities, regions, supply chains and wider society.
The shift is particularly significant in Wales, where billions of pounds of public expenditure gives procurement the potential to influence areas including employment, skills, SMEs, supply-chain development and social value. It also reflects a longer-term change in attitudes towards value for money.
Price remains an important part of procurement, but Steed said public sector purchasing had evolved considerably from an approach where securing the lowest price could dominate decision-making.
That creates opportunities for suppliers as well as buyers.
Businesses competing for public contracts increasingly have an opportunity to demonstrate not only that they can deliver the required product or service competitively, but that their proposal can contribute towards the wider objectives of the organisation purchasing it.
That could include supporting employment, developing skills, strengthening supply chains or delivering benefits within communities.
For Steed, the fundamental principle remains ensuring taxpayers receive value from public expenditure.
But the definition of that value is changing. With £11.4 billion passing through Welsh procurement, even relatively small changes in how that value is defined could have significant consequences.
The emerging question for public bodies is therefore no longer simply how much does it cost?
Increasingly, it is also: what else can Wales achieve from the money it is already spending?
Grahame Steed talks about this and more in the special procurement podcast episode, From Legislation to Real-World Impact: Is Procurement Changing in Wales? listen here:
