Sustainable Public Procurement and Economic Development

Sustainable Public Procurement and Economic Development

July 26, 2022
Government, Procurement, Sustainable Procurement

What is it?

For many industries contracting has become a global affair. Governments are rightly keen to gain economic advantages from a global economy but need to ensure that contracting can also be used as a driver to create jobs and innovation within their own region. This use case describes the use of procurement analytics and datasets to drive economic development forwards across particular industries or geographical regions within an economy.

Why do it?

By encouraging economic development public procurement can be used to increase skills and create jobs, particularly in areas of financial deprivation or within an industry that has the potential to create significant growth. Properly implemented, a good economic development policy can result in more diverse economies and greater growth. In some cases it can in turn reduce poverty and inequality, increase integration within an economy, and increase tax revenue.

Benefits

Analysing public procurement’s impact on an economy can have a range of positive effects for suppliers and entrepreneurs who believe that they can support government with their products or services.

🗣

Research shows that spending with smaller companies provides greater returns for tax authorities and new jobs can reduce govt costs.

🔉

Most innovation happens in smaller companies, and engaging with them can deliver significant advances for governments.

👉

It is possible to create a virtuous cycle that helps small companies grow into large companies just from government business.

How open contracting data helps

Data on local firms, suppliers’ commitments to apprenticeship schemes, or commitments to using local subcontractors can all be used to monitor and measure the efforts associated with economic growth. Simply measuring the number of contracts won by local firms is a good way to start measuring the impact that purchasing can have.

Options for implementation

Economic development is a rich area for analysis, with governments often being able to draw on their own economic data from tax records and public company registers. We outline some simple steps that can be taken to analyse the impact of procurement on economic development.

Option 1: Measure contracts awarded

Buyers can measure the value and number of contracts awarded to suppliers based according to location, size or industry. Simply recording this and looking to see if the number of awards increases is the simplest way to start measuring economic development impacts.

Option 2: Measure commitments to local job creation

The more and better data that exists around suppliers, contracting, and spend, the more buyers can analyse not only how much money is going to their local regions but also compare public spend with other important economic development metrics such as deprivation indexes, location of minority-owned businesses.

Option 3: Find firms used by other parts of government

Buyers can search for local firms that have performed similar contracts based on category, specification, and value. A register of contracts with clean and complete OCDS data will enable this.

Option 4: Measure contracts to high growth industries

Buyers can identify categories of interest and measure the growth based on contracting spend compared to previous years. This can extend to key industries of interest subordinate to larger industries, for instance, those further down the supply chain.

Getting started

What to measure?

What to measure?

How to measure a job

How to measure a job

Not all jobs are equal

Not all jobs are equal

How to gather the data you need

How to gather the data you need

Analysing and reporting data

Analysing and reporting data

Goals for implementers

Better data on the way that contracts are marshalled to deliver economic growth can meet multiple goals. In the first instance, governments need to be able to report on their work:

→ That a policy has been implemented

→ That a policy has been effective at creating growth

→ Where a policy has been more or less successful

As well as public statements on policy implementations the data can be used to generate a viable feedback loop that provides detailed information on the effectiveness of a policy, including where a policy has been able to gain the most traction. Analysis should be able to give teams the following insights:

→ To know which geographic areas achieve better outcomes

→ To know which industries or categories achieve better outcomes

→ To know which types of buyer achieve better outcomes

With robust data in place, it will be possible to work with the most successful teams to find out what they are doing to achieve success and what other buyers should avoid if they want to have a positive impact.

What are your measurement options?

There are a wide range of analysis options in this area, we have already considered the issue of job creation but the scope of socio-economic analysis is very broad and does not have to be limited to job creation. Seeking to direct funding to different areas of your economy can be measured in multiple different ways. Below we outline some of the areas that you can consider:

  1. Measure contracting commitments that have been made using different features:
    1. Supplier’s region (e.g. number of contracts awarded to suppliers in City X)
    2. Economic profile of supplier’s region (e.g. value of contracts awarded to locations with a poor socio economic profile)
    3. Distance between buyer and supplier (e.g. test number of contracts awarded to local suppliers),
    4. Supplier size (e.g. contract awarded to small business),
    5. Supplier’s charity status,
    6. Supplier’s social enterprise status
  2. Record when buyers make reference to socio-economic factors in their tender notices
    1. Count the volume of tenders that score for socio-economic factors.
    2. Count the value of tenders that score for socio-economic factors.
    3. Record impacts related to these tenders when published.
    4. Record which buyers publish these tenders.
    5. Record which suppliers win these tenders.
    6. Record whether tenders encouraging engagement by a given type of organisation (e.g. small businesses) returns increased numbers of bids from these organisations.
  3. Evaluate all activities by category
    1. Establish whether different categories are likely to deliver better socio-economic outcomes.
    2. Determine whether policy take up varies by category.
    3. Explore suppliers by category and encourage those that can deliver better outcomes to bid for work.
  4. Look at the root causes of better socio-economic outcomes
    1. Where a buyer has successfully delivered a positive outcome, it makes sense to determine what conditions made this possible.
    2. Record the key features of successful contracts, reference technologies, metrics and outcomes

Through insights gained from the data, buyers can use this to direct more spending in public procurement to deliver greater productivity and growth. If published openly, suppliers can use the data to make positive changes to their own organisations and to deliver improved bids for future contracts.

Get in touch if you’d like to talk more about our work in government procurement data.

 

September 29, 2022

£900k Government Fund To Help Charities Win Public Contracts.

The Department for Digital, Culture, Media & Sport (DCMS) is running a Voluntary, Community and Social Enterprise (VCSE) Contract Readiness Fund grant...
September 27, 2022

New EU Procurement Instrument Now Law.

About a year ago, we wrote an article on the new procurement instrument approved by the European Union. In recent weeks this...
September 20, 2022

Blacklisting Gets Tested.

Back in June we wrote about blacklisting of suppliers and the Government’s intention to prevent poorly performing suppliers from bidding for government...
September 8, 2022

UK Risks Its Place On Anti-Corruption Body

The UK has been placed ‘under review’ by the 77-country-strong Open Government Partnership (OGP) due to its failure to meet mandatory criteria...
September 8, 2022

Thurrock Exposes Transparency Blind Spot

An investigation by The Bureau of Investigative Journalism (TBIJ) into investments by Thurrock Borough Council has led to the resignation of the...
September 6, 2022

New Zealand Government Reviewing Procurement System.

It’s always encouraging when we see governments around the world looking to improve their procurement transparency and efficiency. The New Zealand Government...
September 1, 2022

Collecting Data For Sustainable Procurement In Construction

Over the last few weeks we have been looking at setting a sustainable procurement framework in the construction industry, and what kind...
August 30, 2022

Selecting Data For Sustainable Procurement In Construction

It is estimated that around 40-50% of natural resources are transformed into construction material, and that as much as 30% of all...
August 25, 2022

Setting A Sustainable Procurement Framework For Construction

When procuring construction projects, it can be useful to underpin sustainability criteria on existing policy and regulation. When assessing the enabling framework,...
August 18, 2022

Big Net Zero Contract Win For Small Cornish Business

A small Cornish company has purportedly won a £70bn contract to help deliver the country's transition to Net Zero. The Penzance based...
August 16, 2022

Supporting Sustainable Procurement In ICT

One of the key challenges of sustainably procuring ICT lies in the lack of transparency in supply chains. To overcome this challenge,...
August 11, 2022

Why Is Sustainable Procurement Important For The ICT Sector?

The extraction of raw materials, manufacturing, transportation, use, and disposal of ICT products is associated with a number of environmental, social, and...
August 10, 2022

Shifts Towards Sustainable Sourcing

A while ago,  we shared an article on findings by the Boston Consulting Group and the World Economic Forum that showed procurement is responsible...
August 9, 2022

Supporting Sustainable Procurement In The Construction Industry

Construction projects are usually long and complex, involving the participation of different stakeholders throughout the different project stages. There are certain factors...
August 4, 2022

Why Is Open SPP Important In The Construction Sector?

The construction industry is estimated to account for 6% of global GDP, with Africa's construction market valued at around USD 5.4 billion...

Newsletter

Compelling research, insights and data directly into your inbox.

Recent media stories

The Times
May 30, 2022
CIPFA
August 3, 2021

Search

Scroll to Top