Need

Assurance that effective cost-saving changes can benefit the wider organisation.

Problem

Short-term cost cutting efforts can be disruptive, so it is important that their effect is felt as widely as possible.

Solution

Where a change in service design or management produces positive results in saving money or improving outcomes, service managers should actively look for opportunities to reflect this change across the rest of a service or the whole organisation. Sharing ideas for service improvement is a positive sign of a creative and engaged market management team.

Need

Tenders from bidders that effectively translate identified needs into commercial models of delivery.

Problem

Ineffective pre-market engagement can mean suppliers are not geared up to provide the solutions required.

Solution

Suppliers hold that the earlier a market maker can signal to the market what his or her goals are, the more likely it is to get the market response needed. Dialogue is the essential tool to getting the bids that are focused on basic, lower-costs. Market managers should be cognisant that short-term shifts can change a market. For instance, switching to shorter contracts on new terms may address short term needs but could make future contracts commercially unattractive to a number of providers, leading them to leave the market, reducing the diversity of the market.

A market position statement is a tool that is being used by some councils to give supplier markets clarity on what it is they are being asked to provide. By providing a picture of current and projected future demand, contract requirements can be more clearly linked to the larger vision for the area and make it easier for suppliers to address these priorities in their business models and service provisions. At the moment not all councils are making full use of market position statements.

A recent example of good engagement with the market was the Probation Reform approach.

The approach on apprenticeships as part of the Work Programme is a good example of commissioning across geographies over a very short timescale. This apporach delivered efficencies and was praised by both the government and suppliers.

Need

Simple contract models that deliver the cost savings required in the short term.

Problem

Over-specification and the wrong choice of procurement model can result in the wrong sort of market that will not respond with the cost savings you need.

Solution

Pre-procurement negotiations are important to understand if suppliers are able to deliver what is needed, and if not, why that it the case. If suppliers choose not to bid on new contracts, or leave the market altogether; or if the quality of bids put forward at a subsequent tender are of a relatively poor quality, it should be a sign to market managers that the market is not seeing the long-term commercial benefit.

Need

Straightforward contracts that ensure the market is incentivised to focus on cost-cutting service models.

Problem

If the market is not clear that the outcome is short-term cost savings, resulting tenders may be overly complicated and unsuitable for producing short-term cost savings.

Solution

Use pre-procurement engagement to stress to suppliers that initial contracts will be let to achieve short-term cost cutting savings, encouraging contract models that are designed to cut costs while maintaining service quality. Market managers should also tender contracts with suppliers on the understanding of what is likely to come down the pipeline when initial cost savings are achieved.