ProcServe: Opening Government Procurement To SMEs

Software company ProcServe has an unusual task ahead of it. It has been chosen by the UK government as the main provider of the national eMarketplace procurement solution. Its clients include The Department for Transport, Department for Work and Pensions, Crown Prosecution Service and Bank of England, to name a few.

According to the European Commission, organisations that have already implemented e-procurement save between 5 and 20 percent of their procurement costs. But it’s not just the savings that push the government to shop online. According to EU regulations, by 2016, all public sector purchases in Europe will have to go though the web. And that means ProcServe has its work cut out for it.

Government procurement – Amazon style

A former CEO of Symbian, Nigel Clifford was appointed to run ProcServe in February. By his own admission, he joined ProcServe because he liked the idea of bringing communities together using the most up-to-date technology – Cloud computing, SaaS and the like. The ability to drive efficiency in the public sector was also “an intriguing proposition”.

Clifford has worked with software companies for more than a decade. Before he joined ProcServe, he was at the helm of Micro Focus International, a FTSE 250 provider of software development and testing tools. And before that, he spent three years as the CEO of Symbian, a period when the number of devices running its OS grew fivefold, and the company itself expanded from a few hundred people to over 1500 staff.

“A decade ago, if you would look at any government, you would find many hundreds of contracts being let for stuff like paperclips and office furniture,” Clifford tells TechWeekEurope. “Each department would have its own relationship with the suppliers. Some of those deals would be good, but they wouldn’t be taking full advantage of the buying power of the government.”

“One of the revolutionary steps was to say that we should be holding government-wide competitions under EU rules, to find the best prices from the best suppliers, and use that buying power.”

And this is where we arrive at a question: how does the government interact with those suppliers? While there’s nothing wrong with using pen and paper, a more efficient way would be to use an online platform that allows the buyer to log in and see all of their options, as if they were buying from a regular consumer retailer.

“Everything is electronic, and it’s just like Amazon,” explains Clifford. “I go to an online catalogue, choose what I want to purchase, send you a purchase order, you turn that into an invoice, I pay you electronically, I receive the services, and it’s done.”

Looking for a tattoo artist

Clifford says that although the Internet has been used for procurement for a while, it hasn’t really taken off because it wasn’t centralised. “For the last five or ten years, eProcurement has been stuck because it was used to facilitate one-to-one relationships. ProcServe is actually an eMarketplace, and it offers a wide choice of potential suppliers, all with their own benefits. “

And in this choice of potential suppliers, government agencies can find pretty much anything. Like a tattoo parlour. “This is a real example,” laughs Clifford, but refuses to tell us why the government needed a tattoo artist in the furst place.

“Obviously, the government doesn’t have a contract with anyone, because this is a “once in a blue moon” occurrence. So it needs to “spot-buy”, put up a really quick tendering exercise to find a tattooist in a particular location. The government does it on the ProcServe network, and then any registered supplier can instantly see the tender and bid. As it turns out, we did have tattoo services on the network!”

To become one of the suppliers, organisations can fill in a very simple 19-question form about their history and services. That alone already makes them a part of the trading network. For more serious contracts, there are pre-qualification questionnaires that include requests for ISO certification and various health and safety measures.

Not only does e-procurement have the potential to make savings for the public sector and the taxpayer, it also helps SME’s to break the cycle in which “you can only sell to the government if you are a 40,000 person multi-national”.

“Prior to the Internet, being a global supplier was a big company’s game. Now, any company can have a global reach. The barriers for entry have dropped,” says Clifford.

Her majesty’s plumber

Organisations in the public sector are starting to realise that buying online is the way to go. Soon, every single police force in the country, 43 in total, will use the ProcServe eMarketplace. However, the challenge is to explain how to use these systems, not just point at them and say, “You have to cut costs”.

“I was given advice by a senior government official when I joined ProcServe,” remembers Clifford. “He said, ‘We know we can save huge amounts of money using this system, but do not use this fact as a door-opener when you talk to people.’ Because there will be an immediate concern if someone thinks they are expected to deliver on numbers. Telling them “how”, showing them case studies, describing good practice is much more useful.”

ProcServe gives each of its clients some free consulting time, guiding them through the first days of using the eMarketplace. After years of relying on pen and paper, handling the change is difficult, but Clifford says that ultimately, the electronic system is much easier to use.

The public sector has a notable reputation as a graveyard of ambitious projects (just look at e-Borders). That’s why ProcServe is treading carefully, splitting its programmes into less-ambitious pieces. For example, the National Police Procurement Hub is being rolled out as 43 individual projects, with separate project management. “Slicing it carefully is how you avoid indigestion,” jokes Clifford.

The system benefits from MasterCard payment integration, which means SMEs can be paid on the spot, instead of waiting for weeks. Overall, ProcServe is trying to be as friendly to the small suppliers as possible, creating a completely new way for the government to manage its procurement.

“If I want to put a plumber on the system, because I believe he’s got a good price and provides a good quality service, and we want to transact with him electronically, I can do that. I don’t have to rely on the ‘central machine’ to eventually get to him.”

Test your CEO leadership knowledge! Take our quiz!