The Lean Sourcing Process Pippa Bass, Deputy Director, Procurement Capability and Process Improvement UNCLASSIFIED 20/04/2017 UNCLASSIFIED

Background At the end of 2010 the Minister for the Cabinet Office, Francis Maude, announced a “Lean Review” to uncover wasteful practices and unnecessary complexity in the Government’s procurement process and to suggest actions to rectify them. The objective was to examine how the procurement process can be accelerated within UK central government to make doing business with government faster and cheaper for buyer and supplier. The 6 week study investigated two examples of recent procurement: both competitive dialogue for ICT services in central departments. The study found that there were significant savings to be made in time and cost by working in a more efficient and effective way.

Lean Review Findings Five Key Themes

Lean Review Output Phase Two One of the study outputs was a proposed new way of managing competitive dialogue procurements, based on lean principles and within the existing legal framework, that eliminates waste and unnecessary sequential activity. From this starting point, the Cabinet Office has developed a “standard solution” - a suite of tools aimed at procurement practitioners for the sourcing stages of competitive dialogue, restricted, and open procurement routes.

Standard Solution Standard Operating Procedures (SOPs) A set of high level desk instructions describing the best known method for carrying out the activities described in the value stream map The Standard Solution enables the execution of the lean sourcing process. It provides a suite of tools that you can use to execute the sourcing process from business need identification and baselining through to contract award & signature. Procurement Route Decision Tree A tool to assist procurement professionals to think through and identify the most appropriate procurement route for their requirement. Visual Management A way of displaying information to drive the performance of the process & specific parts of the process KPIs Performance indicators to measure turnaround times, cost of running procurements, resource capability & indicative supplier costs of bidding Team Implementation Plan (TIP) An action plan showing who will do what and when in specific functions and processes

Future State Value Stream Map The Value Stream Map (VSM) is a route map showing what should happen (activities) and the corresponding outputs for each stage of the procurement process. The VSM sits at the centre of the standard solution. The VSM covers the stages of procurement from policy through business need identification & baselining, market analysis & sourcing strategy, supplier identification, execution of sourcing strategy, finalising contract and handing off to contract management.

What’s Different - Overview Sourcing Process Publish a project specific PIN to warm the market up and advertise the industry engagement event Business need & baselining Market analysis & sourcing strategy Supplier identification Execution of sourcing strategy Finalise contract Mobilisation Establish a performance hub and use visual management to drive the process Industry boot camp to capture the suppliers’ views on your requirement, on the viability, and on possible delivery options and where appropriate to facilitate meetings between suppliers to explore the potential for the establishing consortia, partnering arrangements and / or subcontracting opportunities. Pre-OJEU readiness - the preparation and subsequent publication of a bidders pack at OJEU including requirements, draft terms and conditions, selection criteria, evaluation strategy and criteria and procurement timescales. This transparency allows suppliers to make informed decisions as to whether they wish to bid. Execution of sourcing strategy - for the competitive dialogue procedure this means: the elimination of lengthy proposal documents, the use of an outline solution template to replace the ISOP stage and use of the draft contract as the basis of the dialogue. Driven by visual management

What’s Different for Competitive Dialogue procurements – Focus on Dialogue Supplier identification Execution of sourcing strategy through dialogue Invitation to participate in dialogue (ITPD) includes: Outline Solution Template Draft Contract No ISOP An outline solution template is issued with the ITPD and bidders are given two weeks to complete the template. At the beginning of the first dialogue bidders present the outline solution. The presentation and template are evaluated and the authority may down select at this point. There are no further proposal documents. The draft contract is used as the vehicle for the dialogue so the detailed solution emerges in the form of contract schedules. All bidders are on site for dialogue with continual access to the client, time boxed dialogue sessions are run using a dialogue plan established back at the sourcing strategy stage. Evaluation takes place throughout the dialogue, rather than at the end as a separate activity and bidders are given feedback. Before closing the dialogue the draft contract is reviewed with bidders at the final session in each case. At the invitation to submit final tender the draft contract is issued to all remaining bidders with final terms and conditions and they are invited to submit their final solution and final price in the form of the final contract. Only simple clarifications of the final tender (mistakes, omissions, options, variant bids etc) take place after the dialogue has closed.

Current Activity Working with Departments on live procurement projects known as “pathfinders” to test and refine the process. Piloting a training programme to explain how the lean principles are incorporated into the new Standard Solution, and evaluating prior to further roll out. Developing a ‘lean’ sourcing manual for the Minister of the Cabinet Office to launch in January – the principles of continuous improvement will mean the Standard Solution is available on-line to government procurement teams. Executing a communications plan to ensure procurers, suppliers and other key stakeholders are aware of the work and ready for roll out.