Engaging with the supplier market
Engaging with the supplier market is important for all procurement processes. However, it becomes especially relevant in the context of SPP. Engagement practices can be simple, such as communicating the intention of launching a tender through an advert, or more complex, such as organizing supplier workshops and events.
In this section, we provide information regarding the importance of engaging with the market, and guidance on the different ways market engagement can be carried out at the different stages of the Open SPP process.
Why engage with the market?
Market engagement practices in the context of Open SPP implementation are normally carried out for the purpose of:
- Assessing market capability
- Maximizing suppliers bidding for contract opportunities
- Promoting trust and transparency
When deciding which procurement categories to prioritize, or considering what sustainability criteria should be introduced in public procurement contracts, it is essential to assess market capability. A successful assessment of market capability will ensure that Open SPP constitutes an opportunity to build on the sustainability work being carried out by local suppliers, while using it as a tool to promote innovation and progressively build market capability.
Market engagement activities will serve to promote tender opportunities, which can result in an increase of the number of bidders in public procurement tenders. Being able to choose from different suppliers, including those who might have not considered public procurement before, increases the chances of finding the best solution to the identified needs.
Engaging with the market offers an opportunity for authorities to transparently share their procurement plans with suppliers, their sustainability objectives, and the motivations behind these objectives, promoting trust amongst stakeholders.
- Gathering feedback on your approach from the market
Sometimes, decisions regarding the structure of certain procurement processes, or the inclusion of specific sustainability criteria, may make it difficult for certain suppliers to participate, or contradict existing market practices. Gathering feedback from suppliers can help to correct this, ensuring that procurement processes are planned in a way to maximize the chances of selecting the best available solution.
A great example of how market engagement practices can help you to shape the procurement approach and deliver greater value is Mexico’s City Ecobici bike sharing system. For more information on how open market engagement approaches can help drive SPP see this report published by The Chicago Council on Global Affairs.
How can you most effectively engage with the market?
Market engagement practices can vary depending on the different stages of the Open SPP process.
Market engagement activities can be applied throughout the different steps of designing your first Open SPP Action Plan. For example, engaging with the market is essential to collect the necessary data to prioritize procurement categories, and to design standardized sustainability criteria. The methods that can be used to engage with the market during this process can include:
- Workshops with suppliers to present sustainability goals, and gather needed data to assess market capability.
- Online consultations to allow suppliers to provide feedback on strategic decisions regarding Open SPP, such as the prioritization of procurement categories.
- Industry events to gain a better understanding of the current sustainability offer in different sectors, and gather information regarding different supply options.
- Surveys and questionnaires distributed online, or in organized events and workshops, to assess market capability, or gather feedback on SPP approach.
- Engaging with priority Open SPP groups, such as SMEs, women-owned, or minority-owned businesses, to understand the barriers that they might face when accessing public procurement opportunities. To understand these barriers, it can also be useful to engage with civil society and nonprofit organizations. Insights gathered can be used to design more accessible SPP approaches.
- Communicating your pipeline of projects will allow different suppliers to better understand your long-term needs, and potential sustainability requirements. This will allow them to better prepare to respond to contract opportunities as they emerge. Doing this can be particularly helpful to widen participation amongst SMEs, who tend to have fewer procurement resources.
Engaging with the supplier market when designing your first SPP Action Plan is essential to share and communicate a major strategy change, take suppliers on the journey with you, and understand what is feasible.
Market engagement activities carried out during the planning phase of a procurement process will be based on the needs that have been identified, and will guide decisions regarding the design and criteria introduced in the procurement process. Market engagement activities during this stage can be applied for:
- Conducting market research to assess the availability of existing solutions to solve the needs that have been identified in the most sustainable way.
- Assessing service model delivery options.
- Beginning to engage around selection criteria, gathering an understanding of what criteria could be introduced during procurement to ensure the selection of the best possible solution. One way to do this is by publishing a Request for Information (RFI) to gather insights from potential suppliers.
One way in which you can engage with the market during the planning phase is by organizing events with suppliers to present their sustainability objectives. These are sometimes referred to as environmental, social, and governance (ESG) days, and are seen as a chance to discuss how suppliers might address sustainability priorities. The insights gathered from these events are used to inform procurement processes. Note that sustainability work in the private sector is often divided in these three ESG areas, instead of the three pillars of sustainable development (economic, social, and environmental).
Once it has been decided to issue a tender, there are different methods that can be used to engage with the market during the tendering process, some of these include:
- Use a Prior Information Notice (PIN) or a notice of engagement to the market.
- Finding or developing channels to engage with priority supplier groups.
- Facilitate supplier consortia, especially SMEs and priority groups.
- Give clear channels for feedback.
PINs are a tool to notify the market of your intention to award a contract and initiate discussions with potential suppliers, allowing you to assess the availability of sustainable alternatives and gather information for development of the tender specifications.
Many existing suppliers might not be aware of the possibility of selling their solutions to the public sector. To encourage all types of suppliers to apply it is important to go beyond just publishing on the usual procurement portal. This can be done by advertising the opportunities in local events, and engaging with existing groups and communities.
Addressing the lack of sufficient resources, often a key challenge for SMEs looking to participate in procurement processes. This barrier can be overcome by presenting a joint offer with other suppliers. Public authorities can suggest this option to relevant suppliers, run engagement events, and share participant details.
It can also be valuable to request feedback regarding the design of the tender, including the procurement approaches used, and how the sustainability criteria have been introduced, in addition to providing feedback to all suppliers once the tender has been awarded.
After ten years of operation, Mexico City sought to expand their environmentally friendly and affordable bike share service to more neighborhoods, upgrade the design and technology, and all at a reasonable cost. The city needed to promote competition in a concentrated marketplace, learn more about the latest bike share technology and innovations, and provide better and expanded service at the same or lower budget.
Mexico City used open contracting to design a transparent procurement process to procure a modern, expanded, and user-friendly bike share network. The city published a Request for Information (RFI) for the first time, seeking resident input on the bike share design, held multiple conversations with vendors, and published their findings on a user-friendly website. This approach enabled the team and the vendor community to make data-driven decisions, promote trust, and deliver on their goal.
The city’s new contract expands the service from 6,500 to 9,300 bikes and from 480 to 687 bike stations, and upgrades the city’s bike share technology and design to be more user-friendly, all at approximately half the operating costs of the old service. Other departments have begun replicating Ecobici’s open contracting strategies for important strategic public projects, and the city also enhanced its electronic procurement system to help others use Ecobici’s approach for engaging vendors, citizens and civil society organizations early in high-priority procurement processes. Read more about this case study here.