Intro to Dynamic Purchasing Systems

It is probably a bad idea to start any blog with a reference to legislation, but this particular little gem could transform welfare and employment services in the UK. Dynamic Purchasing Systems (DPS) are now being rolled out across central and many local Government departments. Most recently (at the time of writing), the Department of Work & Pensions has launched its DPS for Jobcentre Plus external purchases - likely to cover everything from CV-writing support to specialist 1-2-1 coaching for vulnerable groups. DPS will be the place where DWP Work Coaches go to buy specialist support to help people get back into work.

What is a DPS?

At its simplest, a DPS is like a framework but with a few key differences: lower administration, no big or time-limited competition, entry at any time, and entirely run through digital channel. As well as the links above, a good summary can be found here

What does it mean for Commissioners?

If run well, we should see a wide range of services move onto DPS. The LGA cites some key improvements to DPS in the 2015 revised legislation. Significantly quicker and easier to administer, DPS also has the power to deliver real strategic objectives more effectively.

  1. De-risking procurement: Smaller and more agile purchasing means reduced risk that you will buy a service that becomes out of date. When needs change, so do the purchases. And good performance can be rewarded by repeat purchases.
  2. More open competition: SMEs, social enterprises and the third sector are much more able to engage with DPS opportunities. Particularly for DWP provision, the DPS could be seen as the future of provision - a significant move away from awarding large, centrally-procured contracts.
  3. Innovation & social value: Done right, DPS can deliver far greater innovation and social value. Your services will be more open to competition, and Suppliers can have far greater reassurance that investing in better outcomes and service delivery will result in funding.

But Commissioners will need to get their market strategy and communications right. If information does not flow out to Suppliers about how well they are doing, there will be a tendency for less market entrants, less innovation, and reduced quality. Anecdotal feedback from DWP's proof of concept suggests that lack of feedback is putting some suppliers off participation.

What does it mean for Suppliers?

DPS potentially means a huge shake-up of traditional bid-led sales processes. Will it be the end of bidding for large scale contracts with 'guaranteed' funding profiles? DPS is just one of an array of tools at Commissioners' disposal, but it is potentially very powerful and will grow. Suppliers will need to change mindsets to adapt (as many already are):

  • DPS is more like 'spot purchase' so Suppliers will need to be able to price based upon individual service users, so understanding the likely demand will be crucial. There is a big risk around certainty of return on investment. Welfare spending is particularly capricious, so investment decisions in the absence of a contract will probably feel much less attractive.
  • Sales processes will be less reactive, but more responsive and transactional: Growth in funding through DPS will be by understanding the buyer and their service users. If you are not meeting demand, you will not get income.
  • Lower bidding costs: After the initial investment of gearing up to DPS, your investment should increasingly be in service improvement and customer engagement. Bid writers beware!

Children's services and disability support organisations will be very familiar with DPS-style commissioning and mini-competitions in the fostering and adult social care sectors. These are typically run through frameworks but are beginning to switch to DPS. Could it work in employability support? It should, but to get the most out of it Commissioners should bear in mind that a strong supplier market needs stability and communication.