KPMG: Invest the time in a market consultation

As the expectations of public procurement continue to surge, contracting authorities’ need for clear communication with industry has never been greater. Fran Kehoe, Associate Director, Corporate Finance, KPMG considers the fundamental impact of market consultations for both the public and private sector.

Market consultations are a powerful mechanism for the public sector to “sell” Ireland as a place to do business, which should in turn drive increased competition and capacity in the marketplace. However, often this phase is either overlooked or insufficiently planned.

There is a strong link between developing an initial business case and the ability of the market to effectively respond, otherwise referred to as market capability. A market consultation activity will help to validate that the assumptions contained in the initial business case remain valid and acts as a checkpoint on deciding whether to continue a procurement process or not. Early engagement with the supplier base allows contracting authorities to communicate their high-level plans, which in turn allows suppliers to appropriately plan ahead and consider whether they have the capability to respond or provide time to consider a partnership with other entities.

The Office of Government Procurement promotes the use of market consultations through its guidelines and advocate that it may reduce procurement timescales. Asking questions of the market early on reduces groupthink, encourages decision making and will support better interaction and outcomes. For example, when developing the sustainability criteria for a social infrastructure project such as a local community centre, it is beneficial to engage early with the market. This may identify key issues including supply chain and inflation risks.

Understanding the market’s interest can be attained through the publication of a PIN (prior information notice). Once the level of market interest has been developed, the methodology or delivery model that an entity may use to deliver a solution needs to be considered. In today’s rapidly evolving technology landscape, the mechanism that entities may use to deliver a service or product could vary significantly. Focusing on outcomes rather than inputs can help a contracting authority to specify their requirements without locking the design into a particular solution. As outcome-based approach is not a conventional “off the shelf” solution, a market consultation may assist in verifying the outcome-based specification, identifying existing solutions or identifying alternative solutions. It could be that the market is not capable of delivering the innovation required and a lot of time can be saved from pausing the procurement until the market is ready.

Fran Kehoe
Associate Director
Corporate Finance, KPMG Ireland
E: fran.kehoe@kpmg.ie
W: www.kpmg.ie