In the second of two blogs, we consider that, after reviewing the current operations and looking to maximise the existing contract, what factors a Council should consider when choosing between a Dynamic Purchasing System (DPS) and Framework.
Typically, once a Council has decided it will commission at least some of its Home to School (HTS) externally, it will either use a DPS or Framework. A DPS is typically the preferred solution for most Councils, with a 2022 report from Association of Transport Co-ordinating Officers (ATCO) highlighting that of the 47 Local Authority respondents, 72% were using a DPS to commission HTS. In comparison, only 11% were using a Framework. But which is better?
DPS
For HTS provision, a DPS would be expected to offer improved value where you have lots of inconsistency in terms of your provision, and need the flexibility which the DPS offers.
- Mileage: If you have a high % of routes across multiple mileage bands, this makes it more difficult for contractors to price effectively and can inflate costs. This is where a DPS would be more effective.
- Geography: If you have a significant variance mix of rural/urban roads, this can lead to wide deviations in route prices and favours a DPS which allows bespoke pricing.
- Market landscape: Likewise, if you have a highly volatile market which sees large swings in active providers year-to-year, it can be critical for the Council to have access to new suppliers which the DPS offers.
Framework
In contrast to the DPS, if you have consistency in the type of route which you will tender, then a Framework may be worth serious consideration, not least because it does allow for several benefits, including:
- Cost clarity – Prices are submitted upfront by Suppliers when gaining access to the framework, and which will be used to cost most of your routes. This allows for much improved budget management as you can calculate your route prices in advance of award.
- Engagement – You are better able to have conversations with Suppliers, about which routes they are awarded, and looking to award your more challenging routes to your better-quality suppliers.
- Consistent cost breakdowns – Again, as part of the Suppliers original submission, a breakdown of their costs should be submitted, and what is making up their rates between Driver, Vehicle etc. This can allow variations and inflation to be better managed.
Vice versa:
The below could also be true of either
- Reset the market – If you have been using a DPS/Framework for some time, this can become familiar to Suppliers who know the likely price which will secure them a route, and do not put the time in to considering what the route actually will cost to deliver.
- Reverse auctions – We do find these instil the wrong behaviours in suppliers and contrast with the approach highlighted above. They instil a ‘race to the bottom’ and can see lower quality suppliers winning routes. Equally, if a supplier has multiple opportunities to bid for a route, their opening price may be high with an increased profit element – and who could blame them!
In summary, at Peopletoo we are not fundamentalist about either a DPS/Framework, and its all about your personal circumstances which need to be informed by robust up-front analysis, which we undertake through our Business Intelligence Hub (BIH). As Suppliers will often tell us, ‘either can work, but give us clarity and manage it properly’ (see part 1 of the blog!).
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danny.marsden@peopletoo.co.uk