Contract Compliance

Understanding Complex Procurement Scenarios: Managing Multiple Lots and Capacity Constraints in UK Public Sector Purchasing

In the ever-evolving landscape of public sector procurement, agencies often face unique challenges that require innovative approaches to supplier selection and contract award processes. One such scenario involves managing multiple lots within a Dynamic Purchasing System (DPS) while considering supplier capacity constraints. This article explores the complexities of such situations and offers professional insights into potential strategies to address them effectively.

The Context

Consider a procurement team operating within the UK public sector, overseeing a DPS featuring approximately 23 registered providers. The agency needs to conduct several mini-competitions—specifically three—each corresponding to different contractual needs but sharing similar service specifications and evaluation criteria. The key distinctions among these lots are the quantities of product X that suppliers can provide: for example, Lot 1 requires 3 units of X, Lot 2 also requires 3 units, and Lot 3 needs 4 units.

The Challenge

The procurement team aims to streamline the process by running a single mini-competition with three lots, rather than multiple separate competitions. This approach reduces administrative overhead and simplifies engagement for all stakeholders. However, the central challenge lies in fairly awarding contracts when suppliers’ capacities vary:

• Suppliers have different maximum quantities of X available (e.g., one supplier might only have capacity for four units, another for six).
• There are no restrictions on whether a supplier can win multiple lots or only one.
• The evaluation is based on a weighted score—30% for quality, 70% for price.
• The procurement must comply with the PCR 2015 regulations, ensuring a light-touch approach.

A Practical Example

Imagine two suppliers post-mini-competition:

• Supplier A bids on all three lots, proposing six units of X across them, but internally only has capacity for four units.
• Supplier B bids on two lots, each with three units, fully within their capacity.

Following evaluation, suppliers are scored based on quality and price. The question becomes: How should the procurement team allocate contracts, considering these capacity limitations?

Possible Approaches

A straightforward method involves awarding each lot to the highest scoring bidder, then allocating the maximum number of units that supplier’s capacity allows. For instance:

• Supplier A: Highest score but capacity of four units.
• Supplier B: Next highest score, capacity for six units.

In this case, the procurement team might:

• Award Lot 1 to Supplier A, offering 4 units (maximum within capacity).