Navigating the increased KPI reporting requirements

The UK government's Procurement Act introduces stringent guidelines on Key Performance Indicator (KPI) reporting, aiming to enhance transparency, accountability, and performance in public procurement. These guidelines require contracting authorities to set and publish at least three KPIs for public contracts with an estimated value of more than £5 million. This blog delves into the details of these requirements and their implications for bidders and buyers.

Understanding the KPI reporting requirements

Like APMP best practice, the Procurement Act mandates that KPIs must be specific, measurable, achievable, relevant, and time-bound (SMART). Contracting authorities are required to publish these KPIs at the start of the procurement process and report on them regularly throughout the contract lifecycle. The KPIs should cover key aspects of contract performance, such as delivery times, quality standards, and cost management. The aim is to ensure that all parties have a clear understanding of the performance expectations and can monitor progress effectively. And there's an element of threat to name and shame failing bidders publicly – will this prevent low ball pricing and then change control to claw back revenue? Or will this give more ammunition to parent-child type buyer-seller relationships?

The "proportionality" guidance in the context of KPI reporting under the Procurement Act is important. It says that the level of detail and effort required in setting and reporting KPIs should be appropriate to the scale and complexity of the contract. This implies that the KPIs will be relevant and proportionate to the contract's scope and value. Perhaps this protects some of the concerns raised above?

Impact on bidders

For bidders, the increased KPI reporting requirements mean that your proposals must now include detailed plans for meeting the specified KPIs. Bidders will need to demonstrate their ability to achieve these targets and provide evidence of past performance in similar contracts – does your evidence bank contain this today? If not, you may need to investment in data collection and reporting systems to ensure that performance can be tracked accurately and reported in a timely manner.

To ensure a successful procurement process, it is essential for bidders to engage with buyers early in the procurement cycle (pre-ITT). Being proactive here will allow bidders to influence which KPIs are set, ensuring they align with both the strategic objectives of the buyer and the strengths of the bidder. By establishing a collaborative dialogue early on, bidders can shape the procurement to create a win-win situation for both parties, enhancing the likelihood of contract success and delivering real value.

Bidders should exercise caution to ensure that their proposed solutions can deliver the established KPIs. It is not enough to simply answer all the questions in the ITT; bidders must ensure that their pricing is underpinned by a clear, achievable solution. This includes proving to both yourself and your customer that you can deliver on your commitment.

Moreover, bidders must be prepared to engage in regular performance reviews and audits to ensure compliance with the KPIs. This includes providing detailed reports on performance against the KPIs and addressing any issues that arise promptly. Bidders who can demonstrate a strong track record of meeting KPIs and a robust approach to performance management will have a competitive advantage in the procurement process.

Impact on buyers

For buyers, the increased KPI reporting requirements provide a framework for ensuring that contracts deliver real value and meet the desired outcomes. Buyers must ensure that the KPIs are clearly defined and aligned with the strategic objectives of the procurement. This includes engaging with stakeholders to identify the most relevant KPIs and setting realistic targets that can be achieved within the contract timeframe.

Additionally, buyers must invest in training for their personnel to ensure they understand the KPI reporting requirements and can effectively monitor and evaluate performance. This will help ensure that any issues are identified and addressed promptly, and that the contract delivers the desired outcomes.

The increased KPI reporting requirements under the Procurement Act represent a significant step towards enhancing transparency, accountability, and performance in public procurement. By setting clear performance expectations and regularly monitoring progress, these requirements ensure that contracts deliver real value and meet the desired outcomes. For bidders and buyers, this means investing in data collection and reporting systems, engaging in regular performance reviews, and ensuring that KPIs are clearly defined and aligned with strategic objectives.