The City of Cardiff is the leading commercial centre of Wales and the country’s most popular visitor destination. It is also the headquarters for most national cultural and sporting institutions, and the seat of the National Assembly for Wales.
The City of Cardiff Council provides services for a population of around 350,000. The authority is, in particular, focused on: economic development; education and skills; and supporting vulnerable people in times of austerity. The Council acknowledges the realities of significantly reduced budgets and sees the need for adopting new methods of delivering services to meet this challenge.
The City of Cardiff Council’s £28 Million Passenger Transport contracts were traditionally allocated via the use of a standard l Framework Agreement with 31 external providers operating 500 daily routes. Once the Framework had been let, new suppliers were locked out for the four-year contract period. The Council wanted to change this approach and looked to introduce a Passenger Transport Dynamic Purchasing System (DPS) to make savings over how it sourced provision for home-to-school routes, while providing greater opportunities for new suppliers and to further improve the quality and reliability of the service.
What is a Dynamic Purchasing System?
A Dynamic Purchasing System (DPS) is a completely electronic tendering process for the selection of suppliers who meet a set minimum service requirements. A DPS is similar to a framework agreement as it offers all the same benefits, however during the life of the DPS, new suppliers may join the system if they meet the minimum service standards.
Having carefully considered present and future needs/requirements, the Council assessed technology providers and chose PROACTIS as its primary sourcing and contract solution. PROACTIS Source-to-Contract solutions include Supplier Relationship Management, eSourcing, Dynamic Purchasing Systems, eAuctions and Contract Management capabilities. These solutions would enable the Council to strengthen control and visibility over spending while improving the transparency and efficiency of the procurement process.
The Commissioning and Procurement Team worked closely with the Council’s Transport Management Team and Legal services to research the potential sourcing options. After visiting other Councils, it was agreed that the best sourcing solution to enable new providers to join the market and to deliver savings from a competitive marketplace was to introduce a Passenger Transport DPS and utilise reverse eAuction technology through PROACTIS. The auctions could take place at any time, thereby enabling new providers to join the process provided they met safety and quality criteria.
The Council’s Passenger Transport DPS was launched on schedule in June 2014, ahead of the academic school year, when new contracts would need to start. In advance, a range of providers – from small taxi firms to large coach companies – were invited to attend a series of ‘Meet the Buyer’ events, designed and facilitated in partnership with Business Wales. At these events, the proposed changes were explained. Support and detailed guidance was provided to enable providers to register on PROACTIS and to be able to tender via the DPS. The Council was pleased that over 60 local providers had successfully registered on the DPS within weeks. Council staff managing the process were given PROACTIS training and technical support by members of the project team to ensure the smooth transition to the new system.
Electronic auctions were used to perform the role of sourcing for the opportunities/routes included within the Passenger Transport DPS. The process included the submission of an initial bid from the supplier prior to the running of a one-hour electronic reverse auction where suppliers could bid for routes and compete with other suppliers. The duration of the electronic auction was extended by a minimum of two minutes every time a bid was received within the final five minutes of the scheduled auction time. The project team actively managed and oversaw the auction to respond to any messages sent via the portal or intervene if any errors had been made.
The Council has achieved £588,000 in annualised savings through the new approach which includes the use of reverse eAuctions technology within PROACTIS, which supports procurement best practice and technical automation. Transport contracts were divided into four lots: journeys for taxis with regular drivers; vehicles with 8-17 seats; and vehicles over 17 seats were run as reverse eAuctions, while the fourth lot for ad hoc taxis was put out to tender. The Council was delighted at the response from transport providers, who rose to the challenge in competing for contracts.
The Council can look forward to sustainable savings, thanks to dynamic sourcing solutions that can adjust easily with bespoke service requirements and an ever-updating list of capable providers. The Council is now talking with PROACTIS about other ways it introduces innovation and makes savings, while improving quality.