Sunday, 13 November 2011

A central, sector led, procurement body for English local government?

It has been reported that the Department of Communities and Local Government (DCLG) have floated the idea of a local government, central, but sector led, procurement body for English local government. If an appetite exists for such a body, then local government should develop a proposal and set out how it would work (Jameson, 2011, p.1).  Central government rarely just float such ideas as a conversation topic but must think, from their perspective, it is a desirable outcome.  The irony of the situation is amazing: central government, which believes in localisation, ‘floating’ an idea of a sector led approach!  Perhaps it is semaphore for DCLG saying they would be willing to provide some funding for such a service?   This paper aims to stimulate debate by providing a suggestion how that might work.
Let’s recall that collaborative purchasing was the child of local government in 1957.  It was central government who learnt from local government the benefits.  Local government consortia are well-organised, business focussed organisations who work together to deliver vast savings and efficiencies to English councils they are also experts in letting contracts although not necessarily of the type required. Equally, local government had the Regional Improvement and Efficiency Partnerships and their forerunners since the early 2000s.  Yet with access to these various ‘central’ contracts there has always remained the problem that uptake of such good deals has never been quite as good as one would have expected.  How would a new central body add value and gain the confidence of the late adopters and laggards?  To me what is required is a switch from incremental improvement to a major disruption in thinking and development of new ways.
A new model is called for, not replicating the traditional model of small cohort of experts letting contracts on behalf of the needy many.  Instead a model which represents a paradigm shift and takes the ‘central procurement body’ to a new level while embracing the existing assets of consortia.
The key requirements, to me, are strategic leadership and commitment, closing an acknowledged gap, innovative thinking, utilising excellent information and harnessing the sector know how through collaborative problem solving cross-functional teams.
Strategic leadership has to come from local government itself, unless they see the need and establish the required governance structure, the initiative will be short-lived. The leadership needs to recognise the value of the consortia and that consortia are key stakeholders and providers – consortia could provide the operational purchasing expertise that will be required.  That leadership should also agree the gap to be closed.  A mapping exercise which compares the key areas of expenditure and then agrees which areas should be targeted will be requirement as will rigorous adherence to scope to avoid mission creep.
The mapping exercise needs to be evidenced based.  While there is a requirement to publish expenditure over £500 that information is insufficient for the required strategic sourcing.  A comprehensive information system iwill be required which makes it easy for the information to be gathered and extracted yet protecting commercial sensitivity.  Despite years of investment in core financials and e-procurement there is still some way to go here nevertheless the lessons learnt from the recent transparency regime should be useful in making rapid progress.
Innovative thinking will be critical. Innovative thinking is likely to be best achieved through harnessing the sector knowledge in collaborative problem solving cross-functional teams. The central body should aim to be masters of unleashing the sectors creativity. Social media now makes this possible by utilising communities of practice.  This is not something particularly new but merely taking the existing local government resource to a higher level.
Cross-functional local government problem-solving teams should be quickly established for each of the targeted areas.  The teams should be truly cross-functional including main users and those dissatisfied with old ways – maverick thinking should be encouraged.  The teams should be considered should be task and finish with intensive short-term involvement.  They should be briefed that their remit is not to focus on introducing bigger contracts with the aspiration that all councils will use them but instead to develop a range of approaches which can be prototyped and refined. These teams should be set ambitious targets and trained in category management.  They should then be charged with developing prototypes which can be tested prior to subsequent refinement and rollout.  Rather than ‘one size fits all’ arrangements, the teams should develop a portfolio approach which reflects the diversity of council priorities. For example, when councils have a priority for cost reduction, they should be able to select that option, whereas when councils have a environmental priority they would have an alternative option.  When councils do not wish to make use of central contracts they should have access to the knowledge assets created so that they can let their own local contracts if they so chose.  Contract ‘lots’ can accommodate the diversity aspired to.
For many areas it would be advantageous to have supplier involvement on the teams, but at the very least proposed approaches should be subjected to soft market testing through web-based consultation. For major services, cognisant of strategic commissioning needs, the priorities for contracts should be set by local communities.  Communities of practice provide a channel for that too. 
So, how could the proposed sector led, central, procurement body work?  Governance structure would represent the sector. It will be critical to invest in integrated information systems.  The focus should be on innovative collaborative problem solving to develop a significantly better approaches to addressing targeted expenditure areas.  The problem solving should be facilitated by the central body making use of social media hosted cross functional teams which develop better ways and a portfolio of approaches which cater for the varying priorities of councils and their communities.  Existing consortia could handle the contracting and contract management. Marketing would be the responsibility of the strategic leadership.

Jameson, H. (2011) ‘’Mini Commission’ mooted’, Municipal Journal, 10 November 2011, p1.

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