Saturday, 26 November 2011

A speech in time: Maude's revisionist revolution in public procurement

On the 20 November 2011 the UK Cabinet Office heralded a speech to be made by Francis Maude MP (Minister for the Cabinet Office and Paymaster General) as “… a package of measures that will revolutionise how government buys from the private sector.”  (2011a).  Given the anticipated impact, closer examination of the speech is justified to establish the validity of such a claim.   A review of the speech (Cabinet Office, 2011b) does not reveal any such revolutionary in initiatives but, on the contrary: a failure to demonstrate appropriate use of evidence based research; a failure to have consistency in definition of key terms; a failure to understand existing policy; and a failure to collect and learn from lessons from the past.
This paper critiques the speech providing evidence of these failures prior to setting out conclusions.

Failure to demonstrate appropriate use of evidence based research
As a result if comparing the value of UK (3%), Germany (1.9%) and France (1.5%) awards to foreign businesses, Maude says UK public procurement has a bias against British suppliers.  He also asserts that France and Germany don’t break any of the public procurement rules. 
The logic that 97% of the value of UK public procurement is with the domestic market indicates a bias against the domestic market appears a weak foundation for policy.  Especially since it is not evidenced that the imported 3% could be supplied domestically.  The claim that France and Germany “do not break any rules” only has relevance if supported by relevant and useful case studies.
A question also arises over the evidence that aiming to build long-term strategic relationships is compatible with assisting SMEs and the Third Sector.  At face value such strategic relationships would be expected to create an additional entry barrier for SMEs and the Third Sector. Is there any evidence that such a shift will help overcome the so called “anti-UK bias in the way our public sector does its shopping”.  
One of the initiatives that has already started has been to provide the largest suppliers with a single point of contact to engage across Whitehall.  No evidence has been provided as to the benefits this has achieved or that it has not adversely affected those who do no have that access.
The Minister states the average cost of each French public sector procurement is  £19,000 while in the UK it is £46,000, and that typically UK bidder costs are four times as much.  Set alongside this is the example of it costing one charity £800,000 preparing to bid for a local government contract.  It would have been useful if the evidence on how these costs were made up so that steps could be taken to taken to apply a targeted approach to reduction.  Logically this should be a higher priority than reducing purchasing timescales.
The proposal is to set a presumption against the use of competitive dialogue.  This appears a bizarre statement given that the Regulations already have a presumption against competitive dialogue in that the procedure is only available for complex procurements; effectively when there is no other alternative.

Failure to have consistency in definition of key terms
There has been an on-going discussion on the differences between purchasing, procurement and commissioning for some time.  Drawing a variety of sources including evidence given by a former Cabinet Office Minister of the Office of the Third Sector to the Public Administration Select Committee, and the Cabinet Office Third Sector Action Plan (2006, p.5), Murray (2009) sought to corral UK central government interpretations and provide a definition of commissioning.  The Cabinet Office have separately published ‘Eight Principle of Good Commissioning’ (Murray, 2011).  Yet Maude says “Before procurement should come commissioning” implying that commissioning is merely having early dialogue with the market – this only represents the second of the Cabinet Offices own Eight Principles and is much narrower than that presented by a previous Cabinet Office Minister and Murray’s 2009 research.   Later in the speech Maude adds to the confusion by implying that commissioning is synonymous with purchasing.
Then Maude refers to “New lean sourcing”.  Lean supply was developed as part of the Toyota Production System and reported as long ago as 1993 (Lamming) and case study evidence of its application in the public sector reported in 1998 (Erridge and Murray, 1998).   The principles of lean supply appear to replicate those Maude espouses – why therefore use a new term or indeed imply that lean supply is new?
Consistent us of terms becomes particularly important when it is proposed there will be a new training initiative, the Commissioning Academy, otherwise there is likely to be significant confusion which itself will act as a barrier to business.  Equally the use of a new term when an existing is in place will reduce the body of knowledge which can be drawn upon.

Failure to understand existing policy commitments
It would have been assumed that prior to announcing “measures that will revolutionise how government buys” there would have been a comprehensive scan of how government currently buys and existing procurement policy.  It is therefore surprising that the Minister’s speech implies a lack of awareness of recent Cabinet Office initiatives concerned with buying, specifically, the Third Sector Action Plan, which included the Eight Principles of Good Commissioning and the National Programme for Third Sector Commissioning (Cabinet Office, 2006a), and the Social Enterprise Action Plan (2006b).  These set along side the policy commitments of the Compact, Small Business Concordat (Murray, 2011) and the recommendations of the Kelly Report (2003), to cite only a few of many, address most, if  not all, of the speech’s attempts to ‘revolutionise’.  This lack of awareness is not only a terrible indictment but also begs the question how policy is actually developed.  Far from a ‘package to revolutionise’ this is a recycled package.
This is not to suggest that progress on current initiatives has not been made but, if it has, that is ground gained from a previous revolution.  But what is to happen when organisations are asked  to effectively replicate what has gone before.

Failure to collect and learn lessons of the past
Given that the attempt to revolutionise represents nothing new, the biggest failure of the whole speech is its failure to say what will be make the proposed changes work.  One would have hoped these lessons learnt would have been stated and the confidence given to the audience that this time implementation will take place.  Murray (2011) addressed the failure of a number of the earlier initiatives to cascade from policy to embedding in procurement strategy, procedures and performance management.  The speech lacked an explanation of how the ‘revolutionary initiatives’ will be monitored.  Without that performance management it is difficult to believe that the required progress will be made.

Conclusion and discussion
This paper is not concerned with subjecting the ideas set out in the Minister’s speech to critique with the aim of defeating it.  On the contrary the author supports many of the ideas.
However, the ideas will not revolutionise how government buys because most of initiatives are far from new but recycled.  That is not to say that some of the initiatives should not be re-emphasised at a time when procurement at a time when procurement focus appears to have drifted to a focus on price.  Yet policy makers need to understand there is an enormous chasm between saying something will or should happen and it actually happening – the revolution would need to be embedded in procurement strategy, procedures and performance management.  In the absence of a robust approach to performance the revolution, recycled or not, can only be expected to remain a pipedream.  A failure to implement procurement policy should be a concern as it weakens the whole foundation of the austerity strategy (Muarry, et al, Forthcoming). 
However the other failures identified in this paper, namely, demonstrate appropriate use of evidence based research, have consistency in definition of key terms, understand existing policy and commitments, and, collect and learn lessons from the past, should be of greater concern as they indicate a weakness in policy development and delivery.
Beyond that there is a weakness in the rationale, for example, does it really make sense to discriminate by providing special access to some firms while denying that access to others?  What happens when those who currently have access are deemed to be no longer strategic?
It is hoped this paper will help move forward the revolution in public procurement but the fulfillment of that vision will only be known if a baseline is established now and a subsequent outcome evaluations plan set out and realised.

Cabinet Office (2006a)  “Partnership in Public Services:  An action plan for third sector involvement’ accessed 25 November 2011
Cabinet Office (2006b)’ Social Enterprise Action plan: Scaling new heights’,
Cabinet Office (2011a) ‘Radical package unveiled to support business and support growth’ accessed 20 November 2011.
Cabinet Office (2011b) ‘Crown and suppliers: A new way of working’ accessed 21 November 2011.
Erridge, A.F. and Murray, J.G. (1998) ‘The Application of Lean Supply in Local Government’, European Journal of Purchasing and Supply Management, Vol.4, No.4, pp.207-221.
Kelly, C. (2003) ‘OGC Report to the Chancellor of the Exchequer:  Increasing Competition and Long Term Capacity Planning’, access 25 November 2011
Lamming, R.C. (1993. Beyond Partnership: Strategies for Innovation and Lean Supply. Prentice Hall, Hemel Hempstead.
Murray, J.G. (2009) ‘Towards a common understanding of the differences between purchasing, procurement and commissioning in the UK public sector’, Journal of Purchasing and Supply Management, Vol.15, No.3, pp.198-202.
Murray, J.G. (2011) ‘Third sector commissioning and English local government procurement’, Public Money and Management, July, pp.279-286.      
Murray, J.G, Erridge, A.F., and Rimmer, E. (Forthcoming)  ‘International lessons on austerity strategy’ (forthcoming) International Journal of Public Sector Management.


  1. Brilliant!A great analysis - I too was very puzzled by the 3% of spend going out of the ocuntry indicating "anti-UK bias"! I've aksed an FOI question on that.
    I will be linking to your analysis next week on the Spend Matters blog..
    Peter Smith

  2. And in case you didn't pick it up here's how Maude's speech progressed into the Chancellor's Autumn Statement delivered on 29 November:

    para. 1.122 In order to help build capability in strong UK-based supply chains and support SMEs and mid-sized businesses, the Government will:
    - introduce a package of measures to deliver better value for the UK from public procurement. Having already published procurement plans for construction, wider infrastructure, information and communication technologies and facilities management, the Government will publish medium-term plans setting out its procurement needs for other sectors by April 2012. This will give suppliers the confidence to invest for the future and compete on a level playing field; and
    - simplify the procurement process to reduce burdens on industry. The Government will make better use of pre-procurement dialogue with suppliers to ensure procurement processes are well designed and quickly carried out. The Government will complete all but the very biggest and most complex procurement processes within 120 working days by introducing the Lean sourcing process from January 2012."

  3. One of the largest UK public sector spends is the NHS which seems oblivious to the Maude mantra. When will Lansley feel the hot breath of his cabinet colleague and be forced into admitting that the average hospital and newly formed Clinical Commissioning groups do not want to collaborate. The Annual Operating Plan for the NHS in 2012/13 has this to say about Procurement:

    Trusts’ non-pay expenditure typically accounts for 30 per cent of their expenditure; therefore in the current economic climate it is vitally important that this expenditure is managed efficiently and effectively. We know trusts can do more to generate savings through better procurement and all organisations need to look at how they can do this well, individually and collectively. This is an important part of meeting the QIPP challenge.

    The Department is preparing a procurement strategy to be launched by April 2012, to help trusts improve their procurement performance. We will expect trusts that spend more on goods and services than their peers and do not use national frameworks where they exist, to justify why they are doing so under a comply or explain regime.

    I find it hard to believe, as someone who is involved in trying to set this procurement strategy, that there hasn't been one before!