Political procurement and boobs: A cautionary tale

Yesterday I asked, through Twitter, if anyone understood the £80m government subsidy which contributed to the successful winning of a contract by Bombardier and how such a subsidy didn't amount to state-aid. I genuinely wanted to know as I have had a longstanding interest in using procurement as a tool for economic development and if some new strategy had been discovered.

Today we've learnt that Justine Greening may have made a boob. The Department for Transport didn't actually play any part in the competition and Bombardier don't know anything about the celebrated subsidy.

Why

Freedom to enter bad contracts

What would you do if a supplier gave you an invoice for a sum which you knew was clearly far from value for money; say £242 to change a padlock on a garden gate?  Well, you could do a comparative price comparison to establish a reasonable rate, ask for a breakdown of the costs, challenge the amount, say that's not a reasonable rate but I will pay you £242-x, ... there are many options.
But what if the supplier said you'd contracted on the basis of that fee, namely, a very bad value for money rate.

Contract law isn't based on good value, it's based on an assumption that the parties have the intention, competence and free will for one party to make an offer and the other to accept, it's based on agreement to pay a sum in return for the delivery but not that the sum be reasonable.  There is no assumed professional competence, just legal competence - the two are entirely different.  In fact we seem to have seen many examples legal competence partnered with questionable professional competence.

So before you give the

Christmas present

In the off chance that someone is reading this blog today, I hope you have a great Christmas and a very happy 2012.

Today's about celebrating the birth in a filthy stable of someone the majority didn't see any value in listening to: Wonderful Counsellor, The Mighty God, the Everlasting Father, King of Kings, Prince of Peace, Emanuel, God with us.

Christmas gives hope of a better future for everyone.

A double helping of Christmas cheer and IT procurement woes

This morning I read Peter Smith's exclusive on a previously undisclosed undisclosed procurement capability review.   I gave a cheer for Freedom of Information.

I then picked up my paper at the local shop and read the wonderful headline 'Patients get right to see medical records online' and laughed.  I laughed for three reasons.

Firstly I have spend the best part of a year

Ministry of Justice finds IT Offender for Probation Services

When I last wrote about IT fiascos I referred to the need for political ownership and effective use of gateway reviews.  But IT procurement just seems to keep on giving lessons, if not unwarranted public monies to the IT wizards in the midst of an Austerity Strategy.

The latest debacle is found in the Probation Service's new £250m IT system for the whole of England and Wales.

A Christmas spin: Investing, giving, shopping

I was always very impressed by Julia Unwin’s ‘The Grant Making Tango’. To me it is a must read for any procurement professional (perhaps a last minute Christmas present) in setting out the options appraisal for the procurement decision of Grant V Contract

The guide basically refers to purchasing as ‘Shopping’ and then differentiates grants as being either ‘investing’ or ‘giving’.

You ‘give’ when

The value of a profession

Who places the value on a profession?  Is it the profession, say the BMA? The user, say the patient? Or the patient's agent, say the PCT? Or even the professional, say the GP? To all those stakeholders the professional accreditation demonstrates something to do with quality but is the value of that accreditation the same to each of those stakeholders?

I remember well the day the envelope arrived confirming I had gained the final results of my professional qualifications. I knew I only had to demonstrate sufficient practitioner experience and I would gain the magic MIPS, yes, it was pre-MCIPS. I had invested in student fees, exam fees, books and hours of home study - I obviously valued MIPS at least worth those costs otherwise why would I have bothered - my employer, at that stage placed no value of MIPS. But I also placed a longer term aspirational value on IPS differentiating the profession and maintaining high value positioning, particularly when 'Chartered' status was gained.  

CIPS, at one time, had a remarkably successful marketing campaign that led to many procurement vacancies requiring MCIPS - it was the professional qualification to open doors but also to close the door to snake-oil salesmen and charlatans. 

Now let's consider the medical profession.  The BMA are robust in defence of the profession, while CIPS appear to join those who throw stones at their members (what else can be take from the CX's responses to recent criticisms of public procurement).  1,000 doctors are currently under investigation by the BMA over their competence - it's the profession who are now investigating competence to practice, post qualification.  When was the last time CIPS reviewed the competence or even ethics of those in the profession and can it?  We hear about 'licensed to practice' but is that an answer or alternative?

So what triggered my train of thought today.  Well it was triggered through the appointment of a Head of Procurement.  Three MCIPS professionals (two of whom also held Masters in Purchasing) successfully navigated the assessment centre along with a Building Control Manager.  Who got that position?  Of course it wouldn't be worth discussing if it was one of the three MCIPS - it was the Building Control Manager!

This raises interesting questions for anyone interested in the value of MCIPS as we have stakeholders ascribing value.  I'd be interested in your view.

Why did the appointment panel view MCIPS of so little value that they looked past it? To them the value appeared zero?  

How did the Building Control Manager assume that a Head of Procurement post was so 'un-specialised/unprofessional' that they could so easily beat 'the professionals' for the post?  Implies zero value for MCIPS there too.  Then we can make some assumptions on the likely future value placed by the new Head of Procurement's in appointing and rewarding staff on the basis of MCIPS? A very unlikely investment when Building Control qualifications seem to have been more personally rewarding - should the procurement team follow the example and train in Building Control, if they do, what is their likelihood of getting shortlisted for a Building Control Manager position without experience? 

So the analysis implies the appointment panel, the Agent of the user (purchasing's internal clients) in this situation did not consider MCIPS a differentiator and indicator of professional competence nor did the new Head of Procurement. The MCIPS candidates, I assume, now also question the value of the professional membership.

What about the actual users of the new Head of Procurement? We will have to wait and see - perhaps the value will be established by the organisation after they face a public procurement challenge, in which case the value could be the cost of the challenge?  

Probing deeper the Head of Procurement role being discussed required the successful candidate to introduce category management, amongst other specialist skills.  I've learnt that, surprisingly, no technical questions were asked during assessment or the interviews.  Could the value be the savings lost as a result of the absence of technical competence to deliver savings?

Finally we can try to establish CIPS value of MCIPS through this appointment?  Do they scan advertisements or use social media to spot the vacancies and then take the initiative marketing the value of MCIPS? Did the consider the risk of what could happen if the organisation appointed a non-MCIPS Head of Procurement?  Did they offer to provide a professional adviser to the appointment panel to ensure the person had transferable technical competence, given that this appointment was for the most senior procurement position in the organisation and there was no one in the organisation with that know how? All that suggests low value allocation based on acceptance of the risk of a none MCIPS appointment.  Finally, what value will CIPS give to MCIPS if the new Head of Procurement at some stage in the future applies for MCIPS through some sort of 'I've been doing the job' route. If, in that eventuality, CIPS award MCIPS, the three MCIPS candidates, the appointment panel, the Procurement Unit, the users of the Procurement Unit will make their own judgements.  Well, perhaps the value could be the new Head of Procurement's potential membership fee set against the potential loss of membership fees for those adversely affected - is that a net loss?  We've seen this before and no doubt will see it again! 

Perhaps it is time for CIPS to go back to a major proactive marketing campaign of demonstrating  the added value of an MCIPS professional procurement manager, why the procurement profession is so unique and MCIPS the only licence to practice.  Such a proactive strategy is starting to appear necessary although it may well be a distraction from world domination through numbers.  Perhaps 'bums on seats' do not represent value, but the cumulative value placed by the stakeholder community. Perhaps CIPS should be leading appeals in these types of situation but I suspect the legal services benefit does not provide such access, anyway that's about bolting horses and shutting doors!

What do you think? 

CERN ideas for procurement

I listened with interest yesterday for the awaited announcement that the infamous Higgs boson had been detected.  Then I became increasingly frustrated as the scientists started to make statements such as 'we may be on the verge of a new discovery' - yes, they may have been on the verge of a new discovery but the scientific method is about testing and evidence, not wishful thinking, no matter how much you anticipate a successful outcome.  Now we've learnt that being on the verge of a new discovery means an announcement 'with confidence' really means within the next year.

Nevertheless I continue to be impressed with the scientific rigour being demonstrated in the search, wouldn't it be helpful if the scientists used the current media coverage to share something about how scientific rigour could help society in general and procurement in particular!

For example:

1. In September the scientists found evidence that questioned the accepted wisdom that nothing moves faster than the speed of light.  What did they do?  They set out their argument and published among their community in the hope that others may spot a flaw in their reasoning.  Now that's risk management.  
2. CERN is about testing theories.
3. The team at CERN appear to be at least two separate teams both trying to solve the same problems independently, yet sharing the iterations of their findings.  The two teams are competing separately to find 'the answer' not just for their team.
4. The team at CERN are there for the long haul - the project started in 1954 - it's a collaboration which predates the 1957 Treaty of Rome.  Some of the teams have been working for 20 years.
5. CERN is about bringing together 10,000 scientists, from many different countries and backgrounds, to solve problems.
6. The investment at CERN is big, billions.
7. CERN has been the home of three Nobel prize winners.

So what could be the lessons for the procurement world?

• Procurement has its own scientific community but what theories are emerging and being tested?
• One of my continual gripes has been that procurement academics have been so obsessed with empirical evidence they only report what they have found through research.  Well to me that says the real scientists are procurement professionals experimenting to see what works for them;. Unfortunately though, my experience is that those same 'inventors' are sometimes quite reticent about sharing ideas.  What I would like to see would be academics floating innovative ideas in practitioner and scientific publications so that flaws in those ideas and suggestions for improvement can be spotted and then refined.  If that happened we'd start to see and progress what Peter Smith recently advocated as 'Procurement Activism'.   Now that requires some change in the status quo - we'd need procurement academics to demonstrate problem based thinking and solution generation and working with practitioners (we could learn from Brazil); we'd need a forum for the thinking (perhaps blogs and a linkage with Supply Management); we'd need procurement practitioners to pose problems and also challenge the academic thinking (role reversal!); we'd need bravery;
• In procurement we frequently have different teams competing but not for the common good.  I would like to see more problem based teams working on how cost reduction could be delivered for example to mutual benefit.  It could be, for example, to work out the best approach to outcome specifications - there could be the suppliers team and the buyers team, then they could both come together to identify the optimum approach which would minimise the potential for legal challenge. For that to happen we'd need culture change. We'd also need to learn from the scientists that problem solving takes time.
• Supplier appraisals and tender evaluations are frequently team sports, by which I mean one team takes certain aspects of the submissions and then come together as a team to reach a consensus.  Yet, for the most difficult, high risk and potentially contentious procurements I don't think I have ever seen evidence of two entirely different teams for evaluators doing their evaluations independently and then comparing results - would that not increase objectively and reduce risk?
• If you want to make a big impact time is required, short-termism is counter-productive to solving the big problems.  We've had procurement consortia since 1957 and there's still some way to go before we have agreement on the optimum mix between local, regional and national procurement. But at least the people in CERN are on a journey of discovery - I sometimes ask myself why we seem so reluctant in the procurement world to say we just don't know but at least we're closer to an answer.  Can you think of the last time any procurement speaker uttered such heresy. 
• Where is the big investment in procurement? Over recent weeks I have heard from colleagues in universities which have had an interest in procurement that they are suffering from reduced budgets, reduced post-graduate student income, and reduced public sector investment in procurement research and learning.  Of course it is only recently we learnt that CIPS had reduced its investment in university chairs.  So are we seeing procurement investment for long-term saving and delivery improvement? 
• Where is the procurement equivalent of CERN's 10,000 scientists being brought together to solve problems, for example, recovery from the global economic crisis?
• We've Noble prize winners for physics, economics, literature, peace, ...  Now does anyone seriously think procurement's contribution will ever be recognised, and if it was, what would it look like and would be recognise it?

Am I wrong?  Is this happening? What do you think?

Titanic lessons for programme and project management

Last week I discussed perceived problems relating to the Titanic Signature Building and the perceived funding shortfall related to the procurement approach.  Now more information has emerged which goes beyond procurement and provides lessons for programme and project management.  To me there some shortfalls in the areas uncovered.

Today the Northern Ireland Audit Office published its report on 'signature projects' which provides further insights into a portfolio of five projects (£159m), of which the Titanic Signature Building is only one.  Interestingly the review is published prior to completion of the projects, so it can only be hoped that there will be a further report.  There must also be a rationale for publication at this stage, presumably to collect lessons learnt.

Looking across the portfolio, delays and shortfall in delivery are attributed to deficiencies on overall project planning, management and governance arrangements, a shortage of funding, time-limited funding, match funding issues and inadequate programme and project level performance management.   One of the criticisms is that each project stood alone and project actions plans were developed independently and organically.  Those are useful lessons which I don't intend to argue with, but merely supplement.

It is surprising that it does not seem to been recognised that this was a 'Signature Programme' and should have been managed as such, completed with a Blueprint and what were standalone projects managed as a Dossier, or at the very least a Portfolio.  Indeed as opposed to the NIAO view that an 'over arching projects board' would have been helpful, what was needed was a Programme Board.  That Board then could have looked across all the projects and also considered the total economic impact as opposed to discrete project boards defending their own interests.

But were the individual projects well managed?  Well the NIAO conclude that even at the project level there were a lack of SMART objectives and consequently a lack of performance management.  Time, cost and quality in terms of project performance management aren't sufficiently addressed, so I'm not surprised that outcomes don't feature.  I'm reminded of an excellent paper on 'muddling through'.

Also amazing is that while the projects date back to 2004, funding was only identified in 2008. In the meantime funds were diverted from elsewhere - no questions appear to have been asked about the impact of that displacement of funding!  We find a wonderful recommendation "When public sector capital projects are approved for implementation, every effort should be made to ensure that funding is made available at the same time".  Why are MSP and PRINCE2 standard methodologies not just advocated?  Is it conceivable that Northern Ireland could have a collection of major capital projects started but then completion unaffordable?  

While discussing the NHS IT procurement fiasco recently, I highlighted the need for senior politicians to be closely involved in projects, fully appraised and potentially act as SROs - the NIAO haven't identified that as a problem, so that lesson may need to be learnt some time in the future.  Some projects seem to have SRO's while other don't - of course SRO's relate to programmes as opposed to projects. We now also have a new role, the 'Project Promoter' - to me this is a major flaw, SRO's like (Project) Executives, are accountable, responsible, ensure the funding is in place and act as champions, 'Project Promoters', who lack a role definition in the report, only appear to be champions without accountability.  So, from the public sector, who exactly is responsible/accountable for this major investment?

It seems no time since the spotlight was on the Millennium Dome and the VfM calculations relating to visitor footfall.  Therefore it would have been assumed those lessons would have been taken on board (excuse the pun) by those responsible for the Titanic Signature Building and exposed to a robust sensitivity analysis.  Sometimes projects just keep on giving the same lessons to be learnt for the future!

"When will they ever learn", when will we learn?"

BRAZIL - observations of a ‘BRIC’ (Part 2)

I made the 45 minute flight from Rio to Belo Horizonte, in Minas Gerais. Minas Gerais has 853 municipalities! It wasn’t the recently opened new City of State Administration (four buildings which cost £250m to build and houses 15,000 staff), which impressed me most, but the hunger of the strategists I met.  This team of departmental directors briefed me on their work and 20 year strategy.

They demonstrated a real hunger to learn from the UK experience of strategic commissioning, community engagement in shaping priorities, how to move towards a focus on outcomes, pooled budgets and community budgets.  They wanted to learn from the experience of the how the UK had encouraged examples of innovative local government practice and then shared those case studies so that others could learn and speak face-to-face with the innovators. Communities of Practice and the improvement work of the former IDeA were also of great interest. This team had a real and visible hunger to learn.  They want to be the best in Brazil.  I discovered that this group, with an average age of around 25, were the outcome of a strategic approach to recruitment.  All students in secondary education had an option of sitting an exam.  Success in the exam covered not only the cost of their degree in Public Administration but a guarantee of a two year post in the Minas Gerais state administration.  The public sector was clearly reaping the benefits. Would the UK make such an investment? 

Singling out Minas Gerais is perhaps unfair.  When I delivered a similar seminar to the state of Rio, those staff wanted to learn more and more about the same subjects, namely, strategic commissioning, community engagement in shaping priorities, how to move towards a focus on outcomes, pooled budgets and community budgets, developing and sharing council good practice, and sector led improvement.  They also wanted to understand consortia and shared services approaches to procurement. Despite giving them many opportunities to close the discussion, they opted for a four-hour seminar. I doubt I did more than whet their appetite – certainly their enthusiasm at the end of four hour for asking questions had not waned.

I also met with state owned public sector organisations.  The state oil company, ‘Petrobras’, and pharmaceutical company, ‘Bio Manguinhos’ wanted a more strategic procurement.  Amongst the big questions from them were: How do we get the organisation to work better together in procurement?  How do we introduce category management and set up consortia purchasing?  How do we cope with a legal environment that is far more prescriptive than that of the European public procurement rules?  Alongside operational questions such as, how would we best buy travel and hotel services?

For someone with a public sector procurement improvement background I thrived on these seminars, discussions and questions.  But what was fascinating to me was the engagement with the academic community in supporting municipalities, state and state owned businesses.  The GPI (Groupo de Producao Intergrada) team, which invited me, were working with all these public sector organisations on problem solving and developing ‘a better way’.  Why do we not have such an integrated approach in the UK?

Behind all the questions, there was also an implied but sometime explicit question for the UK to answer, how can Brazil remove corruption from the public sector?  I explained the steps taken since the 1970s ‘Poulson Affair’, but the recurring response was ‘but what do you do in Brazil, now?’

So to me Brazil is different.  It has almost 6,000 municipalities.  Only came out of dictatorship in 1988 and is still the early steps of democracy but one thing is clear, Brazil is a country which has much to learn from the UK.  Likewise it’s important to recognise the UK has much to learn from Brazil – let’s remember it was from Brazil the idea of participatory budgeting came to the UK!  

Procurement iceberg threatens Titanic

What's the link: Belfast, iceberg, titanic, '12, procurement?

You will probably be familiar with the story of the Titanic, the 'unsinkable ship' sunk by an iceberg.  You may also know that the Titanic sank in 1912; so 2012 is the centenary.  But did you know the Titanic was built in Belfast? That's four of the five links.  What's the link with procurement?

To celebrate the centenary a landmark 'Titanic Signature Building' is being constructed in Belfast at an anticipated cost of £80m. It's the most expensive tourism project built in Northern Ireland. But a procurement iceberg has now appeared on the horizon. Although the building is unlikely to be sunk as it's already virtually constructed, there could be a dampening of the celebrations. The iceberg is in the form of the anticipated £20m European grant.  The £20m grant is now in doubt due to a perceived unsatisfactory procurement process, specifically a lack of competition in tendering for the construction.  In the midst of the current financial crisis I would hate to now try to find an additional £20m!

I've lost count of the number of times I have been told that a particularly large expenditure is 'outside' procurement as it is grant funded.  Typically it has been a research grant to a particular Professor, sometimes for a particular community initiative.  That's unacceptable and particularly naive if good procurement could make the grant go further.

All the facts of this particular case have yet to be revealed - the grant may well be received.

Nevertheless, there are clear lessons to be learnt.

1. Always scrutinise the 'grant letter' - effectively it's another form of contract with obligations to be met on both sides;
2. Consider funders to be major stakeholders who have specific interests - manage their expectations and ensure good communications;
3. It would be useful to set out the strategy for delivering whatever is being funded and have it signed-off by the funder.  That would include the procurement approach;
4. Regardless of the source of the finance good procurement practice should still prevail;
5. For larger projects have a cross functional team which includes a procurement and legal adviser;
6. Remember that the organisation receiving the grant is effectively a contractor to the organisation providing the funding.  Put yourself if the position of the funder and think what good contract management should look like, then put in place the means of demonstrating that, if asked, you can demonstrate exemplary performance as a 'supplier'.

Access the story at:
http://www.bbc.co.uk/news/uk-northern-ireland-16102629

Political ownership of risk management and procurement scrutiny

If there has been one mantra since the coalition came to power regarding public procurement, it has been that transparency in public procurement is paramount - hold on to that context for a few minutes.

Yesterday I discussed the procurement of the NHS IT system and argued that if we really wanted to learn from the experience we had to move beyond criticising the procurement but instead probe what went wrong with the application of Gateway Reviews (http://drgordy.blogspot.com/2011/12/nhs-it-system-procurement-fiasco-or.html).  Now we find that the risks of failure were concealed from MPs - this echoes the defence of David Steele when he was asked to account for the procurement problems with the building of the Scottish Parliament, he said the civil servants concealed the true state of the project from politicians.  Politicians clearly have to be in a stronger position to scrutinise and, I would argue, be a part of Gateway Reviews or see those reports.  Elected members need to be fully appraised of risk assessments if scrutiny is to be effective. Is there a potential script being written here for a Christmas Special of 'Yes Minister'?


Furthermore, today we've learnt that the NHS will not respond to a FoI request on the fiasco. How does that fit with the transparency mantra? What's changed?


Well, allegedly the FoI request cannot be acceded to in case the supplier who has been unable to deliver to contract (for example, 3,128 defects) suffers a fall in their share price.  Correct me if I'm wrong, but should share price not reflect company strength and long-term sustainability?  Do public procurement specialists not consider financial stability when awarding contracts? Is it not the responsibility of the supplier to argue when bidding the grounds for non-disclosure of commercially sensitive aspects of their bid, therefore did the supplier argue when bidding that in the event of such a catastrophic failure to deliver they would prefer no disclosure would take place regardless of the UK public interest in achieving value for money?  How on earth can we collect lessons learnt, in line with the UK public sector best practice, if secrecy prevails even when a procurement disaster has struck? If I was a public procurement practitioner and was carrying out a supplier appraisal on the supplier, would the NHS suggest all is well and let me waste more money with the supplier?




Background reading
Kennedy, D., Pitel, L., and Hohmann, I. (2011) 'Dead wrong, the software that NHS says it just cant't discuss', The Times, 9 December 2011, pp.19-20.
Pitel, L., Smyth, C. and Kennedy, D. (2011) 'American 'cowboys' blamed for NHS fiasco', The Times, 9 December 2011, p. 1 and p.19.

The NHS IT system procurement fiasco or Gateway Review fiasco?

Yet again The Times has provided an exclusive on the on-going procurement saga of the NHS IT system.  Initially it was to cost £6.2bn now it's £11.4bn.  No one could deny this does indeed rank high in any challenge for 'procurement case study classics'.  Yet what lessons have we learnt? Before I start to answer that question, let's pick up on some of The Times story.

The Times report:

1. Health trusts were threatened with cuts unless they agreed to implement the system;
2. Civil servants had privately estimated that the software had a three-in-one chance of being delivered;
3. £250,000 was paid in bonuses to DH staff for exceptional contribution to delivery;
4. Applications installed had failed to function or put on ice;
5. The estimated cost of scrapping the system were estimated as zero if things went wrong, now it's billions;
6. The key provider's CX and Chairman quit with a golden handshake worth millions of pounds;
7. The NHS has pulled the plug on the system but the provider has allegedly boasted it expects a contract extension until 2017 and £2bn extra (we can add that to the potential saving from the Vaccine Purchasing strategy).

In 2007 I picked up on an earlier Times report on the procurement of the system - at that stage it was stated "[the system] is not working and is not going to work".

But I asked above what lessons can be learnt?

To me, although not identified by The Times, had a robust approach to Gateway Review been applied we would have been in a different position.   How have I arrived at that conclusion?

• Gateway 0  should have identified alternative ways of achieving the outcomes - from memory GPs had put forward alternatives, were they given due consideration?
• Gateway 1 Should have identified two risks, firstly, an unrealistic timetable, and secondly, the right people did not appear to be in place to ensure delivery.
• Gateway 2 should have asked at least five questions, none of which appear to have been robustly challenged: Are there suppliers who can deliver? Is the specification clear? How can we control risk, indeed what's the risk management strategy?  Is the procurement strategy appropriate? Have [GPs] been consulted?
• Gateway 3 should have tested the incentives to ensure good supplier performance.
• Gateway 4 would have provided reassurance that the business case was still valid and KPIs were being met.
• Gateway 5 awaits - I hope!

Of course there's a further question which, to me, isn't addressed in the review process 'what's the exit strategy?'  Compare that question with Tony Blair's initial 2002 question 'how fast can you get it/how long will it take?' The response was to accelerate the initial timeline - was that clever?

So, while we may look at this as an IT procurement fiasco, I really want to highlight that the real lesson to be learnt relates to how robustly we approach Gateway Reviews?  Were the Gateway Reviews robust?  Were they cosmetic? What did they uncover?  Were green lights given? If green lights weren't given why did the process continue?

Space doesn't permit a comparison against MSP and PRINCE2 methodologies but it's clear only lip service was paid those too!

Hindsight is a wonderful thing and that's how we collect lessons learnt (or should collect AND LEARN FROM).

My argument is that it is now timely to have an evaluation of the application of Gateway Reviews across the whole of the public sector and senior decision makers need to evaluate and learn from the application of Gateway Reviews in their own organisations.

To me gateway reviews, MSP and PRINCE2 methodologies are worthy of praise and adoption - they do not appear to be at fault.  Isn't it a pity that the appropriate application of the methodologies is sometimes lacking!

Each organisation should by now have had a root and branch review all their projects, challenged against by gateway reviews and particularly, how does this fit with austerity priorities and what's the exit strategy.

The Austerity Strategy needs to address these issues before reducing the delivery of services to citizens.  

Background reading and sources:

Kennedy, D., Smyth, C. and Pitel, L. (2011) 'Exclusive NHS computer fiasco still costing billions'. The Times, 8 December 2011, p. 1.

Kennedy, D. (2011) 'Software firm is banking on getting £2bn extra for its failed system', The Times,  8 December 2011, p.6.
Kennedy, D., and Frean, A. (2011) '$7m payoff for boss behind IT 'nightmare'', The Times, 8 December 2011, p. 8.
Robertson, D. 'We pay toll for road of good intentions', The Times, 8 December 2011, p.8. 

Rose, D. (2007) '£6,2bn IT scheme for NHS 'is not working and is not going to work', The Times, 13 February 2007.
Smyth, C. (2011) 'Project blighted from the start by bad decisions', in The Times, 8 December, 2011, pp.6-8.

BRAZIL - observations of a ‘BRIC’ (Part 1)

For so many years I have heard UK councils and the public sector in general, echo, “we are different”.   While I believe that each local community has its nuances and therefore is different, my visit to Brazil during August puts that UK discussion in context.  A Federal structure of state and municipalities is different from the UK but key areas of interest were the UK approach to strategic commissioning, the UK focus on outcomes commissioning, community budgets and procurement appear to be of major interest to Brazil.  But Brazil also has useful lessons which the UK could learn from.  Also clear was the inquisitive nature of those I met and their passion for public sector improvement.

I was there at the invitation of the Federal University of Rio de Janeiro and they had a packed schedule in place. I delivered a number of seminars to State Governments and their advisers, met with municipal officers, had guided tours of cities, advised Federal public sector organisations on strategic procurement, addressed the National Contract Management Association and had many one-to-one discussions with students. Of course I also had time to enjoy trekking in the world’s largest urban forest.

During my two weeks I discovered Brazil IS DIFFERENT.  But that difference highlighted opportunities for the UK and Brazil to learn from each other.

My first observation of Brazil was from the window of the plane.  I must have flown the equivalent of the length of the UK without any sign whatsoever of human habitation.  Brazil is big, well, Brazil is very big and a lot of it is open space!  Paradoxically a city like Rio is dense!

The image of Beauty and the Beast comes to mind but first let’s remember that the Beast in the story has a soft side and turns out to be full of virtue.  As I travelled within Rio it wasn’t the majestic landscape of Sugarloaf and Corcovado, or beautiful old buildings recalling the days of colonialism which marked Rio as different, nor the modern office blocks which would not look out of place at Canary Wharf, nor the mind boggling 13km bridge to Niteroi. 

No, what is indelibly stamped in my mind is that the architectural gems, both old and the new, sit side-by-side the Favelas, the self-constructed Brazilian equivalent of shantytowns which are the home of one third of Rio’s community. Wherever I went in Rio, I was less than a few metres away from a Favela. 

One of the biggest challenges to Brazil is clearly realising the potential of these ‘Beasts’ and transforming those communities into Beauties.  The Favela bring extreme poverty and crime challenges.  How do the UK debates of Big Society and localism transfer to this society of need and difference?  Having lived in Belfast most of my life I could remember the ‘no-go areas’.  This was different.  I asked my hosts if they had ever driven through a Favela (implying can we drive through a Favela).  My impression was that they had never been in any of the Favela. I was regaled with the account of a UK chief police officer who when asked for solutions to the Favela just replied, “this can not be solved”. I was also shown YouTube films of favela ‘pacification’ – absolutely unbelievable in terms of the war on crime.  Why is there so much deprivation?   Well I don’t have an answer, but I think the lack of an achievable public sector blueprint for success is part of the problem and the control of organised crime.  But perversely it also appears that these communities also have a remarkable sense of community.

While the security services have embarked upon a strategy of pacification of the Favela, removing the power of drug related organised crime – and I mean with heavy arms, it was here I heard of one of the lessons from Brazil in listening to the community.  The biggest Favela have 200,000 residents and many have no roads as the buildings have been constructed so close together, no sanitation, no services, ….  So as part of pacifying one Favela the community asked for a ski-lift.  The ski-lift which covers miles, in a state which has never seen snow, has the sole purpose of moving residents across the Favela.  A clear sense of local community is needed to become part of the wider citizenry of Brazil otherwise Brazil will be starved of some of the oxygen of improvement – could the UK help?  

On procuring for outcomes, payment by results and contract management.

Visualise preparing a tender and clearly stating the outcomes to be achieved.  Then having a few bidders who all look as if they satisfy the qualifying criteria, one of the providers stands out from the others in achieving a social outcome which you view as being completely consistent with the buying organisations long-term objectives.  You award the contract to that provider.  As the awarder of the contract you assume robust contract management will be used to ensure the promised outcomes are delivered.  If you're an unsuccessful bidder you watch carefully believing that the provider is being closely managed to ensure that the promised USP is realised.  I'm sure you could all right the script.

It's a long-term contract for a big event.  Nevertheless the first round of competition is winning the right to deliver the event,  the second round is about the event itself, which is actually a series of sporting events, all bound by entry criteria and rules which are strictly adhered to.  If you don't satisfy the criteria you're out.  Even worse, at the actual events, you're found to have taken an advantage which enhances your performance, even if you won the event, you are stripped of your title and publicly disgraced.

The events take place on a regular cycle and sometimes the event covers an array of activities, say a batch of football matches, sometimes it's a batch of running events, and sometimes it's a whole range of sporting events.  I'm sure've identified the events now, the Olympics, Paralympics, FIFA World Cup, Athletics World Championships, etc.

So what do we make of a situation where the UK win the 2012 Olympic bid saying they will deliver an outcome of a sports legacy inspiring young people to play sport - two million more people active by 2013.  Such a legacy could have reduced NHS costs and also potentially crime costs, therefore could be part of deficit reduction.  So what do we do when monitoring the stated outcomes we find a decline as opposed to rise?  We can't blame it on the Japanese earthquake and tsunami, the Royal Wedding, and even the eurozone crisis may be stretching it, ...

Oh no, the provider has changed the rules, it's no longer achieving an outcome but going for 'payment by results of it's domestic subcontractors'.

So next month the new policy will be announced by the provider, not the client.  As a procurement person, advising the client, as opposed to the contractor, what would you advise?  As someone advising on future awards, what would you advise on review of previous performance in delivery of outcomes?

Background reading:
O'Connor, A. '2012 legacy plan for a fitter Britain is quietly scrapped', The Times, 2 December 2011, pp.12-13.

Has the revolution in public procurement had its first skirmish?

It's seems like only a few days ago Maude's revolutionary vision for public procurement was being discussed.  Well to be honest it was only a few days ago, 21 November to be precise.  I questioned the potential impact of the revolution but not the intention.  Nevertheless I was amazed to read Francis Gibb's report in today's Times which implies the outcome of the revolution's first skirmish.

You will recall that Maude announced there would now be early consultation on procurement, that procurements would take 120 days, publishing of forward procurement plans, ...

So it is a surprise that yesterday the Justice Secretary Ken Clarke announced that consultation on a new approach to procuring legal aid (£2bn) has been delayed for two years with implementation now planned for somewhere around summer 2015 - a lot more than 120 days.  So had a forward procurement plan been published to provide 'certainty' it would need to have been ripped up, but when will those contracts appear in a forward procurement plan?  May not be until after the next election!

Allegedly the delay had something to do with concerns expressed by the legal profession over the potential award of contracts on lowest price.  I would like to think that if I was reliant on legal aid the legal team representing me were not the 'lowest bidder'.
Setting that aside, this raises an issue which anyone who has previously engaged in early supplier discussions will recognise.   Before you discuss with the market you need to understand the relative power and have a strategy for moving forward.  Market sounding and early dialogue can become negotiation and needs to be well thought through and managed.

Anyway, the legal profession claim this isn't a delay but a rewrite of the whole approach - I'd like to hear what options had been considered and whether new options have emerged?  Apparently Ken Clarke, in a statement to MPs, said he believes competitive tendering is "likely to be the best way forward to ensure long-term sustainability and value for money", which doesn't suggest an openness to new ideas.

Oh and to make matters worse we then learn that the lawyers have experienced problems getting paid by the Legal Services Commission.  Now if lawyers can't use the might of the Late Payment of Commercial  Debts (Interest) Act 1998, what hope is there for other SMEs who lack that expertise.  Yes, 1998, provided some redress for suppliers that they would be paid in a timely manner or be in a position to charge interest.  Isn't one of the biggest problems facing SMEs as a result of the credit crunch cash flow and access to credit!  Well in my paper  'Public procurement strategy for accelerating the economic recovery' (available on request), way back in 2009, I argued that the UK government could help SMEs if it just paid in 5 days using Purchase Cards or at the very least on time.

I'd like to know how the work is currently awarded - if it's not legal who on earth would take a challenge?  I'd like to know what has been identified as the current approach weaknesses and how the approach will be improved?  I'd like to know the potential savings which delaying the process is going to forego - I assume someone quantified those.

Finally, I'd like the reassurance that those leading the revolution will take on board the lessons from this first skirmish and learn from them.  Is there a wonderful 'lessons learnt log' - now that would be interesting reading!

Reference:
Gibb, F. 'Lawyers welcome delay over plans to give £2bn legal aid contracts to lowest bidder', The Times, 2 December 2011, p.8.