Thursday, 29 December 2011

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.

had Justine Greening, who has just been promoted from the Treasury (which plays a key role in public procurement), made such a boob?  Well I can't answer that question but perhaps she'd been carried away with the notion that it's better to give than receive, or better to be perceived as giving than that anyone actually receives.  Either way those involved in using procurement as a tool for economic development need to be aware that if their political masters want to adopt the same strategy, that would merely be a strategy of do nothing!  Such a do nothing strategy would be counter productive as there are many constructive steps which a procurement strategy can take to accelerate the economic recovery (if you want a copy of my paper on this just drop me an email).

In case you didn't pick it up there's been another story about boobs in the news lately too which has relevance to procurement. It turns out (alleged) that the French company at the centre of the implant scandal had a differential pricing strategy.  They provided two implant products, one which was approved by health authorities, and a lower priced (i.e five times cheaper) option which hadn't the required approval.  This is not a trivial matter - 30,000 women in France have now been effectively 'recalled' due to potential heath concerns related to cancer.  This creates a very interesting procurement scenario:

  1. Since the company has now gone 'bust' who do the women go back to?
  2. Since the implants have found their way into the UK, who will pick up the costs of supporting these women if they want to follow the French advice of having their implants removed?
  3. Heaven forbid that there is actually an additional risk of cancer for the women involved, but who will carry that financial cost, will it be the NHS?
  4. What will be the cost in terms of additional stress to those women who were customers along with their families?
There are clearly interesting dimensions and procurement lessons to be learnt particularly with regard to consequential loss. I think it is important that when two alternatives are offered and one is five times cheaper than the other, the buyer really needs to learn from this example.

(The language used is not intended to belittle the seriousness of the situations and I apologise should anyone think it is remotely inappropriate)

Background reading:
Barrow, M. 'I knew or silicone was inferior, say breast implant chief', in The Times, 29 December, p.7.
Clark, A. (2011) 'Stalled on a branch line', in The Times, 29 December, p37.
Lea, R. (2011) 'Greening's 'helping hand' is bitten off by Bombardier', in The Times, 29 December, p.35.

No comments:

Post a Comment