Saturday, 10 November 2012

Tarzan leaves no stone unturned in pursuit of growth: even in procurement

Chapter 4 of Michael Heseltine's report, 'No Stone unturned in pursuit of growth' may come as a surprise to some, in that he recognises procurement is strategic to a national growth strategy. It represents a significant step forward from Vince Cable's Vision which I have previously discussed.

Although quite late in the chapter (para. 2.21), Heseltine answers the exam question I wish CIPS would ask, namely, 'What is public procurement for?'  I couldn't agree more with his view:
The simple answer is to secure value for money for the public purse. Who can argue with that? The problem is that it is often equated with short term, lowest cost procurement which ignores the issues about the country’s industrial base – the exploitation of R&D, the skills we need and the creation of jobs. It also ignores international practice. No country of which I have any knowledge takes so simple a view. Although crucial in major policy areas such as defence or aerospace, the same issues are everyday challenges for ministers whether they are placing contracts for high speed trains or new IT systems. We are concerned about the destiny of our manufacturing sector but we do not spend enough time exploring the ways government can work to support it.
Heseltine is also brave enough to express views others may not have, for example,
efforts to centralise purchasing through the Government Purchasing Service just don't seem to be working (para. 4.7):
"Ensuring effective procurement remains an enormous challenge for the government" (para.4.8)   
I have long been advocating we need impact analysis of these initiatives but also that we need KPIs and effective performance management if we are to move procurement policy and rhetoric into practice.

A skills shortfall remains:
"... the Professional Skills for Government initiative failed to improve procurement or project managers skill ..." (para. 4.10)
Therefore he recommends an injection of private sector expertise (Rec. 36):
Every government department should recruit a Chief Procurement Officer at competitive market rates, reporting direct to the permanent secretary, to lead the procurement and delivery of major projects and improve the capabilities of their procurement cadre. The department’s Non-Executives should approve the selection process and appointments.
I could agree with this recommendation if it wasn't for evidence which also suggests that public sector procurement is ahead of that of the private sector - certainly, my own experience is that there is really good, and really bad practice in both sectors!  To me it is no more than an urban myth that public sector procurement would be improved if you merely import private sector experts - were that the case the problem would have been solved many years ago, after all the public sector has not been short of private sector implants to OGC, GPS, ERG, etc..

Thankfully, Heseltine reiterates that best value for money is not lowest price (para. 4.13). I think that's something which can't be restated enough as I continually see a culture of 'lowest price wins' and even a fear of deviation from it due to the paranoia of EU challenge.

Of course we've heard all of this before but Heseltine stands out from the crowd in his bravery of calling for a single public sector procurement strategy (Rec. 37):
The Cabinet Office should place a general duty on all public bodies, setting out the procurement standards to which they should adhere, by providing a pan-government procurement strategy, legislating if necessary.
Personally, I can't see that being remotely feasible or politically acceptable - it would mean greater centralisation and ripping up localisation commitments.  It also flies in the face of local government democracy.  Of course, local authorities could also nod in deference and then do their own thing.  How on earth could such a proposition be sold to Elected Mayors or Police Commissioners? You can just visualise the political stand-offs.  Of course you could also ask the question, 'who on earth would develop the 'standards and what would they comprise of?'

We all recognise what Byatt referred to a culture of 'let and forget' - once again Heseltine suggests a clever solution; public sector let the contracts but outsource the contract management:
Outsourcing the contract management of government projects could ensure that those managing supplier performance are focused solely on the contracts and are not distracted by political considerations. There are many reasons why public bodies throw good money after bad in poorly run projects, but none of them should override the basic requirement to drive up performance. Putting contract management – but not the allocation of contracts – into private hands could diminish these excuses and enable government to improve its record in contract management (Para 4.19).
This would create an interesting scenario: 'who would manage the contract managers and what would the incentives be?'  Of course this also suggests contract management is a discrete activity and only commences after contract award - I can't see how that isolationist view could be effective.

Now it's over to the government to respond to Heseltine's recommendations somewhere around the 5 December.

I can recall the days when Heseltine was known as Tarzan - I wonder how his views will be relayed in the public procurement jungle? Are they jungle drums or war drums I hear getting louder in the background?

PS On the 18 March 2013 the UK Government have made a response to the report largely accepting all the recommendations

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