Thursday, 11 April 2013

Government Purchasing and The Iron Lady

You may recognise that we have spent quite a bit of time recently discussing the Public Administration Select Committee's current Inquiry into Public Procurement. There is a strange irony, which I suspect some may have missed, that the father of Bernard Jenkin (the PASC Committee's Chair), Patrick Jenkin was a Minister in Thatcher's Cabinet when Government Purchasing was published. 

Another Minister in Thatcher's 1984 Cabinet was Michael Heseltine,  Michael Heseltine has continued to demonstrate an interest in procurement as a political tool, and his voice on procurement is still listened to in the corridors of power as was evidenced by the recommendations set out in his October 2012 report being generally accepted in the March 2013 budget.   

So it appears timely and appropriate to reflect on what Government Purchasing said in 1984. Perhaps those messages were part of Bernard Jenkin's early induction into the world of public procurement. Equally so, we can ask ourselves about the progress made in the 29 years since the report's publication given 'the Iron Lady's' focus and determination. 

Purchasing objectives
Government Purchasing stated that there were two objectives for government Purchasing (para. 1.4):

  1. Provide end-users with what they need, when they need it, at the lowest cost; and
  2. Provide the Accounting Officer, and through him Parliament and the taxpayer, with value for money from expenditure on procurement. 

However, a third objective was implied, that of delivering 5% cost reduction over two years (para.1.13). It is interesting to reflect that a 5% cost reduction was aspired to in 1984 against a background of no meaningful improvement in the past. Consider the current aspirations for cost reductions against a background of nearly 30 years of targeted procurement improvement and the levels of cuts made since the austerity strategy was embarked upon; you have to ask are today's aspirations remotely pragmatic?

Government Purchasing recognised that central government departments attached relatively low importance to purchasing (para. 5.1) and that in only a few Departments was Purchasing treated as a specialism (para. 6.3). Government Purchasing also placed on each department an obligation to develop a Purchasing Strategy (para. 3.13). 

Chapter 9 of Government Purchasing addressed the achievement of policy through procurement:
  • The ‘Public Purchasing Initiative’ (PPI), it was alleged, encouraged Departments to develop relationships with suppliers to ensure VFM and stimulate innovation (para. 9.2); 
  • The ‘Small Firms Policy’, hinted at local economic development objectives: "It is government policy to encourage the development of small firms.  One way of doing this is by improving access to government business.  We do not interpret this as favouring small firms irrespective of their competitiveness" (para. 9.6);
  • The Preferred Supplier Policy was a form of awarding a preference to sheltered workshops for handicapped people and prison workshops.  Similar preferences were also given to firms in development areas (para. 9–12).

Strategic Options
Government Purchasing identified a number of strategic options open to government:
  • Make/buy (Chapter 8);
  • Standardisation (para. 1.4, 2.7, 2.8, 2.9);
  • Domestic/overseas (para. 9.16);
  • Single/multiple (para. 3.28);
  • Stockless/JIT (para. 3.14, 3.18);
  • Partnership/adversarial 
  • Vertical integration/arms length (Chapter 8);
  • Consortia/co-ordinated purchasing (para. 1.4, 2.7, 2.8, 2.9);
  • Quality/cost (para. 1.13);
  • Short/long term contracts (para. 3.27);
  • Earlier supplier involvement (para. 3.18);
  • Supplier Development (para. 7.21);
  • Supplier certification (para. 3.26);
  • Centralisation/decentralisation (Chapter 7);
  • Utilisation of IT/IS (para. 5.4, 5.5, 5.6, 7.29); and
  • Skills development (para. 1.15).
When we reflect on some of the evidence given to the PASC is it therefore acceptable to chant the mantra that "it is still early days"?  

I wonder what The Iron Lady would have made of the progress made since 1984? I suspect she may echo Jenkin's "I'm not really enthused".

But why could the Iron Lady not make the aspiration of the 1984 Government Purchasing a reality? To guess at that answer we may be able to make one other tenuous link. In 1984 a young Parliamentary Private Secretary was appointed, Francis Maude MP, yes, the current Minister for the Cabinet Office and champion for procurement. Now if we were ask his opinion on why there has been so much time spent shifting the deck-chairs on public procurement's Titanic, we could surmise from his recently attributed remarks that civil servants have been the obstacle. Is he right? I don't know but we can't wait another 30 years for the change.

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