Friday, 31 May 2013

A risky business

I have already shared some reflections of this year's Chelsea Flower Show but the purchase of tickets is also worth thinking about.

Tickets for the Chelsea Flower Show are freely available to purchase on the RHS website some time during the preceding Autumn. There's limited availability, so, once they're gone, they're gone. If you want to visit Chelsea  therefore you are likely to buy your tickets near enough six months in advance. Therefore, at the time you buy you have no idea what the weather will be like and you also take a gamble whether you personally will be able to attend.

However, since the tickets are in short supply and sold out months in advance you can minimise your risk by buying the tickets in advance and then, should you decide not to go, try to sell your tickets on eBay. That way, you could make a profit on your initial purchase, or possibly be left with dated tickets of no value at all - it's a risk you take.

I'm sure you realise that the only sure winner in this is the RHS Chelsea Flower Show (the supplier). While they do not choose to auction tickets (yet) they have money in the bank long before the event whether or not the ticket purchasers actually use the ticket.

Now the week before Chelsea there's a flower show quite local to me, in Hillsborough. While a ticket to Chelsea costs £55, an online ticket to Hillsborough costs £9. Perhaps at some stage we can discuss the comparative value of the tickets, but that's not the issue here.

Thursday, 30 May 2013

Procurement for growth?

I've been struggling for a few days whether or not to comment on the Cabinet Office's note on Procurement for Growth but I felt I had, if only to acknowledge its publication.

Disappointingly, this a tactical document. Worse, it adds nothing to what has gone before, for example, you could scan any number of the former OGC's guidance (if you could find them) on working with SMEs, third sector organisations, minority businesses, addressing social issues, environmental purchasing, and find the same principles - minimise bureaucracy, talk to the market, and the biggest impact is made early in the procurement cycle.

It is a missed opportunity. What is needed is a strategy - a strategy harnessing the public purse effectively. Of course such a strategy is inconceivable given the narrow procurement objectives espoused by the Cabinet Office. But a meaningful strategy could be published by Business, Innovation and Skills which draws on Heseiltine's recommendations.

Why has such a strategy not been published? Well, my view is that we have seen a dumbing down of public procurement policy and a short-term focus on 'Costcutter' as opposed to 'Wise Buys'. Much of current strategy, in my view is working in opposition to growth - I have discussed this many times, not least in my 2009 Supply Chain Management article but also in many blog posts. I would be delighted to see some sort of published impact assessment of the current strategy which has now been pursued for some years.

Having said that, there is potential for the autonomy of area based commissioning strategies which could be aimed at Procuring for Growth. Perhaps the LGA could drive such an initiative, ideally through a range of varying comparative regional strategies, properly consulted upon with the business communities, baselined and measured for impact, and supported by a change management programme. There would then be meaningful evidence which could be drawn upon for a national strategy which provides an informed answer on how best to use procurement for growth.

Tuesday, 28 May 2013

A very public negotiation

Last week I suggested we were seeing brinkmanship in the NHS between ministers and GPs. Today, the next hand appears to have been dealt with the announcement that GPs can expect to see an increase in their ranks of 2,000 by 2018.

Needless to say the Royal College of General Practitioners applaud this announcement:
If we have more GPs able to spend longer with patients and communities then we can adapt to meet the needs of the 21st century.
Let's try to deconstruct the Royal College's justification. If GPs are more involved in CCGs how will they be able to spend more time with their patients? Indeed why wasn't this issue raised when CCGs were first grasped with open conflicts of interest? Are the Royal College seriously arguing that GPs are unable to adapt to the 21st century without an increase in numbers? Other public service providers are expected to adapt with lesser numbers and greater use of digital. Indeed is it not the case that there is greater self-diagnosis of potential GP door-steppers using web-based sources. Are the Royal College really justifying the case for GPs, and I assume their own longer-term negotiating power.

On the other hand, will the Department of Health question that rationale and why the Royal College haven't taken responsibility for ensuring GPs have been adapting to the 21st century? Will the DoH ask for evidence of impact? In this game of brinkmanship, surely the DoH should have used those levers earlier in the game?

However, if I was in the Royal College, I'd say thanks and wait for the next offer - DoH want CCGs to succeed and politicians will want a good NHS story as they approach the next election.

Fortunately this negotiation is appears to being played out in the public domain - we can all watch and learn.

Sunday, 26 May 2013

Shopping Bag hypotheses

Over the last week I had cause to think about the buying bags.

One of my daughters asked me to price a bag for her, let's call the brand, 'Longshot'. Well, I spotted the bag in a department store for £45 and decided to compare the price in the almost adjacent 'Longshot' shop, £48.

Hypothesis 1: The 'manufacturer's' price isn't necessarily best.

Nevertheless, I informed my daughter of the bag price, and that there was a 'look-alike' bag available at almost half the price. She wasn't interested in the 'look-alike' alternative as a member of the Royal Family had the 'Longshot' bag.

Hypothesis 2: Perceived celebrity endorsement can increase perceived value. Hypothesis 3: Paying for a branded bag, with no discernible difference in specification, can be twice the price or an equivalent.

Thankfully, she decided to delay the purchase until I was next in the Duty Free at Heathrow.

The next day, Friday, I was at the Chelsea Flower Show. As you arrive, it is worth noting there is a bag search - most people are carrying a bag. After entering the Show you can easily get a free bag from the main sponsor - and this year you may also have received a free poncho. Those bags are both functional and weather proof but do not have the year of the Show printed on them. You see many people carrying those bags at the Show. But there is also another bag, which appears, much more sought after, namely, the 'The Daily Telegraph' bag. It's cotton, printed with the year of the Show and quite a nice graphic. The Daily Telegraph bag, naturally enough, contains a copy of the Daily Telegraph. The bag is not weather proofed. The strange thing is that those bags are like gold dust - you see many people with more than one but, like some black art, you have no idea where they come from. This year I found out. For a brief moment a 'bag carrier' arrives, word goes out via the Bush Telegraph, a 'mob' gathers round and, for probably no more than two minutes, bags are dispensed free of charge. It's not the content of the bag they want, the newspaper, no, it's the bag itself! So you can expect to see bag devotees wander round the Show laden with free bags, carrying little in the bags ironically, other than bags. Then there's another bag the 'official RHS Chelsea Flower Show bag' - this year you could buy one for £12 and, low and behold, rather than use it to carry stuff in, protect it by placing it in one of the sponsors free bags! You may be asking 'why the bag search at the entrance?', well clearly those attending the Chelsea Flower Show bring a bag with them.

Hypothesis 4: Performance and functionality do not correspond to value. Hypothesis 5: Perceived value is related to scarcity. Hypothesis 6: Value is perceived in different ways, for example, the bag had more perceived value than its content. Hypothesis 7: People 'procure' even when there is no need.

Friday, 24 May 2013

Brinkmanship at the NHS

I've been discussing Clinical Commissioning Groups and the various twists and turns for some time - there's no denying they're turning into one of those procurement case studies which just keep on giving.

A very quick summary:
  1. In 2004 the government negotiated, what is widely viewed as, a bad deal with GPs. The GPs got more money and were able to opt out of providing an 'out of hours' service.
  2. GPs involved with CCGs expressed concern that they lacked the skills to handle the procurement aspects for CCGs.
  3. NHS Guidance on procurement appears flawed and has to be rewritten just as it is required.
  4. CCGs are identified as having clear conflicts of interest within procurement.
  5. Demand on A&Es increases as a result of the systemic displacement from GPs opting out of providing 'out of hours' services.
  6. GPs say patient care is suffering through the need to be involved in CCGs.
  7. GPs are viewed as 'badies' and ministers hope to renegotiate the 2004 contract.   
  8.  GPs trade union are threatening a withdrawal of the NHS' flagship Clinical Commissioning Groups. 
I'm sure there's no suggestion that GPs have less to gain through CCGs since the conflicts of interests were highlighted. Nor, I'm sure, is there any connection between the suggestion that the GPs contracts should be renegotiated by ministers and at the same time CCGs are precious to ministerial aspirations for the reform of the NHS.

You could of course view the whole thing as a shambles. But then again you could say it's just brinkmanship. It does have the appearance that one side is better at negotiation than the other though. 

Wednesday, 22 May 2013

You're Procurement, get me out of here

If only procurement professionals had the escapology skills of Harry Houdini. Day by day I see bad contracts entered into and hear the mantra "you're commercial, get me out of here".

Why does it all go so wrong with people entering into contracts they no longer can/want to live with.

To me, it starts to go wrong when procurement people are not engaged early enough in the market dialogue. Technical specialists are problem focussed and want to speak to techies who can talk their language and give them what they want.

Naivety and gullibility play a part. Firms which exist to make a profit and sellers incentivised to make a sale find it easy to smile, say yes, and shape the dialogue to reflect their unique selling proposition. The movement of negotiating power from the buyer to the seller is palpable.

Failure to consider alternative options doesn't help - but why on earth would a techie want to consider alternative options, there's is to get a problem solved. Not taking a wider perspective and seeing the transference of costs to elsewhere within the same system blinkers the cost/benefit analysis.

Pride and face saving make it hard to back track and say, "sorry, that's not a good deal for us".

A sense of urgency doesn't help. The requirement is urgent, so there is reduced time to take corrective action.

All this seem familiar? It certainly appears to be demonstrated through the negotiation of GP contracts in 2004, and the recognition that costs have only been transferred to A&E. It also looks as if we're going the same way with Clinical Commissioning Groups - yes, we think the GP contracts were wrong yet are we making the same mistakes? It also looks as if some high level 'staff exit' packages aren't immune.

Yes, maybe we should ask a procurement person to get us out of here - more often than not that cry is heard too late when what should have been heard, right at the start, was, "I'm going into the jungle, can a procurement person get in here with me, now?"

Tuesday, 21 May 2013

A still small voice in procurement

Apple have revolutionised modern communications with iPods, iPhones, Macs and even to a certain extent Facetime.
But Apple have not been without supply chain problems: child labour, riots, strikes, pollution and even suicides.

Today we are yet again reminded of the on-going difficulties with Foxcom - more suicides, this time attributed to the a new 'silence mode'. Yes, one of the world's major revolutionaries in communications, Apple, has a key supplier who has banned workers from talking on the job!

While the unethical working conditions are certainly a concern to me, what really puzzles me is much more basic and relevant to procurement practitioners - are Apple a hostage to Foxconn?

One of the key objectives of the procurement professional has to be to place the buying organisation in a position of relative power and become a preferred customer. In that position the buyer should be able to bring all sorts of influence to ensure the supplier delivers what they are supposed to in a manner which is consistent with the buyer's priorities. The reality that one of Apple's key suppliers continues to damage their reputation and on occasion disrupt deliveries, can surely mean only one of two things. Either Apple don't care about ethical procurement - which appears unlikely, or Apple have little influence over Foxcom.  I'm afraid it is starting to look like the later,  if that is the case Apple have to redress the balance or continue to be held hostage to Foxconn. We all recognise being a hostage is the worst of all positions - 'how are the mighty fallen'!

Monday, 20 May 2013

Do you buy Eurovision

Love or hate Eurovision, it brings procurement challenges.

Place yourself in the position of the Irish Government deciding whether or not their average investment of sending a delegation over the last five years, at an average cost of €200,000 per year, represents good value for tax payers (including those avoiding UK tax).

Ireland has had its fair share of winners over the years and has long been a country associated with culture as ‘the land of saints and scholars’. Indeed, the country’s (and one of its more famous beverages) emblem is a harp.  But does the additional exposure to anything of between 100m and 600m viewers, at a cost of €200,000 per year add value? Being last in the competition and consistently delivering poor performance is unlikely to help cultural positioning.  Perhaps Eurovision actually detracts from Ireland’s cultural heritage – I can’t believe Eurovision would tip the balance in any decision whether or not to visit Ireland, so the tourism payback must be questionable.

However, there must have been a cultural payback in the repositioning of Irish Dancing when the high kicks and short skirts of Riverdance danced on to the stage some years ago. Yet, Riverdance only had a seven minute ‘dance on part’ during the interval of the 1994 Irish hosted Eurovision – can any of you remember which entry actually won that year?  The real beneficiaries of that investment must have been those who subsequently developed the ‘interlude’ into a full length performance, danced their way around the world and on video and DVD sales – did any money actually end up in Irish hands?  So you have a working assumption of the Irish government carrying the risk of investing in the interlude but others gaining the benefits.

What of the actual song writers and singers. It seems even the more bizarre acts can benefit but carry little risk if they lose? Does that make sense to the investor of €200,000?

Of course the logistics involved in moving so many around ‘wider Europe’ must be substantial – is there a corporate hotel and travel deal?

Then there is the perverse incentive that if you actually win you will have to pay to host the next event. That will mean infrastructure investment you may not otherwise have budgeted for and also the risk of the whole thing turning into a debacle. Maybe it only makes sense to put forward a potential winning act if you have that risk well managed and have deep pockets. Having said that, we are led to believe that commercial sponsorship covers most of the actually event costs, yet negotiating sponsorship deals is frequently hard work and the negotiating power may well have moved from the host country. Are procurement professionals even involved in the discussions?

I can honestly say I didn’t watch Saturday’s Eurovision, but the more I think of it, it must represent an excellent procurement case study.  

Friday, 17 May 2013

Let me tell you a story on robust supplier appraisal

On Tuesday we learnt that some of our education policy thinking appears to be shaped by what looks like unreliable evidence - the sort of approach which looks selective as opposed to robust. It is ironic that we want more useful research as an outcome of universities yet in trying to achieve that outcome we are using, what some might refer to as 'Mr Men evidence'. The sad thing is that whether or not you agree with the Education Secretary's views, his credibility has now been weakened, whereas a more robust approach would have strengthened his case.

Gove has also weakened his argument for education reform and could be perceived as hypocritical when he discusses critical analysis. We need to have an education system which encourages more critical analysis, particularly for the next generation of procurement practitioners. We need practitioners who can look at comparative research and evidence, identify weaknesses and then take an informed view - we need procurement practitioners skilled in critical analysis, particularly in the area of supplier appraisal.

Let me give you an example. I recently had sight of a supplier appraisal which considered suppliers past performance. References were requested. Assuming the supplier was able to provide three reference sites of delivering similar work, they passed!  No effort seemed to be expended in validating the references. Reliable and robust evidence?

While I used to think asking a supplier for three references sites was a nonsense, based on the assumption that no one would be daft enough to provide a bad reference site. That was until I came across a supplier who did just that and was surprised when in the debriefing I fed back the bad reference. But how can we be sure a past customer doesn't bare some sort of grudge and disproportionately reflects the poor elements of what the supplier thought was an excellent service. Reliable and robust?

My view is that we need to ask for a comprehensive list of all the similar contracts provided, over say  three years, including their values.  Then, subject to the risk associated with the procurement, select a  random sample and interview those who can speak with authority on the past performance. It may not be completely robust but it is significantly better than the 'Mr Men' approach some practice.

Of course one of the easiest ways of improving supplier appraisal is having good historical records of the quality of service your own organisation has received in the past. Time and time again i have seen poor past performance being overlooked and only 'remembered' when Tender responses are received. Organisational memory has a role here as has easily accessible and reliable records. Here too we find a bizarre example from the Education Secretary, who, in his evidence to Wednesday's Common's Education Committee, advocated a radical new approach to ''O' levels' which replaces the existing A, B, C, etc. grades with a numerical system. An 'A* grade' would therefore be spilt to become 'Grades 1 and 2, 'A grade' would be spilt to become 3 and 4, etc.  We would also see greater focus on end of course exams and the demise of coursework. By gove, isn't that the system under which my own 'O levels' operated in 1973? If only we had really good history lessons things may be improved - no, I don't mean in the education system, I mean in supplier appraisal.

Thursday, 16 May 2013

Missing the point on HS2

If you turned on any of the TV or radio news programmes, picked up a newspaper or scanned Twitter this morning, it is almost impossible that you missed the NAO's anticipated shortfall on the proposed HS2 train link. It is not surprising that the business case doesn't stack up - even I have been questioning some of the more basic assumptions which were in the public domain. However, for the public procurement community there are more significant issues:

  1. Why, after the rail franchise fiasco and the subsequent route and branch review of evaluation methodologies, were there errors in the calculations which had not been identified through internal QA?
  2. In the current environment of government 'transparency' in 'all things procurement' why was the business justification not more clearly set out?
  3. Why did a gateway review not pick-up and lead to the resolution of the issues identified by the NAO?

Wednesday, 15 May 2013

On the high cost of contracting security

In 2008 an Aboriginal elder was 'cooked to death' while being transported to prison by a security contractor (the picture is of the van in which he died). I'm sure there was an in-depth investigation carried out by the Australian equivalent of the MoJ as to why a citizen was subjected to one of the most horrific deaths imaginable by one of their contractors. It was a high profile case and one assumes lessons were learnt.

However, now we have learnt of the death of Jimmy Mubenga, while being transported from the UK by the same company, under what appears to be a contract with the UK Borders Agency.  The inquest is till underway but there will be lessons worth considering for all those involved in contracting private security.

From a distance public procurers have been able to talk about the horrors of the Dhaka disaster and the perils of low price sourcing. Jimmy Mubenga's death causes us to look more closely at our own sourcing responsibilities.

Tuesday, 14 May 2013

No cause for celebration at PASC Procurement Inquiry

It's rare for me not to be interested in a discussion on procurement but I'm afraid Monday's PASC Procurement Inquiry even turned me off. It lacked any sense of enthusiasm or ambition. Instead it had a sense of resignation and despondency.  I left the discussion with a complete absence of confidence in the change management process.

What can you say about a discussion which starts off with the change champion saying procurement reform is not ambitious enough, hasn't done what was set out in current plans, ... is old fashioned, long, expensive, mitigating against small and younger businesses, .... From there it was downhill all the way, including the usual mantra of a lack of skills and lack of any serious contract management. Inspirational - not at all. Encouraging - no. Belief in the change - no.

The glimmer of hope in a potential single source 'closed loop contract' for recycled paper which would lead to a new paper mill had the potential for celebration - but stakeholder ownership hasn't been gained. Senior mandarins are considered partially to blame, yet we were also told "when people really want it to happen it can and does". Personally I would have liked someone to have asked how long that contract lock-in will be and what protection will be in place to protect against long-term supplier power?

Then we heard about reducing the cost of sending out giro cheques, yet no one asked why are giro cheques being sent out at all as opposed to BACS payments?

Procurement reform appears to be aspirational as opposed to performance managed - so all the lessons from Michael Barber's unit seem to have been forgotten!

I could go on, but the most disheartening message, to me, was the assertion that the "primary objective through procurement is getting the goods and services needed by the citizens at the best price". With a message like that is it any wonder there is inertia.

Saturday, 11 May 2013

A reality check on the market impact of the Dhaka disaster

Hopefully no reader of this blog is remotely in doubt about my abhorrence of the low price/high human cost sourcing strategy pursued by some clothing retailers which contributed to the loss of more than 1,000 lives in Dhaka.(For example, see herehere and here)

But I think we need a reality check as to whether or not "(p)eople will think more carefully about where they spend their money, and the statement they are making".

  1. Is there any evidence that those arguing that case were, themselves, 'Primark/Matalan ilk' customers?
  2. Is there any evidence that those who would have shopped at 'Primark/Matalan ilk' stores are aware of the Dhaka disaster?
  3. Is there any evidence that those 'Primark/Matalan ilk' shoppers have made a connection between their low price purchase and the working conditions of those who produced the clothes?
  4. Is there any evidence those who shop at 'Primark/Matalan ilk' stores have felt any pang of conscious over their purchases?
  5. Is there any evidence that 'Primark/Matalan ilk' stores have seen any discernible and potential long-term change in sales since the Dhaka disaster?
Personally, I would like to see that evidence before I would believe consumer impact will lead to a change to more responsible and accountable procurement. 

However, loss of sales shouldn't be the sole reason for organisations to 'buy with a soul'. The public shaming of the finance industry doesn't strike me as having led to major changes in bank customers behaviour, yet the finance sector does appear to be making small steps towards 'doing the right thing'.  We need the 'Primark/Matalan ilk' firms to be more concerned about 'doing the right thing' too. But 'doing the right thing' is very subjective - think of all those in the former UK clothing industry who lost their jobs over the last century when decisions were made to shift and source from 'low price countries'.

Friday, 10 May 2013

Pic n mix evidenced based policy

I was surprised to hear the Health Secretary say that plans to introduce plain cigarette packaging were not included in the Queen's speech as there is a lack of evidence that it impacts on reducing smoking. Logic suggests that the tobacco industry wouldn't design packs for purely aesthetic reasons and there appears to be evidence that cigarette packaging has an impact on buyer behaviour. But then we have a strong tobacco industry lobby and a mass of tax revenue from the purchase of cigarettes. Is tax revenue now more attractive than longer term health benefits and reduced NHS costs?

Equally there appears to be a complete absence of evidence that leaving the EU would have a positive impact on the UK economy, yet that doesn't stop it being a serious economic issue at the present.

But, more specifically, we have to ask, where is the evidence that the current UK austerity strategy will work, the anticipated procurement savings realistic and, what can only be described as seismic public sector, cuts will deliver the required benefits?

Have we reached pic n mix evidence based public policy? How can we avoid pic n mix evidence based   public procurement policy?  It's not that we only need a Plan B for the economy but we also need the evidence to justify the strategy and a demonstrable impact assessment of progress thus far.

Thursday, 9 May 2013

What did Fallon do?

Less than two weeks ago Michael Fallon gave an undertaking that "[UK Government] will look at what responsibility can be put on retailers" in response to the Dhaka factory tragedy, where it is now thought 800 people will have lost their lives.

The tragedy pricked the conscience of some of the UK public and some of those buyers who appeared to have been pursuing a low price (/high human cost) sourcing strategy. Supplier audits and risk assessments  became a topic of conversation for a few days. Unfortunately, as more domestic stories occupied our news headlines the working conditions in Bangladesh become less topical and the cost of low price clothes, like cheap T-shirts, fades. It does not have the same memory joggers as the daily decisions we make regarding the authenticity of the meat we buy which remind us of the horse meat debacle. Indeed even the Bangladeshi Finance Minister appeared to trivialise the significance of the 800 deaths.    

But Michael Fallon did give an undertaking about responsibility and there is surely an obligation on him to make clear what he actually did do and what the outcome was. Two weeks is quite a long time in politics and the rhetoric changes. But in Bangladesh there are families who will never forget that buyer deadlines contributed to death, maiming and loss of income. To make matters worse we have now learnt of more deaths in another Dhaka factory as a result of a fire with at least eight deaths.

Doesn't this put in context yesterday's blog on low spec uniforms?

Now may be a good time for Michael Fallon and those in the retail industry to let us know what preventative actions they took?

Reducing crime doesn't pay if you're paid by on the basis of demand

Not everyone gains from reduced crime. When you've contracted to deliver a service, and the service is linked to prison 'heads on the beds' you're in trouble if crime reduces.

That's the painful lesson G4S have learnt in The Netherlands, which has seen a reduction in prison occupancy rates from 14,100 in 2005 to an anticipated, below 9,000 in 2015. 30 prisons close so there is less demand for the contracted G4S prison officers. Reduced demand for contracted prison officers, for G4S, leads to the need to issue a warning over profit margins. Anticipated deduced profit margins led to a 15% fall in share price. Reduced profits and share price leads to a potential change in financial stability. Reduced financial stability of a key contractor should lead to a reassessment of procurement risk.

This should serve as a reminder to those involved in procuring services of the need to be conscious of:
  • The need to align contractor incentives with those of the procuring organisation;
  • The need to recognise that demand goes up and down;
  • The need to design contracts which can flex for demand;
  • The need to carry out market scanning and understand the potential impact of external changes.

Wednesday, 8 May 2013

When buying womens clothes ...

With three daughters, a wife and, a mother who has Altzheimer's, I am no stranger to buying womens' clothes. That has taught me buying without without user participation is high risk and frequently a false economy. When I used to buy uniform clothing I also recognised buying womens uniforms was something which really needed a lot of, let's call it, 'stakeholder engagement'. 

So it comes as a surprise that Virgin Trains appear to have got it slightly wrong with their new womens' uniforms. The first consignment of the uniforms have now been test driven and the ladies aren't happy - too low cut and 'see through'. Virgin claim it was 'not clear' how the clothes would be received until they were worn - that's hardly a surprise. So why on earth was there not a user panel involved in the selection and a trial not carried out?  If Virgin were trying to reduce cost, they are now faced with additional costs, namely, the £20 vouchers they have offered each of the women to buy underwear which will 'avoid embarrassment'. 

Would the additional £20 voucher have tipped the balance in terms of an alternative offer? Perhaps but how will we know - transparency appears to be a delicate issue though.

For those in the public sector now preparing to buy prisoner uniforms, let's hope they can get the right user panel together. 

Saturday, 4 May 2013

Will UKIPs success impact on procurement?

UKIPs success in Thursday's local government elections certainly changed the English political landscape but will it make a difference to local government public procurement? Or, put a different way, if you're a local government procurement practitioner in a council where UKIP have now a major voice what changes should you anticipate, if any?

Let's first recognise that in local government politicians should shape the agenda; that's what democracy is all about. Although UKIP have not yet taken control of a council that does't mean they can't affect change.

The first area I would anticipate an impact will be if a UKIP member secures the portfolio which covers procurement - given the strategic significance of that portfolio to UKIP's strategic intent, that should be one of their core political objectives. The second impact would be if UKIP members secure a strong position on Resources Overview and Security. If either of these roles is secured expect UKIP members to reflect their manifesto - and, if my experience of local government is a reliable indicator, expect the euphoria of the Thursday's results to bring the confidence and boldness to make a quick impact, even though there will be a lack of understanding.

So what can we assume based on the UKIP Manifesto?

  1. Greater focus on cost reduction as opposed to service cuts;
  2. Resistance to the EU procurement regulations;
  3. Resistance to awarding contracts to non-UK businesses;
  4. Cynicism over the effectiveness of previous initiatives designed to support local businesses;
  5. Questions on how to make it easier for local businesses to tender for contracts;
  6. Challenge on the need to embed equalities in procurement; 
  7. Environmental procurement resisted;
  8. A resurgence in the desire to support third sector organisation;
  9. Cynicism that the procurement manger is committed to serving the citizenry as opposed to their own self-interest;
  10. Expect a need to justify existing procurement staff numbers;
I suspect many, new to local government, may have listened to the election results and thought 'so what?'. Well, if that's how you felt, you have a real problem and need to remember that in local government, political manifestos are the backdrop which should shape strategic procurement objectives. One other thing worth reflecting on is that UKIP have an electoral mandate for pursuing their manifesto objectives, while procurement professionals don't. Procurement's challenge is to provide the best professional advice on how objectives can be achieved, regardless of whether or not they agree with the objectives.

Friday, 3 May 2013

Road repairs Taskforce needs to improve stakeholder engagement satnav

I was mystified this morning, watching Sky Breakfast, when I heard a key member of a new Taskforce to help reduce the cost and disruption of roads repairs had only heard of their membership when a Sky Researcher contacted them yesterday. That beggars belief and makes you wonder how engaged those who set up the Taskforce want stakeholders to be and how open they are to new ideas.

It's not really that big a surprise that so much money is spent making our roads roadworthy when you think of the impact of heavy vehicles, floods and frosts, and the absence of a joined-up approach to utilities. When money is tight, as it is for most councils, what should have been lower long-term planned preventative maintenance frequently shifts to more expensive and less effective short-term reactive repairs.

But the Taskforce focus is to be on the cost and disruption of the utilities companies who have little incentive to focus on long-term cost effective repairs - sub-contract on lowest price, complete the job and get away asap.

Apparently councils have spent £435m over the last two years and 20% of the repairs carried out last year were not of a sufficient quality.  I assume that leads to rework and additional road damage and more claims against councils. Perhaps the Taskforce should ask how the councils can more effectively set and manage a basic quality standard of the repairs based on long-term cost, including performance of the repair over a specified period.

So, one of the key Taskforce members, a representative from the contractors association, stated on Sky that they first heard of their membership from Sky. That's not a good omen. But, given that contractors are involved in the Taskforce, and this is about cost reduction, whole life costs, specification, and contract management - has the contribution of procurement expertise to this discussion even been recognised and are CIPS represented, at the minute that's not easy to establish from the websites!

Wednesday, 1 May 2013

Make or buy - make or break

Today we have learnt of plans to 'mutualise' "dozens" of public sector services within the next two years. Of course that just gets us to the next election, so the political risk is high of selecting the wrong service or even more basic, not managing the process right. Get it right and the public should benefit, get it wrong and you break it.

So, with two blogs this week already considering options appraisal, this looks as if it is topic of the week.

We have already seen the 'cull of the quangos' so let's hope some lessons were learnt from that. But then that begs another question - why were these public services up for the make/buy debate at the minute not deal with at that time?

But this isn't a cull, this is a 'mutualisation'. The assumption is that some of the 75,000 current employees will want to take a stake in the new 'mutuals'. Has that assumption been robustly tested?

Then there's the proposal that the government will guarantee contracts for a number of years to the new mutuals. It will be interesting to see how that will be delivered given the public procurement regulations?

If I were one of the employees, I think one of the questions I'd ask would be, what sort of business justification suggests that the 'mutuals' will be sustainable without the government contracts? We know that the third sector has paid a big price and in some cases brought to its knees as a result of the austerity strategy.

For the wider citizenry, there are other questions. If it is now considered these services can be 'off-loaded', why  were they introduced in the first place? With the increased reduction in political accountability for such a large proportion of public services how is democratic accountability retained? If you reduce democratic accountability, should we see a commensurate reduction in the salary costs of MPs? Who is carrying the risk if this all goes wrong?

We could also question the feasibility of the two year project plan and its dependencies on consultation, staff contract renegotiation, etc.

A uniform approach to justice and wasting money

There's something a bit strange going on when departments are wrestling with spending cuts and how to make them, yet a parallel discussion which says "let's spend more".

That's what looks set to be announced next Tuesday when it is decreed that all new prisoners will have to wear prison uniforms for the first two weeks of their 'Porridge'.

While there appear to be a reduction in prisoner privileges there do not appear any means of reducing the fixed costs, therefore the gyms and fancy TV's will still have to be paid for, but a new additional cost of uniforms will have to be added. Previously prisoners carried the cost of their own clothes, now it will be the public purse. I wonder has some costed this change and carried out a cost benefit analysis.

Thinking of the risks:

  1. What will happen if all prisoners see this as an opportunity to protest and request that the public pay for clothing beyond the two weeks as an act of protest? How much will that cost?
  2. How do you define 'a uniform', is it actually two uniforms (a prisoner could not be expected to wear the same clothes for two weeks?), complete with shoes, socks, etc?
  3. What will happen when prisoners demand the right to be consulted on the uniforms?
  4. What will happen if this goes to public tender and is won by a clothing provider in say Bangladesh? How will the public sector protect against the low cost manufacturing risks?