Monday, 16 December 2013

CLG Committee procurement inquiry: What are the 10 characteristics of good local government procurement?

Regular readers will recognise that I have been following the CLG Inquiry into local government procurement and have not found the approach to taking evidence robust. Nevertheless, we live in hope, while, the Committee persist in asking witnesses, who probably have really good evidence to give, questions which are beyond their ken and fail to ask 'How could this witness possibly know?'.

And so arrive at the sixth oral evidence session when the Committee should have been able to ask a senior manager from the Audit Commission Information and Analysis Group, the Head of Counter-Fraud at the Audit Commission, and the Director of Cabinet Office and Cross Government Studies at the National Audit, 'What they knew?'.

Now, I think these three witnesses should have been in a position to talk about research method, so it was reassuring to hear, buried within the Chair's opening airing of opinion, the following:
How do we get a real feel about whether local authorities in general are using best practice in the area of procurement?   
Neither of the three witnesses recommended a research approach to the Committee but instead said they were not in a position to answer whether or not local government is adopting best practice. I'm sure you have recognised the difference: the witnesses were being asked about method, which should have been their area of expertise, but answered an entirely different question. We know the Audit Commission's role has changed (previous witnesses have reminded the Committee of that too, and we know NAO has a focus on central government, but that's not what the Committee asked about! Sadly the Committee allowed themselves to be distracted and didn't return to the witnesses specialism, evidence gathering.

Now recall that the Committee are trying to find out:
How do we get a real feel about whether local authorities in general are using best practice in the area of procurement?   
Eventually one of the witnesses suggested the answer lay in greater transparency. I'm sure those working in local government will recognise that there has never been as much transparency in procurement since the Local Government Act 1888 - if greater transparency is required, to me, it needs to be clear what its outcome is going to be and how it is to be funded, we actually need a business justification? But those in local government can breath a sigh of relief, the Committee went of on a diversion about suppliers' transparency as opposed to that of local government.

Thankfully, the Committee heard, that councils have been on a procurement journey for the last 10-15 years and there has been a huge effort in producing guidance - I have been wondering if that resource bank would ever be referred to. Disappointingly, the Committee did not probe that or try to reconcile that with the previous evidence they heard which suggested a need for guidance. The Committee need to understand what guidance exists and whether it is current or in need of a refresh. My opinion is that the guidance exists but there is an issue about embedding some of that into practice - the big issue is change management. Of course, a good starting position for the Committee could be an audit of what guidance exists - have the Committee sight of that audit? Why wasn't it submitted by the LGA?

Despite getting close to something which could really help, the Committee went off on another tangent and asked: "Is there a conflict between getting prices down but adding social value to contracts at the same time?". The answer nearly made me fall off my high horse - the Audit Commission started to talk about the need for councils to get the lowest price! I had half hoped the Audit Commission would have explained the concept of public value and, perhaps even, that councils only exist to deliver social value, but sadly that wasn't to be. But it is scary the words 'lowest price' were used as opposed to 'best value for money'. Not to worry, the Committee let that pass.

Just in case you are losing the will to live, so far the Committee have not heard how either the AC or NAO would find evidence about whether councils are doing well on procurement, and then they've heard the procurement heresy of the need to get lowest price.

Thankfully, I felt the witnesses went some way to redeeming themselves by not falling into the Committee's standard question on the benefits of mandating centralised procurement - good answers  and an honest admission, from the Head of Counter-Fraud, "It does not cover my are of expertise" - I just wish more witnesses had the courage to say the same thing.

Then we heard a nice little piece of 'deception', Mr Wardman was asked: "earlier you said that councillors had been on a journey over the last 10 years on procurement", but hold on a second, Wardman hadn't mentioned councillors he'd referred to councils. The questioner then continued to assert that AC and NAO had been damning about the lack of skills to handle complex procurement and how much the lack of skills was costing the taxpayer. I just wish one of the witnesses had answered, "how could anyone place a verifiable figure on that?", but then, the witnesses had previously ducked the question:
How do we get a real feel about whether local authorities in general are using best practice in the area of procurement? 
 Finally an appropriate question to someone who should be a reliable witness:
Could you tell us your view on how effective local authorities are at managing risk, and the risk of fraud occurring in contracts in which they are involved?
We heard of verifiable 2013 evidence that 203 case of procurement fraud were detected amounting to £1.9m, that's 0.2% of all detected local government fraud. We heard of a 40% increase in fraud detected between 2011 and 2013. We heard of the demise of contract audit staff - yes, those people who were a pest and asked nuisance questions but actually were part of an effective risk management system, now dismantled. Then a surprising statement "... the transparency agenda and tackling corruption have helped fraudsters to use publicly available information to commit fraud" - this was from the witness who previously suggested a need for greater transparency! Am I alone in wondering why this wasn't challenged?

We heard that "there is no academically robust and statistically significant estimate of the scale of procurement fraud against local government" - so all those of you in the world of academia, there's a suggestion for a useful contribution.

We heard that there is a central function which considers all fraud detected - that's something which should be applauded. We learnt that most detected procurement fraud is at the contract implementation stage, that the absence of traditional fraud risk management tools of supervisory controls and segregation of duties have contributed to fraud. We heard that pre-tender fraud is problematic and rarely detected (maybe at some stage I will share some case study insights on this). We heard some useful practise of asking to see suppliers' whistle-blowing policies - that's something the private sector could start too.

And at that the session came to a close. My verdict: some really useful stuff but perhaps these oral evidence sessions would have been so much more useful if the Committee had just consistently asked: "What are the ten characteristics of good local government procurement?" - pity they didn't.

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