Wednesday, 4 December 2013

CLG Procurement Inquiry could ask 'why bother?'

I have been discussing the oral evidence sessions at the CLG Committee Procurement Inquiry. I assume those of you following my observations can sense my frustration that this excellent opportunity appears to be slipping away. I'm sorry to say the second panel session of the fifth evidence saw some of the same methodological flaws being repeated.

The opening question of this session asked witnesses from the Federation of Small Businesses, Market Dojo, and Bangor University:
Could I just begin with a subject where we have perhaps had slightly different points of view expressed by yourselves and your organisations? It is about trying to achieve greater opportunities for SMEs and micro-businesses to obtain contracts, and the extent to which there is a potential conflict between that and the council getting the best value for money from its contracts.  
So, ask yourself, if that was the exam question, what would the correct answer look like? Set aside that 'best value for money' is frequently 'in the eye of the beholder'. Were the Committee asking: 'Is the objective of achieving greater opportunities for SMEs and micro-businesses incompatible with the objective of achieving best value for money?'

If that was what the Committee were trying to establish, quite simply, they didn't hear. They heard about a new term for me, 'stickability' (that's the amount of contract value which stays in the local community). They heard that local sourcing can lead to better social cohesion. They heard that local businesses employ a range of employees. They heard that there could be growth in the local economy. They heard that local government procurement processes can act as a barrier to SMEs. They heard that "SMEs are the reason why a lot of large companies fail and yet local government procurement does not take account of this very well in the process" (What on earth is that about?). They heard that councils could not take account of innovation in the award process. But did they hear if the objective of achieving greater opportunities for SMEs and micro-businesses is incompatible with the objective of achieving best value for money?' - in a word, 'No'!

To me this is a serious weakness of the oral evidence sessions - poorly focused questions are being asked and the Committee just aren't extracting what they need to know. There are also opinions being expressed which appear to lack any foundation yet are not tested and lack of clarity of definitions which  mean answers are given but there is no shared understanding.

We heard that the Federation of Small Businesses (FSB) "found something like 70% of small businesses were not interested in engaging with local councils. In fact, it was easier to get them to export than to get them to trade with their local councils". That's a very important statement and relevant to the Inquiry, yet it wasn't followed-up or probed. We don't know, for example, is the FSB saying councils should forget about trying to create opportunities for SMEs and micro-businesses?

When the Committee took evidence in Sheffield they heard that most councils were using of a single, regional portal, yet now the Committee were being told that "each local council has a different portal for its own procurement" - the Committee need to understand the extent to which both these answers are true, if that's at all possible. But they didn't test the evidence heard against the Sheffield claim.

My sympathies go out to the Committee having to decide whether local government procurement skills are suffice. There have been various skills development initiatives (even though none appear to be been discussed) and yet the Committee hearing mixed messages on whether or not the required skills exist. My suggestion is, why not stop all the assumptions and complete a procurement skills training needs analysis?

But will completing a Training Needs Analysis, and even a development programme, solve the problem which seems to be risk aversion? Let's be honest, those who are claiming that councils are risk averse may do well to ask, 'could that be because the supply market has become more litigious?'

The assertion that council procurement managers are risk averse as: "they are more frightened of losing their job" also needs to be tested - how would the FSB know? Surely that assertion isn't based on that old throwaway: 'it's more than my job's worth'? Local government procurement may be risk averse, but I am unaware of any evidence which demonstrates fear of losing jobs is the the cause. Surely such assertions should either be evidenced or be completely ignored if we hope to get to the truth.

At the end of this evidence session one question still lingers in my mind: 'why was one specific SME invited to give evidence?' I'm afraid I have no idea but I would really like the Committee to take the opinions stated and test through a survey of SMEs and micro-businesses to establish just how much consensus there is on the views stated?

A view was expressed by one of the witnesses that early supplier involvement is not a good thing. Personally I have be advocating early supplier involvement in the procurement process since the 90s. But then I also believe that advertising low value contracts is not economically efficient - yet that's what Bangor University argued - how is it good for SMEs to incur the costs of bidding for small value contracts when the probability of winning is decreased significantly due to the number of competitors, and good for council to devote the time to evaluating each one of those bids and subsequently potentially debriefing all the unsuccessful bidders. I just cannot understand how the Committee took this evidence as credible. I view those views as going against the grain of perceived procurement best practice in both the public and private sectors. A further area on which I disagree with Dr Telles is the imposition of word limits - at one time I did impose word limits but the restrictions have to be pragmatic. Only last week I listened to a micro-business share their unsuccessful experience of a recent public sector bid - in their debriefing they were told they were unsuccessful as a result of vagueness in their delivery methodology, yet the micro-business found it impossible to provide the necessary detail within the word count restriction. I wonder many words Dr Telles would suggest are necessary for outlining an effective research approach for the CLG Committee Inquiry into procurement?

The regular question on the benefits of centralisation was trotted out yet again. One of the witnesses suggested:
If you created regional hubs, for example, which would help lots of local councils together, you could have a lot of advantages from that, through standardising without necessarily centralising the procedures. For example, you could have help with the PQQ responses, offer advice, offer best practice, analyse suppliers who are used across several local councils to understand risk and mitigate that risk. You can aggregate opportunities through these ... regional hubs. This is not centralising in one area, but in particular regions, you could centralise that effort. 
As the evidence continued you could only conclude the suggested regional hubs seem to be a panacea for all local government woes.

You know that sounds like a really good idea to me. You know it sounds like such a good idea I can't understand why it hasn't be thought of before. Hold on though, weren't Centres of Procurement Excellence (renamed Regional Centres of Excellence, renamed Regional Improvement & Efficiency Partnerships) established under the National Procurement Strategy for local government in 2002 and stood down only recently. At some stage I'm sure the Committee must ask 'What happened to them, did they work, what lessons were learnt?' - I'm still waiting for that question to be asked - am I an optimist or a dreamer? Am I expecting the Committee to recognise that so many of the current suggestions for improvement were in place and met their nemesis when politicians said 'we don't need this anymore' - why not call those politicians in and ask 'Why?'

1 comment:

  1. Thanks for the summary Dr Gordon - really useful context too. The SME access incompatibility with best value argument is too simplistic in my view. You may be interested in the following blog post on that very topic. thanks Alan