Monday, 23 December 2013

When the Ministers met the CLG procurement inquiry

At last, I hear you say, we've reached the seventh, and final, oral evidence session of the CLG Committee Inquiry into procurement. The witnesses being Baroness Stowell of Beeston (Parliamentary Under-Secretary at DCLG with responsibility for procurement) and Nick Hurd (Minister at the Cabinet Office). When you recall the central government's CPO reports to the Cabinet Office these witnesses should be in a very strong position to speak with authority on the political objectives of procurement.

The Baroness took an early opportunity to volunteer her view of procurement effectiveness:
They should understand that it is not just about buying the relevant services at the best price possible but that this is also an opportunity to make sure that procurement is a way of getting the best service you can and that it is possible to improve the services that are provided locally. If we start putting a [savings] target on things, the focus then is on that rather than what I would see as the more important outcome, which is a better local service for local people.
It is important to note that this was stated in response to a question on what could be potential savings from procurement as opposed to "what would good look like". The Minister responsible for local government procurement, therefore, sees procurement as not about lowest price but better local services. It is really disappointing that the Committee didn't take the opportunity to compare that view with the Cabinet Office Minister's, as you may recall his boss, Francis Maude, told the Public Administration Select Committee in May of this year: that the "primary objective through procurement is getting the goods and services needed by the citizens at the best price". Is it just me, or are the Cabinet Office and DCLG at odds on what epitomises good procurement?

Then compare, former Local Government Minister Michael Heseltine's view, which has the implied endorsement of the Chancellor:

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 ignore 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 di not spend enough time exploring the ways government can work to support it. 
This dysfunctionalism of the Government does little to help local government practitioners write aligned procurement strategies - what exactly are the strategies to achieve?. The Committee didn't pursue these perceived clashes but instead asked whether there were any plans to change legislation or publish new guidance on procurement - talk about red herrings!

We learnt that DCLG held a 'bin buying summit' last year trying to encourage councils to collaborate on buying plastic wheelie bins. The Committee heard that despite evidence of 'better buys', councils continued to exercise their independence. The Committee could have pursued 'why' but didn't. Yet, surely it is important to understand why if the the Committee intends to advocate greater collaboration or even mandating centralsied purchasing.

Nevertheless, I have to say I was really quite impressed when one of the Committee members asked the Baroness how much could be saved through collaboration, then after being told £1bn (2%), came back to ask why DCLG were spending £6bn to encourage collaboration. This is the type of probing the Committee really need to do more.

But just when I felt things were picking up, I was brought back to reality with the more usual style of ineffective questioning - what do you think of this example:
We are getting councils to look at all sorts of different opportunities for contracting and perhaps contracting out—outsourcing. What I am concerned about, and there are a couple of questions that flow from this afterwards, is do you really think councils have the right skill set so that, when they contract out and outsource, the level of risk to the council has been addressed? It is the ongoing work afterwards about fraud in the outsource company or inability to deliver, bonds and things like that. Do you think councils really have those skill sets?
To me that's a chaotic type of question, with too many component parts, for example:
  1. contracting options;
  2. outsourcing;
  3. outsourcing skills (which include options appraisal, business case, make/buy decision making, complex contracting, etc;
  4. risk management;
  5. supply chain fraud;
  6. contract management.
Interestingly, from the answer, we discover the LGA will be launching a strategy which will address procurement professionalism in 2014. Strange the LGA didn't mention that in their oral evidence. We have now reached the last of the oral evidence sessions, and if I am correct, the Committee have neither heard or probed about the 2002-2006 Local Government Procurement Skills Development Programme. I remain mystified why learning lessons from the past appears rhetoric as opposed to practice.

But hold on a second, this is a House of Commons Select Committee and two Ministers are giving evidence - are they unaware of other relevant Committee Inquiries?  Take for example the recent evidence, publicly available, given to the Public Accounts Committee on 20 November, by the top four private contractors to central government. At that Committee, the question (#32) was asked: "... is there expertise, particularly in local authorities where they are perhaps only doing one or two [outsourcing] contracts, ...". The answer given by one of the major providers was:
... In the vast majority of instances we felt that the officers negotiating on a local government side a) had been pretty competent; ... I really think local government, as a rule, is a pretty good procurer... because they have been doing it since 1988 through compulsory competitive tendering. They are more experienced. They drive a harder bargain.  
It is very difficult to understand why the CLG Committee persist in asking questions about outsourcing strategy and skills yet don't seem to have taken evidence from those who would be well placed to know. It is also difficult to understand how, for example, the evidence from a different Committee (say PAC) is fed into an different Inquiry. As I have observed the evidence sessions, I start to get the impression that there may be a tendency to look for affirming evidence that procurement skills are lacking, yet an avoidance, perhaps subconsciously, of evidence which suggests there is not a skills deficit. Yet, the Committee appear to be drawing on evidence from the previous Procurement Skills Development Programme, or indeed a Training Needs Analysis.

The discussion, I am sure you note, has been about procurement skills. The Committee then asked about the role of SMEs, buy local and major outsourcing. They heard about all the good work regarding SMEs but nothing was said about Cabinet Office strategy for aggregation of spend, potentially mandating centralise purchasing, or indeed how SMEs would be able to find the finance, let alone manage the risk of taking on major outsourcing contracts. In simple terms these are barriers to entry to the outsourcing market for SMEs which need to be understood.

We also heard that CLG are removing PQQs in local government for contracts below the EU thresholds. I hope someone briefed the Minister that there is nothing to be removed as there is no obligation to use PQQs, although, to many of us they have their place, and the Restricted Procedure (using PQQs) was at one time advocated by OGC as the procedure of choice.

I have highlighted throughout that I have concerns about how robust these evidence sessions are, indeed, even at the Call for Evidence stage I highlighted eleven questions which I think need answers, sadly, to me, those questions remain unanswered.

1 comment:

  1. Great post Gord, verrryyy interesting. Looking forward to collaborating. Barb