Monday, 28 April 2014

Procurement Tsar for NHS

The Health Secretary has announced the NHS will have its own Procurement Tsar. The Tsar will be responsible for a new 'central list' of hundreds of items, harnessing the purchasing power of the NHS - those of you with reasonable short-term memories will recognise that is not a million miles away from what PASA created and it seems to echo some of what the Crown Commercial Services aim to do too.

Will the Procurement Tsar report to the Health Secretary or Francis Maude?

We all know that the problem is not setting up 'central lists' but in changing the culture so that the lists have the ownership of users, particularly clinicians. I'm not clear who the Tsar will be, but they will need to have remarkable influence, change management expertise, leadership and tenacity. Will they also need to have procurement expertise or will they merely act as champions?

Will the Health Secretary act as the primary champion of the change and the Tsar take on the role of 'enforcer'?  I don't think we've had such a Tsar in the past and it will be interesting to observe, not only who is appointed, but the strategy they adopt - will it be a carrot or a stick?

Of course the Tsar could claim an easy victory if they chose their battles with adminsitrators as opposed to clinicians. A 'central list' which includes toilet rolls, reams of paper, printers, laptops, water coolers, etc., would still be a 'central list' but the Tsar will need to demonstrate success in the areas which have been most resistant to change over the last 20 years otherwise they can expect a short life and difficulties in justifying their own value for money.

If they are successful we can expect a new model for public procurement - I wonder will they need the CIPS Licence too?

Saturday, 26 April 2014

Moral hazard, counterfeits and procurement

I recall reading a great book on Isaac Newton about his little known career at the Royal Mint trying to outsmart a counterfeiter- it's well worth a read.

Yesterday's Times carried two reports which resonated with that book. One of the reports was concerned with supposedly vintage wine,  at £10,000 a glass, that a 'wine detective' claimed "on some of the bottles that are supposed to be centuries old, the labels were printed by computer", other causes for concern were the corks, label glue and the type of bottles. Had the buyer been victim of a fruad?

The second report was concerned with counterfeit £1 coins - not a million miles away from the problem Newton was trying to crack.

Both the reports remind us of one of the challenges which face procurement: 'how do you know you get what it says on the tin (or specification)?'

I recently spent some time exploring an organisation's vulnerability to procurement fraud. One of the areas of vulnerability was the lack of protection against a specifier colluding with a supplier who priced against a specification but delivered below specification. The problem was aggravated in that many of the materials were concealed in the building fabric and a counterfeit was unlikely to be detected unless there was an acute failure which could have led to lives being lost. Of course the failure could have been through a shorter lifespan and long after the specifier had left the organisation.

Part of the problem was the specifier was the same person who dealt with the RFQs, and signed-off acceptance of the delivery to the specification.

While that's a worst case scenario, the strange thing was that the organisation did not have mechanisms in place to protect the specifier against unfounded allegations of collusion - do you?

Tuesday, 22 April 2014

A very political procurement

In 2012 I published a paper on International Lessons on Austerity Strategy - one of the key lessons being the  advantages of having projects 'shovel ready' so that you could deploy procurement to stimulate the economy and accelerate the recovery. That meant planning approvals gained and availability of construction resources 'ready to go'.

If you did that you could reduce unemployment and the human trauma which accompany it, you could also shift from paying benefits to receiving tax and national insurance income.

Today we learn that more than 200 projects are being announced to rebuild Britain - all to start during 2014/15. Some would scream "why weren't these measures taken much earlier to prevent the flooding and now dangerous condition of our roads?".

Of course the cynic could also say this investment is political - designed to create jobs and have a visible impact of 'something happening' in the run up to the election.

The spotlight now moves to the procurement, project management and risk management of over 200 major projects. If the procurement is successful the next election will see a celebration of successful delivery of improvement public services, local economic development and jobs. If the procurement is unsuccessful the spotlight can be expected to be on procurement blame.

Perhaps it is timely that Locke has just been released!

I have absolutely no understanding of the preparations prior to this announcement but it will be a significant test for the Major Projects Authority too. I assume that someone has checked the capacity to deliver on what could become a very political procurement.

Saturday, 12 April 2014

Calvary - film review

Went to see Calvary tonight with Breandan Gleeson centre stage. I would have rated In Bruges and The Guard among my favourite films - now Calvary makes that a trilogy.

There is a trend with that trilogy of Gleeson films but if I shared that with you, I suspect it would be your loss - you'll know when you see it.

While In Bruges could have been released by the Belgian Tourist Board, I'm not so sure that Calvary and The Guard would have the same impact. Yet, you certainly get a feel for Sligo on the West of Ireland - reminded my why I like Sligo so much.

This is really a powerful film. I found it's impact more powerful than 12 Years a Slave and the audience seemed to leave both with the same sense. I honestly don't know why there's a suggestion that this is a comedy - it's not although there are a few bits which could be straight out of Father Ted.

I can't help feel that the timing of the release on the run up to Easter was deliberate. Certainly, it gets my recommendation as a 'must see'.

Thursday, 10 April 2014

One more time: get the procurement processes right and stick to them.

You may well be familiar with the old hymn 'Tell me the old, old story' - it strikes me there is a procurement version: 'Get the procurement processes right and then stick to them'. Time and again we find those basics just aren't adhered to, yet we hear grandiose ideas of procurement being really strategic - are there parallel universes?

Perhaps operational procurement is forgotten and the cry is that the processes must be wrong - if the processes are wrong, fix them, don't avoid them. Broken processes and worse, unadhered to processes have no place in either efficiency, value for money or competitiveness. They also create the environment for procurement fraud, bribery and corruption.

So let's think about some of the basics which Larne Borough Council, like some many, have got wrong and no doubt will be echoed elsewhere shortly:

  1. If you enter into an agreement - get it signed asap;
  2. If you have awarded a franchise, particularly in times when firms are going bust, invoice and get payments regularly;
  3. If you are using corporate credit cards or pCards make sure you manage them responsibly;
  4. Understand what good processes are, adapt appropriately and adopt them, then consistency stick to them.
In this age of 'transparency' it would be nice to see the full report on Larne Borough Council which is said to also express concerns on the award of contracts. 

Those unaware of the Northern Ireland local government may not realise that there is a restructuring of councils taking place, while there are currently 26 councils, there will soon only be 11. The restructuring provides a wonderful opportunity for procurement transformation, not only strategically but in terms of processes - it provides an opportunity for NI to become an exemplar. But if you want to get the processes right, it makes sense to understand the lessons from past failures - that can't happen when reports for investigations remain hidden. Let's hope that the Larne 'hidden' report is the last we hear of inferior local government procurement performance - what are the odds? 

Tuesday, 8 April 2014

Was there even a contract for the water for Sheffield Half Marathon?

On Sunday I discussed the Sheffield Marathon mess. Today we've seen a new twist with the supplier claiming that they did not make the delivery as the organisers had not fulfilled their part of the deal by paying in advance.

In a statement, the water provider said: 

After amending their requirements a number of times they did indeed place an order on 21 March accepting our offer, the terms of which, as always, clearly state that full payment is required in advance of delivery.
It is that payment that confirms the contract and triggers our process of scheduling the assets for delivery.
In the absence of that payment, despite our reminding them of the need to pay, the scheduling did not occur.
There are a few interesting aspects of this statement:

  1. When was the contract established between the buyer and the seller? If the supplier is correct there was no contract at all, but when the supplier says the offer was accepted on 21 March, would that have formed the contract?
  2. What happened in previous years? Was there a history of paying in advance or was this a change in the way of doing business?
  3. Did the buyer even read the Terms set out in the documentation?
  4. Why did the buyer not respond to the reminders for payment from the seller? 
  5. Regardless of how weak the procurement may have been, what type of supplier would knowingly put a race in jeopardy and runners health at risk through none supply of water? Not one concerned with reputation and partnership!
This bizarre competition has all the hallmarks of no-winners but certainly we can learn lessons from what the legal eagles decide on formation of a contract and, at the very least, the need to read the small print. 

Can specifiers tell the difference?

Doubtless, you familiar with the old 'taste tests': "can you tell the difference between Stork and butter?" or "Coke and Pepsi?". You may also be aware of the ploys that some of those running the tests use to confuse the taste buds during such tests. However, many will also be familiar with the cry of "clinical preference" which isn't a million miles away from the 'taste tests' but rely on deference to those who say they can tell the difference between one type of surgical glove, for example, and another. The challenge has long been how to argue with someone who's a specialist in their field and cuts people up for a living! The problem, of course, isn't unique to clinicians but, in my experience variations are fairly common across most sectors. A paper by Fritz, et al., in The Proceedings of the National Academy of Sciences should provide some hope.

Fritz and Co have been experimenting with a variation of the 'taste test' on violins, l suppose we should refer to it more correctly as the 'tone test'. Anyway, they wanted to establish if some of the world's leading violinists really could tell the difference between new and old violins, including five Stradivarius (which everyone knows are the best!!). The 'tone test' has surprised many in that the leading violinists not only couldn't tell the difference but many actually preferred newer instruments!

Procurement managers need to hone some of the skills of Fritz et al., in trying to create and gain the ownership of specifiers for 'blind tests' - if specifiers really can tell the difference the test will provide the evidence, if they can't then the problem is resistance to change and possibly supplier loyalty (symptoms of a different aliment). Overcoming that resistance to change will require political and diplomatic skills and tenacity, but it could make markets more effective, save a fortune and stimulate innovation.  

I'd be interested to hear of some of the more innovative 'taste tests' you use in procurement?

P.S. On the 10 April 2014 there was widespread media coverage on how the NHS had 'wasted' £473m on treatments which were more expensive yet with no additional benefit - exactly what this post was about. You can read Ben Goldacre's account of the Tamiflu research  here.

Sunday, 6 April 2014

Water: Bottleneck item that stopped the 'official' Sheffield Half Marathon

I've discussed bottleneck items before - remember the lethal injections and laptop hinges. Yes, these are the low value items which frequently end up classified as 'tail spend' which lack glamour but when things go wrong with them, they can have really big negative impacts.

Today, bottleneck items were making the national news in the UK: Sky, ITV and BBC included this procurement story in their headlines. For those of you who missed the headlines Sheffield Half Marathon was cancelled, for the first time in 33 years, owing to the water for runners not being delivered. In a separate twist many runners were unaware of the announced cancellation and continued regardless with the local community standing in where procurement fell down. The chair of the organising committee apologised:
It is with huge disappointment and regret that we were forced to cancel the 2014 half marathon because of a problem with the delivery of water. We apologise to all the runners, their families and friends and anyone who has supported the event. 
Even the Deputy Prime Minister found time to talk about procurement:
I know thousands of people have trained long and hard for this event, with many running for some outstanding local charities and others coming from around the country to take part or watch. I can only imagine how disappointed they must have been when they learned that the race was cancelled as they were on the start line ready to set off. 
Everyone involved deserves a full explanation of how this farcical situation was allowed to happen. Sheffield is an outstanding city of sport. The extraordinary scenes today shouldn't tarnish that reputation.
Is the quest for 'big spend' involvement forever destined to distract from making a real contribution because we don't take seriously enough the risks of Bottleneck items which lie in The Tail? Tonight procurement has taken another step backwards in credibility, not just in Sheffield but nationally. Tonight, one bottleneck item, I suspect, is causing a lack of sleep for some, and a laugh for many; let's hope the rest of us learn from this lesson.

Friday, 4 April 2014

Procurement Space Chess with Russian music

It matters little which side of the fence you sit on the politics of Crimea but what we are observing is an amazing game of strategy, negotiation and brinkmanship. While the West have huffed and puffed Putin has called checkmate and the threats of the recent past have done little to affect change.

This is clearly a historical event being played out and we can expect strategists to dissect and debate for many years to come. But does anyone seriously believe that Russia will now walk away from the Crimea? Did anyone seriously believe that once the Russian masses assembled for 'military exercises' that Putin didn't mean business?

So we observed, powerless, from the sidelines, as Russian soldiers walked in and redrew the Russian border.

Now we find that NASA employees and CONTRACTORS  have to freeze co-operation with Russia. While the International Space Station is excluded from the break in collaboration, that must only be due to the US deciding that it would be too painful to break off that co-operation. But surely that just signals to Russia how they can inflict pain on the West.

As we know the US has also lost its independence from Russia to even launch people into space - that's been 'outsourced' to Russia. At some stage the US must have decided on a make/buy decision on space launches, now I suspect they are questioning their 'what if' analysis.

Hasn't the space programme always been about economic benefits. Wasn't the reason for co-operation with Russia about economic benefits and gaining economic advantage. We're now seeing the economic advantages being compromised for political rhetoric. But what if Russia decides that co-oepration with the US is no longer advantageous? What if Russia now starts to co-operative with a different partner, one which shares its longer-term view? Wouldn't those scenarios be detrimental to the US?

Wednesday, 2 April 2014

Is the Met Office new model of relevance to procurement

British scientists have developed a new forecasting model which is said to deliver 80% accuracy. While that may help in planning when to cut the grass and whether to get the BBQ going, is it relevant to procurement?

Anything which can help predict potential demand of goods and services should be of direct relevance to procurement as it cascades to availability and pricing.

Let's consider a few examples. Improved reliability of weather forecasting would:

  • Enable better estimating of the demand for road salt; 
  • Better profile the demand for flood defences;
  • Provide predictability of the demand for some vaccines;
  • Help schedule construction works;
  • Enable the negotiation of rates which could be gained from lower cost scheduling.
But perhaps we should start from a different position. Do you know which elements of your procurement portfolio are directly impacted by the weather, and do you take any steps to mitigate against the adverse risk of fluctuations while gaining the potential benefits? Perhaps someone else in your organisation's planning is considering weather risk - do you talk with them about the commercial implications.

Inside the mind of a project manager: 'Locke' Film review

Last night I was at a preview screening of 'Locke' - one of the benefits of buying an annual subscription to the Times.

A strange film with a cast of one (although others are on the phone). Shot over just two weeks in London last year, all the action takes place during a car journey with non-stop telephone calls. I don't want to spoil the excellent plot but in amongst domestic crisis and confronting demons of the past, is a major construction project being managed. Some of the innovative solutions to ensure the construction project goes to plan found me laughing yet impressed. Then there's the irony over the limitations of Locke's control - a man who thrives on being in control but paradoxically finds so much of what is important to him as beyond control. I liked Ivan Locke, the main character, but my heart also went out to all the other innocent victims whose lives were turned upside down by the unfolding drama.

I thought this was a really good film and it left me wanting to know 'what happened next?', yet I had no doubt what was going to be the answer in delivery of the project. It may have worked well as a radio programme too but that may have deprived us of some of the tension.

Tuesday, 1 April 2014

CIPS scores a masterful coup with Borgen procurement training video

I was really disappointed when I heard, last year, that Borgen, the Danish political drama, had finished. Borgen had been some of the best TV I'd seen - compelling viewing and impossible to predict what would happen next.

Borgen was a great example of a successful BBC make/buy appraisal. Auntie just doesn't seem able to produce such a consistently high quality series', so it was a clever to buy from Denmark rather than even attempt to compete by making.

We have all had enough long-running TV series' constructed around regional accents and although I generally have problems with sub-titles that wasn't a problem I had with Borgen. Would it be worth experimenting with subtitles on Eastenders, Coronation Street and Hollyoaks to see if they become more compelling viewing?

Borgen must also have been a tremendous success for the Danish tourist board. I suspect their marketing research now finds that when someone now asks: "What comes to mind when you think of the word 'Danish'?", responses have now moved beyond Danepak, Carlsberg, and pastry to include Borgen. That's a big success and is believed to contribute to the 0.23% increase in the Copenhagen tourist footfall.

So beyond make/buy lessons, what's all that got to do with procurement? As a stroke of genius, CIPS and CCS have entered into a partnership with DUPE (the Danish Unification for Public Procurement Eccord) in commissioning a public procurement training video for politicians based on Borgen. As I understand it, Borgen's central character, Birgitte Nyborg, finds herself faced with calls for her resignation as a result of a scandal involving the CPO and the Danish Chief Secretary to the Treasury. CIPS' press release states that "the video helps demonstrate the need for a clarity of roles between politicians and officers". CIPS also claim that this is a central part of their marketing strategy and is the first of a range of procurement resources using of subtitles due to ease of being able to provide translations. Consistent with that strategy, DUPE have priced for the first and second phases of translations. The first phase of translations are targeted for Belize, Botswana, Kenya, Fiji, Jordan, and Namibia; and the second phase translated for Mauritius, Malta, Nigeria, and the Philippines. It is understood that a recommendation for Cyrillic is being considered by CIPS Congress as part of a wider package of translation of all CIPS resources on public procurement and piloting of CIPS Licence.