Saturday, 30 January 2016

Grossly excessive fees?

There was a fascinating story in yesterday's Times  and Mail online on a leading surgeon being referred to the General Medical Council for charging "grossly excessive fees". £12m was charged to a member of the Brunei royal family for breast cancer treatment.

If the report is correct, it begs a number of questions:
  1. Do the GMC have policies on fees?
  2. What constitutes "grossly excessive"?
  3. Is there a difference between "grossly excessive" and "excessive" fees?
  4. What constitutes fair and reasonable fees?
  5. Would the view be different depending on whether or not the treatment was effective?
  6. Does the relative value to the recipient have a bearing on the view?
  7. Did the recipient have the option of an alternative provider?
  8. Is there ever a situation where the surgeon is paid by results?
  9. What's the GMC's view on fees charged to private patients in the UK by comparison to those a surgeon is paid by the NHS for like-for-like treatments?
  10. Should the principle of accountability and unacceptability of charging "grossly excessive" fees be applied to other professions?

Friday, 29 January 2016

Learning from the failed procurement strategy of reforming legal services procurement

Finally the government has faced the reality that success was unlikely in the dispute with the legal profession and have aborted their plan to cut layers legal fees. I have discussed this daft procurement strategy for years now and why it was unlikely to be successful.

Face-saving is of course required and it was probably easier for Gove to draw a line under this than his predecessor, but let's pick up a few lessons:
  1. Pick your fights carefully - the legal profession is an oligopoly who understand the law, relative power and dependency. Without a means of redressing that imbalance, failure could be predicted;
  2. If you are going to consult with the market, listen. While there were great promises of consulting with the legal profession, the failure to take on board the messages of the market did not appear to be listened to.  Making a sham of market consultation ultimately reduces confidence and trust in the process;
  3. 'Cutting and pasting' one type of sourcing strategy to another category is just stupid - larger contracts and a lowest price pursuit may make sense in some situations but definitely not all;
  4. Procurement risk assessments are important - it would be great to hear how the MoJ identified and planned to mitigate all the risks associated with this procurement strategy and how political and reputational risk were being mitigated?
It would be really interesting to carry out an impact assessment of the UK government procurement strategy over the last 10 years, say, and establish which worked and why; having said that, it may well be that is a comparatively short list compared to those which didn't work.

Sunday, 24 January 2016

The mystery of CIPS Life Honorary Membership

We have previously discussed CIPS' License, and even Chartered Status, but I only recently became aware of CIPS Life Honorary Membership. 

My awareness started when one of you shared with me their intention to leave CIPS but only decided to remain when they were offered free lifetime membership - I don't want to share the details of those particular circumstances, but my friend's understanding was that the offer was made due to the number of years they'd been a CIPS member. 

Now I've been a member since the 80s so I decided to enquire about eligibility.  

As many of you will know I have been a great supporter of transparency of the procurement process and have advocated stating award criteria beyond the requirements of the EU Regulations. It strikes me as just good practice. I would have thought CIPS would have advocated a similar approach to transparency. However, when I wrote to CIPS I received this reply:
Thank you for your email. I must advise that you are not eligible for life honorary membership. I cannot advise the criteria for this membership but I recommend you email again with your query in a few years.
Of course, that was like waving the proverbial 'red rag to a bull', so I challenged the 'secrecy' and it was reiterated: "As advised I am not able to discuss the criteria", and subsequently:
Life honorary membership is rewarded on a discretionary basis and is not automatically awarded. There is no fixed criteria and each case is reviewed individually.
I'm not sure if CIPS meant to say 'rewarded' but exasperated by CIPS lack of transparency I said I would use my blog and try to establish others awareness of the process. Here's what they said:
I am sorry that you feel disappointed with the information that you have been provided.  Reading through the previous emails it appears that you have been led to believe that Life Honorary Membership is something that our members are entitled to after a certain period of time.  All I can do is reiterate what my colleague has told you that this is not correct and that this is a discretionary award on a case by case basis. I appreciate that you wish to blog about this, however I must stress that we are the team who handle these enquiries and as such are the experts in this area, any information gathered from other sources cannot be treated as reliable.
Using the shield of "we are ...  the experts in this area" echoes the criticism levelled at the profession many years ago when buyers refused to demonstrate professionalism in contract awards which only led to cynicism and suspicion.  

Equally, while information gained from a blog may not be reliable, CIPS isn't prepared to provide any clarity at all.  Let's remember that CIPS membership fees must subsidise this cabal and its beneficiaries.

I don't know about you but that leads me to ask: who decides there is a case for Life Honorary Membership, who are the Life Honorary Members, and, given the lack of any fixed criteria, how can we have confidence in the process? A straw poll of members with over 25 years MCIPS/FCIPS membership indicates few are even aware of the category of membership!

So, if any of you can provide the clarity which CIPS can't/won't provide on the dark secrets of CIPS Life Honorary Membership, I'd love to hear? It would be better that we had the transparency of a professional organisation than the perception of application of the black arts. 

Tuesday, 19 January 2016

Marketing Procurement as a service - the issues

I hear and read a reasonable amount about the need to transfer Marketing principles over to Marketing the Procurement function as part of Procurement's transformation and repositioning.  Procurement Branding is all very well but a Brand is more than a streamline or logo, it's about the mental image conjured up in the potential customers head and that is often shaped by a perceived bad past experience.

It often strikes me that we tend to forget that Procurement is not a product but a service, and that brings with it unique problems. In Marketing the Procurement function needs to be aware of some of those problems if we are to effectively overcome them. Having said that, at some stage in the future I may discuss the Procurement Product Offerings, however, what are the problems:

  1. The Procurement service is inseparable from the person receiving the service, viz, the internal customer of Procurement. You cannot separate the service user from its delivery/provision - their involvement is central. For example, let's say they can't help in shaping the specification or evaluation criteria, then how can you be sure it will fit there quality needs? Let's say they refuse to use you nicely negotiated framework arrangement, it really won't serve its purpose. Let's say they just don't want to take your advice, then regardless how good that advice is, it has little value in that particular procurement;
  2. The Procurement service is heterogeneous, the person who delivers the Procurement 'Product' is a factor in the quality of the outcome. Let's say the Procurement Advisor gives poor quality advice, then the procurement is compromised - quality control is difficult because it depends on the quality of the procurement person and what's more it depends on how they are on the day. Let's say, the Procurement Advisor is caught up in dealing with a willingness to help an internal client, how can you be sure, in their enthusiasm to be helpful, they don't stray beyond their area of expertise and give an inappropriate answer? Let's say the person is just having an 'off day' then they may not give their best; 
  3. The Procurement service is perishable - while the internal customer may be able to make use of FAQs on an intranet, they can't keep you in a drawer and only pull you out when required. Let's say you answer a query from an internal customer over the phone  - the minute the call is over you're vulnerable to whether the advice is misinterpreted or even forgotten. But let's say you were advising based on certain constraints unknown to the user, and the advise provided is wrongly applied by the user to a different environment. Really, once the service is consumed, it can't be reused as the same repeatedly. Equally, really good professional service could be quickly forgotten as a result of some minor bad experience or perceived bad experince;
  4. The Procurement service is intangible - you can't place it on a shelf and say "look what I got from Procurement, would you like one for your Birthday?" . 
Of course we can devise strategies which might overcome these problems, for example, ensuring appropriately qualified staff, placing letters before and after our names, certificates on walls, etc. but if we want to really address Marketing Procurement a good place to start is understanding some of the issues.

Saturday, 16 January 2016

A family affair or a weak procurement strategy?

Sadly the Queen's 90th birthday party has needlessly got off to a bad start. Not only is there criticism about the plan to charge £150 to attend the picnic, but there are also questions about the procurement of the event organisation. The problem isn't that the event is being organised by the Queen's grandson, but that her grandson's company are charging a fee for organising the event.  

Why on earth have those representing the Queen's interests not warned about the probability of a perceived conflict of interest and sought to avoid that criticism. Transparency of a competitive procurement would have helped. Alternatively her Grandson could have acted as a specialist advisor to a different provider free of charge.

It makes little difference to the perceived conflict of interest that the event will be run on a not-for-profit basis since there is no means of demonstrating that the costs are reasonable.

But there's another procurement angle; whoever delivers this once-in-a-lifetime event will gain unrivalled commercial gain from the ability to sell services to future clients on the strength of the demonstrable experience gained.  Given that value to potential providers, those procuring the event could have asked, "Is it really necessary to pay someone to organise this at all, would good providers see it as having such long-term value they'd have done it for nothing or even paid for the privilege?"

It never ceases to amaze me how often perceived conflicts of interest in procurement make the headlines when they could so easily be predicted and prevented. It never ceases to amaze me that there's an assumption you always have to pay?

PS. 10 February 2016: Queen's grandson quits birthday charity due to conflict of interest!!!!

Saturday, 9 January 2016

Book review: 'Procurement Mojo'

This book has been around for over a year or so but I only got round to reading it after receiving it as a Christmas present from one of my daughters.  To be honest I think it was the title which put me off previously and, to be honest, try talking to a C-level stakeholder about the 'procurement mojo' and I suspect doors will close.

The book is well positioned in a niche which I'm unaware of others having addressed; setting aside procurement technicalities to focus on making the Procurement function more effective. You may well find some of the themes familiar as they are really transferred from the management literature you would expect to find in one of those airport shops - nothing wrong with that and Osagie makes an excellent transfer.  I really can't disagree with anything he says and can't think of any other book which addresses the themes in a Procurement context. Although I did  think the chapter on Branding was weak (I will return to this in a later Blog post). It would be particularly useful for those interested in Procurement Organisation & Management or even Procurement Change Management.

I did find some of the references to Osage's and others' research a bit aggravating since the detail was missing and it tends to be anecdotal - so it wouldn't work as an academic source. I also found the frequent cliches and case studies, which seemed to be more about demonstrating Osage's pedigree, annoying.

Set all those criticisms aside and you have a really good, easy to read book, relevant to all those who want to improve Procurement's strategic positioning as a function. Osage's five step approach  makes perfect sense and I suspect represents his own transformation approach:
  1. Build an effective Procurement organisation;
  2. Deploy robust fit-for-purpose enablers;
  3. Adopt robust supply base management;
  4. Apply appropriate performance management; and 
  5. Build your Procurement brand.
I particularly liked the section on leadership but was surprised, when discussing processes, he didn't really explore the need to sort out processes only after you have define the new structure and roles. 

At only £14.99 Procurement Mojo is particularly good value (there has been a recent trend in over-pricing Procurement books lately) and an easy read. I think I will use aid memoire. 

Monday, 4 January 2016

Is the PM's direct commissioning plan sound?

The Prime Minister will announce today a landmark scheme of direct commissioning of affordable homes. The idea appears to be that the government will secure planning approvals for houses on publicly owned land, and then directly commission builders to build.  That sounds like a really good idea and goes some way to address some of the risks of planning approvals I have previously discussed. However, the idea goes further and suggests that the government will ring-fence the competitions to build the houses to small building firms in the hope of undermining the market dominance of the eight biggest building companies.

Before anyone seeks to replicate this strategy, perhaps it would be worth getting a legal opinion on whether or not such distortion/exclusion of part of the market is legal and doesn't contravene the EU Rules, or better, perhaps the government could share their legal advice on how others can follow their lead without falling foul of the law.

Friday, 1 January 2016

A New Year procurement lesson from Rodin and the Honore of Balzac

Some time ago I discussed the story behind one of Rodin's sculptures, the Burghers of Calais, and its relevance to procurement; this time I want to discuss the actual procurement of a different one, namely, the sculpture of Balzac, the novelist who lived from 1799 until 1850.  

Rodin was commissioned by Societe des Gens de Lettres in 1891. Rodin spent seven years on the work, seeking to understand the author's life, arranging for models to pose and actually ordering clothes to Balzac's measurements. He eventually clothed the sculpture in a dressing gown depicting Balzac's dress sense when writing. Worse, Rodin chose to present the sculpture as a persona as opposed to a true likeness. The client was unaware of this intention and when a plaster model was presented to them in 1898 they were furious and refused to pay.

Rodin kept the sculpture but it was not cast in Bronze until 22 years after his death.  (You can now see the finished work and the Burghers of Calais in the Rodin Museum in Paris.)

Few would doubt Rodin's capability and capacity to satisfy the client, that's not where the commission went wrong. So, as we approach the procurements of 2016, the lesson is clear: make sure you specify clearly what you want and any constraints you place on the provider. If your commission can be managed in stages with sign-offs, make sure you set out what those stages are and also how you have the right of exit.

Rodin's sculpture of Balzac was not to everyones taste and indeed neither the buyer nor the seller ended up happy; pity they hadn't given more thought to the procurement process.