Friday, 20 May 2016

The risk of unshared service at Whitehall

Few will be surprised at the failure of the Whitehall Shared Service, set up in 2013, to deliver its anticipated savings.  I remember when first being asked to give a view on the tender document saying the major risk would be getting sufficient buy-in from the departments to deliver the benefits.  Sure enough, only two departments have now adopted the 'shared service', four others having dropped out along the way.  You can read the NAO report but, to me, for the initiative to be a success there needed to be leadership, risk management, change management, technical capability of the provider and programme management.  I'm sure the Major Projects regime will have its own view - let's face it the MPA must have to provide some accountability for delivery.
  1. Leadership: who was/is leading this initiative providing a compelling agrument to ensure and the potential user departments stay the journey?
  2. Risk management: How were the risks accessed and managed, particuluarly the risk of failing to deliver the business case, failure to have sufficient confidence in the new solution to shift from the old systems, failure to gain ownership of the departments, and more, to grow the number of users, failure to ensure the provider will sufficient income to 'stay the distance'?
  3. Change management: I fear that like so many of these projects the emphasis will have been on the technical solution and as a result the 'people aspects' will have been sidelined - these initiatives are never just a technical solution, there will be people who need to want to shift to the new ways of working.
  4. Does it work: Of course the technology has to do  what it is supposed to better than the 'old ways' but it also has to remain current and reflect the speed to innovation in technology.
Now those politically and managerially responsible need to have a response plan. Can they learn the lessons, salvage the relationships with those who have 'dropped out' and still make the investment deliver its projected benefits?  For the rest of us we can only learn.

Sunday, 15 May 2016

Dominant power & lethal injection procurement

Back in 2013 I discussed the problems Texas was facing with its death penalty regime due to a supplier no longer wanting to supply. Today there are reports that there are no longer any legal supplies of the drugs at all in USA, after Pfzer, the last remaining supplier, decided to cut supply.

This is a remarkable example of how dominant power impacts on procurement.  While few would doubt the USA has massive buyer power collectively over markets, in this case, the USA have discovered that dominant power can also be with the supplier.

Like yesterday's posting, on Archaeologists, this is another clear example of a bottleneck item. It is also an interesting example of the difficulties which can be faced in finding substitutes.

Saturday, 14 May 2016

For want of an archaeologist ...

I love it when I find a new example of a Bottleneck item - those purchases which are often comparatively low price but of critical importance.  Today's Times yielded one such example which I'm not sure many would have thought of: archaeologists!

UK politicians have made a lot of noise about the need for more housebuilding. In parallel, the HS2 is quite possibly the biggest, and most politically sensitive infrastructure project for some time, for example, it's 350 miles long - you can read more of my observations on its procurement here. The financial cost of each of these initiatives is enormous and logically delays will add to cost and have a negative impact on delivery of the business case.  Politicians accountable for delivery will understandably be a bit sensitive too.

However, before work can actually commence on site there is a requirement in the UK for an archaeological investigation.  The estimated demand for archaeologists means that an additional 25% of these 'Indiana Jones' types are required.

I'm sure you can see where this is going - what's the lead-time to get an archaeologist with the necessary skills trained, was the supply pipeline of archaeologists created in sufficient time, has enough attention been given to attract students to pursue archaeology, how much had been budgeted for the premium costs which may now need to be paid for this scarce resource, has the Home Office thought through the potential visa implications for non-EU citizens who may be required? You get the feel for the procurement, project and programme management risks?

Somebody tell me that this has all been previously risk assessed and mitigated. Do I sense an 'In The Thick of It' moment?  Perhaps. as they used to say of procurement, this is Archaeology's opportunity - but hopefully not at Procurement's expense.

Thursday, 12 May 2016

Anti-Corruption Summit - Is Afghanistan's Procurement Strategy right for others?

Linked to today's Anti-Corruption summit in London, the Prime Minister's Office have published 'Against Corruption: A Collection of Essays.  One of the essays, by Afghanistan's President, specifically addresses procurement.

In that essay President Ghani argues that a failure of individual and institutional accountability is at the heart of corruption; that is compounded by fragmented institutions. The panacea, to Ghani, is strong political leadership:
In fragmented systems, only strong, national political leadership can tackle corruption at its roots. This is because only the top leadership can look across the different areas and ministries where corruption happens, in order to provide an effective agenda for reform. By demonstrating top commitment through positive action, even fragmented systems can build coalition with internal and external reformers.
 Ghani reports that public procurement in Afghanistan suffers from:

  • bid rigging, including, bids received from non-existent companies; 
  • buyers sharing cost estimates 'for a fee'; 
  • conflicts of interest in the decision making process; 
  • coercion of bidders to alter or withdraw competitive bids;  
  • specifying for sole supply; 
  • acceptance of deliveries which are not of the specified quality.
Let's be honest, these are not problems unique to Afghanistan, nor the public sector alone - they are common in many businesses throughout the world and few can be sure they are completely immune or risk free. 

The Afghan strategy to combat the above is "formation of a National Procurement Council (NPC) to review all high-value contracts and the consolidation of construction contracts through two specialised agencies."  The National Procurement Council is chaired by the President himself!  This overseeing is claimed to have saved $350m in the first year.  Ironically we are told though that punishment of those guilty of corruption in procurement has been almost negligible. 

No-one could deny that public procurement in Afghanistan has become a 'top table' issue and I congratulate the President on his commitment.  However, I do question the strategy: 
  1. Responding to institutional corruption through concentrating oversight on a few at the top table, or even two 'centralised buying bodies' is well meaning but the Brazilian President's current predicament may be worth considering and learning from?  What if corruption is at the top?  Perhaps Afghanistan could consider what risk management approach is applied and how there can be independent scrutiny of 'the executive'?
  2. I also think it is naive to think all procurement can be addressed or policed by 'the few'.
  3. I don't actually believe fragmentation of governance is a cause, in fact, the tiered government system of the UK between Central, Devolved and local government may serve as a useful demonstration that it is not. Local democratic accountability may well provide part of the solution.
  4. Ghani implies a culture change is required - how is that actually being addressed and managed?
  5. Simplifying, standardising and automation of procurement processes, led by the Top, is an essential part of the solution, but that has to include clearly defined segregation of duties. That is not referred to by Ghani but perhaps is on the agenda.  
  6. The procurement systems need to be fit for purpose, make compliance easy and abuse hard - better use of eProcurement tools can spread the load and enable the NPC to focus where it is necessary.
  7. I didn't see any mention in the essay of the performance management structure, given that personal accountability is identified as part of the solution. I think that should be addressed otherwise rhetoric and an essay will be the only legacy.
  8. Ghani has implied that the consequences of being caught need to be addressed; I would argue that unless the risks, penalties and probability of being caught outweigh the potential rewards of fraud, bribery and corruption, the Afghan strategy is merely chasing the wind and unlikely to succeed.

I am genuinely impressed that Ghani has been prepared to lead the reform of procurement in Afghanistan, and I wish him well, I look forward to hearing of progress in a few years time. Hold on, what are the plans to review the effectiveness of his strategy?