Global Manufacturing Festival talks Procurement Strategy

Thursday's Global Manufacturing Festival was not the place to be if you think procurement is about 'lowest price wins'. That's where Andrew Miller MP, Chair of the Science and Technology Select Committee (the sort of person you would expect to be able to do quite big sums) weighed in to the current debate on the role of UK public procurement. I don't think Miller was invited to give evidence to the Public Administration Select Committee inquiry into procurement, but it would be interesting to have his views expressed.

Miller argues that the government needs to be "more holistic" in procurement strategy and take into account strategic economic benefits such as job creation, skills and tax income:

They've got to also take into account whether procuring from a foreign company genuinely produces overall better value for money or whether if you take into account the potential tax revenues, people in employment, the re-skilling of people that come through having high value jobs, whether sometimes they ought to give greater priority to British companies.

That's not the voice of a mere a lone critic but, to me, an echo of Heseltine's definition of public procurement:

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 ignores 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 do not spend enough time exploring the ways government can work to support it.

While PASC deliberate on the role of public procurement and one of the Chancellor's allies, IMF commander-in-chief Christine Lagarde, tells George Osborne his austerity strategy isn't working, I wonder are we starting to reach the tipping point which moves political procurement from cost cutting to value adding. Pursuit of wider procurement policy objectives would be healthy. However, the reality is that cost cutting, economic and social benefits, and sourcing from non-British firms are not mutually exclusive, yet, narrow-minded jingoism is unlikely to deliver long-term benefit if other countries follow suit. Equally, you have to consider what would have been the impact on the UK economy if it were not for foreign owned hotel chains, car manufacturers, steel companies, IT companies, communications network providers, banks, newspapers, and even teabag providers.

I've procured quite a bit of sponsorship in the past.  There's something ironic about criticising sponsors when they're paying the bills, therefore it would have been interesting to have been a fly on the wall when the sponsors of the Global Manufacturing Festival heard that non-British companies were persona non grata!

Perhaps it will fall on procurement policy makers to inject reality and pragmatism into the debate.

N.B. I confess that although the views expressed in this blog are my own, I work for an Indian organisation which employs over 50,000 in the UK.