Bovaird on 30 yrs of outsourcing & free access to this important paper.

It was with enthusiasm I approached this paper: Tony Bovaird has been someone I've know for quite a few years; the introduction of CCT was one of the key milestones in shaping my career as it elevated procurement to a strategic role, albeit with the objective of retaining contracts 'in-house'; and, the make/buy decision remains a big question I am faced with when discussing Target Operating Models.

Bovaird's paper can be expected to become a core reference paper but it should also be of interest to practitioners, public and private sector - particularly those in the NHS concerned with the debate on Agencies 'Ripping-Off' the NHS - who have to complete an options appraisal on which procurement approach is most appropriate.  Remember, an options appraisal, as Bovaird points out, is not a once and for all event but something which has to be regularly reviewed. 

Bovaird provides a review of the various strategic procurement options from the introduction of CCT (Compulsory Competitive Tendering) through partnership working, strategic commissioning, prime contracting, and then insourcing.  He clearly articulates the comparative benefits of the purchaser/provider split - the make/buy decision. He also highlights questions over the effectiveness of joint-commissioning although he does not expand that to discuss the role of consortia buying. 

One line which Bovaird uses is particularly worth wider reflection: " the age- old lesson that the search for certainty and tidiness in policy is likely to come at the expense of inappropriate decisions". At a time when there is frequent discussion on the role of procurement in innovation, we have to be prepared for managed risk which will in turn sometimes mean, with the benefit of hindsight, that wrong choices have been embarked upon - that's not a word of caution but instead a call for recognising that the appetite for innovation must be matched with a similar appetite to risk.

In concluding the paper we are presented with 10 lessons learnt from 30 years of outsourcing - if you feel you haven't time to read the paper why not take the time to read the lessons learnt.

Public Money & Mangement, in view of its potential impact have taken the unusual step of providing advance free access to Tony's paper which can be accessed here.

NHS getting ready for another procurement scrub

I found the news in today's Financial Times that the NHS is in talks regarding the future of Commissioning Support Units an interesting brain teaser - what would I do?

The 19 CSUs were set up last year to support the Clinical Commissioning Groups (CSGs) in designing health services, providing back office computer services, payroll and procurement services. Now NHS England is considering the options for their future. Yet, it appears it's the CSUs who have to decide on their own future - how will that work and what freedom will they have to plough their own furrow?

Anyway, it does seem strange that there wasn't a clear strategy when CSUs were set up as opposed to 19 CSUs starting to deliver services and then debating their future so soon.

The usual outsourcing organisations could bid for all or part if the services, but is the current environment (e.g SFO now probing tagging contract) likely to be conducive to productive discussions when the government seem to lack confidence in so many of the providers and also the ability to successfully contract manage?

Alternatively, could the CSU services be provided through the contract let recently for government shared services? That may be difficult since it didn't appear to be in scope. One could of course ask why it hadn't been included in the scope?

Could the Crown Commercial Service provide the procurement aspects? It seems odd that the CCS would allow independence of such a vast amount of spend so early in its life, but then again why haven't they been providing the procurement services up until now, and if they have, have they failed to win over hearts and minds?

Should the NHS aim to let one job-lot contract for the whole of the 19 CSUs and, if so, how will they shape the contract? If NHS England went down that route, how would they avoid being held hostage to the provider? How would they gain the ownership of the CCGs?

Could each of the CSUs become a centre of excellence and each deliver a specialist shared service to the others, say one CSU leading on payroll and another on procurement?

If theoretically it was possible for CSUs to become centres of excellence, with the sole aim of supporting CCGs, why couldn't the CCGs 'cut out the middle men' and just agree among themselves which of the CCGs would become centres of excellence?

Would my position be different depending who I was advising? Well, I think to be honest, if I were in a CSU or one of CCGs, my inclination may well be to let all the others sign-up to a central deal and then use that as the starting position to get better deals from those who were unsuccessful in winning the main contract. When you compare the classic Prisoner's Dilemma scenario doesn't it sometimes make sense to actually avoid collaboration and standalone in procurement?

Well, it gave me something to muse on during this morning's flight in the absence of the facts - what would you recommend?

A sad reflection on social care procurement

Last night's Newsnight didn't do any favours for public procurement and particularly those responsible for social services.

In summary, the report highlighted that some organisations, contracted to provide home care, only pay staff for the specific time the careworkers are in the users home (no travelling time getting between users locations is paid for) and, as a result, the carers, considering all their actual working time, are paid below the minimum wage.

For quite some time it has been recognised that it makes good sense to keep those who need care in their own homes as long as is safe - it improves their quality of life and reduces the national costs of placing users in care homes. That being the case, the aim should be to ensure good quality home care provision which also means paying for appropriate quality staff.

We have discussed some of the implications of when care provision goes wrong in the past.

Bad as that is, the real disappointment was in the interview with the social services (ADSS) spokesperson. Her analysis was that bidders could choose what price to bid at and the conditions of employment. If that was actually her justification it is seriously flawed. Those procuring social care need to recognise the risks of contracting at rates which are unsustainable and cannot deliver the level of service required. There needs to be much more due diligence.

All together the Newsnight report was not good for those who procure social care, but worse it was not good for those who are dependent on that care if 'lowest price' regardless is the strategy now being pursued.

Political procurement brohaha in Glasgow

Only days after celebrating some of the best in UK public procurement we are brought down to earth
with a jolt, reminding us that all is not as good as it could.

One of the benefits of local government procurement is the centrality of political leadership in the decision-making and councillors personal accountability to the electorate, through the ballot box, for their stewardship of the public purse. But there is a fine and delicate line which delineates when public and councillors should be involved in procurement, and when they shouldn't. Getting it wrong jeopardises public confidence in the system while getting it right enhances public confidence. So councillors and their advisers need to get the balance right.

Of course design contests as part of procurement invariably add an element of subjectivity to the whole process too. It's not easy to prove you've made the right decision.

Then, particularly in an age of austerity, there are questions as to whether spending £15m on a project represents what the public want or when a cheaper option, of say £500k, makes more sense?

With all those ingredients, this Glasgow case is particularly interesting and should provide lessons for all involved in public procurement.

A design contest was held for a £15m  revamp of George Square. Six designs were received along with a public protest to the effect that the work should not go ahead and a cheaper alternative option, at £500k, be pursued instead. A decision was taken to drop the project and pursue the cheaper option. The council Leader was praised for that decision although questions were asked why there hadn't been sufficient public consultation earlier. Then the RIAS complained that the Leader had compromised the process and had showed bias towards a particular design. Now the Leader, Councillor Mattheson is allegedly being investigated by the Police Major Crimes and Public Protection unit. Ironically, the Leader had previously said:  "... I'm sure whichever design team is chosen, Glaswegians will have a George Square to be proud of again".

So, at this stage, what are the lessons:

1. Define clearly the role of the public, councillors and officers in any procurement process;
2. Make effective use of scrutiny and gateway reviews in the process;
3. Carry out an appropriate needs assessment and establish what the public want;
4. Avoid costly procurement exercises for both bidders and buyers until you have completed a full options appraisal process.

N.B I've a paper published on the role of councillors in the Journal of Public Procurement - let me know if you want a copy.

PS on the 27 September George Matheson was cleared of any misconduct

Defining the scope for conflicts of interest in CCGs

It was only on the 15 March, discussing the potential Clinical Commissioning Groups' conflicts of interest, I said "what we don't know is how big a scandal some of those involved in CCGs could be walking into out of ignorance". Today's Sunday Times, 'naming and shaming' provides some indication that it will be a big scandal.

While "NHS England is creating guidance which outlines how conflicts of interest can be avoided and mitigated in the reformed health service" media attention and public scepticism just won't wait and have already jumped to conclusions.

I suspect a level of naivety in the NHS and CCG on procurement decision making and when those with a potential conflict of interest should absent themselves from the decision making process.

In commissioning the potential to exercise 'undue influence' is long before the decision of who should be awarded the contract and indeed long after. For example, the opportunity to influence for personal gain can be exerted:

1. In completing a strategic needs analysis and identifying which services would help match the needs of the area;
2. In prioritisation of the identified needs;
3. In determining the budget allocated to specific needs;
4. In determining the make/buy decision;
5. In determining the level of competition required;
6. In determining the potential for collaborative commissioning partners;
7. In determining whether the identified needs should be expressed as outcomes or narrowly defined inputs/outputs;
8. In agreeing the risk allocation;
9. In agreeing exit clauses;
10. In agreeing the bundling of contracts;

"NHS tendering 'a threat to patients' "?

I suspect many of you will not have access to today's Times but it has  a fascinating letter from Dr Hilary Cass (President, Royal College of Paediatrics and Child Health), Prof Sue Bailey (President, Royal College Psychiatrists), Dr Clare Gerada (Chair, Royal College of General Practitioners) and Prof Lindsey Davies (President, Faculty of Public Health).  Yes, the sort of people who you may be inclined to listen to if you were not deaf.

Their letter includes:

... we are concerned that Clinical Commissioning Groups will be forced to open services to competition against their will - creating an unnecessary bureaucratic and financial burden on commissioners, and unnecessary drain on vital NHS funding. There is also a real danger that the enforced tendering of one service may damage another independent service in a different part of the same organisation or care pathways which are key to providing high-quality healthcare to thousands of children and mental health patients every year.

We urge the Government to think again about how the section75 regulations are framed and their potential consequences. We want to see a full debate in Parliament and engagement with the Medical Royal Colleges and health professions to ensure these regulations are redrafted in the best interests of patients.

That's a fairly clear statement to the effect that key stakeholders have yet to be convinced on the way forward.

I have no reason to doubt the NHS procurement staff who, for many years, made clear that helping clinicians engage with professional procurement has been a major challenge; indeed many consider gaining their ownership of procurement initiatives the equivalent of winning an Olympic Gold.

Are these medical luminaries fighting against the changes as they see the erosion of their own vested interests or is patient care their sole motive? Are these very clever people, who appear to have resisted all forms of NHS reform, just creating yet another filibuster?

NHS Commissioning looks poorly

I had thought we had done away with public flogging but today's Public Accounts Select Committee certainly gave me cause to doubt that. What was even more bizarre was that some of the witnesses appeared to be wearing self-written sandwich boards which said "I haven't really prepared for this grilling and I don't plan to demonstrate any humility today and certainly not accept personal accountability".

It was a gruelling session for all those involved and the patience of the MPs seemed to be sorely tried - I may return to some of the evidence in more detail. Four points though are worth reflecting on and one worth discussing:

1. Hospital consultants appear to have negotiated wonderful contract which led to being paid more and being less productive. 'Pay more for less' just isn't that best outcome for a buyer from a negotiation.
2. The reason why we are 'paying more for less' is, believe it or not, being a consultant has become more complicated in the last decade. I'm sure that's not what they meant to say but they made a point of reiterating that argument.
3. There was great play made of the presence of annual plans for clinical consultants. The committee appeared to struggle to understand why their presence alone was worthy of credit while the lack of an associated performance management system.
4. There is a need to really understand what you have authority to do - our friends seemed unsure whether Treasury Guidance, because it had been around for some time, still needed to be adhered to.

However, there was another strange twist in the Clinical Commissioning Group saga, now we find "Commissioners should only use competition where there is evidence it works". I would have liked the Committee to have been more probing on this statement and what the guidance will say. Given the conflicts of interest we discussed on Friday this does not strike me as a good foundation for achieving value for money:

• What will be acceptable evidence that competition works?
• What incentive would there be to try to prove competition works?
• Will it be possible for potential challenges that 'competition doesn't work'?
• What incentives will there be to ensure that those who have demonstrated poor negotiation in hospital consultants' contracts will be able to negotiate contracts without competition? 

It is certainly is an interesting precedent to set and one which I am sure others will crave for. Why on earth did the Public Accounts Committee let that pass?

Unhealthy diagnosis for NHS commissioning reform

The NHS chief publicly begs for his job arguing that he didn't make any mistakes but has learnt from his mistakes. Then, because he made a promise to lead the NHS reforms two years ago he justifies that he should be allowed to stay, whether or not he was paid to be personally accountable for needless deaths and misery. It is also clear that there has been no succession planning - quite simply, he implies, with the Prime Minister's endorsement, there is no one else in the whole world would could oversee the NHS reforms.

As if we were in any doubt about Nicholson's view of the world, the efficiency element of the reforms is named the Nicholson Challenge. Not that I would want to cast doubt on the effectiveness of the man's leadership, but it appears even the delivery of Nicholson Challenge is challenged.

So just as we learn that there is an indispensable man leading the NHS reforms, and recognising that the efficiency strand delivery is questionable, and with less than four weeks to go before the new commissioning regime kicks in, we also learn that the commissioning rules need to be rewritten.  After all this time discussing the commissioning reforms is it really conceivable that a sprint rewrite will be a good job.

We have one person at the top of the pile with a history of losing focus (his own admission) and new commissioners who now discover the rules are being rewritten.

So all the ducks seem lined up for an almighty mess. Change management case study ready and waiting - pity we all look set to suffer. I wonder is anyone identified as personally accountable?

Staggering from Burgergate to Zimmergate

Retailers buy on consumers behalf beef which is to be of a suitable quality. The retailers have a supply chain and rely on third parties to provide the beef. The quality is set out in a specification, and behind that there is an assumption of risk management and contract management. The beef turns out to be wrongly labelled and we have a national scandal. The 'Godfathers' of the mafia are cited as potentially at fault, then we discover it, as much as it may be attractive to export blame, the finger starts to point locally.  Most of us are aghast and the fear is our health may suffer. We give it a name 'Burgergate'.

But substitute some of the words: Social services buy on the needy's behalf personal care which is to be of a suitable quality. Social services have a supply chain and rely on third parties to provide the care. The quality is set out in a specification, and behind that there is an assumption of risk management and contract management. The personal care turns out to be wrongly labelled and we have a national scandal. Potentially your father and mother are the victims, the finger starts to point locally.  Most of us should be aghast and the fear is our health may suffer. That's what I'd call 'Zimmergate'.

What's worse Zimmergate, for want of a better description exists as the Care Quality Commission has now found. 26% failure to meet the quality standard, reluctance to complain, failure to listen to the families who tried to raise concerns. Of course this isn't the first time we have considered the dependency of the elderly on good procurement. Is it right we could it be more concerned about the content of 'cheap burgers' and call that a scandal in need of urgent attention?

Let's leave the last word to The National Pensioners Convention General Secretary, who seems to have some useful suggestions for public procurement:

"Local authorities have a responsibility to start commissioning services on the grounds of quality - rather than for the lowest price. Contracts should only be awarded to those who can guarantee that staff are properly trained and qualified to do the job - and the idea that services can be provided in blocks of 15 minutes at a time has got to stop."

Another death with procurement in the dock

What on earth can you say when people die and procurement are in the when the various suspects are assembled. It was just less than two weeks ago when a procurement failure was identified as a contributing factor in a young girl's death. Is death too serious an issue for a blog? Is it appropriate to comment while facts are still being assembled?

Well I feel compelled to comment on another death in the hope that some speedy lessons learnt may reduce the risk to others.

You can read some of the background on the BBC website here and here. I won't go dwell on the story but a few lessons occur to me based on what I have gleaned from the media reports:

1. If you are providing a personal care service to the vulnerable, a risk worth considering could be, how do you ensure that individuals who personally deliver the service to the vulnerable, have the credentials? In the case in question it appears there may have been an issue of illegal workers and fraud. There are some similarities here with the Apple case when a third party was providing workers to a provider but the third party could not be relied upon to make sure the staff provided were appropriate. 
2. If a provider is being relied upon to provide essential services, a risk worth considering may be, how can you quickly be alerted if the provider ceases to supply at short notice?
3. Linked with #2, a risk worth considering may be, if you need to find an alternative source, almost instantly, how do quickly can you get the new service be put in place? In this case it appears that the UKBA raided the providers office, the service ceased and the council put in place replacement services the same day.
4. If you need to migrate service to a new provider at short notice, a risk worth considering may be, how do you ensure that the transition takes place at no risk to the recipient?
5. When you are providing a personal service, on which recipients are dependent upon, a risk worth considering may be, if there is a failure in provision of personal support, how will you know?

Don't get me wrong, I am not suggesting for one minute that the council in question or indeed procurement or the commissioners are in the least bit culpable, I am merely highlighting some personal lessons learnt from this tragedy.

On Social Impact Bonds

Social Impact Bonds are quite an innovative 'payment by results' approach which includes up front investment - you can find good explanations of SIB on the Social Finance and  Young Foundation websites

However, you could paraphrase SIBs as: 'PFI meets Big Society'. Similarities being the drawing in of investment to drive an outcome-based delivery which, had the public sector not been starved of cash, would normally have been public sector funded and managed. They should encourage innovation and be user focused in design (something which we have discussed over the last few days).  Of course investors expect a return, which they are due if the designed intervention works. That return can be a long way away.  Some big issues must be that:

Doctor in Commissioning

How long has GP commissioning been argued about?  How long has it been implied that GPs and their group practices could take on a wider commissioning role with assumed procurement expertise?

Today we hear that GPs have a tendency to hand out anti-depressants too hastily.  Meanwhile I'm reading Ben Goldacre's excellent book on Bad Phama which suggests that decisions by GPs are frequently distorted by skewed information from journals and the market which shape their decision making.

To me these are both indicative of poor procurement practice and, to use a widely used medical term, question the efficacy of GP commissioning. Why?

1. Good procurement is concerned with seeking out that best whole life cost solution.  Prescribing  drugs unnecessarily doesn't sit well with that as it suggests a narrow options appraisal, a lack of Whole Life Costing for patient, the NHS and even the GPs surgery;
2. Good procurement is about challenging potential requisitioners (patients) and whether there is need to consume (buy), albeit via the NHS, anything at all;
3. Good procurement is about ensuring the best possible unbiased search of the market and avoid being swayed by the marketing (see Goldacre's analysis of the existing pharma marketing).

The pursuit of GP commissioning may well be on a sound foundation of trying to get as close to the patient needs as possible, but there are some fairly basic procurement principles which need to be more generally practiced too.

Now, since it's the weekend a loosely relevant good ol' YouTube:

    

Third sector health warning for addicts

There’s a touch of irony in today’s reports that Cabinet Office enforcers will punish mandarins who opt not to implement government policy, while on the same day we learn that third sector organisations, providing specialist support to NHS patients addicted to prescription drugs, believe they are the victim of a badly designed procurement process that could force them to close.  What happened to Third Sector Commissioning and the Big Society?  This is one example of policy failing to be implemented in  the procurement practice.

To cut a long story short, it appears a new tender approach is underway that requires a comprehensive service in which only bidders which provide support to alcoholics and those addicted to illegal drugs, AND those addicted to legal drugs are eligible to compete.

While I am an advocate of category management, category management needs to be pragmatic.  It has to include understanding the market and how the market works.  It also has to ensure that any bidding which takes place does not stand in the way of making the market work.

However, the approach strategic commissioning is even more baffling. Government and NHS approach to commissioning is to include dialogue with both users and the market as early as possible in order to shape the service.  Third sector criticism of this tender would suggest that dialogue did not take place – can we also assume that specifying outcomes may also have been set aside?

Bizarrely the change in tender approach is being blamed on NHS cuts, yet,

Commissioning on a wing and a prayer

We have been inundated with discussions around the Work Programme and the associated  communications debacle.  For example, the coincidental removal of what appeared to be inconsistent guidance from the DWP website and my own comments on the due diligence associated with the appointment the 'Tsar of Contract Manipulation'.  However, I now want to draw on some insights from an  excellent academic paper which strikes me as pertinent, namely Don Harradine's paper published in Public Money and Management.

Don explored a different DWP initiative, 'LinkAge Plus', and interviewed staff from DWP, a local authority and the third sector. His findings are intriguing and resonate with some of my previous blogs:

• Proposals were developed in haste for political expediency while funding was available and it is was therefore accepted they would be flawed;
• Pilots were agreed and funded partly to justify a political agenda;
• DWP were reluctant to probe potential third sector providers' quotation costs: "if they say they can do it for that cost, that will do me"; 
• Third sector providers though lacked sufficient financial expertise to understand the relative costs associated with service delivery;
• There was a lack of agreed definitions on some aspects of contract delivery, for example, what constituted 'a contact';
• Third sector providers acquiesced on agreement of targets just to obtain the funding, even though the targets were not understood.

We need to be wary of reading across too much from Harradine's research to other DWP programmes, but

The perverse outcomes of results based contracts

“That’s another fine mess you’ve got me into”, said Dave to IDS (I suspect) when today’s Daily Mail arrived through the letterbox of No.10.

The headlines suggested it had all gone horribly wrong (again) on the procurement front.  Fresh on the heels of the CX of the UK Student Loans Company promoting tax avoidance, here was a ‘Tsar’ getting an £8.6m dividend through what appears to be promoting contract avoidance.

In a nutshell the story is the lethal mix of:

• A Tsar
• The DWP Work Programme
• The Tsar is paid a dividend from her company
• The company’s only customer is the public sector
• The main customer is the Work Programme
• The company’s delivery performance has been abysmal, namely, 9-24.2% ‘back to work’ as opposed to the target of 30%
• Half the company’s subcontractors are the third sector.

It looks like the main beneficiary in getting 120,000 troubled households into work was the main shareholder of a poor performing contractor. I suggest she would be better as the Tsar of Contract Manipulation. To take Dave’s previous endorsement out of context “… I know we can count on her to help drive this campaign forward”.  It seems to me that

BRAZIL - observations of a ‘BRIC’ (Part 2)

I made the 45 minute flight from Rio to Belo Horizonte, in Minas Gerais. Minas Gerais has 853 municipalities! It wasn’t the recently opened new City of State Administration (four buildings which cost £250m to build and houses 15,000 staff), which impressed me most, but the hunger of the strategists I met.  This team of departmental directors briefed me on their work and 20 year strategy.

They demonstrated a real hunger to learn from the UK experience of strategic commissioning, community engagement in shaping priorities, how to move towards a focus on outcomes, pooled budgets and community budgets.  They wanted to learn from the experience of the how the UK had encouraged examples of innovative local government practice and then shared those case studies so that others could learn and speak face-to-face with the innovators. Communities of Practice and the improvement work of the former IDeA were also of great interest. This team had a real and visible hunger to learn.  They want to be the best in Brazil.  I discovered that this group, with an average age of around 25, were the outcome of a strategic approach to recruitment.  All students in secondary education had an option of sitting an exam.  Success in the exam covered not only the cost of their degree in Public Administration but a guarantee of a two year post in the Minas Gerais state administration.  The public sector was clearly reaping the benefits. Would the UK make such an investment? 

Singling out Minas Gerais is perhaps unfair.  When I delivered a similar seminar to the state of Rio, those staff wanted to learn more and more about the same subjects, namely, strategic commissioning, community engagement in shaping priorities, how to move towards a focus on outcomes, pooled budgets and community budgets, developing and sharing council good practice, and sector led improvement.  They also wanted to understand consortia and shared services approaches to procurement. Despite giving them many opportunities to close the discussion, they opted for a four-hour seminar. I doubt I did more than whet their appetite – certainly their enthusiasm at the end of four hour for asking questions had not waned.

I also met with state owned public sector organisations.  The state oil company, ‘Petrobras’, and pharmaceutical company, ‘Bio Manguinhos’ wanted a more strategic procurement.  Amongst the big questions from them were: How do we get the organisation to work better together in procurement?  How do we introduce category management and set up consortia purchasing?  How do we cope with a legal environment that is far more prescriptive than that of the European public procurement rules?  Alongside operational questions such as, how would we best buy travel and hotel services?

For someone with a public sector procurement improvement background I thrived on these seminars, discussions and questions.  But what was fascinating to me was the engagement with the academic community in supporting municipalities, state and state owned businesses.  The GPI (Groupo de Producao Intergrada) team, which invited me, were working with all these public sector organisations on problem solving and developing ‘a better way’.  Why do we not have such an integrated approach in the UK?

Behind all the questions, there was also an implied but sometime explicit question for the UK to answer, how can Brazil remove corruption from the public sector?  I explained the steps taken since the 1970s ‘Poulson Affair’, but the recurring response was ‘but what do you do in Brazil, now?’

So to me Brazil is different.  It has almost 6,000 municipalities.  Only came out of dictatorship in 1988 and is still the early steps of democracy but one thing is clear, Brazil is a country which has much to learn from the UK.  Likewise it’s important to recognise the UK has much to learn from Brazil – let’s remember it was from Brazil the idea of participatory budgeting came to the UK!