Talking rubbish

I've just returned from a great holiday but whether for good or bad had no internet, therefore no news and no blogs. Hopefully I will be able to share with you some of my holiday observations though over the coming weeks.

Today's news in The Times that 'Councils waste £200m on rubbish bins of all colours' naturally caught my eye. The headline was supposedly based on a report 'Wasted Opportunities' by the Circular Economy Task Force. Too bad the report doesn't provide the evidence to back such a claim up.

But The Times write-up also quotes one of the Report authors, Dustin Benton, who said that "analysis of 40 councils' policies on procuring wheelie bins showed that only two had co-operated on purchasing".  Surely the assumption that councils waste £200m is not based on such a small sample, or was it based on muliplying a potential saving in one council by the number of councils in the UK - sadly we aren't told.

It is also surprising that Dustin (Bin) expected find the answers as to how councils procure wheelie bins through a review of policies on wheelie bin procurement - I have never seen such a policy but have seen the evidence of many councils making use of consortium buying for bins. Why didn't the author ask the question of the local government consortia: "how many councils buy their wheelie bins through your arrangements?"

So yet again council procurement is presented as incompetent - shame that more reliable evidence or a defence wasn't presented.

Do you need to know how much is lost to fraud?

Last night's Panorama programme on 'The Great NHS Robbery' and the related press stories appear to have created quite a stir. The NHS is now criticised for not knowing how much it loses due to fraud even though Full Fact question the very basis of the figures quoted. Naturally, my own interest lay in the passing reference to procurement fraud by Jim Gee, one of the main contributors, and Director of Counter fraud services, BDO LLP and Visiting Professor and Chair of the Centre for Counter fraud studies at University of Portsmouth.

If you don't get a chance to see the programme, the basis appears to be The Financial Cost of Healthcare Fraud 2014 report, said to be the outcome of 15 years research!

Let's first acknowledge that the Panorama programme, the Report and the surrounding media reports have usefully raised awareness that fraud is a big issue and a waste of scarce resources. Let's also acknowledge that fraud is on the increase and the reduction in forensic public sector auditing is unlikely  to hasten a demise of fraudulent activities.

But it is a nonsense for Mr Gee to say the NHS "needed to carry out a proper assessment of how much it was losing" or, as paragraph 1.2 of the report, states:

The measurement of losses to fraud (and error) is an essential first step to successful action. Once the extent of fraud losses is known then they can be treated like any other business cost – something to be reduced and minimised in the best interest of the financial health and stability of the organisation concerned. It becomes possible to go beyond reacting to unforeseen individual instances of fraud and to include plans to pre-empt and minimise fraud losses in business plans.

"Essential"? Why? What purpose would that serve? It is not at all essential to have measurement of fraud before you can treat the causes of fraud and put in place preventative measures. At best, knowing the cost of fraud, helps the business justification for taking preventative steps.

Procurement for growth?

I've been struggling for a few days whether or not to comment on the Cabinet Office's note on Procurement for Growth but I felt I had, if only to acknowledge its publication.

Disappointingly, this a tactical document. Worse, it adds nothing to what has gone before, for example, you could scan any number of the former OGC's guidance (if you could find them) on working with SMEs, third sector organisations, minority businesses, addressing social issues, environmental purchasing, and find the same principles - minimise bureaucracy, talk to the market, and the biggest impact is made early in the procurement cycle.

It is a missed opportunity. What is needed is a strategy - a strategy harnessing the public purse effectively. Of course such a strategy is inconceivable given the narrow procurement objectives espoused by the Cabinet Office. But a meaningful strategy could be published by Business, Innovation and Skills which draws on Heseiltine's recommendations.

Why has such a strategy not been published? Well, my view is that we have seen a dumbing down of public procurement policy and a short-term focus on 'Costcutter' as opposed to 'Wise Buys'. Much of current strategy, in my view is working in opposition to growth - I have discussed this many times, not least in my 2009 Supply Chain Management article but also in many blog posts. I would be delighted to see some sort of published impact assessment of the current strategy which has now been pursued for some years.

Having said that, there is potential for the autonomy of area based commissioning strategies which could be aimed at Procuring for Growth. Perhaps the LGA could drive such an initiative, ideally through a range of varying comparative regional strategies, properly consulted upon with the business communities, baselined and measured for impact, and supported by a change management programme. There would then be meaningful evidence which could be drawn upon for a national strategy which provides an informed answer on how best to use procurement for growth.

Sacrifice the 5 Rights at our peril

In the mid 70s, when I first entered the world of Purchasing & Stores, Purchasing was the poor relation. The emphasis was on Stores. Gold stars and kudos came from stores management, minimising stockholding but avoiding stock-outs. Having said that, the mantra was the '5 Rights': The Right Product, at Right Quality, in the Right Place, at the Right Time, at the Right Price.

When carrying out the field research for my PhD, it became clear that one of the characteristics of those who had been successful in the transition from a clerical to strategic function had been their ability to demonstrate consistent competence in delivering the 5 Rights - it was the springboard for a more strategic role. 

So, it came as a surprise to me, during the 'noughties', when I started to meet those who had entered the profession at comparatively senior levels, who asked me what I meant by the 5 Rights. I continue to meet CPOs who have no idea what the 5 Rights are - what is perhaps more concerning is that they don't seem to care. It appears to me that strategic procurement seems to have lost sight of the 5 Rights - have the 5 Rights gone the way of the Dodo? If that's the case who is making sure that the 5 Rights are achieved?

pCard or not pCard, that is the question: Considering the evidience

The Government Procurement Card (pCard) was introduced in 1997. Its primary purpose was to reduce the transaction costs associated with Low Value Orders when it was assumed the cost of the transaction was more than the actual purchase price.  It was also believed that pCards would deliver better control and reduce fraud.

On 1 June 2012 the Public Accounts Committee (PAC) published its report on the use of pCard’s in central government. While the PAC report highlights the need for strengthening controls and a refreshed business case. This blog is not concerned with the key content of the report but instead considers some of the oral evidence reported verbatim in the report. The oral evidence discussed reveals some matters of relevance to all those concerned with reducing procurement transaction costs, regardless of whether or not they are based in the UK, engaged in central government or the wider public sector.  While concurring with the PAC findings and recommendations, the significance of some of the key issues debated appears to have been missed in the key body of the PAC Report.

Maude's procurement speech impediment

Back in November I spent some time reviewing Francis Maude's speech on revolutionising procurement.  My key messages at that time included:

1. The ideas espoused would not revolutionise how government buys because most of initiatives were far from new but recycled;
2. Policy makers need to concern themselves less with rhetoric and more with delivery.  Just saying something is going to happen, evidence would suggest doesn't make it happen - embedding in practice is the challenge;
3. Policy makers need to make greater use of evidence based research, have consistency in definition of key terms, understand existing policy and commitments, and, collect and learn lessons from the past; 

Francis Maude made, what to me was, a follow-up speech at the Procurex Conference on14 March.  It seems sensible to consider what he said.  

Maude describes himself as "the Minister who gets excited about procurement". Whether or not that is a good thing will be judged in the fullness in time.  However, I wonder if his 'excitement' is a barrier. I honestly question whether those advising him are intimidated by his excitement and are being as diligent as they should be in their advice.

Reserved contracts: Disabling Article 19 and Regulation 7?

The government have announced the closure of 36 of Remploy's 54 factories.  Supposedly the rationale behind this being that it is wrong to subsidise Victorian era segregated employment of those with disabilities.  On the back of questions over the success of assisting those with disabilities back into employment and the perceived attacks on disability benefits claimants, this seems inconsistent with 'Compassionate Conservatism'.

Yet there is also a procurement dimension.

Within Regulation 7 of the Public Contracts Regulations (sometimes known as Article 19 of the Directive) there was the option of reserving contracts to those businesses considered to be 'sheltered workshops'. Eligible UK businesses are listed in the Supported Business Directory.

A quick scan of the Directory would suggest that if you delete 'Remploy' there will be questions over how competitive reserved contracts can be in the future. For many areas of the market there there will now be a monopoly. That will bring real problems for ensuring value for money.

The previous aspiration of every public sector body having at least one contract with a supported business also seems to have been forgotten about - that shouldn't surprise readers as I have already discussed this type of policy ignorance and contradiction in the past.

Equally, for many public sector bodies hoping to deliver social benefits, an easy way of achieving that aspiration is now going to be lost.

There are also risks which procurement practitioners now have to consider:

The curious case of the procurement of blue light temporary staff

PSNI are the subject of an investigation on re-hiring former officers as temps. Estimates of spend vary but somewhere between £45m and £60m is reported to have been spent over five years. That's slightly more than the response given to a FoI request in 2009 which stated an estimated value was £5m (per year).  

Three quarters of those hired are former police officers who were recipients of redundancy payments. That's 300 staff. 

You may ask, 'why were they made redundant in the first place - what was the desired outcome?' The redundancies were the result of the Patten Recommendations to transform the former RUC into a new PSNI. Critics could argue that aspiration has not been achieved. Supporters could say there was a need to ensure business continuity and the terrorist threat had not gone away.

In addition, it was a condition of the redundancy scheme that if those made redundant were re-hired as police officers there would be a repayment of the redundancy payments. Was the contract designed to circumnavigate that requirement since the stipulation doesn't apply if those re-engaged are civilians; even, it seems, if they are carrying out broadly similar roles.  Is this what is meant by the private sector taking up the slack from public sector redundancies?

If the intention was to re-engage as civilians, then the investigation needs to go beyond one contract into the whole category.  Up until now no one has mentioned the contract for Outplacement Services.  If you are fortunate enough to be unfamiliar with this service, it is a bit like a JobCentre Plus advisor which is supposed to help those made redundant adjust, and get back into employment. My experience of it was that it was a smoke and mirrors service which should have been paid by results.  But if they were paid by results, I don't think they would exist and a grant to the Samaritans may be better use of public money - I may save that argument for another day.  Nevertheless, how much was that contract worth and was its purpose merely cosmetic if a revolving door would have sufficed?

Now we face an interesting scenario which may resonate with others.  

How does this sit with

Sustainable procurement risk

Tell me what would you do if you read this statement in an ITT:

The [organisation] is committed to sustainable procurement and would wish to see tenderers adopt a positive environmental approach.  Information and guidance about how to pursue a more sustainable future is available from [central government portal]1

You could

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

Return of the iPads

I recently  referred to being asked to produce a business case for iPads. I was astounded that, without any meaningful development of a business case, a self-fulfilling conclusion seemed to have been arrived at that business could no longer be carried out efficiently without this 'must have accessory'. 

Anyway our friends at Apple seemed to have just developed the 'sale of the century'. Now all those procurement and finance people who would advocate the need for a meaningful business case have just been punched in the solar plexus - the House of Commons Administration Committee has apparently now recommended "rapid rollout of suitable mobile table hardware" to all 650 MPs.

It's not that the MPs lack technology to support them in their work; they already have three desktops and two laptops - I suspect also a Blackberry. (I hope someone has asked the question relating to how much slower they travel with all this luggage.  I also hope they have completed an H&S assessment to protect against potential injury.)
Nevertheless,

It takes two to tango but who leads?

The NAO have just published a report exploring the rationale behind equipping England’s 43 police forces with Blackberry’s and other mobile technology.  

Referring to the report, Amyas Morse, head of the National Audit Office, said:

"The roll-out of mobile technology to police forces was achieved against a tight timescale and at reasonable cost. Too little consideration was given, however, to the need for the devices or how they would be used. In the majority of forces, the benefits have not so far extended beyond simply allowing officers to spend more time out of the station.

"There is still the opportunity to achieve value for money, though, if more forces use the technology to improve the efficiency of their processes and make savings in their back-office activities."

I may revisit the report at a later date and explore some of the detail, but one finding immediately triggered a train of thought. The report concluded that the introduction of mobile technology by the then Government was a policy decision simply to procure and deploy devices. 

We’ve seen similar ‘mandates’ before, remember the NHS IT system when Tony Blair said ‘how fast can you get it?’ 

Flaws in BBC News story - Knowing your PQQs

I was surpised to see BBC Northern Ireland present a flawed argument against public procurement today.  In a nutshell the PQQs, which I agree are frequently inappropiate and cumbersum, are being blamed for:

1. The loss of construction industry jobs, and
2. Adding to construction industry costs.

The public sector is spending vast sums of public money - there is no shortage of criticism, including on this blog, of how that money is sometimes badly spent.  However,

The political procurement blame game

Last week Spendmatters exposed the lack of substance behind some of the procurement claims made by Francis Maude.  I had previously critiqued Maude's 'revolutionary speech'  and have expressed a wish that some sort of test was put in place for robnessness prior to these fanfared announcements which are really only compromising credibility.

Today's font page of theTimes headlines a must read investigation into Whitehall waste - estimated to amount to £31bn!  Needles to say procurement does not escape the spotlight, so

Titanic lessons for programme and project management

Last week I discussed perceived problems relating to the Titanic Signature Building and the perceived funding shortfall related to the procurement approach.  Now more information has emerged which goes beyond procurement and provides lessons for programme and project management.  To me there some shortfalls in the areas uncovered.

Today the Northern Ireland Audit Office published its report on 'signature projects' which provides further insights into a portfolio of five projects (£159m), of which the Titanic Signature Building is only one.  Interestingly the review is published prior to completion of the projects, so it can only be hoped that there will be a further report.  There must also be a rationale for publication at this stage, presumably to collect lessons learnt.

Looking across the portfolio, delays and shortfall in delivery are attributed to deficiencies on overall project planning, management and governance arrangements, a shortage of funding, time-limited funding, match funding issues and inadequate programme and project level performance management.   One of the criticisms is that each project stood alone and project actions plans were developed independently and organically.  Those are useful lessons which I don't intend to argue with, but merely supplement.

It is surprising that it does not seem to been recognised that this was a 'Signature Programme' and should have been managed as such, completed with a Blueprint and what were standalone projects managed as a Dossier, or at the very least a Portfolio.  Indeed as opposed to the NIAO view that an 'over arching projects board' would have been helpful, what was needed was a Programme Board.  That Board then could have looked across all the projects and also considered the total economic impact as opposed to discrete project boards defending their own interests.

But were the individual projects well managed?  Well the NIAO conclude that even at the project level there were a lack of SMART objectives and consequently a lack of performance management.  Time, cost and quality in terms of project performance management aren't sufficiently addressed, so I'm not surprised that outcomes don't feature.  I'm reminded of an excellent paper on 'muddling through'.

Also amazing is that while the projects date back to 2004, funding was only identified in 2008. In the meantime funds were diverted from elsewhere - no questions appear to have been asked about the impact of that displacement of funding!  We find a wonderful recommendation "When public sector capital projects are approved for implementation, every effort should be made to ensure that funding is made available at the same time".  Why are MSP and PRINCE2 standard methodologies not just advocated?  Is it conceivable that Northern Ireland could have a collection of major capital projects started but then completion unaffordable?  

While discussing the NHS IT procurement fiasco recently, I highlighted the need for senior politicians to be closely involved in projects, fully appraised and potentially act as SROs - the NIAO haven't identified that as a problem, so that lesson may need to be learnt some time in the future.  Some projects seem to have SRO's while other don't - of course SRO's relate to programmes as opposed to projects. We now also have a new role, the 'Project Promoter' - to me this is a major flaw, SRO's like (Project) Executives, are accountable, responsible, ensure the funding is in place and act as champions, 'Project Promoters', who lack a role definition in the report, only appear to be champions without accountability.  So, from the public sector, who exactly is responsible/accountable for this major investment?

It seems no time since the spotlight was on the Millennium Dome and the VfM calculations relating to visitor footfall.  Therefore it would have been assumed those lessons would have been taken on board (excuse the pun) by those responsible for the Titanic Signature Building and exposed to a robust sensitivity analysis.  Sometimes projects just keep on giving the same lessons to be learnt for the future!

"When will they ever learn", when will we learn?"