The UK needs to be an intelligent giver (procurer)

Friday's Times reported an investigation into the UK's "scandal of squandered overseas aid".  At the centre of the story is the UK's commitment to spend 0.7% of GDP on overseas aid - now a legal obligation and endorsed by all three of the main political parties.

The issue is not whether or not the UK should be benevolent, or indeed whether we should be more generous, but Dfid's strategy of channelling the aid through multi-national agencies, such as the EU and the UN without retaining sufficient control and scrutiny of the spending. The suggestion is that the UK have outsourced its giving and, in so doing don't have a voice in scrutiny.

We are led to believe that over £6bn a year is contributed through the international agencies, 60% of the total amount, and that £6bn is not subject to UK oversight.

The giving of this £6bn is actually a procurement - the UK pay out some money in the anticipation of a delivery. Giving through the international agencies does not shackle the hands of the UK in terms of exercising its control. On the contrary the aggregation of the UKs aid with that of other countries should lead to a more strategic approach and more effective targeting. As one of the biggest 'givers', or should we say procurers, the UK is in a stronger negotiating position in demanding reforms and evidence of impact. Demanding reforms and evidence of impact is just good stewardship.

The incoming UK Government need to bring a new assertiveness to the aid strategy. They need to recognise that this is procurement. They need to develop a negotiating strategy. They need to have their own objectives which ring-fence how aid will be spend through the international agencies and they they to significantly improve accountability and performance management. Where that approach is resisted the UK shouldn't withdraw aid but instead redirect through channels where the required level of accountability will be satisfied. That would deliver the required value for money, accountability and improved impact.

Some dosh, some dosh, my design for some dosh

In 1485 Richard III died in battle. His remains were recently found underneath a carpark and there's an argument still taking place as to where he should have his final, more fitting, resting place. This is the King linked to the conspiracy theory that he was responsible for the mysterious deaths of ‘The Princes in the Tower’ - the children of 'The White Queen' (remember the recent TV series). He was also a Shakespearian character. So it is perhaps fitting the the drama continues, but can procurement learn from this latest act?

The Richard III saga has now turned into a hostage crisis as a potential contributor to the cost of his burial now threatens to withdraw their offer of funding, if they don't get their way in the design of the tomb. Now Cathedrals can be accepted as knowing a bit about design (most medieval Cathedrals remain iconic today), so you'd have thought Rich's mates would have concluded: "let's just go with the flow". Not so.

The Richard III Society had offered to contribute £40,000 to the cost of the £1.3m tomb in Leicester Cathedral The Cathedral hadn't budgeted for the funding from the Society. So, to a certain extent, the Cathedral gang appear happy to say "keep your dosh".

This has wider implications for procurement strategy

Can public procurement harm society?

Yet again we hear claims that public procurement processes are having a detrimental impact on society. The problem appears to be a trend towards contracts as opposed to grants. It strikes me that there is a misunderstanding in the minds of some procurers that grants are perceived as bad, while contracts are perceived as good. That just isn't true, both are options and the procurement professional needs to be able to help funders in that option appraisal and select the right choice.

Julia Unwin’s ‘The Grant Making Tango’ probably provides the best guidance for procurers but there are other sources. To me it is a must read for any procurement professional in setting out the options appraisal for the procurement decision of Grant V Contract.

The guide basically refers to purchasing as ‘Shopping’ (what we prefer to call procurement and contracting) and then differentiates grants as being either ‘investing’ or ‘giving’.

You ‘give’ when you want to be associated with a good cause and don’t expect anything in return; a bit like the Christmas ideal. It may be that the ‘giving’ organisation will be more than satisfied if it is given credit in say the local theatre’s advertising as a sponsor.

‘Investing’ is different.  You invest when you want something to take place which wouldn’t otherwise take place.  For example, there are no providers in the market and you want to ensure some service provision takes place or alternatively you want to ‘market make’.  In such a situation you would expect there to be performance management in place to ensure the funder obtains the intended outcomes for the funder's investment - a form of contract management.

It is selecting the wrong option which is causing the harm, yet at the same time there is a need to help previous grant recipients navigate the change if contracts are now deemed most appropriate. 

Aside from this there are the commitments of the Compact (and in local government Local Compacts and the Small Business Friendly Concordat) which should be understood by procurers.

This isn't easy stuff but it is not complicated, nevertheless it causing trouble in the market and difficulties for those whose primary intention is to 'do good'? 

Is 78% non-compliance with procurement procedures the tip of the iceberg?

Waterford City Council, reported to have 78% of a sample of procurements audited to be non-compliant with procurement procedures and, 40% of contracts awarded without a procurement process must be up there with a claim for the Guinness Book of Records - it certainly places them on the procurement map. Almost €219k had to be returned to funders as it was not spent in accordance of the rules (mind you this is not the first time we've encountered this risk of claw back of money previously spent).

 The Council's defence is also potentially worthy of an award in itself:

"Whilst acknowledging that the full rigours of the procurement rules were not adhered to, the adhered to principle of obtaining value for money was of upmost importance" 

It is inconceivable that the Council can believe their own rhetoric in the absence of a more comprehensive review. Unfortunately, I can visualise that flawed defence being echoed many times in the future by CCGs given their poor foundation.

Insofar as I can base my views on the Internal Auditors Report, I agree the need to professionalise their procurement and embark on a skills development programme but I personally don't think that will be suffice.

I suspect that what we are seeing is only the tip of the iceberg. The administrative processes for the receipt and opening of bids, and a sample review of tender evaluations were not included in the review. I suspect the inclusion of those areas within the audit could have revealed a minefield open to corruption and awards not made to the most economically advantageous tender. Nor did the review consider the effectiveness of contract management - can the constituents of Waterford really be confident that their Council are getting what they have paid for?

Why not give the Internal Auditor's Report a read and use it as a test of your own organisation - it would be great to hear from you if you can beat the benchmark of 78% non-compliance.

A Christmas spin: Investing, giving, shopping

I was always very impressed by Julia Unwin’s ‘The Grant Making Tango’. To me it is a must read for any procurement professional (perhaps a last minute Christmas present) in setting out the options appraisal for the procurement decision of Grant V Contract

The guide basically refers to purchasing as ‘Shopping’ and then differentiates grants as being either ‘investing’ or ‘giving’.

You ‘give’ when