A bizarre approach to procurement of social services in Northern Ireland

Sometimes I hear a news story relating to public procurement and just sit back mystified. Tonight it was announced that the independent social care sector in Northern Ireland will receive a 'no strings attached' £1.6m gift from the public sector, a 2% increase in the rates Trusts pay to private sector providers.

The aspiration is said to be that the increase will help in recruiting staff, yet whether or not the private sector providers decide to use the additional money in that way is entirely their choice.

It is great that the NI Health and Social Care Board have decided to plough more money into care, but let's remember that the care packages offered to families in Northern Ireland are not remotely similar to those offered elsewhere in the UK and, as a result, many families have to cover care costs which they wouldn't have to elsewhere. I suppose you could argue that 2% increase would reduce costs paid to self-funders, but is that the case?

However, if we look at this purely from a procurement perspective:

• If the objective was to help with recruitment costs, why was the money not made available with the explicit requirement that it would directly flow into staff pay-packets?
• Then again, why should the money be passed to private sector providers without any regard to the profits being made and retained by the providers? Would it not have been more prudent to consider how each provider currently manages their business?
• How does this look to other businesses, particularly family run businesses, which have seen a reduction in their own 'take home pay' while trying to avoid pain for their staff?

I'm sure this was a well intentioned initiative, but perhaps it could be better managed.

Grossly excessive fees?

There was a fascinating story in yesterday's Times  and Mail online on a leading surgeon being referred to the General Medical Council for charging "grossly excessive fees". £12m was charged to a member of the Brunei royal family for breast cancer treatment.

If the report is correct, it begs a number of questions:

1. Do the GMC have policies on fees?
2. What constitutes "grossly excessive"?
3. Is there a difference between "grossly excessive" and "excessive" fees?
4. What constitutes fair and reasonable fees?
5. Would the view be different depending on whether or not the treatment was effective?
6. Does the relative value to the recipient have a bearing on the view?
7. Did the recipient have the option of an alternative provider?
8. Is there ever a situation where the surgeon is paid by results?
9. What's the GMC's view on fees charged to private patients in the UK by comparison to those a surgeon is paid by the NHS for like-for-like treatments?
10. Should the principle of accountability and unacceptability of charging "grossly excessive" fees be applied to other professions?

3 simple lessons when relying on reports

The Kids Co demise has been well documented and some of the lessons for procurement have already been drawn out by Peter Smith, for example, the need for contract management and sufficient reserves. However, today we have learnt that two separate  'independent' reports were cited as evidence of the good work of Kids Co which we can also learn from.

The reports were cited by Kids Co and probably swayed some funders decision making. I would suggest that perhaps funders may well have been naive and that those who based decisions on 'evaluations' need to look much more deeply before being influenced.

The first question worth asking was 'who funded the report'? Well one of the reports was funded by Kids Co and the other appears to have had Kids Co covering the costs. It's not unreasonable to see the potential conflict of interests.

Next, 'what was the purpose of the report'? Neither of these reports appear to have been outcome evaluation reports or indeed value for money reports. One was written by a Professor and leading psychologist who benefited from studying "the language of love". The second focused on the children who used the services of Kids Co.  The reports may well have been fit for purpose but that purpose was not one of commercial due diligence.

Thirdly, 'what was the approach to ensuring rigour'? I could be wrong, but neither of these reports seem to have been subjected to peer review which would have considered the research approach, reliability and validity.

Those three simple tests may have shone the spotlight on the weaknesses of relying on the reports. While it is easy to see the weaknesses we also need to reflect on those same points within a procurement environment, for example, when commissioning reports, when drawing on reports as part of a bid evaluation process, when taking the advice of 'independent' experts particularly in preparation of specifications. Caveat emptor as they say.

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.

NHS Procurement Tsar meets the Fat Controllers.

The NHS' new procurement tsar looks as if they may have an interesting first challenge - working out
a procurement strategy for 'fat clubs'. The National Institute of Health and Care Excellence (NICE) has endorsed three providers who can deliver, what appears to be, NHS funded places at 'fat clubs'.

The challenge now is how the Tsar will approach the procurement of 'fat clubs' to maximise the purchasing power of the NHS.

With only three providers operating through a network of local clubs we should see some interesting procurement questions answered.

1. Are the local providers endorsed by NICE?
2. Who would be the contracting bodies - the national or local providers?
3. Will payment by results be used?
4. Will the providers collude and carve delivery?
5. How will alternative providers respond to potentially be excluded from delivering the service as they don't have NICE endorsement?
6. How will the EU procurement rule be complied with?
7. Somewhat tongue in cheek, will we see a lean approach pursued?
8. What evaluation weighting will be used?
9. Will the Tsar be able to shape up?

Weathering the VfM decision-making storm in the South-West

My heart goes out to those in the south-west who have suffered from the ravages of weather and short-term decision-making. It seems quite easy, from afar, to blur the catastrophe of what seems to be two separate problems. One being the battering from the storms which are beyond our control, the second being the flooding which does seem to have had some antecedent in human decision-making.

For their visits to the Somerset Levels somebody took the decision to buy green wellies for David Cameron and red-toed Argyll boots for Chris Smith. You can just visualise an episode of 'The Thick of It' considering the various pros and cons of health and safety needs, being able to avoid slipping in front of the media and even whether trousers could be tucked in without getting wet. Of course those living on the Somerset Levels have more pressing purchases on their mind, for example, the need to buy sandbags.

But somebody also took the decision as to what value for money criteria were applied in evaluating the request from Edwin White last year asking for match-funding for dredging to prevent flooding. It can only be assumed the architect of the criteria is not one of those who lives in the Somerset Levels. From the remoteness of a dry Whitehall office establishing such criteria and weights, against a background of civil service job losses, may well be a purely academic exercise as opposed to one which may impact on real people.

Then consider the decision-making of Sam Notaro (that's his home in the picture). Sam invested £1m constructing a 5ft flood defence around his own house. Apparently still in the house, managing breaches in the defences when they occur. He has also taken the additional precaution of wrapping some of the house with polythene. I think Sam has made a good assessment of VfM criteria and hopefully he has demonstrated, through his own risk management, his competence as a potential builder for others.

There's something strange happens when evaluation criteria are established. There's always an element of subjectivity. There may also be an element of risk aversion. Perhaps some political pandering. It does strike me that some may be better left to evaluating wellington boot purchase options than anything of significance.

Wobbles on HS2 business case

It is expected that tomorrow George Osborne will embark on a

different journey planner to justify HS2. The core business justification is expected to shift from reduced travel time to capacity and regeneration.

Set this against the backdrop of MPs recent confidence of having their collective voices heard over military intervention in Syria and you may say this shift of emphasis is very brave - it could actually be stoking the fire for those against the whole project.

I have discussed HS2 many times but it has struck me, from early on, that there is a need to get the basics right in communicating HS2 benefits. I'm not so sure that a good communications strategy for a procurement of this size is to be unclear what the key benefits are.

From a procurement perspective, the key question around HS2, and any other major spend, should be 'what is the problem we are trying to solve?' The answer to that question should then lead to options being generated to solve the problem. Only then can the options be appraised. If the problem to be solved is capacity and regeneration it is highly likely that you would generate different solutions than if the problem to be solved is shifting people and things faster throughout the country.

If HS2 is to get on the right track, my suggestion is that we need to build consensus on what is the problem which needs to be solved - it is a mistake to start from the position of saying "HS2 is the solution, now what is the problem?".

It's time for procurement policy outcome evaluations

I'm sure many of you followed the discussion on the evidence given by Colin Cram and Jon Hughes to the Public Administration Select Committee. We had a good critique, over a few Spendmatters' Blogs and the readers associated comments, then we had Colin's pieces in Public Leaders and Supply Management once again with associated comments. We need more discussion on how procurement is approached and more debate. But yet I feel there was a fundamental weakness in the whole discussion - it lacked any rigour and solid evidence.

There is an additional weakness though in relying on the wisdom of procurement's eminence grise to provide the right answers - while those in the procurement world can debate good practice, their wisdom is cloaked, in spite of the obvious disagreements, in 'the narrowness of the same school'. By way of contrast, we know that the Prime Minister takes advice from the philosopher Nassim Taleb. It is interesting when reading Chapter 12 of Taleb's 'Antifragile' that, had the philosopher been asked to comment on the best structural model for procurement delivery he could have been expected to have given a different view. Just to be clear, what I am saying is that, even though there is disagreement amongst some of the more influential procurement commentators, if we want to identify what is best, sometimes it is worth considering the views of those outside our world.      

One way of opening up to others views is through the use of social media. But as we make greater use of social media, and blogs in particular, for sharing thoughts on how to improve procurement we need to be cautious of taking opinions too seriously, regardless of the deference due, in the absence of evidence. I was surprised to discover that The Times differentiates between 'opinion' and 'reporting' through the use of ragged edges - we don't see that differentiation in most blogs. Opinions have a tendency to swing like pendulums. One day a particular view is fashionable and the next it's not.

A useful illustration of the need to be wary of opinions was provided in the second session of oral evidence provided to the same PASC. There we had the unexpected luxury of one of the witnesses, Kevin Craven (Chair of the CBI procurement sub-committee of the CBI PSSB, in answer to Question 55) stating "Generally the MoJ is seen as doing good work in the procurement area", yet on that very same day, MoJ procurement was being described as 'shambolic' by MPs in the same building - need I say more!

The situation isn't helped by

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:

Designing better services

I sometimes think what's lacking in government policy making is a really good institutional memory and a broader outlook. The real benefit wouldn't be in recycling old policies but in 'ah we tried that before and if we want it to work this time we would need to ..."

The reason I say this is that I have now learnt that senior civil servants recently received training from the Royal College of Art in the hope that they would be more creative and think about how public services could be better user focussed in design. One of the speakers has been quoted as saying:

"We were trying to get them to think about products from a supply chain and user-experience point of view rather than in terms of policy roll out."

A good starting point could have been considering the success of the Nesta Creative Councils initiative or indeed what happened with Innovation Nation. So, learning from those successes and failures would point to: 'ah, therefore, this time we would need to ...'.  Isn't that what you would expect from good policy advisers?

Although I may be doing them an injustice, I suspect that the attendees are not personally known for creativity and design in either their public or domestic lives. I also suspect that they have a civil service centric approach to design - by that I mean 'we can best interpret what the user needs and wants in service delivery'. So while they may have left the training with new colouring books what they probably needed most was a blank notebook and the removal of their pens - were that to have happened they would be dependent on others stating the problem and writing the solutions.  Hold on, haven't we been here before, isn't this specifying by outcomes!

If we want to be creative in service delivery, we need to

Suggested questions for the Home Affairs Emergency Select Committee on 17 July 12

The security contract for the Olympics provides a unique opportunity to learn lessons for the future.  Not only for future major events but security and stewarding contracts in general, whether public or private sector let.

While I am full of admiration for the scrutiny of the Select Committees, although in the past I have suggested their Inquiries could have been perhaps been more forensic.   So, I’ve taken the liberty of suggesting questions which the Inquiry should ask in the hope they may help us all learn for the future.  Of course these questions could also asked by others concerned with procuring security and events stewarding, so here goes:

G4S an alternative view: Should you be feeling insecure during the Olympics?

The Olympics is just one enormous procurement case study waiting to be written up - I wish I had the time and also a financier.

I've discussed before the problems of manned security for the Olympics. The whole saga relates to 'back of an envelop' estimates of demand, and a provider who appears to have over-promised.  I'm not going to repeat what you can read elsewhere but in a nutshell, to get round the problem extra cash has been found, troops are being called in to fill the suppliers shortfall  and volunteers used, while G4S, the contractor, hastily leafs through its 'little black book' with a view to finding recently retired police officers who may be able to stand in.  Of course that's only part of a bigger problem as there are displays of public disorder and rebellion at the Border Controls and there's an additional need for police support there too over the Olympics!   It would be easy to draw out lessons from all of this but perhaps premature.

No, I want to provide a few words of caution to all my procurement mates who have responsibility for manned security - a health warning.

When I'm cleaning windows

You couldn't help but be impressed by the design and engineering accomplishment of London's latest landmark, the Shard.  It is western Europe's tallest building, a mere 87 floors at a cost £1.5bn.

Without doubt its top floor public viewing gallery will become a must visit location.  That assumes however that the windows are kept sufficiently clean for you to enjoy the view.

I was reminded of the Scottish Parliament shock when the penny dropped that cleaning the windows of their new building would cost significantly more due to the awkward shape, intricate design, irregularly shaped bomb-proofed widows and sweeping skylights. One of my favourite case studies on whole life costs.

The award of the Shard's window cleaning contract has yet to be announced but it is interesting to speculate on the procurement approach.

• How many potential providers are in the market?
• What will the buyer and suppliers risk assessments would look like? 
• Will inputs (such as frequency of cleaning) be the basis of the specification or outcomes (such as 'no visible bird poo')? 
• What sort of previous experience would be appropriate?
• What type of insurance cover would be required?
• Will respecting tenants and hotel residents privacy be a factor? 
• Will providers need a head for heights?
• What would be an appropriate mix of cost/quality?
• Will the award be transparent (sorry just couldn't resist)
• ...     

Of course this is a private sector venture, freed from the constraints of public procurement - let's look forward to what we can learn from this procurement.


Background reading:
Hipwell, D. (2012) 'Only one Shard ... but so many windows'. The Times, 5 July, p.3. 
Nutt, K. (2006) 'Row over Holyrood's £28,000 window cleaning bill', The Sunday Times, 9 April.

Procurement look Big in the Public Services (Social Value) Act 2012

In the firing line of criticisms regarding penalising the Third Sector through the Budget's tax regime and criticism that the Big Society aspiration has been swallowed up by the austerity strategy, I would have would have had a fanfare announcement of the The Public Services (Social Value) Act 2012. But I suspect many of those who need to operationalise the Act have missed something which should be fundamental to public procurement's contribution.  I don't think I even noticed a reference in Supply Management; CIPS's oracle! Is the absence of that fanfare indicative of a lack of ownership or scepticism that its potential will be realised?

Is the Act, which gained Royal accent on 8 March 2012 although yet to become law, is in danger of going the same way as so many strategic initiatives and disappearing off the procurement radar?  So, for example, when I ask the average UK public procurement person about the impact of the Welling-being Powers, The Compact, Eight Principles of Good Commissioning and the Small Business Friendly Concordat, I see that blank stare which says: 'I know nothing, and have done nothing, about embedding those in procurement policy, strategy, practice and performance management' (If you want a copy of my research paper on this, just let me know).  We have also considered some of the hollow strategic commitments relating to sustainable procurement.

Let's try to ensure that the Social Value Act does not end up the same way but is seized by procurement professionals as an opportunity to reposition procurement strategically and also 'make a difference'.

The Act is so simple and concise my blog risks having a bigger word-count than the Act itself. So, in a nutshell what does the Act say?

You've got to accentuate the positive,

Eliminate the negative,

Latch on to the affirmative,

Don't mess with Mr In-Between. 

I tweeted recently to that effect: 'Student loans misunderstood, Health reforms misunderstood, DWP reforms misundertood: Dave and the Commotions, 'Please don't let me be misunderstood''.

Communication misunderstandings aren't unique to public policy reform, they are also a frequent procurement weakness; the procurement 'end' appears to be misunderstood.  An example was provided as recently as 2 March with the furore over the supposed 'police privatisation'. The only message which appeared to have been communicated was the 'negative'.  Why was there such a complete lack of confidence in the affirmative that the procurement could deliver a better outcome for citizens even though so much appears to have been contracted in the past? Highly respected procurement commentator, Peter Smith, even went so far as to refer to it as an example of 'stupid sourcing'  While I largely agree with Peter, in terms of a questionable sourcing strategy but the stupidest aspect is the associated communications strategy.

A lot of my blogs ask the simple question, 'Did the procurement deliver the anticipated results?'  I have argued that effective political leadership, scrutiny and use of 'fearless' gateway reviews all have a contribution to effective procurement outcomes - they certainly would have helped with the police procurement debacle.  But these are concerned with the procurement 'means' as opposed to the procurement 'end'.  The achievement of the outcome sometimes gets lost in the bureaucratic process or indeed in debating the process.

Yet I have also argued that suggesting some ends can be met when the process constrains that is also political folly.

Nevertheless, too many times investment just hasn't delivered what it was supposed to - that epitomises ineffective procurement;

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

Potentially a perfect love match: Northamptonshire's romance with the waste market

Too often procurement features in the news because it is found wanting. Yet I highlighted last week that the GO Awards for Excellence in Public Procurement demonstrate examples of good practice exist.  So it was great to see  BBC coverage of Northamptonshire County Council's seeking ideas from the market on how to address non-recyclable waste.

Why is this story so newsworthy?   What can we learn from Northamptonshire's approach?

1. The council are acknowledging that the market may know better than their own technical staff how to solve problems - the market is a source of innovation to be drawn on but that rarely happens.
2. The approach goes some way to slaying one of the common myths/excuses I frequently hear, namely, you must have a really tight specification which sets out explicitly the 'how and what' bidders have to deliver if you don't do that you will be exposed to challenge. Hopefully, the only challenge to Northamptonshire will be a constructive challenge to the old ways, whereas what I find so often is comfort in 'the old ways'.
3. The approach also suggests a confidence in managing risk.  This strikes me as a council which is risk aware and seeks to manage risk - the greater risk is not listening to the market.

What we now need to do is learn from the Northamptonshire case study as it develops, warts and all.  Hopefully there will be a researcher who has access to the full story and retells that story with academic rigour. Only then can we really learn.

Nevertheless, I congratulate Northamptonshire and look forward to following the story and hope fortune favours the brave.

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

Did the intervention have the desired impact?

Tucked away in this week's Sunday Times were some notes from an interview with Health Secretary, Andrew Lansley.  In the interview he is reported to have said, "An interesting case in point is knee surgery.  The data has now come back demonstrating half of knee surgery doesn't substantially change the outcome for patients: their mobility isn't improved that much, nor their pain."  In other words someone asked the common sense question: 'did the intervention make, as a minimum, the desired impact; was it value for money?' This should also be at the centre of any outcomes based commissioning and procurement.

I'm sure you have been asking

Who identifies when only transnational legislation will do?

When inviting bids it's normal (I hope) that buyers carry out a risk assessment, identify who is best placed to manage those risks and stipulate the insurance cover which the successful provider will have to put in place during delivery of the contract.

The insurance cover aims to protect the buyer and others who may suffer during the supplier's delivery of the contract.  On one hand the buyer is being protected through the insurance in the event of supplier failing to deliver or causing damage.  On the other hand