Songs of Praise procurement and avoiding unnecessary discord

Outsourcing has now hit the religious broadcasting arm of the BBC and not everyone is singing a happy song.

Some time ago we discussed the BBC's change of weather forecasting provider and the storm of criticism that brought criticism based on whether a non-UK provider could be up to the mark - let's remember that the BBC didn't produce the weather forecasting, merely the transmission of it.

Now the BBC has exposed the production of its flagship 'Songs of Praise' programme to competition, and as a result, it will be outsourced. There does not appear to be any suggestion that the Christian orientated programme will be produced by heretics. No, only that it will not be produced in-house.

Bectu, the union, are "[demanding] better transparency over how this happened"; others fear the loss of specialist expertise in worship broadcasting.

These concerns suggest that perhaps there was a lack of engagement with key stakeholders in the procurement process, and if that was the case, I think that was a mistake. Songs of Praise has built up a strong brand and loyal following since 1961, tampering with that could have been expected to have encountered resistance.

The BBC would be in a stronger position to address criticisms if it had:

• Agreed with the key Church representatives the outcomes to be delivered from Songs of Praise in the future and how it could be improved;
• Discussed with Bectu how best to deliver the desired outcomes in the future and provided some opportunity for the in-house provider to match those expectations within an agreed reasonable time;
• Included Church representatives in the development of its sourcing strategy, development of its award criteria, and tender evaluation;
• Consulted with Bectu on its proposed sourcing strategy and evaluation model;
• Thoroughly debriefed all the bidders and Bectu on the outcome of the tendering process.

Big commissioning changes need to be supported by a change management plan if you want harmony at the end.

When contract management meets prisons management.

In the face of an obvious procurement performance management crisis in UK prisons, the Prisons Minister has stated "We have robust processes in place to closely monitor and manage the performance of all contractors".  It therefore seems strange that a £200m maintenance contract has been able to take on the appearance of not being managed and it was only when prison officers refused to accept inmates, some repairs made within hours!

Robust contract management process need to be more than just a written procedure, they need to be embedded as a way of working.

To make that happen the contract needs to have explicit standards and a specification of what represents acceptable performance - it is agreement between the provider and client of what they are exchanging. Is that explicit in the prison's maintenance contract?  That statement should have been based on a risk assessment and understanding of the 'front line' - were front line staff involved in defining the standards?

There also needs to be a cascading of the contract documentation down to those who are in a position to know, on the ground, what acceptable performance means. There is little point in a contractor being criticised for poor delivery if they are actually matching what they were asked to price, that could include, for example, schedules of which repairs need to be completed within particular timescales - again risk based.  While Carillion, in this particular case, are being criticised, is the specification part of the contract actually robust?

A contract management structure needs to support the process which sets out who monitors what and the escalation approach. It also needs to have a process where and when client/contractor liaison meetings take place.  Either this was not in place or it has failed drastically for the Prisons Minister to now be meeting with Carillion's senior management to set out the improvements required.

But the Prisons Minister also needs more that a list of defaults to wave in front of Carillion, he needs to have a very clear plan of what he is going to do if Carillion don't make the improvements. Can he terminate the contract and find someone else, for example? If he makes a threat at this stage and then doesn't follow through, he'll be looking for his own 'get out of jail' card.

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.

Is the NHS suffering from procurement Tinnitus?

Tinnitus: Is a term that describes any sound a person can hear from inside their body rather than from an outside source.

Today, I read in the Financial Times two parallel reports on the same page, one with the headline "NHS prepares £1.2 bn outsourcing deals", and the other adjacent report with the headline "Bidders pull out of elderly services contest" (sadly the web versions have different titles).

You may also recall that last month I discussed the poor stakeholder management associated with care.data and how the communications strategy needed to be improved. One of the big issues relating to patients concerns with care.data is the fear that their health records will be accessible to the private sector. The notion that £1.2 bn of NHS 'pioneer contracts' for scandal-hit Staffordshire, along with Stoke on Trent, will be let for all cancer and end-of-life treatment for children and adults is unlikely to reduce those fears. How will private sector providers be able to deliver the services without access to the records? Yet, nowhere in the reports is that risk mentioned.

However, that shouldn't be the NHS main issue. Perhaps they need to consider how the lessons from the parallel report on what looks like a failed procurement exercise in Cambridgeshire will be learnt. It is reported that in Cambridgeshire and Peterborough a contract for elderly care, yes, something similar to the Staffs and Stoke-on-Trent contract, has suffered from providers opting out. Serco, Northamptonshire Healthcare Foundation Trust, Capita and Circle are all reported to have withdrawn, supposedly due to the gap in what the Trust are prepared to pay and what the providers think it will cost. Are the providers who have withdrawn correct or the three remaining providers and the Trust right?

When the Ministers met the CLG procurement inquiry

At last, I hear you say, we've reached the seventh, and final, oral evidence session of the CLG Committee Inquiry into procurement. The witnesses being Baroness Stowell of Beeston (Parliamentary Under-Secretary at DCLG with responsibility for procurement) and Nick Hurd (Minister at the Cabinet Office). When you recall the central government's CPO reports to the Cabinet Office these witnesses should be in a very strong position to speak with authority on the political objectives of procurement.

The Baroness took an early opportunity to volunteer her view of procurement effectiveness:

They should understand that it is not just about buying the relevant services at the best price possible but that this is also an opportunity to make sure that procurement is a way of getting the best service you can and that it is possible to improve the services that are provided locally. If we start putting a [savings] target on things, the focus then is on that rather than what I would see as the more important outcome, which is a better local service for local people.

It is important to note that this was stated in response to a question on what could be potential savings from procurement as opposed to "what would good look like". The Minister responsible for local government procurement, therefore, sees procurement as not about lowest price but better local services. It is really disappointing that the Committee didn't take the opportunity to compare that view with the Cabinet Office Minister's, as you may recall his boss, Francis Maude, told the Public Administration Select Committee in May of this year: that the "primary objective through procurement is getting the goods and services needed by the citizens at the best price". Is it just me, or are the Cabinet Office and DCLG at odds on what epitomises good procurement?

Then compare, former Local Government Minister Michael Heseltine's view, which has the implied endorsement of the Chancellor:

A balanced approach to probation outsourcing

I've discussed the outsourcing of the probation service on a number of occasions but today revealed a strange 'spin' which requires re-balance and critique if the best option and approach is to be selected.

We have learnt that "Officials have warned the Justice Secretary", but then that the warning is actually in the form of a risk register. Of course there should be a risk register which identifies risks in as objective a manner as possible, but risks 'might happen', it doesn't mean they 'will happen'. Is it fair refer to inclusion is a risk register as a 'warning'?

Then we learn that a "a criminal justice expert said the Probation's sell-off is being carried out too hastily; there is too much risk. It is highly likely that service delivery will collapse and public protection will be undermined. The Government must think again". Well if you heard that from a 'criminal justice 'expert' you'd assume an objective opinion, but if you were then told that 'expert' had been a trade union representative of the probation service perhaps you'd consider the opinion highly subjective and more than a little biased?

The Times. which report that they have seen the risk register, appear to have been a victim of spin and not managed the risk of being a pawn well.

From a procurement perspective, whether or not we agree with outsourcing, we should applaud comprehensive risk registers, but we should also avoid being too influenced by subjective opinions. Professional procurement requires robust options appraisal and risk management as opposed to scare mongering.

Intriguing procurement: BGT, Twitter-gate and PRISM

What have the Britain's Got Talent egg-thrower, Twitter-gate and PRISM got in common? Well the answer is they are all had contractors who behaved inappropriately, and brought embarrassment and loss to their client.

Last week I posted a blog on Dark Procurement which was previously a guest post on Spendmatters - it was fascinating to read some of the comments on the Spendmatters' post. I think it is fair to paraphrase the comments as saying, 'CPO's should act in line with their personal beliefs and conscience even if those personal beliefs are in conflict with those of their employer.

In BGT, Twitter-gate and PRISM we see examples of the contractor acting on their judgement/conscience as opposed to the clients - I'd really like to hear from CPOs who believe that's acceptable performance of a contract? But isn't the argument that CPO's should act on their conscience something similar?

What these examples highlight is moral hazard. When you're dealing with individuals who provide some form of personal service you face the risk of 'will they do what they're supposed to', which isn't easy to protect against. So we have Simon Cowell with egg on his shirt; Newsnight resignations; loss of Booz Allen Hamiton's share value;  NSA, GCHQ and the Foreign Secretary all being diverted from what they should be doing and paying a high cost due to a maverick contractor.

It really doesn't matter whether or not you believe the maverick was 'doing the right thing' if you were the CPOs who bought them but it does matter if the CPO didn't demonstrate due diligence.

Outsourcing - good or bad?

Amidst this week's embarrassment of Parliamentarians serving their own interests the Sunday Times Business section included a piece of the increasing outsourcing of public services. I first have to declare an interest in that I am currently involved in a major outsourcing contract, so assume I have some bias, just in case.

One of the criticisms of outsourcing is alleged to be "little accountability or transparency over the claimed savings". To me, that argument just doesn't stack up.

First, it implies an acceptable level of accountability and transparency over existing savings under the 'as is' service delivery. It implies both will be reduced through outsourcing. Accountability for service delivery should remain with the democratically elected representative (or CEO) regardless of whether or not the service is delivered in-house or outsourced - failure to recognise that is a failure to recognise the fundamentals of public service delivery and contracting. Outsourcing delivery does not mean an abdication of accountability for delivery. In a well defined contract there will be clear levels of service stipulated supported with tight performance/contract management - accountability starts in defining what is to be delivered, which may not previously been subjected to the rigour of a specification.

There has been scepticism over claimed savings within the public sector for years. Indeed, even more fundamental, there have been difficulties actually calculating how much the 'in-house' service delivery costs. Without clarity on existing service costs there is no baseline for comparing the achieved savings, regardless of whether an in-house 'efficiency agenda is pursued or outsourcing. However, assuming you have gone through some sort of contracting route, you should be able to see how much an outsourced service will cost through the price. You should also be able to compare that price against any internal cost. Then, in subsequent years, you should be able to see year on year changes in the price paid.

Make or buy - make or break

Today we have learnt of plans to 'mutualise' "dozens" of public sector services within the next two years. Of course that just gets us to the next election, so the political risk is high of selecting the wrong service or even more basic, not managing the process right. Get it right and the public should benefit, get it wrong and you break it.

So, with two blogs this week already considering options appraisal, this looks as if it is topic of the week.

We have already seen the 'cull of the quangos' so let's hope some lessons were learnt from that. But then that begs another question - why were these public services up for the make/buy debate at the minute not deal with at that time?

But this isn't a cull, this is a 'mutualisation'. The assumption is that some of the 75,000 current employees will want to take a stake in the new 'mutuals'. Has that assumption been robustly tested?

Then there's the proposal that the government will guarantee contracts for a number of years to the new mutuals. It will be interesting to see how that will be delivered given the public procurement regulations?

If I were one of the employees, I think one of the questions I'd ask would be, what sort of business justification suggests that the 'mutuals' will be sustainable without the government contracts? We know that the third sector has paid a big price and in some cases brought to its knees as a result of the austerity strategy.

For the wider citizenry, there are other questions. If it is now considered these services can be 'off-loaded', why  were they introduced in the first place? With the increased reduction in political accountability for such a large proportion of public services how is democratic accountability retained? If you reduce democratic accountability, should we see a commensurate reduction in the salary costs of MPs? Who is carrying the risk if this all goes wrong?

We could also question the feasibility of the two year project plan and its dependencies on consultation, staff contract renegotiation, etc.

"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?

A risk in outsourcing: (Not) Embracing Digital Procurement Strategy

I have been discussing Digital Procurement Strategy over the last few weeks. I thought I had said as much as I was going to until I read Thursday's report in The Guardian on the gagging orders allegedly placed on probation staff during the current outsourcing process of 70% of the work. This provides lessons for all those involved in outsourcing and change management.

As I see it, some stakeholders affected by the outsourcing decision aren't happy - should that be a surprise when your job is at risk, particularly in the current economic climate. They have not been won over during the change management process. They assumed they had freedom of speech and social media provided the channel. The main champion of the proposed outsourcing (the Justice Secretary) doesn't like what is being said using social media, so has chosen to effectively issue a gagging order on any dissenting voices. The gagging order isn't restricted to the disgruntled workers criticism but also applies to their 'retweeting' of others views (potentially this blog too). Seems like a strange view of justice but then perception counts for a lot. There also seems to be more than a little contradiction between the MoJ's view of the world and the proposed NHS Duty of Candour!

Of course we also need to remember that there are more stakeholders than the staff - there are the other potential providers (as I discussed in Probation's Dilemma a few weeks ago).

We are currently in the outsourcing process, what will happen when the contracts are subsequently awarded - will social media turn the process into another West Coast Rail debacle, will contract management become a target of social media, etc...?

My suggestion is that:

1. Recognise social media is two way - you may see it as part of external communications but it is also market communication about and to you;
2. Digital Procurement Strategy needs to reflect the risks of stakeholder engagement, misalignment and criticism;
3. Any potential discussion, yes, even a discussion, on outsourcing needs to be viewed within the context of a change management programme, even if it may not lead to outsourcing;
4. Trying to stifle social media is unlikely to be productive.

Bob: Outsourcing Guru

The make/buy decision is one which frequently alludes the procurement manager; involvement in it can be an indication of strategic influence. It is high risk but can lead to significant savings. Bob's experience indicates off-shoring software development to China can result in a service costing 20% of the previous cost with no detrimental loss of quality.

The 'You Couldn't Make It Up' is that Bob, who was able to work from home, had actually outsourced his own job and it was two years before the outsourcing came to light. Bob was able to be more personally productive in his own surfing and social media interests, satisfying the reporting needs of his superiors through a daily email. It's not clear how Bob selected the Chinese provider.

The downside is that Bob has now lost his own job - it is not clear whether his work is still being outsourced to China, whether there has been a detrimental impact on quality since Bob's exit from the organisation and what the contractual arrangements were.

Did procurement bring down BBC Director General?

I have been a devotee of Newsnight for many, many years - I would even go so far as to say it is my favourite viewing. So the debacle related to its handing of child abuse scandals is really disappointing - but was this a Supply Risk Management disaster waiting to happen?

Let's rewind. The BBC has been on a cost reduction strategy for some time; outsourcing programmes, contracting with its front-line 'names' as opposed to employing, and now it has all the appearance that it may have outsourced quite a bit of its investigative journalism to the Bureau of Investigative Journalism.  It was the BIJ who appear to have had the commission from Newsnight and led most of the investigation into the abuse claim and it was a BIJ journalist who sparked the Twitter flurry which has ultimately led to the resignation, last night, of the BBC's Director General.

Newsnight appear to have outsourced one of its strategic assets: investigative journalism. That may have been fine had they not also failed to quality assure the outputs and manage the contractor's opportunistic pursuit of glory through the posting of 'The Tweet that did it'. While we recognise that the DG appears to have had a remote approach to delegation, when you are managing such a strategic issue as the potential credibility of an innocent, high-profile politician, who must have been in the inner-circle of Conservative politics at the same time as the BBC Trust's Chairman, you are really putting yourself out on a limb.

I really hope Newsnight will not be sacrificed in the witch-hunt, but there is a procurement lesson here: be careful what you outsource/partner, identify and manage the risks, and always remember that a lack of Supply Risk Management can bring down even the top guy!

Riding the outsourcing wave

There is little doubt that the strategic make or buy decision is territory which requires procurement expertise, but it requires more than 'how to' knowledge, it requires acute stakeholder management and ownership. Today we learnt of the political cost which can be an outcome of a lack of stakeholder ownership, but it strikes me that there are other lessons which we can learn from today's political fallout at Cornwall County Council.

By way of background Cornwall County Council have been wrestling with the decision of whether or not to outsource £300m of council services.  The rationale for the outsourcing was quite explicit:

Under the proposal one of the two companies bidding for the contract - BT and CSC- will be legally required to deliver at least £5m of savings over the next two years, with ongoing further savings in future years, and to create a minimum of 500 net new jobs in Cornwall.

That seems a fairly clear statement of what was intended. Yet the politicians in Cornwall must have questions about the likelihood of achievement as today they had a vote of no confidence which removed the Leader of the Council.  The vote was specifically linked to the outsourcing decision.  The final decision on whether or not to proceed with the outsourcing has yet to be made, but this is not a good foundation for a successful outsourcing arrangement.

Prior to proceeding with any outsourcing there needs to be