Ed's pledge on government procurement

Today Ed Miliband set out his six national goals for a Labour Government. Within the speech was a commitment that Ed will make it a requirement for every firm awarded a major government contract to offer apprenticeships. We have seen the creation of apprenticeships being part public sector contracts before, largely in local government, but will this commitment deliver?

First, we have a problem of definition: what is a 'major contract'? Will it be defined by the EU threshold or a definition of the service? If you are an SME you would have a different difinition of what is a 'major government contract' than, say, a large out-sourcing organisation.

Will the requirement be solely on central government contracts or will it also apply to devolved and local government? Will it be for services, supplies and/or works?

But then again, what is a 'requirement to offer apprenticeships'? Doesn't the shaping of the offer dictate the likilhood of uptake? Will there be wiggle room for those drafting and committing to contracts?

Will there be the requirement explicity state the apprenticeships have to be established in the UK - surely that wouldn't be legal?

Does a single apprenticeship on a multi-million pound contract represent compliance? Having said that, is there a threshold of what would be an unacceptably high dependency on apprentices in the delivery of a contract?

Regardless of all those questions, won't the cost of apprenticeships increase the cost of contracts - will budgets accommodate those potential additional costs?

Central government contract management has become an oxymoron - how on earth will this be contract managed?

Great to hear that Miliband recognises public procurement has a part to play, but can public procurement play its part?

That's another fine mess for Tesco procurement

There was a time when Tesco was held up as the exemplar for procurement; that changed with Horsemeat. But today things just got significantly worse and a strategy of late payment for suppliers paralleled with charging suppliers for prominent placement seems to have led to 10% fall in share price and significant reputational damage. Euphemistically this is referred to as 'profit overstatement'. Will CIPS' condemn this as unethical and flex the new disciplinary process?

But while the big news story was on Tesco's 'overstatement', tucked away inside the Times was a related story about one of Tesco's suppliers, Moo Free Chocolates. Moo Free Chocolates have named and shamed Tesco in a late payment dispute - Tesco, it is claimed took five months to pay £6,000 while no such problems were eencounteredwith Sainsbury's and Waitrose.

Wouldn't it be interesting if the main political parties, who are now holding their Conferences, announced, that if they win the election, they will introduce a naming and shaming register of late payments - perhaps that would be the single best thing they could do to help SMEs!

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.

An alternative option for school uniform procurement

First thing I heard on 'the box' today were the Lib Dems plans to break the self-inflicted monopoly power of single-source school uniform suppliers over schools. The power is derived from the schools over-specfiying on the uniform and enabling the supplier to charge excessive prices ('rents'). New guidance is proposed.  But is there a better way? I think there is.

The easy answer is to use public procurement collaborative buying and provide access to the contracts for all parents. You can still have schools differentiating on the choice of uniform, if they want but first industrialise through simplifying the uniforms, standardising, and then sharing the contracting. Those letting the contracts could view this as a social benefit. You could also look at more functional uniforms taking into consideration running costs (wear and tear, washing, etc.) and durability and refreshing.

Of course you could always use the purchase of school uniforms as part of the school curriculum. If schools want to opt out of using existing collaborative buying organisations, they could have support from local CPOs volunteering their time to support the procurement. Business Studies and Economics classes could work out which schools or public bodies it would be most advantageous to collaborate with in procurement (say, all those who want green blazers); Art and Technology classes design the uniforms. Let's face it, at the present time we have pupils leaving school who understand what marketing is about but have no grasp of procurement.

Even more radical, would it be at all possible, given the changes in child benefit, for school uniforms to be provided by the state. That would cut the nonsense of 'elitist uniform snobbery', place the uniform in the context of education budgets (after all one of their most passionate advocates in the Education Secretary) and the cost would be borne by those who insist they are necessary as opposed to locking parents into bad deals which they have no choice but to pay for.

To me the Lib Dems have missed the more innovative way of solving the problem.

3 SoS, 3 Presidents and 1 PM: A negotiation masterclass

Set aside which side of the fence you sit on regarding intervention in Syria and think are there any lessons which can be transferred across to procurement?

I have already discussed lessons from the House of Commons Syria vote, so let’s ratchet up a gear and consider three Secretaries of State, three Presidents, one Prime Minister, and negotiation.

First a quick paraphrased catch-up. Terrible atrocities taking place in Syria. Almost impossible for the average ‘Man on the Clapham Omnibus’ to understand who are the good guys and the baddies in the Civil War. Evidence of chemical weapons having been used but no clear ownership of the smoking gun. The US President attributed blame to the Syrian President and announces a swift, short, sharp punishment is required to make clear chemical weapons cannot be used. While this was being discussed a team of weapons detectives were on the ground in Syria hoping to find the evidence (their verdict still awaited). US President looks for support in the proposed punishment beating. There is no evidence that that the US have been attacked in anyway, nor any Western country but to take the moral high-ground a missile aimed at the Syrian President’s lawn is deemed appropriate. The Russian President makes his lack of support for US intervention clear. UK decide some sort of Parliamentary Mandate is required but it is not yet gained. UN mandate is not yet received. Some petty point scoring with potential allies. The US President starts to look very lonely and decides he would be better with mandates from Congress and the Senate – not yet received. The US President is backed into a corner, the UK Prime Minister is backed into a corner, the Syrian President waits. In the meantime airmiles are built up holding a G20 summit, bringing some of the world's top politicians and their advisors together, fails to find a way forward.

So the scene is set to learn from the high stakes negotiation, very high stakes negotiation.

First,

Can procurement learn from the vote on Syria intervention

I'm not going to discuss whether or not I agree with the idea of military intervention in Syria, but yesterday's Commons vote was clearly a setback for some. It was also something of a triumph for what the UK believes is worth fighting for, namely, that democracy and the voice of the people.

We heard of lessons learnt from the past - which must be a good thing. We've heard commentators declare that the vote is also a vote on the PM's judgement and that confidence in that will be irreparably damaged. Sadly, there was also a 'bad loser' syndrome, obvious after the vote, with some of those who failed to win over hearts, minds and votes denying the value of our treasured democracy and instead railed about the international implications. While Cameron said he "got it" the post-debate debate may have made us wonder which particular part of the message our leaders actual did get. However, I think there are some lessons from last night which are relevant to CPOs, particularly when they want to sell a new procurement strategy:

1. Make every effort to learn from the lessons of the past - what's gone wrong is unlikely to have been forgotten and the legacy needs to be addressed before you can go forward;
2. Regardless of your academic and professional pedigree, you need humility and excellent communications to bring key stakeholders to a position of accepting your strategy if it is to be adopted and implemented;
3. You need to bring people with you and be seen to really, really, really listen to their fears and concerns - that means being seen to have taken those concerns on board and reducing, if not removing, their fears;
4. Remember that key stakeholders are influenced by their key stakeholders too, for example, the PM appeared to view winning MPs voted as critical, but the MPs may well have viewed their own constituents voices more precious and recognised the problems they would have selling the strategy on doorsteps; 
5. Recognise that losing credibility in your judgement will have long-term adverse impacts on virtually every piece of advice you subsequently give; 
6. It is far more important to be viewed as having the good judgement to rip up a proposed strategy which lacks stakeholder ownership than to be so precious about it that your credibility is lost;
7. Forcing through an unpalatable strategy is 'no win' as you can never predict with certainty the future and those you were against the strategy, with the benefit of hindsight, can always say, "but if only ...";
8. Don't create unnecessary deadlines for decision-making - if you try to force a deadline on people sometimes it's easier for them to just vote for 'no change';
9. If you can't sell a strategy it was unlikely you were ever going to successfully implement it;
10. If you were unsuccessful in selling a strategy there's little since in saying "but I still know best'.

What does capping HS2 spend mean?

There's a peculiar paradox with HS2 - while the proposed costs just keep on taking from the public purse, for a blogger the whole saga just keeps giving.

I first highlighted problems in the approach away back in January and there's been a steady stream coming down the track since then. We also had the high profile reporting of the Institute of Economic Affairs expectation that the real cost is likely to be £80bn, even though Steve Ashcroft had blogged to that effect early in July. This week there appears to have been confusion among key stakeholders what the budget comprises: the Transport Secretary says £42.6bn, the Chief Executive charged with the implementation says there's an extra £7.5bn for rolling stock, and the Treasury are reported to be working on a figure of £70bn.

Now we have learnt, amid nervousness in the Labour ranks, the Shadow Transport Secretary wants to cap the spend at £50bn. What does that mean and what are the implications?

1. There needs to be clarity what the budget is supposed to cover. While there is clearly confusion already regarding the budget, if Labour propose to cap at £50bn, then what is counted within the £50bn needs to be made clear, otherwise if they come into government, they risk being castigated when the first pound over £50bn is paid.
2. What is the agreed categorisation and split between capital/revenue costs? If that isn't clear there is a danger of reallocation to mask overspend.
3. Are the consequential costs of expert opinions, compensation to those adversely impacted, the costs of legal challenges, etc., also to be met from the £50bn allocation?
4. What are the likely consequences of spending £50bn and then saying 'no more'? Will £50bn be viewed as sunk/wasted?
5. If the budget is to be capped at £50bn, what is the most appropriate way to sequence the investment to ensure, if the plug is pulled, that the maximum benefit can be achieved from the £50bn spent and how will that scrutiny be provided?

It is quite easy to make a statement of capping expenditure but I fear this could come back to haunt the Shadow Transport Secretary.

My own personal prediction is that we have not heard the last of HS2 procurement, by a long shot.

Supply Wars: Spain v Gibraltar

I've decided to return to the theme of Supply Wars but from a different tack. It's now a fairly daily occurrence hearing news of the diplomatic abbess between Spain and Gibraltar. Today's news was slightly different in that we are now seeing public procurement becoming one of the chess pieces.

In a nutshell, Gibraltar had ordered 10,000 tonnes of sand from a Dutch company but less than 3,000 tonnes has been received. The Spanish have intervened and halted the supply in response to a claim from an environmental group that the sand being supplied is from a protected area.

Gibraltar claim they have taken every step to ensure that the sand has been legally extracted and that the Dutch provider says it has provided copies of the relevant licences. I have insufficient understanding of the specific procurement to comment on the efficacy of the procurement.

To me this has the hallmarks only of a first skirmish - an end of season shortage of wouldn't normally make the news. However, skirmishes generally fit within a bigger theatre and that's what should be the focus. Procurement has been demonstrated to be both political and tactical, my suggestion is that it also needs to be looked at more strategically.

I if were advising both countries I would suggest a mapping of the existing and anticipated trade using Kraljic's matrix. If I were advising Spain I would target, for supply chain disruption, those procurement's in the 'Bottleneck' quadrant. If I were the UK and Gibraltar, on the other hand, I would now start to put in place risk management strategies and alternative sources for those 'Bottleneck' categories. This isn;t protectionism, this is pragmatism.

Of course while I'm talking about strategic procurement at a state level, there is also a need for those in the UK and Gibraltar, who procurement from Spain and it's sympathisers, to also carry out a risk assessment and put in place mitigating plans. This could get very messy in the supply chain world.

Taxpayers Alliance procurement assertions are flawed

Today's Times makes great play of The Taxpayers' Alliance, Bumper Book of Government Waste. Not only does public procurement get a bashing on page 4, but also in an Opinion piece from Matthew Sinclair (Chief Executive of the Taxpayer's Alliance) on page 26.

When I read that £15bn a year could be saved through better public procurement naturally I looked for the evidence. That led me to the source being cited as the Institute of Directors. But the Institute of Directors hadn't identified £15bn could be saved, their source was Colin Cram's report, Towards Tesco.

Now I have deliberately stayed clear of the procurement family spat on Towards Tesco, not least because I like and have great respect for those presenting the opposing arguments. However, we have to remember that the Towards Tesco was based on big assumptions too - it also stated there was an absence of reliable data.

I have serious concerns about the pragmatism of the centralisation argument and I'm not even sure if Colin's argument has been correctly interpreted. But we have reached a dangerous stage when a hypothesis presented by Colin, who is clearly committed to public procurement, is being misinterpreted and used by the Taxpayers' Alliance. We need to end the rhetoric and move to robust peer reviewed evidence to get to the most likely outcome. In the meantime, perhaps we should take all the other Taxpayers' Alliance assertions with a pinch of salt.

Degrees of rotteness

How can you interpret what is the right thing or reinterpret doing the wrong thing? Whether or not Patrick Mercer MP has done the right thing remains for others to judge but what I can't get my head round are some of the crazy statements which seem to imply there is some honour in doing the wrong thing. Take for example these two statements:

If Mr Mercer has done something wrong he would act totally honourably.

Patrick Mercer has done the right thing in referring himself to the Parliamentary Commissioner for Standards and resigning the whip. 

It is a strange world we live in where corporate tax avoidance is considered morally wrong even though it may be complying with the law. Yet someone perceived to be unduly influencing the legislative machinery of the land, breaking rules of the organisation is spun as doing the right thing if they resign when caught.

How big a shift is that from a child murder, who, when there is compelling evidence presented which places them beyond reasonable doubt as the killer, decides to change to a plea of guilty?

Or what about the public sector procurement manager; are they doing the right thing awarding contracts to 'mates', until their malfeasance is exposed?

Is it any wonder confidence in the democratic system is waning when you can make up definitions of what is right as you go along, or rather, when you are exposed!

Brinkmanship at the NHS

I've been discussing Clinical Commissioning Groups and the various twists and turns for some time - there's no denying they're turning into one of those procurement case studies which just keep on giving.

A very quick summary:

1. In 2004 the government negotiated, what is widely viewed as, a bad deal with GPs. The GPs got more money and were able to opt out of providing an 'out of hours' service.
2. GPs involved with CCGs expressed concern that they lacked the skills to handle the procurement aspects for CCGs.
3. NHS Guidance on procurement appears flawed and has to be rewritten just as it is required.
4. CCGs are identified as having clear conflicts of interest within procurement.
5. Demand on A&Es increases as a result of the systemic displacement from GPs opting out of providing 'out of hours' services.
6. GPs say patient care is suffering through the need to be involved in CCGs.
7. GPs are viewed as 'badies' and ministers hope to renegotiate the 2004 contract.   
8.  GPs trade union are threatening a withdrawal of the NHS' flagship Clinical Commissioning Groups. 

I'm sure there's no suggestion that GPs have less to gain through CCGs since the conflicts of interests were highlighted. Nor, I'm sure, is there any connection between the suggestion that the GPs contracts should be renegotiated by ministers and at the same time CCGs are precious to ministerial aspirations for the reform of the NHS.

You could of course view the whole thing as a shambles. But then again you could say it's just brinkmanship. It does have the appearance that one side is better at negotiation than the other though. 

What did Fallon do?

Less than two weeks ago Michael Fallon gave an undertaking that "[UK Government] will look at what responsibility can be put on retailers" in response to the Dhaka factory tragedy, where it is now thought 800 people will have lost their lives.

The tragedy pricked the conscience of some of the UK public and some of those buyers who appeared to have been pursuing a low price (/high human cost) sourcing strategy. Supplier audits and risk assessments  became a topic of conversation for a few days. Unfortunately, as more domestic stories occupied our news headlines the working conditions in Bangladesh become less topical and the cost of low price clothes, like cheap T-shirts, fades. It does not have the same memory joggers as the daily decisions we make regarding the authenticity of the meat we buy which remind us of the horse meat debacle. Indeed even the Bangladeshi Finance Minister appeared to trivialise the significance of the 800 deaths.    

But Michael Fallon did give an undertaking about responsibility and there is surely an obligation on him to make clear what he actually did do and what the outcome was. Two weeks is quite a long time in politics and the rhetoric changes. But in Bangladesh there are families who will never forget that buyer deadlines contributed to death, maiming and loss of income. To make matters worse we have now learnt of more deaths in another Dhaka factory as a result of a fire with at least eight deaths.

Doesn't this put in context yesterday's blog on low spec uniforms?

Now may be a good time for Michael Fallon and those in the retail industry to let us know what preventative actions they took?

Will UKIPs success impact on procurement?

UKIPs success in Thursday's local government elections certainly changed the English political landscape but will it make a difference to local government public procurement? Or, put a different way, if you're a local government procurement practitioner in a council where UKIP have now a major voice what changes should you anticipate, if any?

Let's first recognise that in local government politicians should shape the agenda; that's what democracy is all about. Although UKIP have not yet taken control of a council that does't mean they can't affect change.

The first area I would anticipate an impact will be if a UKIP member secures the portfolio which covers procurement - given the strategic significance of that portfolio to UKIP's strategic intent, that should be one of their core political objectives. The second impact would be if UKIP members secure a strong position on Resources Overview and Security. If either of these roles is secured expect UKIP members to reflect their manifesto - and, if my experience of local government is a reliable indicator, expect the euphoria of the Thursday's results to bring the confidence and boldness to make a quick impact, even though there will be a lack of understanding.

So what can we assume based on the UKIP Manifesto?

1. Greater focus on cost reduction as opposed to service cuts;
2. Resistance to the EU procurement regulations;
3. Resistance to awarding contracts to non-UK businesses;
4. Cynicism over the effectiveness of previous initiatives designed to support local businesses;
5. Questions on how to make it easier for local businesses to tender for contracts;
6. Challenge on the need to embed equalities in procurement; 
7. Environmental procurement resisted;
8. A resurgence in the desire to support third sector organisation;
9. Cynicism that the procurement manger is committed to serving the citizenry as opposed to their own self-interest;
10. Expect a need to justify existing procurement staff numbers;

I suspect many, new to local government, may have listened to the election results and thought 'so what?'. Well, if that's how you felt, you have a real problem and need to remember that in local government, political manifestos are the backdrop which should shape strategic procurement objectives. One other thing worth reflecting on is that UKIP have an electoral mandate for pursuing their manifesto objectives, while procurement professionals don't. Procurement's challenge is to provide the best professional advice on how objectives can be achieved, regardless of whether or not they agree with the objectives.

What will Fallon do, what can he do?

'Any Questions' is a great programme on Radio 4. The episode on 26 April (repeated on 27 April) (specifically the section at 11 minutes) was all the more interesting since the panelists were discussing procurement in the context of the Dhaka factory collapse which I discussed earlier today.

Michael Fallon MP, currently, Minister of State for Business and Enterprise, gave an interesting undertaking "that [UK Government] will look at what responsibility can be put on retailers". When pressed, the only clarification he gave as to what that meant was "we'll look at the various codes that they're signing up to and see whether they are sufficiently transparent and whether enough retailers in this country are actually signed up to them and whether there are significant gaps".

Another panelist, Sir Ming Campbell, suggested accurate labelling may be part of the solution, yet we know 'accurate labelling' didn't protect against 'horse meat in the UK food supply chain'.

We also know that the government have not been able to effectively mandate their own spending departments to use centrally set up contracts.

Yet bizarrely Stephen Kelly, in his evidence to PASC, was implying the public sector should look to retail as exemplars!

So what will Fallon do, or more specifically, what can Fallon do?

He can hardly tell those who have just had their benefits cut to buy more expensively.

However, given that it is alleged it was only the need to meet buyer deadlines that caused the workers to be in the factory on Wednesday in spite of the obvious risks, perhaps he could ask UK retailers to demonstrate that they were not culpable through placing undue pressure on supply chains. Could he initiate legislation which would bring about a new criminal offence of supply chain culpable negligence which may well help strengthen political relations? Or could he have the issue addressed through the G20?  I suppose it all depends on whether there's a will!

Belfast City Hall 'fleg': Lessons for negotiation and change management

Few of you probably realise that just as I was starting my procurement career one of my 'any other duties' was sending out details, to those responsible for Belfast City Council buildings, when they should fly 'the Fleg' (as they say where I come from). I worked in Belfast City Hall right through the worst of 'the Troubles' and the daily threat of bombs - indeed I clearly remember a bomb going off a few metres from my office during a meeting with one supplier. Heaven forbid that we ever return to that dark past of daily atrocities. I left the Council in 2000 but I still live in Northern Ireland.

It may come as a surprise to you, but I think the whole 'Fleg' fiasco, like the Julian Assange fiasco, can teach us some lessons for procurement negotiations and change management.

The average man in the street could have predicted that a decision to instantly change from 'business as usual' of flying 'the Fleg' would have provoked anger and resistance.

2012 marked the centenary of the signing of the Ulster Covenant by 471,414 men and women - many signed the Covenant in their own blood in the same City Hall (see picture) - so timing of the change was not particularly sensitive. The fact that there were protests outside when the decision regarding the 'Fleg' was to be taken should also have signalled problems - clearly there were those not ready for change and quite vocal in their resistance to the change. The reality that there was a large continental market taking place in the grounds of the City Hall, with traders from across Europe, could also have indicated that the decision's impact would travel far and risk compromising so many positive Belfast stories of recent years. Risk management, stakeholder management, communications strategy and timing don't seem to have been considered in a way that would have minimised the resistance to change. It just doesn't appear that Belfast had reached the right stage of change readiness.