Is there a lesson for procurement in Tory's forgotten manifesto?

The suggestion that the Chancellor's advisors simply "forgot the manifesto"  may well be a symptom of incompetence or just contempt for previous commitments but it does have lessons for procurement leaders.  First let's think about the purpose of a manifesto - it sets out the basis on which the political party seeks election and says "if you elect us, we'll do this".  It is a bit like a contract commitment with the electorate. It is a commitment, through choice, to pursue a particular strategy. Simply 'forgetting' that policy commitment and strategy is a serious breach of trust.

So what's the 'forgetting the manifesto' lesson for procurement? Well, I have long since stopped being surprised when I find out that procurement staff are oblivious to the higher-level policies, and even their own prior commitments, which are supposed to shape their decisions.  For example, a commitment that all staff complete anti-bribery training - when you ask the staff when they last completed it they were unaware of such a commitment.  Then there's the Fairtrade commitments, the sustainable procurement commitments, prompt payment commitments, .... need I go on? Breach of all these 'policy' commitments represents a reputational risk at the very least.  Let's face it the commitments are rarely made without a lot of deliberation and business case justification.

Many of those commitments are voluntary but there are also statutory commitments - surprisingly there appears to be little external policing of those, for example, the Equality Act, Modern Slavery Act and Bribery Act.

Strange thing is when you interview staff for a position, quite frequently they can trot out all the relevant commitments!

Is this a case of selective memory or perhaps just ignorance? Both could be factors but they are unlikely to be the only causes.

My suggestion to ensure there is no 'forgetting' is that:

1. Complete an audit to identify and catalogue external and internal commitments;
2. Embed within risk management, yes, even at the top table;
3. Raise awareness; 
4. Ensure no commitments are overlooked through the use of checklists for both strategy and tactical decisions. 

The UK Prime Minister and Chancellor of the Exchequer now appear to have to backtrack due to 'forgetting the manifesto' - surely there's a lesson for procurement risk management to make sure there isn't a similar carryover in your organisation.

Tales of the unexpected, Harmeston & procurement leadership lessons

I do not recall when the professional credibility of a CPO has received as much attention as that of Kath Karmeston (for example,  The Guardian, FT,  and The Times).  Harmeston already had a significant profile, largely through the reputation she gained as Royal Mail's CPO, before moving to the Co-op.  At the Co-op she became responsible for cutting the costs of the >£1bn spent on 'goods not for resale', and The Times claims she was paid £357k a year for that!

However, after a remarkably short stay, say ten weeks, Harmeston and the Co-op parted company. Harmeston decided to pursue a claim of £5.2m for unfair dismissal (I've no idea how that figure was calculated and some would say it was an unachievable negotiating position). Whether intended or not, Harmeston brought the spotlight on herself through the decision to go to the tribunal. You can read the Co-operatives version of the Tribunal here.  Now after almost two months of waiting for an answer, it is reported she has failed in her claim against the Co-op for unfair dismissal.

I am not competent to comment on the legal aspects, and feel a slight discomfort intruding on private grief, but I can have an opinion on some of the alleged practice reported in press - let's remember this blogpost is based on reported evidence and some of the evidence was contested.  Much of evidence struck me as irrelevant to the unfair dismissal case but relevant to the profession and those who would hope to bring about procurement change - it's those areas I discuss below.

We are told Harmeston believed she had uncovered a lack of procurement policy compliance; 70% of the budget. Understanding the extent of non-complaint spend is certainly a good starting position for improvement - understanding 'why' and what to do about it would be an even better position. The CEO though claimed the issues raised by Kath were already known about and Kath had previously been briefed on them. It is always dangerous to claim the glory for uncovering something when others say you didn't - that applies just as much to claiming savings in isolation of the budget-holder's contribution. 

Nevertheless, when the Co-op's head of group risk probed Kath, he concluded that the CPO didn't know the details of the procurement policy. Now given that she was only in post ten weeks, it could be argued that was understandable. What strikes me as unacceptable though was his assertion:

Policy process and governance she defaulted to [her deputy] because she felt it was beneath her. 

Anyway, that was made worse by, Paula Keegan, the former group chief strategy officer's opinion that Harmeston knowingly chose to break the Co-op's procurement policy herself.

I cannot think of any situation when procurement governance should not be a primary concern when seeking to bring about procurement change, indeed even setting the example of compliance.

Perhaps you can already sense the loneliness of the CPO's journey. To me, when you want to bring about procurement change you also need a coalition of allies - the CEO, head of group risk and group chief strategy officer would be useful allies but Kath failed to gain their ownership.

Nevertheless,

is procurement a better route to peace than sanctions

Like so many I am appauled by the deaths of those on flight MH17 who just happened to be
passengers in a plane, in the wrong place at the wrong time - it would be difficult to see any justification for this slaughter of innocents.

Yet the West's response is based on a single tool philosophy, namely, apply sanuctions on Russia, even in the absence of robust evidence that Russia is directly responsible. There appears to be absolutely no evidence that sanctions against Russia work and to a certain extent the West could be both 'cutting of its nose to spite its face' or perhaps in the longer term demonstrating a lack of ability to make any meaningful impact on Russia. Is the objective to penalise or prevent perceived bad state behaviour in the future?

It is also clear that sanctions could backfire and perhaps inflict pain on the 'sanctionor' just as much, if not more, than on the 'sanctionee'.  Perhaps it is therefore time to consider other alternatives.

For centuries the tool of trying to bring about world security and avoid conflict was marriages between the Royals of potential enemy states. The days when that strategy was effective have long gone. I wonder if an alternative would be, rather than impose sanctions, to develop stronger procurement interdependence between states, for example, contracts which create greater reliance on 'buy' from other inter-dependent states who have competitive advantage rather than 'make' within a protectionist independent strategy. Surely in such a strategy state inter-dependence would increase the stakes of conflict, and the greater the inter-dependence on strategic contracts, the higher the stakes. Such a radical idealist approach to the aspiration of 'world peace' would shift from reducing inter-regional trade barriers, like those the the EU to reducing barriers across separate economic trade regions, for example between Russia and the EU, and the EU and Latin American countries.

As I watch the daily news I feel as if we are sitting on the edge of a precipice with potential lethal alliances appearing all over the world. Sanctions have had little impact on so many of the major areas of conflict and are unlikely to have a major impact in the future. We need to consider alternatives beyond the existing toolbox, perhaps procurement and contractual inter-dependence is a tool worth considering.  

PSNI dysfunctional procurement strategy: A case study or 'who done it' mystery?

Two years ago I discussed the PSNI's procurement of temporary staff, many of whom had just retired from jobs in the same organisation. This week the Northern Ireland Assembly's PAC published its inquiry report - ten recommendations of which seven relate to procurement. The 'case' should be of interest to all those organisations which make use of Agency staff. 

Those with an interest in procurement strategy as opposed to public policy could look at the Inquiry slightly differently. Is this one of the few situations where there is evidence of a procurement approach actually working in opposition to the intended outcome of the legislation? Cynically, was a procurement approach requested which would satisfy the PSNI's (Police Service of Northern Ireland) objective of 'getting round' the need for changing the personnel? Put slightly differently, was this an 'intended strategy' to match objectives set for procurement or an example of poor procurement?

First, some background. The transformation of the make-up of the police was one of the core commitments of the Good Friday (Northern Ireland Peace) Agreement. Basically there was a desire to have a smaller police service (a peace dividend) and more balance in the mix of Protestant/Roman Catholic police officers. Former RUC (Royal Ulster Constabulary - the old police service) officers were given the option of early retirement while a parallel recruitment campaign was put in place to balance the make-up of the new PSNI ). But the procurement approach resulted in more than 1,000 retired RUC officers, 19% of those who took early retirement, being brought back as agency workers to the new PSNI. £106m was spent between 2004 and 2012 on these Agency staff who had just left the RUC. Had those offices been reemployed directly by PSNI they would have had to repay their severance lump sum, which was not the case if they were hired as Agency staff.

Yet again, there was a lack of competitive tendering (you may also find Peter Smith's post today on a similar issue at MOD of interest). The service delivery commenced in 2002 but the competitive tendering was only in 2008. There had been a legacy contract in place for permanent staff which had a throughput of £2m per year, but a variation on that contract to include 'temps' led to a spend of £44m over four years.

The Queen, Dredging, Potholes and short-term procurement

The news over the last week has highlighted some of the false economies of short-termism in procurement decision making,

The residents of Somerset Levels claim that the recent flooding could have been avoided if there had not been a cut in river dredging operations. They have good cause to be angry as no doubt their property investments have become almost valueless (would you buy their property?). If you follow the trail of cause and effect from the alleged short-term decision to cut dredging,  then that contributed to the flooding, which in turn led to damaged property and farm crops, which in turn leads to loss of access to insurance, increased fresh produce prices, potentially farmers exiting from their businesses, which in turn leads to the to claim benefits. Then if people move from the area there will be a depopulation and questions as to the sustainability of local schools and remaining local businesses! Do you honestly believe those who suffer the impacts, and their families, will not blame their politicians, through the ballot box, for many years.

Separately consider the problems with potholes.

Should labour adopt a policy of the living wage for public sector contracts?

Ed Miliband is proposing the adoption of the Living Wage in all public procurement contracts, while the CBI’s Director General, John Cridland, views the mandating of the living wage as a threat to small businesses. In the UK we already have the minimum wage of £6.19 (for London) but if the Living Wage were used instead that would mean all employees in London would receive a minimum of £8.55 per hour.

Would the adoption of the Living Wage be a threat to small businesses? Is it even right to use public procurement as a policy tool in this way? It’s for politicians to decide but we need to be reassured they have thought it through.

Could such a condition in public sector contracts lead to a two-tier workforce with those working on public sector contracts within the same firm, paid a different rate than those working on private or third sector contracts? How easy would it be to cope with those who work on more than more than one sector’s contracts?

Given that the additional cost of the living wage will have to be passed through the contract price to the public sector, will the additional costs not merely be transferred to the public purse? Will the Treasury accept such an additional cost? What will be the implications to wider budgets and will some public services be cut to balance the books?

Then we have to ask will this mean different pricing strategies are required for public and non-public sector contracts?  Surely it would be counter-productive to have non-public sector contracts priced on a minimum wage while public sector contracts are bid on the higher living wage?  If such an approach were adopted it would make a mockery of any comparative benchmarking between private sector prices and those of the public sector.

Where do you draw the line on a public sector contract? For example, what about the supplier who has a low value order for say, Lego blocks, how far down the supply chain would the impact of the living wage be passed? Would a threshold have to be adopted for the application of the living wage in contracts? If that were the case would we see disaggregation of contracts to avoid the higher costs?

But would the wider public sector be ready to pay the additional costs? When you think of it, this would really be a public sector purchase tax borne by the buying organisation. How would it be viewed by local government who have already wrestled to make significant cuts?

If the policy were introduced how much would it cost to handle the administration and even the policing of its application? Just as interesting would be to understand how the policy could be exited?

Then we have to ask the more fundamental questions: are there more effective ways of achieving the same outcome, and should public procurement be used as an alternative to low pay benefits?

I can’t see this idea as a risk to small businesses but I do think there’s a need for a more thorough analysis of the risks and alternatives

NB First published as a guest post on Procurement Insights and  Procurement Insights EU edition

MoJ Legal Aid Procurement Strategy needs an advocate

The Ministry of Justice's procurement has an uncanny knack of providing something worth discussing.The latest being a decision to put its proposed legal aid reform on hold.

Like all good procurement practice MoJ engaged in consultation with the market but there were fundamental doubts as to whether or not the Lord Chancellor has been serious about consultation. Joshua Rozenberg provided a really good review of how that discussion went - suffice to say it did not go well and the key stakeholders, lawyers, put forward a purely selfless argument, that a tendering exercise with lowest price being the main criteria would not be good for justice.

The MoJ appeared to have had one central objective in the exercise, namely, to save £220m a year out of the annual spend of £2bn. Perhaps the outcome of the consultation may have been more productive if they had asked their learned friends for solutions on how to take cost out of the system.

However, whether or not the Lord Chancellor was serious about the consultation, he does appear to have heard something; I suspect what he heard was not the criticisms of the approach but the threat that few, if any, of the lawyers would compete for the business. Now all good procurement people know one key fact, a competitive tendering exercise only works if sellers chose to bid - the legal profession appear to have used their powers of persuasion to suggest that they wouldn't take part in a bidding process. The outcome is a return to the drawing board for the MoJ and I suspect a discussion on how on earth these ket stakeholders can reach a readiness to change

I have no idea how the MoJ propose to move forward on this but it will pose major problems:

1. The lawyers appear to have won through harnessing their collective power to opt out of tendering;
2. The notion that lowest price wins is rarely right but how will the MoJ repackage the procurement strategy or will they just give up?
3. If you chose to take on lawyers are the odds stacked against you winning in a regulated procurement environment? 
4. The government now appear to have met their 'trade union' nemesis in trying to bring about change with the 'professions' of the medical world and the legal world  - how will they change their future negotiating strategy?

A spending review anomaly for procurement policy

The Spending Review provides an opportunity to gain some insights into public procurement policy, so it is worth looking slightly deeper than the common headlines of cuts, cuts, cuts.

The nugget which I want to highlight is the freedom gained by Arts Council England and the national museums to opt out of government procurement procedures. 

First it is worth reflecting on what I think was the last relevant report on DCMS procurement by the National Audit Office - at that time, (admittedly November 2005) the view was:

"Procurement is an area where the Culture, Media and Sport sector can achieve significant savings and improvements. Whilst the sector has made some progress in improving its procurement capabilities and practices, a great deal more can be done. A greater level of commitment from organisations to adopting good practice, as well as addressing specific issues such as greater collaboration between organisations when buying common goods and services, will result in greater value for money." (Sir John Bourne, 30 November, 2005).

Is the new freedom to opt out of government procurement procedures an acknowledgement that DCMS has so significantly improved procurement that they should be cut loose from the constraints applicable elsewhere in the sector? If that is the case, which I doubt, it would be useful to understand how they have brought about greater collaboration, which just has not been achieved elsewhere in the public sector, for example, the police?

Is the freedom an acknowledgement that existing government procurement procedures are inappropriate? If so, why release one part of the sector rather sort out the procedures for all departments?

Did Arts Council England and the national museums actually ask for this freedom, if so what was the business justification? What precedent has been set and how will it be applied to the next petition for 'opting out'?

What particular areas of government procurement procedures will Arts Council England and the national museums be released from and have those relaxations been risk assessed? Are major construction projects, grants, and commodity goods and services included? Have new procedures been drafted, if so, can we hear what the proposed new procedures are? Will those procedures be 'leaner'?

Assuming government procurement procedures exist to provide value for money, achieve public policy and provide a shield to protect those involved in public procurement from criticism; how will those objectives now been satisfied?

On the heels of so much debate on greater use of 'centralised' contracts, has the so called 'mandating' just been set aside?

Will the independence bring with it reduced costs for what is procured? If yes, then some serious questions need to be asked about the 'centralisation agenda'? If costs increase, how will that be justified? Will a baseline for future comparison even be established and published?

To be truthful, I just can't understand the freedom as it seems to go against the tide - I'd like to have heard the view of Francis Maude, Margaret Hodge and Bernard Jenkin?

Small Business Friendly Concordat and institutional memory loss

Isn't it great to hear Chloe Smith has made a commitment to bring about change in central government procurement so that it is easier for SME's, particularly in the construction sector, to gain business.

Not so great that no-one actually briefed Chloe that what was being said had little new. Not so great that Chloe wasn't briefed that much of what was being championed had been committed to in the 2001 'Smaller Supplier ... Better Value? Not so great that Chloe wants local government to follow her example, without having been made aware that many council's have already signed the 2005 Small Business Friendly Concordat.

What we really need Chloe to tell us, isn't the old, old story of commitment to ..., but a new story of accountability for implementation, what's going to change to ensure her commitment is acted upon, and whether the Government are prepared to be measured against this commitment in May 2015 election.

Procurement for growth?

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

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

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

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

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

Let me tell you a story on robust supplier appraisal

On Tuesday we learnt that some of our education policy thinking appears to be shaped by what looks like unreliable evidence - the sort of approach which looks selective as opposed to robust. It is ironic that we want more useful research as an outcome of universities yet in trying to achieve that outcome we are using, what some might refer to as 'Mr Men evidence'. The sad thing is that whether or not you agree with the Education Secretary's views, his credibility has now been weakened, whereas a more robust approach would have strengthened his case.

Gove has also weakened his argument for education reform and could be perceived as hypocritical when he discusses critical analysis. We need to have an education system which encourages more critical analysis, particularly for the next generation of procurement practitioners. We need practitioners who can look at comparative research and evidence, identify weaknesses and then take an informed view - we need procurement practitioners skilled in critical analysis, particularly in the area of supplier appraisal.

Let me give you an example. I recently had sight of a supplier appraisal which considered suppliers past performance. References were requested. Assuming the supplier was able to provide three reference sites of delivering similar work, they passed!  No effort seemed to be expended in validating the references. Reliable and robust evidence?

While I used to think asking a supplier for three references sites was a nonsense, based on the assumption that no one would be daft enough to provide a bad reference site. That was until I came across a supplier who did just that and was surprised when in the debriefing I fed back the bad reference. But how can we be sure a past customer doesn't bare some sort of grudge and disproportionately reflects the poor elements of what the supplier thought was an excellent service. Reliable and robust?

My view is that we need to ask for a comprehensive list of all the similar contracts provided, over say  three years, including their values.  Then, subject to the risk associated with the procurement, select a  random sample and interview those who can speak with authority on the past performance. It may not be completely robust but it is significantly better than the 'Mr Men' approach some practice.

Of course one of the easiest ways of improving supplier appraisal is having good historical records of the quality of service your own organisation has received in the past. Time and time again i have seen poor past performance being overlooked and only 'remembered' when Tender responses are received. Organisational memory has a role here as has easily accessible and reliable records. Here too we find a bizarre example from the Education Secretary, who, in his evidence to Wednesday's Common's Education Committee, advocated a radical new approach to ''O' levels' which replaces the existing A, B, C, etc. grades with a numerical system. An 'A* grade' would therefore be spilt to become 'Grades 1 and 2, 'A grade' would be spilt to become 3 and 4, etc.  We would also see greater focus on end of course exams and the demise of coursework. By gove, isn't that the system under which my own 'O levels' operated in 1973? If only we had really good history lessons things may be improved - no, I don't mean in the education system, I mean in supplier appraisal.

No cause for celebration at PASC Procurement Inquiry

It's rare for me not to be interested in a discussion on procurement but I'm afraid Monday's PASC Procurement Inquiry even turned me off. It lacked any sense of enthusiasm or ambition. Instead it had a sense of resignation and despondency.  I left the discussion with a complete absence of confidence in the change management process.

What can you say about a discussion which starts off with the change champion saying procurement reform is not ambitious enough, hasn't done what was set out in current plans, ... is old fashioned, long, expensive, mitigating against small and younger businesses, .... From there it was downhill all the way, including the usual mantra of a lack of skills and lack of any serious contract management. Inspirational - not at all. Encouraging - no. Belief in the change - no.

The glimmer of hope in a potential single source 'closed loop contract' for recycled paper which would lead to a new paper mill had the potential for celebration - but stakeholder ownership hasn't been gained. Senior mandarins are considered partially to blame, yet we were also told "when people really want it to happen it can and does". Personally I would have liked someone to have asked how long that contract lock-in will be and what protection will be in place to protect against long-term supplier power?

Then we heard about reducing the cost of sending out giro cheques, yet no one asked why are giro cheques being sent out at all as opposed to BACS payments?

Procurement reform appears to be aspirational as opposed to performance managed - so all the lessons from Michael Barber's unit seem to have been forgotten!

I could go on, but the most disheartening message, to me, was the assertion that the "primary objective through procurement is getting the goods and services needed by the citizens at the best price". With a message like that is it any wonder there is inertia.

Road repairs Taskforce needs to improve stakeholder engagement satnav

I was mystified this morning, watching Sky Breakfast, when I heard a key member of a new Taskforce to help reduce the cost and disruption of roads repairs had only heard of their membership when a Sky Researcher contacted them yesterday. That beggars belief and makes you wonder how engaged those who set up the Taskforce want stakeholders to be and how open they are to new ideas.

It's not really that big a surprise that so much money is spent making our roads roadworthy when you think of the impact of heavy vehicles, floods and frosts, and the absence of a joined-up approach to utilities. When money is tight, as it is for most councils, what should have been lower long-term planned preventative maintenance frequently shifts to more expensive and less effective short-term reactive repairs.

But the Taskforce focus is to be on the cost and disruption of the utilities companies who have little incentive to focus on long-term cost effective repairs - sub-contract on lowest price, complete the job and get away asap.

Apparently councils have spent £435m over the last two years and 20% of the repairs carried out last year were not of a sufficient quality.  I assume that leads to rework and additional road damage and more claims against councils. Perhaps the Taskforce should ask how the councils can more effectively set and manage a basic quality standard of the repairs based on long-term cost, including performance of the repair over a specified period.

So, one of the key Taskforce members, a representative from the contractors association, stated on Sky that they first heard of their membership from Sky. That's not a good omen. But, given that contractors are involved in the Taskforce, and this is about cost reduction, whole life costs, specification, and contract management - has the contribution of procurement expertise to this discussion even been recognised and are CIPS represented, at the minute that's not easy to establish from the websites!

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!

Scepticism is a procurement virtue

We all hold up Harvard, home of the HBR, as having a reliable voice worth listening to. That's where Michael Porter's 5 Forces, value chain and so much of procurement's basic academic theory derives from.  Yet we have now discovered that two of its esteemed professors, who influenced UK austerity strategy, got it wrong in their research. Fortunatelty one of student, Thomas Herndon, a PhD candidate (pictured), had the sense to question their data.

There is a not insignificant problem though in that the Chancellor may relied on Reinhart and Rogoff's flawed evidence which told him what he wanted to hear about austerity strategy, even though it has now been proved wrong.  But Osborne is not alone in being gullible.

We have also learnt that a key influencer in childcare policy was feted yet without much testing of his credentials.

Then we have the health nightmare unfolding in Wales as a result of the nonsense propagated by the now discredited Dr Andrew Wakefield over the dangers of MMR vaccinations. Many of the population, including the Lancet proved gullible.

That's not to mention the £50m spent on fake bomb detectors.

Is there not something which suggests that when you get someone who is coming up with a 'flat earth theory' you maybe should test a bit more, after all is that not what the scientific method is all about. The   student who have the bravery and tenacity to challenge the findings of the two Harvard professors was not welcomed with open arms but has been proved right.

As procurement professionals perhaps we also need to be bravery, more tenacious and sceptical.

Two examples of what I mean in terms of procurement: I recently critiqued a bid and found 25 assumptions stated by the bidder - when the buying organisation were challenged on the assumptions I found that raised a hare in terms of readiness to accept the bid without being contractually open to additional costs and risks. Secondly, some 20 years ago, I was asked to review a recommendation for a tender award a few hours before it was to be recommended to councillors for acceptance. I received many cynical looks when I strayed beyond my 'look at the process' remit and revealed that the 'numbers just didn't add up'. Of course the "specialist consultants couldn't be wrong" - well actually, sorry, they were wrong.

We should use the low risk option of questioning validity in procurement more often - all we need is to be more sceptical and recognise that scepticism can really add value.

So, why is it so difficult to be a sceptic? Isn't scepticism a procurement virtue?  

Jeremy Hunt's recommendations for procurement improvement

On the 26 March the Heath Secretary outlined his response to the Francis Report; the investigation into healthcare failings at Mid Staffs. I have been watching some of the NHS discussions and, in parallel, following the Public Administration Select Committee (PASC) Inquiry into Public Procurement. As I listened to the discussions on the Francis Report I had a vision of Bernard Jenkin (Chair of PASC) having had coffee with the Health Secretary and each accidentally leaving with the others papers. Just to clarify, I wondered what would have happened had suggested improvements for the health service been transferred across as recommendations for public procurement improvement.

First a caveat, I am not in any way trying to undermine or trivialise the significance of the horrors experienced by patients and their families at Mid Staffs, but merely exploring transferability of the proposed NHS improvements to public procurement. PASC will need to come up with something significant in the light of the conflicting evidence their Inquiry uncovered and decades of inertia, while CIPS has long argued that the procurement profession should be viewed as an equal of other professions. Now I pose the question: "Is what's good for the goose, good for the gander?".

Let's consider the Health Secretary's rationale for a response as an example of what I mean:

"Actions that must ensure [public procurement] is what every [procurement] professional and [citizen] wants - a service that is true to [government] values, that puts [citizens] first, and treats [it's users and the market] with dignity, respect and [professionalism]." 

Hopefully the above provides a feel for this blog, so let's see what you think?

It is recognised there is a need for culture change in the NHS. It is also inconceivable that PASC will not agree there is a need for culture change in the light of the evidence they considered. While the NHS needs to ensure a culture of 'patients first' is embedded, public procurement, I would suggest, needs to get on top of implementing policy, reducing costs, managing risk, working more strategically and collectively across silos, and with perhaps a little more honesty and humility.

I applaud the government for recognising mistakes happen in healthcare and there is a need to learn from those mistakes while fostering a culture of managed risk. Is it not true that public sector has too high a level of risk aversion embedded within its culture. Public procurement needs to also accept that mistakes happen and yet proactively encourage more innovation through prototype procurements. I think the current NHS system of explaining risks to patients prior to an operation is good but I have very, very rarely seen anything remotely similar applied in public procurement - why is that acceptable?

Global Manufacturing Festival talks Procurement Strategy

Thursday's Global Manufacturing Festival was not the place to be if you think procurement is about 'lowest price wins'. That's where Andrew Miller MP, Chair of the Science and Technology Select Committee (the sort of person you would expect to be able to do quite big sums) weighed in to the current debate on the role of UK public procurement. I don't think Miller was invited to give evidence to the Public Administration Select Committee inquiry into procurement, but it would be interesting to have his views expressed.

Miller argues that the government needs to be "more holistic" in procurement strategy and take into account strategic economic benefits such as job creation, skills and tax income:

They've got to also take into account whether procuring from a foreign company genuinely produces overall better value for money or whether if you take into account the potential tax revenues, people in employment, the re-skilling of people that come through having high value jobs, whether sometimes they ought to give greater priority to British companies.

That's not the voice of a mere a lone critic but, to me, an echo of Heseltine's definition of public procurement:

The simple answer is to secure value for money for the public purse. Who can argue with that? The problem is that it is often equated with short term, lowest cost procurement which ignores the issues about the country’s industrial base – the exploitation of R&D, the skills we need and the creation of jobs. It also ignores international practice. No country of which I have any knowledge takes so simple a view. Although crucial in major policy areas such as defence or aerospace, the same issues are everyday challenges for ministers whether they are placing contracts for high speed trains or new IT systems. We are concerned about the destiny of our manufacturing sector but we do not spend enough time exploring the ways government can work to support it.

While PASC deliberate on the role of public procurement and one of the Chancellor's allies, IMF commander-in-chief Christine Lagarde, tells George Osborne his austerity strategy isn't working, I wonder are we starting to reach the tipping point which moves political procurement from cost cutting to value adding. Pursuit of wider procurement policy objectives would be healthy. However, the reality is that cost cutting, economic and social benefits, and sourcing from non-British firms are not mutually exclusive, yet, narrow-minded jingoism is unlikely to deliver long-term benefit if other countries follow suit. Equally, you have to consider what would have been the impact on the UK economy if it were not for foreign owned hotel chains, car manufacturers, steel companies, IT companies, communications network providers, banks, newspapers, and even teabag providers.

I've procured quite a bit of sponsorship in the past.  There's something ironic about criticising sponsors when they're paying the bills, therefore it would have been interesting to have been a fly on the wall when the sponsors of the Global Manufacturing Festival heard that non-British companies were persona non grata!

Perhaps it will fall on procurement policy makers to inject reality and pragmatism into the debate.

N.B. I confess that although the views expressed in this blog are my own, I work for an Indian organisation which employs over 50,000 in the UK.

Government Purchasing and The Iron Lady

Peter Smith and David Smith highlighted that Margaret Thatcher was an early champion of change in UK public sector procurement. The report she requested in 1984, Government Purchasing, was a real landmark. 

You may recognise that we have spent quite a bit of time recently discussing the Public Administration Select Committee's current Inquiry into Public Procurement. There is a strange irony, which I suspect some may have missed, that the father of Bernard Jenkin (the PASC Committee's Chair), Patrick Jenkin was a Minister in Thatcher's Cabinet when Government Purchasing was published. 

Another Minister in Thatcher's 1984 Cabinet was Michael Heseltine,  Michael Heseltine has continued to demonstrate an interest in procurement as a political tool, and his voice on procurement is still listened to in the corridors of power as was evidenced by the recommendations set out in his October 2012 report being generally accepted in the March 2013 budget.   

So it appears timely and appropriate to reflect on what Government Purchasing said in 1984. Perhaps those messages were part of Bernard Jenkin's early induction into the world of public procurement. Equally so, we can ask ourselves about the progress made in the 29 years since the report's publication given 'the Iron Lady's' focus and determination. 

Purchasing objectives

What are the national strategic objectives of procurement?

We all know that a strategy is forward looking and circumstances sometimes justify a change of direction. The general idea though is that you are consistent in your logic and what you are trying to achieve, your objectives.

Today’s raft of announcements from George Osborne suggests the Treasury haven’t yet read that chapter of the strategy book though.

Mr Osborne holds the view that those with vested interests always complain, with depressing predictable outrage, about every change in a system which is failing. According to the Chancellor “They want to take the cowardly way out, let debt rise and rise and just dump the costs on to our children”. That’s his view on those concerned about welfare reform. 

Yet, if we were to substitute ‘environment’ for ‘debt’ there seems to be some inconsistency. Does the Chancellor really want to bow to pressure groups and pass the costs of negative environmental impact on to our children?  While the Chancellor won’t bow to pressure of lobby groups on welfare reform, he does appear happy to bow to those pressure groups with vested interests who want more road traffic – haven’t the UK made major global commitments to reduce the UK carbon footprint? Has it now been decided that carbon footprint reduction is no longer an objective?

We find that decisions about investment in road infrastructure, which were rejected in 2010 and some rejected 10 years ago, have been revived. We will have £1bn investment to get us back on the road to recovery through investment in roads. It looks very like we know that vehicles aren’t good for the environment and we’re merely passing the environmental costs on to our children, and we know some of the road schemes will drive through the centre of environmentally sensitive areas, but that appears okay now. Unlike those lobby groups arguing unpalatable messages against welfare reform, it certainly appears that a lobby group’s report, which was also being conveniently published today, supporting road investment has had some bearing on the Chancellor’s U-turn.

While the Chancellor hopes that the investment will help stimulate economic recovery why did he not adopt the policy when he took the reins of our economic strategy?

Separately the Chancellor has also argued today that the new Prudential Regulation Authority must learn the lessons from the past. I previously suggested we could learn from Australia’s response to the GFC by putting in place the approval schemes necessary to have major projects ready ‘to go’ – clearly that advice wasn’t heeded.

Public procurement meets super-hero comics

He spoke but mere mortals couldn't see him. He spoke our language but used new words - he spoke FIST. We could see Bernard Jenkin nervous and deferential, here was a man who talked of toy hovercrafts, the fastest computers, bombers, fighter jets, and nuclear submarines. He took risks but gave examples of delivery at half the cost in half the time. He had the Public Administration Select Committee talking about super-hero comics as a procurement change management tool. It was 18 March 2013. It was the 5th session of the Public Administration Select Committee Inquiry into procurement. This was a new way. This was a new day. It was the day Lt Col Dan Ward USAF came to town - or rather it was the day he gave evidence by video link.

So what is 'FIST'? It is an acronym for "a pattern of thinking": Fast, Inexpensive, Simple, Tiny. It is concerned with reducing complexity in the procurement process and specifications.

Asked why, in his experience, procurements fail he provided three simple answers:

1. Engineering mistakes;
2. Communication failures; and
3. Management failures.

Adopting FIST and breaking bigger projects into much smaller chunks didn't removed the risk of failure, but it means the failures are smaller and identified earlier with less impact.

He provided a wonderful example of a threshold for cancellation being included in a contract, so that once the threshold of 15% was exceeded everyone knew the contract was cancelled - simple but effective.

He also referred to the culture of rewarding success with bigger and bigger budgets with a simple solution, "okay you did really well, now let's see what you can do with half the budget". 

So, how do super-hero comics come into the story? Well Lt. Col. Dan Ward USAF was asked how he managed to get his message across - he adopted change management principles and as part of his communications wrote super-hero comic books. Yes, simple but effective.

This was an impressive evidence session and I think it is a useful education resource. I recommend watching the session as part of your own personal development, and yes, you will be able to watch the Committee reading comic strips too. It's in two parts accessible here and then here.

I am clear that this will not be the last we've heard of FIST and rightly so.

The full transcript of meeting can be accessed here