Planning for uncertainty

We've previously highlighted the problems encountered when a procurement takes place on the assumption that planning permission will be granted and then the approval isn't received. Money is wasted as a result of a poor risk management.

Given that history, I would have hoped that there would be a wariness of being too presumptuous of the planning approval process.

So, if you were going to take over one landmark, listed, art deco building which has survived the worse of the Belfast blitz and the bombing campaign of 'The Troubles', you may be cautious of assuming a clean run in the planning approval process. Yet, in Belfast, it is alleged Tesco have started to demolish internal walls of such a building prior to receiving planning approval. I may be risk averse, but to me that is a risk too far unless there is a real business case which demonstrates the expected benefits of earlier completion outweigh the potential costs which will be incurred if approval isn't received.

Tesco are so often held up as exemplary yet they also seem to have a remarkably high percentage of procurements which have not been exemplar.  Is it that they are prepared to sail very close to the wind or are they just caviller?

Suggestions from China on combating construction fraud

It's not often I refer to Chinese authors, indeed I think this is a first. Deng, Wang, Zhang, Huang and Cui have published an interesting paper in the latest issue of Public Money and Management which discusses fraud risk in public construction projects in China.

You may not think that recommendations from China are transferable, yet I have been asked about how to combat construction fraud in a number of countries which really struggle with corruption and fraud in construction procurement - amazingly those asking the questions seem to ask the question in private and expect a one-line, off the cuff answer. The recommendations of the authors may help those facing that challenge so I thought they were worth sharing:

Can CIPS licence learn from Labour's Licence to Teach

The Shadow Education Secretary has an aspiration for the introduction of a 'licence to practice' for all
teachers. The idea is that teachers would have their lessons peers-assessed and have to demonstrate they are up to date with the latest material. The peer assessment would then lead to licensing which in turn would require re-licencing every five years.

It would be the responsibility of the employers (schools) to provide the training but for teachers to make use of it. Fail to gain the licence and the teacher is 'struck-off' and banned from teaching - perhaps a bit strange in those situations where there is a shortage of teachers anyway. There are no suggestions as to what would happen if so many teachers are 'struck-off' that schools can no longer provide education, equally no suggestions as to how JobCentres would handle 'struck-off' teachers. There is some suggestion that the unions aren't happy with the proposals which may itself lead CIPS (our union, I suppose) to ask why?

I'm sure many see the advocating of a Licence to Teach as justification for the introduction of the proposed CIPS licence which I have previously discussed. Perhaps CIPS may even be considering this a part of their recommendations for the next government.

However, it is worth considering some aspects of the proposed Licence to Teach:

Horsemeat scandal: a healthy outcome for procurement

I have discussed the horsemeat scandal  on many, many, many occasions but today's 'I' carries a interesting report of calls for a Food Crime Unit as a response to scandal.

Professor Elliot also advocated that food fraud needed to become an item on company risk registers. His view is that:

Any particular incidents of suspected food fraud that are happening should be reported to the board. What we don't want are chief executives saying "I knew nothing about this". 

The call for a Food Crime Unit is interesting but surely inconsistent with traditional Conservative philosophy of interference with markets. But wouldn't a Crime Unit be responding after crimes had been committed, wouldn't it make much more sense to improve the robustness of food quality assurance and supply chain management? Is it really likely that the current coalition would invest in the setting up of such a Unit?

However, Professor Elliot is right about the need for food fraud to be included on company risk registers, but not just when a fraud is suspected but as a risk which has the potential to materialise in the future, is regularly monitored and reported on.

CEO's need to be reassured that effective risk management systems are in place for all procurements and managed at the appropriate level.

If the risk registers of any of the major food retailers had not identified food fraud as a risk prior to 'Horsegate' then there have to be questions asked about competence and negligence. But if food fraud was not on the risk registers, what else has been missed, for example, what about the health and safety of clothing manufacturers?

But having said that, what about the other procurement story today on the MoD's decision invite bids from only two suppliers for Logistics Commodities Service Transformation, it would be fascinating to the mitigation plans on that risk register particularly in the light of the lessons learnt from the failed GOCO procurement.

One thing that Horesegate has highlighted is that food procurement risk management systems failed. The real questions we need answers to are why it failed and what steps are being taken to correct those failures - if it is a basic as including food fraud on risk registers then shame on the industry and we shouldn't be remotely surprised when Horsegate2 arrives. 

Whistleblowing for procurement

I think we all recognise the benefits that whistleblowing can bring. We've seen it lead to the
exposure of NHS failures, police manipulation of figures, and exposure of public sector contract failures. If I am correct, whistle-blowing polices are being presented as one of the key strategies in the fight against fraud, bribery and corruption, but they are also largely inward focusing and fall short of boundary spanning buyer/seller issues.http://www.actionfraud.police.uk/node/262

But when serious questions are, in parallel, being asked about the role major contractors to the public sector is it time to come up with something more substantial?

I would like to see contractual obligations which put in place a mechanism for contractors to provide a 'whistle-blower' line to the buyer's head of risk management for any contractor staff to whistle-blow on contract abuse or procurement fraud and corruption.

Of course such an approach may be cumbersome on a contract by contract basis and may only be justified for the biggest contracts. However, many are familiar with the work of Crimestoppers, a charity which enables anonymous reporting of crime. Perhaps what we need is a Crimestoppers type service for procurement, it could be jointly funded by the CBI and the Government and be a national service.

Having said that, we do have Action Fraud but when I look at the procurement fraud section I struggle to see how it ties in with the types of procurement fraud we are most familiar with. Let's be honest, if you were aware of a fraud would you think of Action Fraud? I doubt it.

No, I think we need to recognise fraud is unlikely to pass us by, improve Action Fraud to make it more procurement specific, and, embed in contracts an obligation for contractors to raise awareness of procurement fraud and widely raise awareness of that procurement fraud should be reported and how.

Bad Pharma, data manipulation & procurement inquiries

Richard Bacon MP, a member of the Public Accounts Committee, gave a very good interview on the Today programme this morning. I have listened to Bacon during various PAC procurement related inquiries and have always been impressed - to me he grasps key procurement issues very quickly and provides excellent scrutiny and probing. 

Although he did make reference to the NHS being a monopoly buyer, his interview wasn't about procurement but the publication of clinical research, or more specifically, the problems of drug companies withholding information which doesn't suit their vested commercial interests. I discussed some of these issues in my review of Ben Goldacre's Bad Pharma. 

However, he made a number of comments which are particularly relevant to procurement, for example, stating that "The whole point of scientific research is that you take all the data ..." because cherry-picking and just using research which suits your vested interests distorts the truth and leads to false impressions. 

I would like PAC to reflect on that when they consider procurement evidence too.

What do you do in a lawyers' market?

I have often said that Procurement's biggest risk is that no one wants to supply. Now MoJ are faced with a variation of that very problem as barristers opt not to provide services under the new legal aid arrangements - quite simply barristers are saying, "at that rate, no thanks". This isn't remotely new, indeed I predicted as much last July.

There is little point in assuming, as a buyer, that rates are too high and that you are no longer going to pay, if you haven't ensured someone will supply, at what you to consider to be, a more reasonable rate. It appears as if the negotiating power isn't with MoJ at the moment but with the legal profession. So who will climb down?

The costs incurred through not being able to ensure a fair trial due to lack of legal representation will have an impact on the justice system, the costs of delayed court cases will have to be borne somewhere in the system, and then there's the question of whether or not the government have the courage to take on the legal profession claiming they are acting as a cartel?

The stand-off with the barristers can't be seen in isolation though; couldn't the medical profession try a variation of the same ploy in negotiating their contracts?

The big question is 'can the buyers break the market' or reconstruct it in their favour, say, for example, contracting with advocates from other EU countries, or does the English legal system prohibit such freedom of movement to English courts?

This is more than a test of wills, it strikes at the very core of austerity and the notion of being a preferred customer. When suppliers have a choice of who to sell to, who would expect them to opt for contracts which just don't suit them.