Were procurement voices heard at Bristol's European Green Capital?

I'm sure it will have escaped many of you that Bristol was the European Green Capital in 2015. The Times have just revelled some of the £12m of procurement's involved:

• £37,000 wiring a tree with a sound and light system activated by falling beechnuts, only to discover that it was predictably going to be a lean year for beechnuts; 
• £49,200 creating an artificial fog over footbridge;
• £84,000 for life size wicker sculpture of whales;
• £5,000 for a guest speaker;
• £3,800 for pies provided to guests at a launch party;
• £25,00 for a 'happy cities' survey;
• £6,000 for a circus group;
• £18,000 for use of 'Shaun the sheep' image on promotional materials;
• £1,000 a month for a press-cuttings service.

Now let's assume that proper procurement policies were in place and processes complied with - although we know that often 'arms length' bodies feel they are beyond that.  Let's also assume that there was some benchmarking to ensure that the various deals represented good value for money.

The previous Mayor of Bristol claims the year was a "massive success". Unsurprisingly, others don't agree but is that criticism justified? There must have been a strategy for the year and that should have drilled down to the various event components - those responsible for governance had a responsibility to ensure that was scrutinised and justified and not just 'rubber stamped'. It would have been good if that plan had been published and consulted upon as that would have deflected some of the later criticisms.

It would also have been good if the initiative were subjected to an independent outcome assessment - that would have demonstrated the economic and environmental benefits gained - the ratio of cost to benefits.

As with so many of these types of initiatives money was pooled from various big funders: £1m from the City Council to pump-prime, and that brought a further £7m from the government £3m-£4m from the private sector.  I actually know nothing about the governance structure which was put in place, but to me, Bristol City Council probably came out on top. However, I would like to have seen a pro-rata allocation of influence at the governance table based on the funding provided - those funders had real 'skin in the game' and needed to be clear these were procurements they had confidence in as opposed to rubber stamping, of worse, giving without control. I wonder how many procurement voices were heard at that table?

A new twist on Make/Buy for the NHS - how to avoid the latest drugs rip-off?

I was very late getting to today's Times but when I did get round to reading it I was fascinated to find a procurement story dominating the news: "'Extortionate' prices add £260m to the NHS drug bill". I won't try to explain the whole story but in a nutshell it appears there's a loophole in the NHS purchasing policy which has created a 'get rich quick' opening for a few entrepreneurs.  The opportunity is linked with the selling of patents which are bought from the big pharmaceuticals by comparatively small, clever,  opportunistic entrepreneurs, who are then able to harvest excessive profits from the NHS, etc.  For example, here's one price trend provided by The Times:

For more than five years the NHS in England paid pharmacists £3.77 for a 28-pack 25mg tablets and £5.71 for a packet of 50mg tablets. In July 2014, under [one of the firms using the strategy], the price suddenly increased to £24 and £48 a packet respectively. Eight months later both prices doubled. Eight months after that, last November, they almost doubled again, this time rising to £97 fro a 25mg pack and £154 for a 50mg packet.

The Times suggest that this, perfectly legal practice, is costing the NHS an extra £262m a year for over 50 drugs! When NHS budgets have been unsustainable for a few years it seems odd that the Times uncovered this as opposed to the NHS - what's been happening there with benchmarking prices, procurement strategy and category management?

Now, it would be easy to throw stones at the NHS but I wondered what I would recommend if I was involved in NHS procurement. Of course I have no inside knowledge of what is actually going on but I think I would start with:

1. Exploring why such price increases have been justified and accepted?
2. Clarifying why the market isn't working effectively?
3. Ensuring prescribers only name the drugs in question when absolutely no other alternative is available - pharmacists will have a part to play here? 
4. Exploring the feasibility of a new model of patenting, and agreement to purchase, with the major pharmaceuticals which ensured that the NHS had first refusal on a transfer of some patents?
5. Establishing why the NHS, WHO or even the EU couldn't intervene and take on role which the entrepreneurs have - clearly the business case evidence is there?

It does strike me this is another variation of the make/buy decision.  Yes, I appreciate that what I'm suggesting may well be contrary to the prevailing political philosophy but when the money is running out of the NHS 'piggy-bank' surely all options need to be explored.

The risk of unshared service at Whitehall

Few will be surprised at the failure of the Whitehall Shared Service, set up in 2013, to deliver its anticipated savings.  I remember when first being asked to give a view on the tender document saying the major risk would be getting sufficient buy-in from the departments to deliver the benefits.  Sure enough, only two departments have now adopted the 'shared service', four others having dropped out along the way.  You can read the NAO report but, to me, for the initiative to be a success there needed to be leadership, risk management, change management, technical capability of the provider and programme management.  I'm sure the Major Projects regime will have its own view - let's face it the MPA must have to provide some accountability for delivery.

1. Leadership: who was/is leading this initiative providing a compelling agrument to ensure and the potential user departments stay the journey?
2. Risk management: How were the risks accessed and managed, particuluarly the risk of failing to deliver the business case, failure to have sufficient confidence in the new solution to shift from the old systems, failure to gain ownership of the departments, and more, to grow the number of users, failure to ensure the provider will sufficient income to 'stay the distance'?
3. Change management: I fear that like so many of these projects the emphasis will have been on the technical solution and as a result the 'people aspects' will have been sidelined - these initiatives are never just a technical solution, there will be people who need to want to shift to the new ways of working.
4. Does it work: Of course the technology has to do  what it is supposed to better than the 'old ways' but it also has to remain current and reflect the speed to innovation in technology.

Now those politically and managerially responsible need to have a response plan. Can they learn the lessons, salvage the relationships with those who have 'dropped out' and still make the investment deliver its projected benefits?  For the rest of us we can only learn.

Dominant power & lethal injection procurement

Back in 2013 I discussed the problems Texas was facing with its death penalty regime due to a supplier no longer wanting to supply. Today there are reports that there are no longer any legal supplies of the drugs at all in USA, after Pfzer, the last remaining supplier, decided to cut supply.

This is a remarkable example of how dominant power impacts on procurement.  While few would doubt the USA has massive buyer power collectively over markets, in this case, the USA have discovered that dominant power can also be with the supplier.

Like yesterday's posting, on Archaeologists, this is another clear example of a bottleneck item. It is also an interesting example of the difficulties which can be faced in finding substitutes.

For want of an archaeologist ...

I love it when I find a new example of a Bottleneck item - those purchases which are often comparatively low price but of critical importance.  Today's Times yielded one such example which I'm not sure many would have thought of: archaeologists!

UK politicians have made a lot of noise about the need for more housebuilding. In parallel, the HS2 is quite possibly the biggest, and most politically sensitive infrastructure project for some time, for example, it's 350 miles long - you can read more of my observations on its procurement here. The financial cost of each of these initiatives is enormous and logically delays will add to cost and have a negative impact on delivery of the business case.  Politicians accountable for delivery will understandably be a bit sensitive too.

However, before work can actually commence on site there is a requirement in the UK for an archaeological investigation.  The estimated demand for archaeologists means that an additional 25% of these 'Indiana Jones' types are required.

I'm sure you can see where this is going - what's the lead-time to get an archaeologist with the necessary skills trained, was the supply pipeline of archaeologists created in sufficient time, has enough attention been given to attract students to pursue archaeology, how much had been budgeted for the premium costs which may now need to be paid for this scarce resource, has the Home Office thought through the potential visa implications for non-EU citizens who may be required? You get the feel for the procurement, project and programme management risks?

Somebody tell me that this has all been previously risk assessed and mitigated. Do I sense an 'In The Thick of It' moment?  Perhaps. as they used to say of procurement, this is Archaeology's opportunity - but hopefully not at Procurement's expense.

Anti-Corruption Summit - Is Afghanistan's Procurement Strategy right for others?

Linked to today's Anti-Corruption summit in London, the Prime Minister's Office have published 'Against Corruption: A Collection of Essays.  One of the essays, by Afghanistan's President, specifically addresses procurement.

In that essay President Ghani argues that a failure of individual and institutional accountability is at the heart of corruption; that is compounded by fragmented institutions. The panacea, to Ghani, is strong political leadership:

In fragmented systems, only strong, national political leadership can tackle corruption at its roots. This is because only the top leadership can look across the different areas and ministries where corruption happens, in order to provide an effective agenda for reform. By demonstrating top commitment through positive action, even fragmented systems can build coalition with internal and external reformers.

 Ghani reports that public procurement in Afghanistan suffers from:

• bid rigging, including, bids received from non-existent companies; 
• buyers sharing cost estimates 'for a fee'; 
• conflicts of interest in the decision making process; 
• coercion of bidders to alter or withdraw competitive bids;  
• specifying for sole supply; 
• acceptance of deliveries which are not of the specified quality.

Let's be honest, these are not problems unique to Afghanistan, nor the public sector alone - they are common in many businesses throughout the world and few can be sure they are completely immune or risk free. 

The Afghan strategy to combat the above is "formation of a National Procurement Council (NPC) to review all high-value contracts and the consolidation of construction contracts through two specialised agencies."  The National Procurement Council is chaired by the President himself!  This overseeing is claimed to have saved $350m in the first year.  Ironically we are told though that punishment of those guilty of corruption in procurement has been almost negligible. 

No-one could deny that public procurement in Afghanistan has become a 'top table' issue and I congratulate the President on his commitment.  However, I do question the strategy: 

1. Responding to institutional corruption through concentrating oversight on a few at the top table, or even two 'centralised buying bodies' is well meaning but the Brazilian President's current predicament may be worth considering and learning from?  What if corruption is at the top?  Perhaps Afghanistan could consider what risk management approach is applied and how there can be independent scrutiny of 'the executive'?
2. I also think it is naive to think all procurement can be addressed or policed by 'the few'.
3. I don't actually believe fragmentation of governance is a cause, in fact, the tiered government system of the UK between Central, Devolved and local government may serve as a useful demonstration that it is not. Local democratic accountability may well provide part of the solution.
4. Ghani implies a culture change is required - how is that actually being addressed and managed?
5. Simplifying, standardising and automation of procurement processes, led by the Top, is an essential part of the solution, but that has to include clearly defined segregation of duties. That is not referred to by Ghani but perhaps is on the agenda.  
6. The procurement systems need to be fit for purpose, make compliance easy and abuse hard - better use of eProcurement tools can spread the load and enable the NPC to focus where it is necessary.
7. I didn't see any mention in the essay of the performance management structure, given that personal accountability is identified as part of the solution. I think that should be addressed otherwise rhetoric and an essay will be the only legacy.
8. Ghani has implied that the consequences of being caught need to be addressed; I would argue that unless the risks, penalties and probability of being caught outweigh the potential rewards of fraud, bribery and corruption, the Afghan strategy is merely chasing the wind and unlikely to succeed.

I am genuinely impressed that Ghani has been prepared to lead the reform of procurement in Afghanistan, and I wish him well, I look forward to hearing of progress in a few years time. Hold on, what are the plans to review the effectiveness of his strategy?

Design & delivery of a compelling 'Stay In' public information leaflet without shooting client in the foot

Next week we are told every household in the UK will start to receive a copy of a public information leaflet setting out 'Why the Government believes that voting to remain in the European Union is the best decision for the UK'.  We are told the leaflet has cost £9m, including the cost of packaging and delivery (Production: £458,500; Print and delivery: £5.947m; Digital promotion and website: £2.894m).

The initiative is proving, unsurprisingly, to be politically toxic but there are interesting procurement issues too - so if I were the CPO asked to have handled this procurement exercise here's some of the questions I would have asked:

1. Have we processes in place to comply with the EU Regs?
2. I assume the business case has been agreed, risk assessed and approved?
3. Has the 'do nothing' option or leave to the 'Stay in' campaign been fully evaluated?
4. Do we let one contract for design, one for print, one for packaging, one for delivery, and one over-arching contract?
5. The budget is separate for 'production' and 'print and delivery', what do we mean by 'production' - is that 'design'?
6. The design appears to include every other page as a colour picture, given that this is primarily about 'facts' will the additional pages of print and costs directly associated with the pictures be justified?
7. Has an equality impact assessment been completed on the design?
8. Are those with special needs accommodated?
9. Is there any risk that the potential suppliers could subsequently prove to be an embarrassment to the initiative? 
10. Which elements of the work can be used to showcase UK businesses, SME's and the community sector?
11. Which elements of the work could be delivered by UK businesses, SME's and the community sector?
12. What quality of paper is required, would cheaper quality match our needs?
13. Given that this initiative is being led by the Environment Secretary, will the paper and inks used reflect our aspired environmental credentials?
14. What are the alternative avenues for distribution which can be subjected to an options appraisal, for example, do we use Royal Mail or its competitors, community sector, local government refuse collection operatives (some may say that would cut out the middle man for many householders and go straight to the bin)?;
15. Given the Government Digital Strategy, the target audiences, and the Environment Secretary leadership, would a 'soft copy' and making use of social media perhaps be worth exploring more before pursuing a print dominant route?
16. Will there be costs incurred if householders pursue a 'return to sender' protest and have they been factored in?
17. Are you sure this initiative is not something we may live to regret?

Almost echoing my suggestions for reducing the cost of organising the Queen's Birthday celebrations, a letter in today's Times must ring alarm bells for those concerned with stewardship of the public purse:

Sir, I doubt I am the only director of a creative agency who would be more than happy to design a 16-page glossy brochure, edit and proofread it, for less than one tenth of the £500,000 of taxpayers' money mentioned in your report.

EDEN PHILLIPS, CEO, Edenco Creative