IACCM CEO Cummins discusses government waste due to poor contract management

Posted on October 14, 2010

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Inefficiencies in public spending are a result of the lack of defined practices for managing supply contracts and relationships, according to IACCM, a leading authority on contract and commercial management.

The recent review of UK public finances by Sir Philip Green highlighted what the Topshop owner called ‘shocking’ spending processes, claiming that no business could survive the level of waste from the £191bn of spending he reviewed.

According to IACCM CEO, Tim Cummins, “as the complexity and volume of public sector procurements has grown, the organisation and procedures to manage them has lagged far behind and, in many cases, the investment in new procurement practices and external consultants have directly undermined success and value for money.”

With the government planning significant cuts in spending, the efficiency of managing contracts and suppliers will also need to be improved in order to fill the nation’s budget deficit, said Mr Cummins.

Several previous reports have also revealed that public sector agencies are ineffective at managing contracts and suppliers, such as The Economist (August 2009) and National Audit Office reviews. These reports suggest that the public sector lacks most of the necessary ‘best practice’ capabilities and behaviours, a finding which is supported by numerous top suppliers and reflected in the unwillingness of Government departments to collaborate.

There is a carefully researched set of defined practices that organisations need to follow if they are to be successful at managing their supply contracts and relationships”, said Mr Cummins. “Whareas the private sector took steps to raise its competency by investing heavily in skills and resources to shape and manage these contracts, government sought to escape the problem by pushing responsibility for success onto consultants and suppliers.”

The above excerpt from Tim Cummins Commitment Matters post pulls no punches in condemning the apparent abdication of responsibility that has marred the inefficiencies in UK public sector procurement policy and practice.

As I will be participating in a SSON-moderated roundtable discussion on Monday regarding this very subject, I thought that throwing my proverbial hat into the discussion ring as a lead up to the show was probably warranted.  After all, public sector procurement has been in my wheelhouse of experience and expertise for many years.

In fact just yesterday, in a post here in the Procurement Insights Blog titled “Why does the press always confuse malfeasance with incompetence?” I talk about the less than enviable track record private sector expertise has delivered in terms of public sector eProcurement initiatives.

With the exception of initiatives such as the Commonwealth of Virginia’s eVA and the eProcurement Scotl@nd programs, successes in the public sector have been few and far between.

There are of course many reasons including the almost blind adherence to the New Public Management (NPM) concept of the late nineties in which there was an assumption that the private sector somehow had an insiders view as to what did and did not work from a process efficiency and automation standpoint.  My recently re-released white paper “SAP: A Propensity For Failure” gives credible testimony to the fact that private sector success, or the lack thereof runs almost parallel to that of the public sector.  In fact I have often made reference to the comments of a senior executive from Colgate-Palmolive who after my keynote at a conference expressed her belief that the only difference between failure in the private sector versus failure in the public sector is that when a company like her’s misses the mark (as they had with their Ariba launch), they are not likely to end up on the front page of the daily newspaper.

Truer words have never been spoken of course as 85% of all initiatives in both the public and private sectors fail to deliver the promised results.  Once again, refer to the SAP paper for specific examples including the recounting of a  colossal misstep by wannabe leading integrator Hewlett-Packard.  Or as one Red Monk analyst so cuttingly put it, if HP couldn’t successfully install SAP in their own company, why would anyone hire them to implement SAP in theirs.

Needless to say, Monday’s SSON roundtable should be both lively and informative so make certain you tune in at either 8:00 AM EST or, if across the pond, 1:00 PM London time.

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