The Public Administration Select Committee is a UK Parliamentary body consisting of about 12 members of Parliament. Select committees are where much of the useful Parliamentary work is done. It has decided to examine government procurement. It is doing this through requesting written evidence from anyone who cares to submit any and through asking people to appear before it to provide verbal evidence and be questioned by members. I was the first witness, appearing with a colleague, Jon Hughes, who runs another consultancy. http://www.parliamentlive.tv/
The focus of much of the questioning was how to structure UK government procurement. I argued in my written and verbal evidence that, whilst the committee was examining just central government procurement, this represented only about 30% of public sector procurement spend and the committee should not ignore the rest.
The committee chair, Bernard Jenkin MP, had read ‘Towards Tesco’, https://www.iod.com/MainWebSite/Resources/Document/policy_article_towards_tesco.pdf a paper that I wrote about 3 years ago and reviewed by Jon Hansen, and got straight into the issue of structure. He then changed tack and focused for a while on ‘leadership’ and its importance. My view is that great ‘leadership’ is often only recognised in hindsight, once results are apparent. My concern is that a focus on ‘leadership’ can result in a cop-out from taking difficult decisions. The session ended with both of us being asked to produce wiring diagrams of how public procurement should be structured.
The hearing seems to have provoked some controversy, in procurement circles at any rate. For example, Peter Smith, who runs the UK end of ‘Spend Matters’ has provided bizarre and, arguably, virulent and personalised criticism as to why an integrated structure will not work. Despite my challenging him, he offered no alternative solution. He also criticised ‘Towards Tesco’, which hopefully will have encouraged more people to read it, but will also have misled people as to what ‘Towards Tesco’ was about. (See also my Guardian Public Leaders Network article and comments http://www.guardian.co.uk/public-leaders-network/2013/jan/31/national-integrated-procurement-silos-commercial ). More importantly, it may increase opposition to the fundamental reform of public sector procurement that is so desperately needed. Advocating change was ever thus.
Despite some examples of excellence and some great collaborative initiatives, the organisation of UK public procurement is far too complex, reflecting the complexity of the public sector and reinforcing silo working. For instance, no-one knows how many people work in public procurement, nor how many organisations there are. That means that no-one knows the cost of managing public sector procurement. Understanding how it works is beyond the capacity of most suppliers, so they don’t engage with it – despite some useful government initiatives to encourage them. That means we may be missing out on some great opportunities for innovation and cost savings. It also means that many supply chains will not be managed effectively, thus creating unnecessary risk.
So what are the principles that I have applied to procurement organisations that I have created or taken over?
- Identify all the factors in the supply chain and within one’s own organisation that create cost and risk and eliminate them. In other words, drastically simplify.
- Identify all the factors that prevent the best use of specialist expertise, best practice and leading edge procurement techniques – and eliminate them. Such factors can include procurement organisations refusing to join up with others, thus preventing the development of long term world class capability.
- Align the organisation’s objectives with those of the organisation within which they sit and those of the government which they serve.
These are the principles of ‘lean’ public procurement. Whilst they don’t provide all the answers, they seem a pretty good place to start.
©Colin M Cram FCIPS