Can we have the best of both worlds — independence and procurement co-operation?

There is major change going on in UK public procurement. But before all you non-public sector readers run a mile, I want to highlight an issue facing that sector that also has implications for any procurement professional in any organization.

We are seeing a major drive to centralize commodity procurement across the larger central Government Departments (Defense, Foreign and Home Offices, Work and Pensions and so on). Meanwhile, the Office of Government Commerce, based in Treasury (the Finance Ministry) is being moved (in part at least) to the "Cabinet Office," a Department reporting to the Prime Minister that seems to be accumulating significant power. The CEO of OGC has announced he is leaving in September, and there is much uncertainty amongst the several hundred staff as to what this all means for government procurement. Meanwhile, attempts are being made to negotiate significant cost savings with major suppliers to government; of course, our biggest suppliers are great British firms such as IBM, Hewlett-Packard, Fujitsu, and Siemens. They clearly have the best interests of the UK economy at heart, so I'm sure they will happily give up most of their margin to help us in our time of economic need...*

But I wanted to focus on local Government and the "wider public sector," as we call it -- local authorities (town, City, county councils), schools, colleges, police forces and hospitals. They spend in total four or five times more than central Government, so really this is where the battle for greater procurement value will be won or lost. And that is where the issue of wider note is emerging.

The new Coalition government is promoting a strategy of devolvement in government. Schools are being encouraged to in effect become independent of the State; many hospitals have already gone down the same route and more will do so. We may even have independent elected Police Commissioners. And central government will interfere less in local councils and government generally.

But at the same time, Eric Pickles, the relevant Minister, is looking for; "A renewed and concerted focus on better procurement, greater transparency and increased collaboration that puts the emphasis on productivity above processes can further reduce duplication and unnecessary costs."

So can you get more co-operation and collaboration across organizations that you are strategically encouraging to become more independent and innovative? Is it possible to get a corporate, collaborative approach in some areas, such as procurement, while encouraging the same organizations to become almost competitive with each other more generally?

This is an issue for all organizations. I was always taught that procurement strategy had to follow organizational strategy. And a good friend of mine left a huge global CPO job last year because he tried to push an organization with a very decentralized, independent style into a more structured and governed procurement strategy.

So can the UK public sector get the best of both worlds? Dynamic, independent schools, councils and hospitals that nonetheless come together and drive co-operative procurement? We will see.

* Irony alert

Peter Smith

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