BBC Panorama look at schools technology procurement “fraud”

Panorama on BBC 1 television this week (available here on iPlayer) was intensely depressing for 90% of the programme. It wasn't clear if the particular scam being described was still going on, as the firm that was presented as the main culprit seems to be no more. But basically, UK schools were being ripped off by unscrupulous - possibly even criminal - firms who sell them dodgy leasing deals for computers and photocopiers. Some approach the schools with a free offer of laptops, then fail to deliver and (certainly in one case) then go bust, leaving the school owing a fortune to the banks that stand behind the leasing deal.

The concept of scams around technology leasing deals isn't new. I remember a small firm in the group of which I was CPO getting sucked into a similar deal 20 years ago and paying £100K+ over three years for a £5K photocopier. Like most schools, that firm didn't have a professional procurement person because of their size.

But this is particularly distasteful as it is causing schools to struggle, taking money directly away from children's education. And in some cases Panorama presented, well meaning, if commercially naive, head teachers are losing their jobs and careers after many years of service.

And things may well get worse as English schools are being freed from local authority control, and the central Department is not resourced to provide procurement advice to schools. Conceptually, there's a lot to be said for this freedom, but it does mean schools will be free to make lousy procurement decisions.

What can we learn from this? Well, the devolved strategy of this government will have some negative consequences as well as positive. We don’t see Cabinet Office and the government’s Chief Procurement Officer getting too involved in improving procurement in schools, and I believe the Department of Education is doing less in this area than it did a few years ago.

So if you're a school governor, as I'm sure some of our readers will be, make sure you have some very clear and even draconian rules in place. The delegated authority for even the Head should be very limited, I'd suggest. And if you're a head or teacher yourself, don't sign anything you don't absolutely, fully understand. Remember, your career and reputation are on the line.

Actually, whatever organisation or role you’re in, that’s not a bad rule...

However, the programme finished on a surprisingly positive note. When Panorama approached the banks, they first of all got the normal rubbish from an industry spokesman. Not our problem and all that sort of thing. But then Clydesdale Bank, (owned by National Australia Bank), who had funded some of these dodgy deals, decided that they would write off the debts of all the schools that had been caught out like this!

Let's hope other banks fully suit - and well done Clydesdale for showing that banks can have a heart and a social conscience.

Voices (21)

  1. alan m dransfield:

    You might be right on that Sam and I would love to know why the Old Bills are N OT kicking doors downs at Government level because this type of fraud cannot be be done without INSIDER assistance

  2. alan m dransfield:

    Just HOW BAD is this PFI fraud, that’s the $64k question. Not only schools but there are hospitals,fire,ambulance stations and police stations,etc .
    The debt from these PPP &
    PFI are staggering AND NOT EVEN ON THE NATIONAL DEBT RADAR.

    1. Sam Unkim:

      264 Billion £ question surely ?

  3. alan m dransfield:

    Apparently a new school in Stockport has been built slap bang on top of a landfill site which is STILL releasing 75% gasses. Wouldn’t you think they would at lease try and recapture this gas??!!
    It only a matter of time befor we use body bags at one of the dodgy schools??!!
    I can’t do any more on the matter.My local PA has slapped a lifetime email ban against me,ditto for the HSE, my local MP Ben Bradshaw has REFUSED to meet me at his surgery.
    One of these new 6 PFI schools has had to provide bottled water for 7 years because the tap water was unfit for human consumption??

  4. Clare Munzur:

    It is terrible that anyone would seek to take funding away from children’s education, but what makes it worse is the fact that it is totally avoidable. In late 2011 http://www.openemarketplace.com was launched to make the process of buying goods and services faster, simpler and safer for schools. It provides a single, secure place to access a large community of pre-approved and fully accredited suppliers of goods and services in the UK, on one easy-to-use website. I work for Procserve – the company whose technology is powering OPEN – but just wanted to draw attention to the service as it as it is an effective way for schools to no longer have to deal with door-to-door suppliers, and removes the opportunity for them to be ‘scammed’. Something that no-one can afford to happen today.

  5. Final Furlong:

    What role is GPS playing to address this issue?

    Well, in March 2012, it awarded its new framework contract “Multifunctional Devices and Services, Managed Print Services and Print Audit Services (RM1599)”. http://gps.cabinetoffice.gov.uk/contracts/rm1599

    The most fascinating aspect of this framework is Lot 4: “the provision of an entirely independent vendor neutral print audit service based on the total cost transparency of a customer’s existing printing processes with a further provision for proposed revisions where required. Suppliers will not provide devices or equipment as part of this lot. Suppliers will provide objective and professional advice and surveys for tactical and strategic requirements. All tactical advice will be given in the context of sound strategic direction.” [Try your best not to scratch your head at that last sentence.]

    In Lot 4, there are suppliers who are clearly independent, but here’s a sample of those whose independent status may be slightly questionable….
    – Danwood (kit/solution provider?)
    – Ricoh (kit/solution provider?)
    – Toshiba (kit/solution provider?)
    – DTP Group (kit/solution provider?)
    – Bramble (kit/solution provider?)
    – Altodigital (kit/solution provider? “your office technology partner”)
    – Apogee (kit/solution provider?)
    – M2 Digital (My personal favourite: “….works with the four leading global Multi function and print manufacturers: Ricoh, Canon, HP & Xerox. Its what we call the Magic 4”)
    – etc (there are others….)

    Makes you wonder.

    1. Alan Hale:

      Final Furlong, I couldn`t have put it better myself…you have obviously seen some of the contracts I have seen.

  6. alan m dransfield:

    As I said , the procurement fraud is just the tip of the iceburgh. What the hell do teachers,headmaster and board of governors know about the design,construction and operational phase of multi million pound civil engineering industry. That’s what’s happened over this past 9/10 years,i.e local authority have handed over billion of Capital Funds and said to the school GET ON WITH IT.
    It onLy a matter of time before body bags are used at one of these all sing all dancing schools.??!

  7. Willing to help:

    Have a look at the deals on the links here and schools won’t go far wrong: http://www.education.gov.uk/schools/adminandfinance/procurement

  8. bitter and twisted:

    I suggest, get local 6th formers to do buying as part of buisiness studies. Everybody wins

  9. Clark Kent:

    I’m sure you’re right that some do, Paul. In our area, unfortunately, i have seen a little too much cosiness with suppliers and inertia in areas that are important to schools. Maybe YPO’s reach could spread a bit further across the Pennines.

    1. Paul Smith:

      YPO’s owners include Bolton, Wigan, Knowsley and St Helens councils so we do extend across the Pennines. All schools in the North West are covered.

      I don’t think the issue is one of solutions (there are plenty out there), it is one of communication.
      The move away from local authority influence means that instead of communicating the best way to buy once (to the centre) it is needed at an individual school level. This is difficult when you have Maserati (!) driving salesmen competing for the attention of the decision makers in schools.

  10. Paul Smith:

    Don’t forget there are still some Local Authority owned purcahsing consortia such as our good selves (www.ypo.co.uk)
    No charge to join
    All profits stay in the public sector
    Not only do we get schools a good deal, we are returning over £1.7m to schools this year.
    Our new MFD deal struck in conjunction with our friends at ESPO and GPS is a great example of addressing these very issues.
    😉

  11. alan m dransfield:

    The procurement fraud in UK schools is but the tip of the Iceburgh. There is even BIGGER scam underfoot as we speak,ie. PFI funded schools. For example, my local authority back in 2005 gave 6 PFI schools £400million pounds and allowed them a FREEHAND in the design,construction and operation of these 6 schools.
    I thought teachers got paid to teach not look after Bob the Builder.
    Cowboys contractors have ripped off my Local Authority, Devon County Council (DCC)and we are left with BOONDOOGLE schools, in fact 6 of them.
    I am due to appear before an Upper Tribunal in Nov where the DCC and the ICO are attempting to GAG ME from obtaining FOI data which will prove my allegations that these 6 PFI schools are unsafe and unfit for purpose.
    watch this space.
    The DCC and the HSE have put me on a lifetime email ban since 2008.
    I could be forgiven for thinking I live in a Stalinist state??!!

  12. clark kent:

    £10k to join an eprocurement club is an awful lot of money for a large number of schools. The fact is that the discretionary spend available to schools these days (after 80% of your budget has gone on thimgs like your staff) and i think youd struggle to make a business case when that might make up 5-10% of the money you have to spend on the materials ans services that are required to run the school.
    In my experience, it might be convenient to tie yourself to the local authorires services there is little out there providing competitice tension for local services for schools. School meals is a classic example. Primary choices are buy the LA service or employ a cook yourself. Few schools want to put a chef on their payroll, bit i dount that many are satisfied with anneffective single sourcing arrangement through the local authority either. LA’s are not invcentivised to improve the offering to schools and the schools cant really make a difference themselves. As a consequence the market doesnt rsspond. One start up tried in our area (offering hot food prepared off site and brought in) but the could not (for some reason cover) kids on free school meals as a result the service could only provide for half the kids who wanted to use it. Useless. They went bust. LA’s should have a vested interest in providing competitive services for its users in schools. Currently they do not.

  13. Sam Unkim:

    I have no idea, in this day and age, why schools are even doing their own purchasing.
    Surely a modest fee (10k ? ) to join an on line E-procurement “club” is a no brainer.
    Access to an Web based E-requisition tool with a guarantee of 24 hour turnaround (to order placement) and good budget based reporting are really all thats needed ?

    1. Dan:

      Why are schools doing their own purchasing? I suspect that the answer in at least some cases is “because they can”

      1. Final Furlong:

        Good point Dan.

        But, having watched the programme, it seems that the DoE disbanded the team responsible for providing the day to day support and guidance to schools (ironically, they described it “as part of the cost cutting”).

        Also, there were two common themes to many of the instances of bad or malpractice. Firstly, these weren’t just unscrupulous salesmen, but crooks, who, while presenting perfectly legitimate and lawful contracts, took advantage of some inexperienced buyers (Headteachers), knowing they would shut the companies, leaving the £16m in debt to be picked up by schools. Secondly, these Headteachers had ignored their own governance procedures and had signed these agreements without any sign-off from their own Board of Governors. (Presumably, because these were ‘free’ (no cost) they felt they didn’t need to.) And, as I say, the national team wasn’t around anymore to advise them.

        It was, as Peter said, very depressing, until the end, when Clydesdale demonstrated that they hadn’t lost their moral compass. They should be applauded. But they all need to make sure that it never happens again.

      2. alan m dransfield:

        Dan
        Not only are these schools doing their own procurement, they are doing the BLOODY JOB LOT mate including design,construction and operational phase. This is because of the government cutbacks.What the hell do teachers know about design and build of a £60-80 million school.
        Teachers teach and Bob the Builders Build and drink tea??!!

  14. Paul Wright:

    Peter, we’ve tried to provide some low cost commercial skills training for schools (www.first4schools.co.uk) to try and get some of the necessary tools into schools. Primaries in particular tend not to have a Burser looking after the money. Not a great deal of take up, but we are doing this to help rather than get rich.
    Feel free to delete this if you think it is an advert, but this is the sort of thing we hope to help schools avoid.

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