Ben Goldacre demolishes “procurement savings” claims

Ben Goldacre is a hero. He's a  "best-selling author, broadcaster, medical doctor and academic who specialises in unpicking dodgy scientific claims from drug companies, newspapers, government reports, PR people and quacks". His book, Bad Science, is great, and he starred in the recent Uncaged Monkeys tour (which we saw in Basingstoke) and the award-winning BBC Radio 4 series 'the Infinite Monkey Cage'.

In the Guardian last week, he turned his analytical view onto our area of interest -  a new report from Opera Solutions, a spend analytics and consulting firm, which suggests that local authorities could save 20% - or £10 billion -  from better procurement. This was picked up by the Mail and Express newspapers, who reported it as more evidence of councils' incompetence.

And what was this huge saving based on? Spend analysis across three categories of spend (mobile phones, solicitors and energy) in three local authorities. Based on this huge sample, and without any real analysis provided in the report,  Opera reckoned that councils could save 20% on mobile phones. Then, as Goldacre describes;

Opera ... cheerfully applies this magic 20% from the tiny mobile phone spend to the entire local government procurement budget of £50bn, magicking up £10bn of savings, £452 a year for every one of us.And even before that astonishing, shameless bait and switch, these figures are all presented out of nowhere. There is no working at all for any single saving, no description of how 10% or even 20% was calculated.

All this analysis occupies one page of the Opera report -  the other 5 pages is a sales pitch for their spend analysis / cost reduction service, which looks pretty standard, and shows no particualr understanding of public sector issues.

But, looking at it as a procurement person, the analysis is probably even worse then Goldacre says. For instance, there is no discussion of different specifications in the report. As we all know "solicitors" as a category in an AP report can cover anything from £50 an hour transactional work to several times that for QC advice on a sensitive child care case. Energy prices may differ because contracts were let at different times in a volatile market. The mobile phone tariffs may well cover different service levels or contractual conditions. There's no evidence anything like that has been considered - simply taking unit price differences and then extrapolating all the way up to £50 billion of expenditure is just ridiculous.

I don't know Opera, and this has probably blown my chances of them ever signing up as a sponsor, but this is not going to do them any good with the people who are presumably their target market. I suppose they're testing the theory that "no publicity is bad publicity".

And then there's Eric Pickles reaction. We stay out of politics here, but my goodness, this is testing my resolve. There's a whole page on the report on the DCLG website here, including a description of the report as "cutting edge analysis", and Pickles saying this.

" Let there be no doubt whatsoever - today's figures show that there is significant scope for councils to make taxpayers' money work even harder".

"No doubt whatsoever" - based on this dubious analysis?  He's obviously keen to get councils looking for savings, and that's quite correct, and indeed we all know there are some savings to be had from better procurement in EVERY organisation, public or private.  But you might expect him to apply just a little more analytical judgement before he sounds off.  We  expect sensationalism from the Daily Mail, but we would hope for considered analysis from a Cabinet Minister, and indeed from his Department.

Sometimes, I despair...

Voices (6)

  1. Dean O'Brien:

    What all these authors and commenters are missing is that the White Paper released by Opera is an advertisement of services. It isn’t a full rigorous analysis rather it is a hypothetical, FREE suggestion of possible services which the company hopes to provide. It is not meant to be a rigorous analysis. This is how all of consulting works. Every firm produces reports like this. That is why as Mr. Goldacre notes, the remaining four pages of the White Paper are an advertisement of Opera’s services.

    1. Peter Smith:

      I agree – I don’t think Opera have exactly helped themselves, but it is their perogative to market themsleves however they see fit, and you’re quite right in that everyone in the consulting world does this sort of thing (although I do think an Accenture or KPMG might have been more rigorous in their approach!) What really shocked me was DCLG and the Minister issuing their statement supporting the findings. That just seemed inappropriate given the weakness of the analysis.

  2. Rob:

    Hilarious. Where you have cleverly ‘joined up the dots’ (for our amusement), Pickles has clearly been ‘painting by numbers’ (for our amusement). They must have seen him coming. Having said that, having seen Pickles, everyone sees him coming.

  3. Philip Hoult:

    Hi Peter,

    Good post. Funnily enough, I wrote about the Opera report last week as well but specifically about the legal services element. Here’s my take:
    http://localgovernmentlawyer.co.uk/index.php?option=com_myblog&show=is-buying-legal-services-just-like-buying-a-tin-of-beans.html&Itemid=111

    All the best.

    Phil

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