Cameron asks procurement people to take risks. Just how exactly?

On the theme of the recent annnouncements about government procurement and SMEs, here's David Cameron speaking at the Cabinet Office supplier summit last week (as reported by the New Statesman).

"And from the procurement managers in government....the commitment to open up opportunities to new providers including SMEs and voluntary organisations.

I understand your concerns. In the private sector, there's an old adage - no one got sacked for hiring IBM.  Sometimes the big option seems like the safe option.  But I want you to feel empowered.  I want you to know that as long as you follow the right channels, I will stand by you if you take risks with young, new and dynamic companies".

But the problem is, that is not how public procurement and the regulations work.  It is not about subjective assessment of risk and identifying 'young dynamic' organisations to whom we award contracts. It is, rightly or wrongly, about objectively assessing the merits of bids and suppliers and awarding the contract to the 'best' suppleir(s). So the whole concept of taking risks just doesn't, and shouldn't, enter into the process. There may be a little more scope in the case of smaller contracts that don't require the full EU process, but all procurement, whatever the size,  is covered by the EU Treaty principles (fairness, eqaul treatment, transparency etc.). Those principles don't say "unless you like the look of a dynamic SME..."

And of course Cameron caveats that anyway by saying "as long as you follow the right channels". So how is the procurement person supposed to follow the right channels AND take risks?  "This supplier scored 10% less than IBM on our evaluation but they seem like a really nice small company with an interesting approach..."

Will that stand up to scrutiny? And how do we think IBM going to take that when we get the de-brief? It's all fine until;

a. IBM successfully challenge the decision and win a few million in damages

b. The small firm fail spectacularly resulting in a mission-critical service failure, leading to loss of life / loss of political reputation etc

c. We find out the small firm that came third in the bid scoring but was awarded the contract is actually owned by the procurement manager's brother in law / mistress / fellow freemason.

So if it goes wrong, then the retrospective verdict will be that the procurement didn't follow the 'right channels' and the procurement manager will be hung anyway. I suspect the plea that 'David Cameron made me do it' won't carry much weight in the high court when a contract award decision is overturned or an official is sent down for corruption.

This is all very well intentioned, and I know Cameron is speaking with the best of intent. And there are things to do to open up procurement to smaller firms, and other announcements last week were very positive. But talking about procurement people 'taking risks' is not the way to address this. No, Prime Minister.

Voices (6)

  1. bitter and twisted:

    Benefits of randomness:

    http://dilbert.com/strips/comic/1999-03-10/

  2. R:

    Dan, I think that’s a great idea, actually.

    Let’s join forces – I’ll randomly tear out a number of ads from Yellow Pages – but let’s be too random, so, say, from the ‘IT support’ section – and we’ll put them all into a hat. Whomever we pull out of the hat, whether it be “Laptop Angels” (in Staines) or “PC Paramedics” (also in Staines – they’re local to each other and may need to set up a consortia…), then we will, on a single-tender action basis, award them a succession of sub-£100k procurement packages – mission-critical components – of the £16bn NHS Connecting for Health procurement programme.

    To avoid any notion of failing to align to the EU Treaty and its principles of fairness and transparency etc, we’ll repeat the process with using Thomson Local, and a beret (oui?), or a flat-cap, if we’re in Yorkshire.

  3. Dan:

    I can kind of see where he’s going with this.

    Risk isn’t really assessed at the tender stage, but at the PQQ stage. This is where you assess them on financial standing and technical capability (and under the procurement regs, this are pretty much the only things you can use to select them). Technical capacity usually revolves around experience, with those companies with more experience scoring higher.

    These assessment criteria pretty much guarantee that larger companies will be shortlisted and invited to tender – winning work enables them to win more work, leaving new start-ups without much of a chance.

    However, if you don’t use these selection criteria, how do you shortlist? You can’t ask them how they will perform the work, as this is something that can only be assessed at the tender stage.

    The only viable way is to pull names out of a hat – which I think even Cameron would agree is a bit too risky…

  4. R:

    One of your contributors (to a different but related question on PQQs) suggested “sitting down and thinking about it for 15 minutes”, and, taking on board DC’s advice, I took a risk, stood up, and brainstormed for a full 15 seconds, to identify a potential solution for all purchasers. And then it hit me (actually, I tripped over it, and just managed to glance at it, before my head glanced off the door which was being propped open by it). Yellow Pages. It’s full to the brim of local, dynamic suppliers, especially SMEs – pre-categorised into key commodity areas, and, importantly, it contains key information: their names and numbers (sometimes the ads say “phone Maureen now on 0845…”, so you’re already on first name terms from the outset…), addresses (so you can simply drive round to found out if they actually exist during ‘due diligence’, and if you don’t like the look of them, keep on driving…), service level commitments aligned to market-level capability (“we’re just around the corner” with my personal favourite “we’re simply the best”…), and, often, pictures (so you know what you’re buying before you buy it…). Rubbish this concept, if you choose to, but in one government procurement department that I came across (about 10 years ago), Yellow Pages was the first step in their ‘market engagement process’ within their procurement manual, so they were way ahead of the pack. And, If you don’t like the colour yellow, there are other solutions out there like ‘Thomson Local’ which is also freely available. Notably, it’s predominantly blue which, importantly, for me, matches the colour of my eyes.

  5. Alex:

    I remember when collaborative IT hardware eAuctions first got going and local authorities were reluctant to participate because they used Dell and HP, they’d always used Dell and HP, all their IT technicians had dinky little Dell and HP certificates on the wall, and the thought of having to go with any lesser known brand which might win the eAuction (which includes weightings for quality evaluation and lots of other factors) was just unthinkable.

    A few years down the line, many of the same local authorities ARE now using much smaller lesser known brands, have saved 30-40% on their costs through using eAuctions, and have never looked back. But it did take the kind of leap of faith that Cameron is talking about to make it happen.

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