A confused vision of public procurement from Michael Heseltine

Last week saw the publication of the report from Michael Heseltine “No Stone Unturned: In Pursuit of Growth”, looking at how the UK can boost economic growth.

It’s worth a read – it is something of a scattergun of 89 recommendations and ideas, some good, some interesting, some bordering on the barmy.  Heseltine is a funny mixture – he believes in localism, yet it is a sort of centrally imposed, top-down, bureaucrat-driven, statist localism. He believes in government intervention in many ways, yet he also wants individual cities and regions to become more independent and powerful, with stronger local economies. I’m far from being an extreme free-marketer myself, yet I can’t quite see how those two factors align.

And actually, there is a nice illustration of this in some muddled thinking on procurement.  I groaned when I saw this in the report.

“Recently I saw a prime example of government procurement not working. It is a simple one, indeed one that will make many people laugh, such is the absurdity. But it says a lot about the way departments approach the buying of goods and services through complicated framework contracts.  The Taxpayers’ Alliance recently assessed the amount different departments were paying for A4 paper. Compared to the cheapest – the Department of Health, which paid £8.93 per box of paper – most other departments were spending over £2 more per box. In a wonderful irony, it was the Business Department which they said was shelling out the most – £12.43 a box….

Efforts to centralise the purchasing of office essentials through the Government Procurement Service do not seem to be working. Departments do not have to opt in to the scheme and even if they do opt in, they can still purchase items on an individual basis at their own discretion”.

Where do I start? Firstly, we know that pretty much every cost comparison made by anyone with an axe to grind is flawed – see the Philip Green report. Apples with apples comparators are just very hard to do. But if Heseltine wants more local independence and power, how does that stack up with imposing central, national procurement deals on everybody? Some diversity in pricing is inevitable if you want diversity and innovation in supply.

Then there's the usual bugbear for us in procurement -  a leading figure in an important report associating what we do in the profession with buying copier paper. (To be fair to Heseltine, even our own professional leaders make that mistake at times).

And very fundamentally, if he wants money to flow to local economies, why not get rid of national procurement deals? Push local or regional deals with more small, innovative local suppliers.  But no. He wants national standards, backed up by law:

"Recommendation 37: The Cabinet Office should place a general duty on all public bodies, setting out the procurement standards to which they should adhere, by providing a pan-government procurement strategy, legislating if necessary".

We could make a case in either direction, to be honest, when it comes to centralised, top down government procurement approaches. The best and most considered argument I’ve seen in favour is the Jon Hughes /Marc  Day report from a year ago - subtle as well, rather than simplistically centralizing.  But my point is you can’t take both sides of the argument at the same time I’m afraid. A top-down, centralised approach to procurement just won’t help the regional cause.

On the more positive side (maybe) for procurement, he thinks every government department should have a Board level CPO (hooray!) and that they should be paid more (hooray!) Here’s more from the report.

“Those responsible for large procurements in the private sector are typically paid more than three times the salary of senior civil servants. I am not recommending massive salary increases for civil servants. But in the short term there is an overwhelming need to bring in private sector expertise at competitive rates to fill the most senior levels of public sector procurement. Given the scale of government procurement each year, the benefits this will bring will far outweigh the costs.

Recommendation 36: Every government department should recruit a Chief Procurement Officer at competitive market rates, reporting direct to the permanent secretary, to lead the procurement and delivery of major projects and improve the capabilities of their procurement cadre. The department’s Non-Executives should approve the selection process and appointments.

 Sounds great, but.. we’ll come back to this one another day. The exam question is  - do we really believe that if we paid more for government CPOs, we would get significantly better people?

And we’ll also come back to the Heseltine report later this week and look at some of his other procurement related ideas.

Visit our new search4 procurement jobs site for the best in procurement and supply chain vacancies!

 

Voices (5)

  1. On the Sidelines:

    Here is a central government attempt herding sourcing and buying decisions
    http://gcloud.civilservice.gov.uk/cloudstore/
    If anyone can figure out a way of using this to buy something – anything then please let me know.

  2. eSourcingSensei:

    Peter

    A personal experience comment:
    I was approached for a role in Gov Procurement – the role was exciting and I knew why I was being asked because they simply wanted my eSourcing experience to assist what they were doing, and I would have been keen to do something with them – BUT when it got to the level of pay – they offered £32.5k!!!!!!!!!!!!!! Around 50% under my previous salary.
    Sadly we were so far away on expectations discussions ended.
    I do not think myself as a greedy person given what I believe I have to offer but, are we amazed they do not hang on to good people – they cannot even attract them into the midle management positions (clearly this was not a top role)
    So amending their pay scale policy I would say was fairly important and not just at the top of the tree if they want to either retain or bring in good quality Procurement specialists
    Sensei

  3. Dan:

    “Recommendation 37: The Cabinet Office should place a general duty on all public bodies, setting out the procurement standards to which they should adhere, by providing a pan-government procurement strategy, legislating if necessary.”

    1. The government tried something like this before:
    http://www.communities.gov.uk/publications/localgovernment/nationalprocurementstrategy

    2. It ignores the fact that local authorities are accountable to the local electorate, not central government. What kind of localism ignores this?

  4. Sam Unkim:

    Would we get significantly better people? Maybe

    Would we get retain better people? Definitely !!

    Have a browse through Linkedin, at just how many of the purchasing consultants, are actually ex-public sector

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