Francis Maude – an open letter about government procurement (there goes the knighthood..)

Dear Minister

The debate around further centralisation of Whitehall procurement is, I understand, coming to a head. As someone with experience of both public and private sector procurement, as a procurement director, consultant, writer and analyst, I wanted to lay out my thoughts about that issue in the context  of future Whitehall procurement.

No-one is arguing that every Department should be letting their own stationery contracts. The push for greater collaboration around a range of common spend categories over the last three years has been a positive move, I believe.

But the proposals now being discussed seem to suggest a move to a fully mandated situation, perhaps stripping out procurement and contract management capability from departments. Central procurement might also  move into categories and contracts that go beyond those initial common spend areas.

I would argue that this is risky and is unlikely to bring clear benefits, for these reasons.

1.  There is no clear evidence that economies of scale apply beyond a certain point, a point which large departments can reach on their own anyway. It is unlikely that more centralisation will drive these benefits, and indeed, economies of scale can become dis-economies at a certain point.

2.  To move more responsibility to GPS (Government Procurement Service) requires that organisation to have the capability to carry out the work better than the departments. Whilst GPS has that in some areas (energy comes to mind) it is not true across the board. And the departure of David Shields adds an element of risk here, particularly if he is followed out by other senior managers, which is a real risk I fear.  (If you have not talked to Shields personally since he resigned, I would urge you to do so and get his perspective on this).

3.  Taking decision making authority and management control away from departments brings real issues of accountability. If departments have no say in choosing suppliers, or are not responsible for managing key contracts, there will be a lack of clear accountability and a diffusion of responsibility between those departments and Cabinet Office.  You have been rightly vocal about your desire for civil servants to be more accountable – this will work directly against that aim.

4. I suspect you are being told that departments are simply being obstructive for reasons of personal power amongst their procurement people - “turkeys don’t vote for Christmas”. But in the case of four of the biggest departments, the procurement director is likely to retire in the next 18 months or less. Their objections to further centralisation are based on experience rather than preserving their own jobs or power – the easy thing for them to do frankly would be to sit back and take their redundancy packages. With the greatest of respect to your Cabinet Office staff, you have considerably less senior level procurement experience in your team than that which resides in the departmental professional leads, who are rightly concerned about developments.

The prize from all of this change is unclear, and the risk to fundamental principles of departmental accountability is great.  The uncertainty is also beginning to have a corrosive effect on morale in government procurement generally, and there is a real danger of much of the good work you have overseen in the last three years being undone.

GPS has significantly increased its “market share” over the last three years, including with the wider public sector (that positive development  is also being put at real risk by the current uncertainty). So  I would suggest you continue on that successful track, and don’t ask GPS to over-reach itself. Focus on improving government procurement in its widest sense (and there is still plenty to do), rather than pursuing what seems to be an overly strong focus on centralisation for centralisation’s sake.

I would be happy to discuss further; as a citizen, taxpayer and life-long procurement professional my only interest is in public procurement doing the best possible job it can on behalf of all of us.

Yours faithfully

Peter Smith

MA, FCIPS, and Past President, Chartered Institute of Purchasing and Supply

Voices (5)

  1. Barry Coidan:

    Does no one remember the Property Services Agency?

  2. Clark Kent:

    The other unwritten rule being dont try and write and proof read blog comments whilst walking through a busy street and trying to look where you are going. You’re not the multitasker you think you are.

  3. Clark Kent:

    I always got the feeling that low morale argument never worked because the unwritten rule when morale drops it’s a sign your heading in that direction with your change initiative. Otherwise, points well made.

  4. Dave Orr:

    Bill- Brilliantly written “Cabinet letter”. So satirical, that it could be the “real thing”!

    Maintaining Bill’s high standard of cynical realism – Will this be about privatising Gov procurement and the centralisation is necessary to make the offering attractive enough for the tender to outsource it.?

    Or another GoCo a la MoD?

    Yet again, we risk the poachers running the pheasant shoot instead of the gamekeeper (whom you employ in your interest, you silly people)…..

    Still, the commercial model is clearly better “sans doubt” – just look at privatised UK rail – 30% more costly (subsidy & fares) than other European rail networks, whilst punctuality is 23% lower.

    Anyway, who needs specialist knowledge for particular departments, when it is all just “buying stuff”?

    Stick in a big ERP like SAP and off you jolly well go, whilst claiming (without any empirical evidence) that “economies of scale” will sort it all out.

    And I managed not to mention IBM, Southwest One or Somerset….nor did I draw your attention to http://spendmatters.co.uk/the-southwest-one-story-part-4-from-hubris-to-high-court-almost/

  5. Bill Atthetill:

    Dear Peter,

    Thank you for your open letter which, in embracing the transparency agenda, I welcome. Below you will find a response which, I hope, will dispel any fears and, indeed, any rumours, in respect of the journey upon which we have embarked in Cabinet Office.

    The strategy we are taking forward isn’t really a strategy, as such, but, in my view, it is an ideology, a philosophy – a firm belief – based upon what have been told by all those who have come to us, and whom we met recently, from the private sector. Of course, it makes sense to source common goods and services across Government once, but we want to go well beyond stationery into more complex categories, such as office products.

    I openly acknowledge that the new Crown Representatives were chosen for their track records as senior, strategic, heavy-weight negotiators, but I want to be transparent about the process here; at £500 per day for a two-day week, they represent excellent value-for-money. These individuals are extremely impressive, and you will note from their profiles on LinkedIn, that it is clear that their experiences and skills are far in advance of those found anywhere within the procurement profession. We refer to these individuals in a special way: we call them ‘commercial’. Hence, you will have noted that I have been persistent in using the phrase ‘from the commercial sector’. It is our intention for this interim, part-time team to become the foundation stone to a new, permanent model.

    So, let me be clear. We are not centralising procurement. We are, in fact, creating a new central commercial group called the ‘Crown Commercial Service’ and procurement doesn’t feature anywhere within the proposed operating model, which we have yet to develop. Notably, nor does ‘commissioning’ which, I am told, is just another procurement process, but one where you have to ask real people (sometimes taxpayers, I understand) what they actually want. (Why, I ask you, would you want to that? Many colleagues who have been through the Commissioning Academy are asking themselves the same question.) We all know of course, as I am sure you know, that real people don’t really know what they want, and we wouldn’t want to know what they really want, because, if we did, we wouldn’t know how to deliver it, though we would want to know how much it was going to cost. And I want to do everything possible to avoid any procurements going through competitive dialogue – at any cost.

    We have not told anyone about our plans because we are still developing them, and I recognise that this must be frustrating for the entire procurement community who remain unsighted on what we are actually planning to do. I must also acknowledge that the negative response from some Departments is something we didn’t plan on. I will ask the new team, once we have recruited them, to develop a plan for this, and one which informs the procurement community across wider Government on what the new team will actually be doing when they are in post and why commercial is so different to procurement. This has always been my plan.

    Finally, let me reassure you, all Departments will be accountable for what we negotiate with our key suppliers on their behalf in terms of current and future commercial arrangements. We will, of course, be managing the contracts because, as you will know from your own career in the commercial sector, this is a core skill of commercial people.

    I hope this is helpful to you and your readers.

    Yours sincerely
    ???

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