Francis Maude speaks – is the Minister for Procurement an enemy of procurement ?

The UK parliament Public Administration select Committee last week quizzed Francis Maude, Minister with responsibility for public sector procurement. I was going to do the same as in part 1 (here) and give a detailed commentary, but then we got onto the question of procurement skills in central government, and Maude made a statement that stopped me in my tracks. I listened several times to get his words exactly right.

"Commissioning is about much more than procurement, it is about knowing the market of potential suppliers. Procurement is the relatively narrow and should be very short technical part in the middle and contract management - where we have too few people ... who have confidence and knowledge to engage with the market of suppliers and then have the capability to manage contracts after they have been awarded...."

That is verbatim - I have highlighted the important part. I can't embed the video unfortunately but you can watch it here, with this section at about 17:33 on the clock.

So after 3 years, our Minister thinks procurement is “narrow”, focused apparently on getting a contract let as fast as possible, and it is a “technical” activity. How intensely depressing.

I’ve generally given Maude the benefit of the doubt here because he has got into the detail of procurement in a way no other Minister ever has. But, for whatever reason, rightly or wrongly, the conclusion he seems to have come to is that procurement and “the profession” is pretty insignificant – he certainly doesn’t see it in the way we do.

But it fits with a few other things going on. So centralise common categories (Government Procurement Service) and drive lean procurement, which emphasises speed above all else and of course reduces the resource needed. We’ve seen a huge decline in the numbers of procurement people in government, and now we have general business people (the Crown Commercial Representatives) coming in to lead negotiations, which arguably is a core procurement role. Meanwhile the attempt to upskill procurement professionals is negligible – as evidenced by the appropriation of the Procurement Investment Fund (which was supposed to be used to improve skills) for other purposes.

Now this is totally independent to the question of whether Maude’s strategy is doing the right thing for the country. And his approach may not concern even many of us working in procurement, particularly if you’re not in central government. But putting my procurement trade union hat on, it’s clear now that Maude has been terrible news for “us”, and I do believe there is a knock-on effect in terms of our wider professional credibility, when someone in a position like his takes this line.

Which might also make us question whether the two government CPOs who have worked for Maude have acquiesced in this, or just been unable to get the alternative view across – that procurement is much more than this “narrow and short technical activity”. And it also suggests that the CIPS strategy of positive engagement (and accepting a bit of Maude’s money here and there) has not paid off - it certainly doesn’t look like it. Perhaps it’s time for a fight-back?

Voices (27)

  1. Ian Heptinstall:

    What a great question Life.

    I don’t believe that there is any robust research – for every example where volume aggregation saved money there will be another where placing 10 smaller orders saved money.

    Whilst waiting for someone to research it properly, we should be using our price & cost analysis skills. Where are cost and value added? What are the variable and fixed cost structures of the businesses? Are there marginal cost opportunities? Are there overtrading risks? Who has the scarce resource/skill? What drives cost and innovation – competition or intimacy?….. At least with the answers to these we will have an idea whether big or small is likely to be best, and avoid the dumb buying assumption that it must be better value because I’ve got one big, long-term supplier……

    1. Final Furlong:

      There is a huge evidence-base out there which demonstrates that leverage reaches a plateau in almost every (commodity) model. Beyond leverage, one must introduce and evaluate other differentiators such as ‘service’ above the base or standard (ie global versus local value-add) or innovation (where, for example, IP might make a difference) – recognising there others. So, Central Gov could buy many things ‘once’ from a range of single-source providers, but in most categories or commodities a plateau would be reached (due to scale) and therefore, they would need to, or would want to, introduce competition.

      Anyway, the current strategy isn’t “what’s the most optimum category strategy?” it’s “let’s centralise more to control more” – a case of the tail wagging the dog. (Organise then strategise…)

  2. Dan:

    How procurement used to be:

    1. Client department writes specification.

    2. Client department gives specification to procurement.

    3. Procurement use specification to run a tender exercise that complies with EU regulations.

    4. Procurement hand completed contract back to Client Department.

    5. Client Department manages contract. In theory. Usually doesn’t in reality – a condition known as ‘let and forget’.

    This was obviously not ideal, with procurement having very little knowledge of the procurement beyond the written specification. A great deal of time and money was spent on strategic sourcing and category management to eradicate this ‘disconnect’ between the procurement team and what is being procured.

    How procurement is done now (according to Mr Maude):

    1. Commissioner writes specification.

    2. Commissioner gives specification to procurement.

    3. Procurement use specification to run a tender exercise that complies with EU regulations.

    4. Procurement hand completed contract back to Commissioner.

    5. Commissioner manages contract. In theory.

    What exactly was the point?

    1. life:

      Spot on process flow Dan. All I’d add is a decision point at 1.5 for both – “Decide to go it alone?”. This can then alluringly also very quickly lead to “Buy” -> “End”.

      Your strat sourcing / cat management “time and money” point is also well made. Genuine Question: Is there any independent empirical research available on how much consolidated buying (just that one aspect) actually saves (perhaps treating the claims to internal cost savings separately) across different types of products and services in practice? This sort of evidence is obviously also relevant to the “centralisation or not debate” but there doesn’t seem to be a lot of serious research freely available.

  3. Peter Webb:

    After 25 years in private sector procurement working on a global basis I entered the public sector, working as an interim Head of Procurement, and consulting projects, and I was staggered at the inefficiency that I found on entering, and still there on leaving the public sector 10 years later. The ‘Commissioners’ I worked with often had their head in the clouds, generally over specifying their requirements, refusing to collaborate with other public sector bodies which they were allowed to do as they had their own budget, and seeing ‘Procurement’ as an interfering nuisance in many cases, because we would draw their attention to opportunities they weren’t prepared to take and identify examples from other public sector bodies that often proved they were missing cost reduction opportunities whilst not sacrificing quality and service. I believe billions of pounds are being wasted by the lack of national collaboration on common categories, the national standardisation of specifications meeting all needs at the best value for money being agreed and complied with, and the unwillingness of front line staff to provide the necessary supplier performance data in the required format to allow effective contract management. As a taxpayer I am extremely frustrated at this inefficiency, it is unsustainable and needs to be admitted and dealt with asap.

  4. Paul Wright:

    The good news is that he has recognised Procurement is important, even though he doesn’t really understand it. This is actually a step forward. Given that most of us here (I assume) think that commissioning and contract management DO actually fall into Procurement then he is recognising the need for the roles even if he is mistaken about how best to manage the process. I still think getting rid of OGC was daft, but it is far from my biggest issue with the government. And FM does appear to be more nuanced that Eric “pile it high and we’ll get it cheap” Pickles. I’ll stop now before I get even more political

  5. dan2:

    Slap in the face for the profession – yes.

    However, probably worth just noting that in some govt departments procurement isn’t set up to work as procurement would actually want i.e. the commissioner/budget holder overrules and ignores procurement in favour of delivering on time/quality; with price/contract quality/risk etc coming a distant second. Landing these procurement functions with the commissioner might actually improve things; rather than allowing them to bypass procurement as happens in some (all?) departments.

  6. Doug forbes:

    You have to ask why he thinks that? it is consistent with the Civil Service Reform plan which describes procurement as a support service for Commissioning. If there has been a failure, then what is going to be done about it?

  7. Sam Unkim:

    I always thought it was odd, how heavily, the NHS “Call for Evidence” targetted commissioning !!

    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/152330/dh_134416.pdf.pdf

    For example: Actions at national level in the NHS

    “What specific actions do you think national NHS bodies, such as the NHS National Commissioning Board, need to take to transform procurement across the NHS?

    I had assumed it was just the author doing a simple cut n paste from the remarkably similar “call for innovation”

  8. Dave Orr:

    “Commissioning” is the new cuddly word for “privatisation” or “outsourcing”.

    A few fig leaves of the odd charity or community group staffing a small library, will be dwarfed by the march of big private providers into a whole new swathe of frontline public services.

    Nu Lab used the expression “strategic partnerships” to the same end.

    If it needs a big, complex legal contract then ergo it must be an outsource or privatisation.

    Commissioning is the buzz phrase that Barnet Council have used for a massive outsourcing of public frontline services to Capita.

    New legislation passing through parliament will see “commissioning” groups being used for a massive privatisation of many NHS Services, bringing all the costs of bidding, adjudication, legal challenges, consultants, lawyers and other contingent costs that we have seen in rail.

    Can anyone point to a definition of “commissioning” that is widely accepted as being definitive?

    1. Final Furlong:

      Bill, I think the answer to your question lies in one of your previous comments.

      “In the land of the blind….”

      http://spendmatters.co.uk/francis-maude-at-pasc-select-committee-digs-into-uk-government-procurement/

  9. Feetontheground:

    Very depressing, having come from the private sector I have spent 8 years in a small central government agency. In this time I have moved procurement (for want of a better word!) from being a transactional, order placing function to one where we are engaged from the outset, working up a sourcing strategy with the business function, advising on how to specify and evaluate requirements, order placement and a comprehensive contract management process. The latter has involved designing a supplier management training programme for non specialist staff which has now been devered to 10% of our total employees. We also delivered a very sucessful outsourcing programme with just my in house team.

    Clearly though if I want to get on in Government, I had better sharpen my quill pen and get back to order placement…………

  10. Ian Taylor:

    So is it time now to reinvent the OGC? Things do go around. That’s the Office of Government Commissioning of course. Shame CIPS missed the commissioning boat – and keep missing it.

  11. life:

    It’s obviously not just Francis Maude either – there’s not been a lot of demanding / informed questioning by the PAC throughout this. As pointed out earlier the people that have been brought in Cabinet Office side don’t have the right experience for the stated objectives either – great negotiation skills aren’t necessarily the best fit for what lies beyond the “relatively narrow” sparrow-through-Valhalla-moment that procurement has now somehow become!

    More than the individuals though it’s a systemic thing – when you look at the personal motivations in play it might be easier to be a bit more upbeat, but the skills, resources and shortened timescales involved (plus a few damaged relationships along the way) mean that the opportunity to do anything much more positive has been lost for another few years at least.

  12. PlanBee:

    Why does the public sector need to make things up? Its redefining the role I have done for 30 years out of existence.

    In all those years in the private sector I never came across the word commissioning. Ever, unless it was related to get a new bit of plant working

    And if I had Procurement staff who didnt know the ‘market of potential suppliers, I would consider them incompetent and they would know about it in their appraisal (and long before)

    I havent watched the video, but what he suggests is Procurement is not about specification, market knowledge, negotiation or contracting. It only leaves placing orders…..welcome back to the 1950’s

    1. Dan:

      My personal view is that ‘Commissioning’ is merely procurement for people who think they are above being a procurer.

      1. Thieves Like Us:

        I agree!

      2. Ian Heptinstall:

        Its not just being above being a procurer Dan. The sceptic in me would add that it gives one the right to make it up as you go along (with it not being procurement as such, how can I be accused of not involving you lot?), and also the big brand consultants need to give it a new name to claim they are selling something new.

        After all how can you charge £3K/day to suggest “just do good procurement. Identify & prioritise opportunities, find and select the best suppliers, manage their performance & continuously improve”.

      3. Dan:

        I suspect its more to do with ’empires’ Ian – Procurement is usually the remit of a dedicated team. Any increase in procurment activity will de facto increase the power and influence of the Procurement Team and its manager(s). Whereas, if you invent a new term (such as, lets say, ‘commissioning’), then there is no pre-existing team that can benefit from this change in focus.

  13. Peter Jones:

    Maude could start with a dictionary or this extract from Bristol Council – either way he has a very narrow view

    Commissioning:

    “the process of specifying, se

    curing and monitoring services to meet people’s needs

    at a strategic level. This applies to all se

    rvices, whether they are provided by the

    local authority, NHS, other public agencies, or

    by the private and voluntary sectors”.

    Procurement:

    “the process of acquiring goods, servic

    es and construction projects from

    providers/suppliers and managing these through to the end of the contract or

    disposal of assets. Plus the overarchin

    g activities that corporately maximise

    effectiveness, efficiency and value

    for money from this process.”

  14. Rob Gillingwater:

    It is an unfortunate fact that in the public sector commissioning is seen as separate from procurement and contract management, when in fact they are linked. Contract management is key to sustained delivery of service and value

    Comparison with the commercial sector is clear, Procurement is from concept to contract management to ensure a “commercially practical” supply contract is secured

  15. Bill Atthetill:

    It’s genuinely quite depressing. (Watched the whole video.) His advisers (whomever they may be…but you know who you are…) should be ashamed of themselves upon reflecting that this is the outcome of two years’ intensive, dedicated effort in influencing and shaping the views and opinions of Minister Maude. Why didn’t they just give him a script, saying “stick to this because we need to show all of our 6,000 fellow practitioners out there that you’re the Minister that finally understands our profession, at a time when we need to make a difference…”

    They also need to stop sharing the same ‘example’ – where “we were going to be charged £4m but in the end we only paid £60k to an SME”. Anyway, perhaps it was ‘commissioning’ that made all the difference in their example….

    1. Galen Milne:

      The difference you are making is killing off innovative small business here in the UK as more public spend ends up in hands of multinationals who we don’t even know whether or not they pay their fair share of corporation tax. Consider the alternative PETO model now operating in the NHS. This uses 21st century ecommerce methods that embrace and encourage small innovative companies that will save the NHS and in turn the taxpayer money. Without a vibrant private sector public services will be starved of resource. Look at the bigger socio-economic impact of your tenders and then explain how you think they impact on indigenous businesses?

      1. Bill Atthetill:

        Galen – Peto (or ‘Peto Partners LLP’, to be precise) – this would be the company that is backed by the type of venture capitalists who have become very adept at creating and maintaining ‘tax efficient’ entities? At some stage, they’ll want a return on investment and, if their venture is successful, will sell the company to the type of multinational company you refer.

        Just looked at Peto’s website and can’t find any report or output outlining the positive impact that their solution has made with “small innovative companies” – so I’ve contacted one of these potential companies myself. What I am told is that Peto are charging all small companies for accessing their website and, secondly, they’ve asked (some or all?) Trusts to send out letters to all suppliers (small innovative ones included) to tell them that they can no longer go direct to the Trusts themselves but must go through Peto (and pay the fees)?

  16. Tom Graham:

    Spot on. Francis Maude is still criticising procurement professionals even though by his own admission he doesn’t know how many there are in government and still further doesn’t know what skills they have. GPS are involved in a major land grab exercise at breakneck speed and it is doomed to failure. Not because “mandarins” get in the way, it’s because GPS don’t have the skillsets required to support specialist procurements.

    1. Galen Milne:

      Procurement professionals who follow the mantra of framework agreements are destroying small companies by the barrowload. Unless they face up to the socio-economic impact of their strategies there won’t be enough taxpayers left within the private sector to pay for their their public sector pensions.

      It’s high time you weakened up to the destruction you are causing in all sectors of industries.

      1. Dan:

        Nowt wrong with framework agreements if used correctly.

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