IACCM Conference – Gender Parity and Extracting Maximum Value from Deals

iaccmLast week we reported on the IACCM annual conference Day 1 and Day 2 at the very English Hurlingham Club Putney (croquest lawns pictured). Today we’ve rounded up more of the event highlights from the first day.

I attended the Women in Contracting Networking Lunch (an optional luchtime venue), with the subtitle: “Companies with more women at the top outperform others. So why are there so few women leaders?” I’d never attended one of these before, and discovered that one of the advantages of attending these events is that you get to sit down to eat your lunch – and wonderful food it was too! Rebecca Hill, Strategic Project Lead Ernst & Young, gave a short speech about gender parity at executive level -- if we carry on along the present path, we will have to wait 80 years to reach it. EY set up Women Fast Forward, designed to speed up that time.

And a quick plug for the 30% Club: a global group of business leaders committed to achieving better gender balance at all levels of organisations. In the year ended February 2012, 27% of FTSE 100 and 25% of FTSE 250 board appointments were female – in the six months ended September 2014, these figures rose to 33% and 31% respectively – whilst work remains to be done to increase the numbers of women appointed to executive positions, this is a significant shift in the momentum of change. There is no charge for membership, just a commitment from people with a common drive.

Talking of brilliant women in senior positions, the after-lunch presentation came from Sally Collier, CEO, Crown Commercial Services, in the form of an on-stage interview. The theme was “emulating UK Government commercial reform to extract maximum value from any deal.” As I said in our first post on the event, the public sector was rather under-represented, when Sally asked how many public sector professionals were in the room, two people put their hands up!

Driven by the impact of austerity measures, many organisations are now recognising the limitations of ‘price-only’ cost reduction, and seeing the importance of both the beginning and execution phases of a deal, and are placing greater emphasis on advancing commercial capability. Sally explained why ‘Commercial Reform’ matters across the public sector. With a total annual spend of £732 billion and an income of £648 billion (2014), the UK Government, being clever, could see that the sums didn’t add up. It decided to establish a commercial strategy to reduce spending at all stages of a contract’s life.

CCS’s job is to merge the Government Procurement Service with other commercial teams from the Cabinet Office and central government departments to work across the public sector in pre- and post-contract activity to extract maximum value, so it is at the heart of the transformation. Sally summed the job up as “we buy directly, offer an advisory service, and deliver policy, with the purpose of saving tax-payer money.”

One example of the savings so far is, of the £230 billion of public money spent on goods and services in 2013/14, £40 billion is in central government, and through better commercial practices, £5.4 billion of that has been saved. CCS has made recommendations that are now being rolled out throughout government. They work on the premise that most value comes from focusing on more SME involvement, people capability and talent, and procurement process. They now have 500 contracts under management. Sally had some great slides to support her, and they can be downloaded in full from the IACCM website.

Sally was asked:

What should we expect from suppliers?” Answer – To recognise that it’s not just about taking more off the bottom line. We do want suppliers to make profit, but it's not just about saving excessive amounts, what we want is ethical standards and open book accounting.

What are you doing about capability improvement?” Answer – We are responsible for public money. We should be able to recruit the best. We are now recruiting contract managers – people who are good at extracting value. We are also looking at recognising and leveraging the talent in internal people, people with good judgement and commercial acumen. The trick is – how do we test for that?

How valuable has the "Mystery Shopper" initiative been? Answer - It's been a brilliant, success -- since I set it up myself! The Mystery Shopper scheme allows suppliers to report tenders they did not understand or instances of what they believe to be poor procurement practice. The government uses this information to help challenge procurers to be more transparent and open. The scheme publishes the results of investigations every two weeks, to help improve procurement practices. It's become an easy route for suppliers to have a say, whether good or bad. We have a small team who take the calls, and 80 percent of them have led to a change being made (ie a call has resulted in a process or agreement change). So that's pretty successful.

Have you noticed a shift in the types of complaint? Answer - yes, we had a lot of pre-qualification-type questions at the beginning - like 'why do you need this or that?' That has shifted more towards strategy-related questions, like 'why have you structured it like this?' Suppliers get a lot out of it.

Is the public sector leading in commercial contracting? How are other countries doing? Answer - Other countries are ahead in some areas (like Estonia in eProcurement and cycle time to contract in Germany), but we are trying to spearhead commercial contracting in Europe. We have implemented some new EU directives early (14 months' ahead in some cases) and have introduced lots of advantages for SMEs -- a lot of what we are driving and learning will be relevant for the private sector too.

In a follow-up newsletter Tim Cummins, CEO IACCM said of UK government policy: “It is an important step for UK government in addressing the critical role of Contract Management in delivering better value outcomes.  IACCM is delighted and proud to be playing a role in improving government contracting and we are looking forward to expanding the programme in the UK and in the many other countries where we operate.”

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