Improving Government Procurement – NAO report out today

The new National Audit Office report  “Improving Government Procurement” is out today. It looks at the progress of the UK’s  Cabinet Office and Government Procurement Service (GPS) led procurement programme, and the point that will probably grab the wider headlines is that still less than half the expenditure across Whitehall on common categories is collaborative.

The Cabinet Office will have to lead a major cultural shift across government if the centralising of buying goods and services is to deliver the significant benefits on offer.

"There are signs of real progress, but the success of the reforms cannot depend on whether departments choose to cooperate. Departments must commit as much of their procurement expenditure as possible to central contracts and the Government Procurement Service must be held accountable for its performance."

The NAO identifies a fundamental issue with the programme for collaboration on the major category spend areas – the lack of a true mandate. As they say, either, “the Cabinet Office will need to create more effective levers, or it will have to win 'hearts and minds', and demonstrate that it has the capability and capacity to deliver a high-quality central procurement function”.

It’s hard to see that the accountability of Departments and Permanent Secretaries can be over-ridden just in the procurement area (and nowhere else), so it feels like the hearts and minds option is the way forward.

The report identifies positives – clearer responsibility at the centre, and a better grip on expenditure, for instance – and the NAO “expresses confidence in the Service’s reported savings of £426 million in 2011-12 as a result of reductions in price owing to centralised procurement”.

But GPS also comes in for some flak, with “departments raising concerns about the inconsistency of contract management and the quality of customer service. While departments need to make compromises and adapt to a more standardised approach, there are cases where the central contracts do not meet departments' operational needs, in part due to a lack of consultation when developing the specifications”.

I suspect some of that may be true but may relate more to historical contracts and behaviour – as we’ve said before, this isn’t easy to deliver, but my observation is that David Shields and his senior team have made positive strides in the last couple of years in exactly these sort of areas. And it shows just how important stakeholder management is in complex procurement programmes, and few are as complex as this.

As well as the collaboration efforts, the goal to increase spend with smaller suppliers (SMEs) is considered – progress is slow there, and I was pleased to see NAO comment on how “poor quality data on SMEs means that these figures are difficult to verify”. That’s certainly what we’ve found when we looked at that topic.

And there are a number of other surprising points emerging from he report. For instance, the Cabinet Office “does not hold data on levels of procurement staff in departments, or on how numbers have changed in recent years”.  I find that very surprising because I know that the old Office of Government Commerce were collecting that information back in 2008/9 for instance. It does call into question just how seriously the “Chief Procurement Officer “ role is perceived  within Cabinet Office – it’s hard to imagine a CPO in a large Corporate for instance not knowing how many procurement staff there were in the organisation, even if they didn’t all report directly to him / her.

So the NAO had to collect information directly– and found that  “numbers have fallen in procurement departments across government from 3,900 in June 2010 to 3,200 in June 2012 (a fall of 17 per cent), although numbers with formal Chartered Institute of Purchasing and Supply (CIPS) qualifications have increased”. Interesting…

Anyway, at first sight, the report is well worth perusing, with much to think about, and we’ll be giving more detailed comments and analysis next week once we’ve had a chance to take in, digest, assimilate and generally get far too friendly with the report.

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