Might a change of strategic focus for GPS lie behind David Shields’ departure?

Will the departure of David Shields from Government Procurement Service (GPS) help, slow or halt the march to greater centralisation of procurement in UK central government? That's the question fascinating those of us who have either a personal interest or simple curiosity in the machinations of Whitehall politics and procurement politics.

Talking to a few people since he announced his departure last week, I've heard everything from a view that it will make no difference at all, or even that centralisation is likely to accelerate, through to the idea that this marks the high-water mark for the whole centralising concept. And another theory has emerged...

It suggests a recognition in some quarters at least that GPS needs to be more of a service-driven organisation. If it is going to run not just the common spend categories for central government, but take on other work from smaller departments for instance, then it will have to act in some sense like an outsourced procurement services provider. Now that doesn't seem to fit comfortably with the whole mandated approach - we know it is hard to get an organisation that has a monopoly (which is what the mandate would mean here) to focus on customer service.

But it might be part of a longer term strategy. Use the mandate to drive business to GPS, but also work on their service, with a view to ... well, the Cabinet Office has an obvious enthusiasm for JVs and similar private sector partnerships (see the PRINCE2 JV, and the Behavioural Unit proposal). Why not look at something similar for GPS?  If it is going to act as what is effectively an outsourced procurement services provider, then why not use the expertise of a Proxima, Xchanging or Procurian to help - firms who are experienced in running that sort of service? There's nothing particularly secret that GPS do - it would be nowhere near as sensitive as the MOD procurement outsourcing ideas for instance. Now I'm not saying this should happen, but it might be what is going on and actually, it is probably worth considering at least.

But that raises some interesting issues about "contractualising" the service. Most apply equally, we'd suggest, if GPS stays in the public sector and takes on various categories on a mandated basis or if we moved towards an outsource. If Departments must use GPS, here are some questions the procurement heads in those departments need to be asking themselves, and in some cases GPS:

1. What is a mutually agreeable SLA (service level agreement) between GPS and the client departments going to look like?

2. Will GPS guarantee savings to their clients (in the way that Proxima, Xchanging etc. would do with their clients)? Can those savings be baked into the budgets?

3. Or should departments simply transfer their budgets (minus the saving) for the common items to GPS? But then there would have to be very clear agreement as to what GPS will provide in terms of quantity and quality.

4. What sort of “intelligent client” function will the clients need to retain – someone will still have to manage the requirements process, and manage the SLA with GPS.

5. What happens if the next government doesn’t like centralisation (or a JV) and returns the work to the departments?

So, coming back to David Shields. I still believe many of the departmental procurement heads are unhappy about his departure and see it as a negative. But there may be more of a schism here than I first thought, if some are supportive of a more service-focused GPS strategy. It may be that he wasn't perceived as the man to lead a different sort of organisation, or that he himself didn't agree with the proposed approach.

Anyway, interesting times, as they say. We’ll close our musings on Mr. Shields departure – for now at least – and end by wishing very good luck to Sally Collier in her new role.

Voices (4)

  1. 5th Columnist:

    If GPS goes private, even partially, there is no way Departments will cede control to it.

    Doesn’t matter what Francis Maude thinks or ‘mandates’, Departments know the sands are running down on this administration’s time.

  2. Sam Unkim:

    This recent announcement certainly adds credence to you outsourcing hypothesis

    “Procurement bodies agree alliance to increase NHS savings”

    http://www.buildingbetterhealthcare.co.uk/news/article_page/Procurement_bodies_agree_alliance_to_increase_NHS_savings/88502

    Do we take this, that GPS will rely on SBS, for future Health related contracting

    1. Bill Atthetill:

      I’m happy to be corrected, but, having just come off the ‘phone, I am told that the GPS MOU isn’t limited to just SBS, but has been signed (individually) by many, if not all, of the procurement ‘hubs’ in the NHS, including the London Procurement Partnership (LPP). NHS hubs will be ‘remunerated’ for selling GPS frameworks. It would be worth enquiring from which ‘fund’ they will remunerate the hubs (hopefully, not the PIF, or similar, ie diverting it away from the PIF…). Unless my sense of economics has failed me, ultimately, NHS Trusts will pick up the tab for this commercial masterstroke (suppliers build in the ‘margin’ that they must pay to GPS into their final pricing to Trusts). I am also told that the OJEUs being published by LPP are no longer exclusive to London, but are now NHS-wide, cutting across the procurements of all other hubs. London Trusts won’t be charged for using their frameworks (they are already being charged for LPP itself), but those outside of London will be….

      A ‘procurement marketplace’, and a broken one, it seems.

  3. eSourcingSensei:

    Hi Peter

    No postings from me for some while and I will actually keep this comment very brief (I know a rarity for me)

    I believe this signals a significant shift away from the current direction of GPS under DS, and again will create more uncertainty within the teams.

    It also underlines the issues they face with the so many changes in the leadership of the organisation and the almost continual changes in direction that take place as a consequence.

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