MOD Procurement hits the front page of the Sun

Is this a first? A procurement issue is front page - and lead editorial - in the Sun, the biggest selling UK newspaper. (That's the first time we've liked to that newspaper as well!)

Unfortunately it is not exactly a good news story for the profession. The Ministry of Defence is apparently paying £22 for lightbulbs which can apparently "be bought for 65p in the High Street". As the Sun says,

The public money spent on lightbulbs represents a mark-up of more than 3,000 PER CENT on their true retail value. Angry Defence Secretary Dr Liam Fox said last night the inflated prices paid showed a "lack of common sense".

Is this a scandal? Well... I don't know.  For instance, this may be an internal 'transfer price'. The form the Sun shows is an 'internal issue voucher' featuring the £22. So perhaps the huge mark-up goes towards the running costs of the whole logistics operation which is then charged internally to operating units via those inflated prices? This is just speculation, but I'm hoping someone who knows the whole story might comment here.

But, you might say, why wouldn't the Minister point that out? Well, let's just say this story doesn't exactly hurt him or the current government. At a time when cuts in military resource are beginning to bite, the Sun highlighting this 'waste' which can be laid at the door of the last government is positive rather than negative for him.

Then again, it could just be really bad procurement..  Anyway, let's see if any of our MOD readers can enlighten us as to the real facts.

UPDATE - 12 noon

The MoD denies this is an example of waste. The BBC reports that

"a MoD spokesman said it was actually a "highly specialist" item.  He said: "It was a precision made lamp filament for the Watchman radar. The MoD purchases about five per year."

In which case, the more interesting question is maybe why the Minister (Liam Fox) was so quick to slag off his own staff without checking on the facts? Not very motivating behaviour for someone in a leadership position. See our later post!! MoD has withdrawn their denial.

Voices (12)

  1. Guy:

    From VoR

    ‘Thanks to the procurement “professionals” the UK is littered with products that people DO want but are sadly not fit for purpose.’

    Really? Care to name a couple? Oh that we had that level of influence

    If thats true for your business I would really have to question the governance (or lack of) in play.

    Any business who let Procurement set the specification will reap what they deserve. Specifications should be set as a collaboration, broadly the technical part by the techies and the commercial by the buyers. Both need input from Marketing and Finance.

  2. The Final Furlong:

    Dear Voice of Reason, it does seem that, upon reading your post, you must work with some woeful procurement folk!

    But I dare say, that’s a pretty broad brush you’re using to outline the scope of your interactions with these procurement folk!

    First, it’s
    “in my own business”
    and if that’s not enough, it’s
    “in my industry”
    and to top it off
    “the UK”.

    Your procurement folk must be operating the ‘mother of all’ shared services centres in your company/industry/country/nation…

  3. VOICE OF REASON:

    A very lame attempt at self justification Guy…

    In my own business (and it’s not engineering!) we have lost work that has been managed by “procurement professionals” (sic.), not because we could not compete, but because we refused the work on the basis that the end products (as specified by the procurement professionals) would be unfit for purpose. And guess what? The end products were either rejected or came in hideously over budget!

    An old adage in manufacturing is that there are three types of job – a good one, a fast one and a cheap one. The saying goes that you can only ever pick two of those options. Sadly the belief in procurement is that all three are possible every time and consequently they consistently fail to deliver.

    In my industry we are faced with daily requests from procurement that are so woefully ill-informed they are laughable. Some don’t even display the slightest common sense, let alone even a suggestion of industry knowledge!

    Thanks to the procurement “professionals” the UK is now littered with products that people DO want, but ones that are sadly not fit-for-purpose!

  4. Guy:

    I am all for the right people making the right decisions.

    If the engineer, lets call him VoR for argument’s sake, were to define the requirements of the washers and seals, then the Procurement professionals can get them at the best possible price.

    If the seals bought meet the requirement, but fail, the blame sits with he engineer.

    The history of UK industry is littered with over engineered over priced products that nobody wants.

  5. VOICE OF REASON:

    Sorry Barry, I am no more an engineer than you are a scholar of English grammar! Like the rest of us in this country and beyond, I am just a frustrated victim of the idiocy of procurement “professionals”! Sadly it is those “professionals” in their ivory towers that endanger our forces on the battlefield time and time again.

  6. Barry Henniker:

    What are the odds that the “Voice of Reason” is an engineer – you know one of those “profesionals who design and build gold plated solutuons which look gtear in that big white ivory tower in Whitehall or down at Abbey Wood – but when deployed for real by professional soldiers in Helmand province somehow are not quite fit for purpose that they are supposed to be..

  7. Rob:

    I think someone from the MOD should enlighten us

  8. VOICE OF REASON:

    Well said “Bitter and Twisted”!
    There is a foolish notion amongst people in procurement that everything is in some way justifiable.
    And how I laughed when I read in Peter Smith’s article his reference to procurement being a “profession”.
    Society today is blighted by these “professionals” dipping their noses into specialist fields about which they know nothing. One minute they are buying stationery, the next minute it could be technology!
    They talk a good story and occasionally reduce costs, but they have no concept of the expression “fit-for-purpose”.
    In one of literally thousands of examples, recently a power tools manufacturer employed the expertise of these “professionals” to source machine parts. They did make tremendous savings on the washers and seals in the item. However, every single item had to be recalled because (and you know where I’m coming from here!), the washers and seals failed – they were not FIT-FOR-PURPOSE!
    Procurement should be left to experts in their field – no-one else!
    As to the miraculous cost savings they allege to make through their use of reverse or “e” auctions, a recent independent report by Mohanbir Sawney uncovered that in general 50% of any financial benefits promised were lost between the close of a tender and the final invoice. This is because these “experts” make promises on matters they do not understand!
    I’ll say no more at this point, but the next time your deodorant can falls apart in your hand, or your sandwich box disintegrates, you know why… because the “professionals” have procured something that doesn’t work!

  9. bitter and twisted:

    Oh come off it. £22 for a lightbulb is an absurd figure by any definition.

  10. James:

    The thing that struck me is that the invoice reproduced by the Sun said £22.51 “per D of Q” (denominator of quantity) which suggests to me it isn’t actually per bulb but per pack. I think the first issue is how many bulbs per pack.

  11. Rob:

    It’s a classic piece of journalism. If it’s outsourced, then the £22 is likely to be the total cost of the transaction including supplier’s staff costs, overheads etc, or in-house, as you suggest Peter, an internal recovery/recharge – but the journo wouldn’t know this, nor really care.

    If a highly-paid journalist changed a light bulb, and let’s say it took him/her one hour to purchase and replace the bulb, then it would be about £33 (unless, of course, he/she walked passed a pub on the way to the DIY store, in which case you’d have to add another three, maybe four, more hours…and expenses bill of about £100, possibly a hotel bill too to boot…).

    How many journalists does it take to change a light bulb?
    “We just report the facts, we don’t change them.”

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