Procurement and Contract Management – the revolutionaries of Hounslow Council

In the debate about procurement’s future, one potential route for the function is rarely discussed or seen as a feasible option (although Sammy Rashed did touch on it in his excellent series for Procurement Leaders, now available as a short e-book here).

That option is the idea of taking over the direct contract management and responsibility for service delivery in the case of major contracts. Now in many cases, procurement does by default pick up some of this responsibility. Unless there is a strong facilities management function, there is every chance procurement will gain responsibility for some general goods and services that cut across all other parts of the business. It’s quite usual for procurement to “own” delivery of the stationery or travel contract – simply because no-one else wants it, or is positioned to take it on.

However, when it comes to more critical contracts - outsourced IT, or critical manufacturing support, or front line service delivery in a government sector context, then almost always procurement takes a back seat. Even if the function is involved in the procurement phase (choosing the supplier and putting in place the contract), someone else leads on contract management.

So it was a real shock to come across a true revolutionary in a most unexpected context the other day. I was speaking to a group of local government auditors (yes, sometimes my life really is that exciting), and a fellow speaker was Sarah Rayner, Assistant Director of Supply Chain for Hounslow Council, a borough which includes Heathrow airport, some really pretty low-income areas plus some lovely parts of West London. She's only been there a few months, having worked at Windsor and Surrey councils before that, and at BAA on the Terminal Five programme prior to her local government career.

And her session was fascinating, because Hounslow are pursuing perhaps the most radical model I've seen (public or private sector) for some time in terms of the role of "procurement" - although as you'll see, it really goes well beyond traditional procurement.

It’s also relevant to major issues in UK government, and probably government contracts globally if the US healthcare travails are anything to go by. For instance, we mentioned recently that top UK civil servants have been told to get a grip on contract management. Well, Hounslow are addressing that very issue by bringing responsibility for contract and supplier management on a range of critical contracts and services into the Supply Chain  function, under Rayner's remit.

Procurement, contract management and delivery are being in effect brought together and centralised under her management - not just letting the contract but truly running it too. Now this process has been gradual and is continuing - so children's services, perhaps the most critical spend category for a local authority, won’t move across to her group until early 2014. But Rayner already has a team of 65 people, pretty substantial compared to a "normal" procurement department in a council of this size, including the operational arm of Highways contracts and service delivery for instance .

This focus is driving some ambitious targets and I particularly liked the way Hounslow are looking for both substantial savings when re-letting contracts and then a further value improvement through the contract – very few organisations set these targets for both contracting and contract management phases.

So, a very interesting model. I'm not sure how other senior executives in the council might feel about this shift of responsibility, and it certainly raises some interesting questions about accountability, but it will be fascinating to see if it works, and if so, whether others will follow. And we'll be featuring an interview with Rayner shortly to get more insight into this innovative approach. Watch this space!

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