Why public procurement is VITAL to the success of government policy

We featured yesterday the challenges facing DWP and their procurement team given the issues around the UK Government's programme for giving work experience to unemployed folk.  Recent claims that this was in effect free labour for large firms, helping them to increase profits and maybe even reducing their need for paid workers, has led to some outcry and a number of firms pulling out of some government schemes (although we should note that the work experience scheme is separate from the new Work Programme, which will be the central initiative going forward to address employment).

That fuss was then linked to the fraud investigations going on around A4E, one of the leading providers of  employment services. Again, there's a fair amount of confusion around, as the allegations relate to work done under previous schemes concocted by the previous Government! But the A4E Chair, and one of the founders of the firm, Emma Harrison, first stood down as David Cameron’s adviser on problem families, then resigned from her A4E role.

We then saw more general comments in the media around about the philosophical and moral issue of private firms benefitting from this sort of activity - helping people into jobs. Some saw it as “immoral” that firms were receiving state funding and making a profit out of the unemployed.  We’ve seen the same in Education, where even the bone-dry Tory Michael Gove has had to tread gently around the issue of firms potentially making money out of running  state schools.

And yet.. think of all the firms that make money out of health and the National Health Service. I don’t mean simply private hospitals doing NHS work, but (most fundamentally perhaps) what about drugs companies? They make huge profits. Should they all be charities, or not-for-profit organisations of some sort? (Making money out of dying babies? How dare they! )

Then there are firms making money and receiving cash from the state for taking our rubbish away, or providing care for old folks. Are those any less worthy causes than support to job seekers? So why don’t we get hung up on those services being provided by private firms? And what about food and water? They are even more basic to human existence than health, education or work. How can we tolerate firms making profit out of these essentials?

It seems very illogical that we get worked up about some of these things and not others. Personally, I have no philosophical  issues with the private sector delivering anything on behalf of the government, as it were. But it all comes down to good procurement. (There, you knew we’d get back to procurement eventually!)

Because if we are going to have private providers involved in sensitive areas, then, in order for the process to succeed, someone has to ensure that certain things happen, and the taxpayer needs to see those things happening to build faith in the policy.That someone is often procurement.

What is needed then? Here's a short list, probably not complete, but all important points nonetheless.

The competitive process must be transparent and fair; there must be strong barriers against fraud and corruption; contracts must be carefully constructed with aligned objectives, fair returns for success and penalties for failure; there need to be measures to protect against suppliers making excessive profits; and contract / supplier management needs to ensure transparency, proper delivery against the contract, and propriety at all times.

If all this can be achieved (through top class procurement and contract management),  I have no problem with much greater private sector delivery of services on behalf of government, and I suspect many people would share that view.

That’s why, despite all the frustrations, I’m personally still fascinated by complex public procurement issues and challenges – they have an impact on everyone in ways you rarely see in the private sector. And the complexity, scope and volume of these challenges are only likely to increase if we see more private sector firms as providers in these areas. Despite the current furore around the employment area, it seems more than likely that this will be the case, leading to even more focus on the strength and depth of public procurement capability.

No pressure, ladies and gentlemen of public procurement!

Voices (3)

  1. Huhh?:

    I am always fascinated by the continually remarketing of the concept of private/public sectors engaging and crossing over. There always seems to be “something to learn”.

    But no one ever seems to consider that private sector companies (if they’re limited or public liability) are there to serve the profit hungry desires of their shareholders. This is the way their Chief Execs are compensated and motivated and the only objective of the organisation.

    Public sector organisations are there to deliver outcomes for people, a social profit if you will – and that should be their only objective.

    So how exactly is putting one together with the other ever going to square this circle?

    And this has been repeatedly tried over the years. The famous Einstein quote springs to ming: Insanity is doing the same thing over and over again, and expecting a different result.

    We know what the result will be: Huge mess in public sector service delivery, more profits at key firms and the outcomes for people – in the toilet.

    1. Final Furlong:

      The voice of reason. Some of us (in procurement) must have been displaying the symptoms of insanity for quite some time.

      A simple test – one that resonates with your view. Go on to the ‘careers page’ of a large supplier to government. Even better, choose a front-line service, like Health, (like I did – see below).

      You’ll see an interesting perspective and the ‘key characteristics’ in their search for a ‘sales rep’ (see example below), and begin to understand why procurement (in the public sector) has a mountain to climb, in the way you describe. Try and find a sentence which describes ‘enhancing user outcomes’, ‘delivering value to the customer’, ‘ensuring value for money’….

      JD for sales rep:
      1. Outperform the market – take over and gain market share for all [name of manufacturer] products in the territory and in doing so exceed quarterly sales targets within the first six months
      2. Maximise current [name of manufacturer] business – meet all current [name of manufacturer] customers within the first month and create an immediate impact plan to meet challenges and expliot opportunities
      3. Develop relationships with potential new customers – within the first 3 months, engage 10 competitor surgeons and influence them, through presentation and discussion around [name of manufacturer] philosophy and [name of manufacturer] product benefits, to a point where they agree to evaluate the product. This should be aimed at surgeons and other key related influencers. Meet all surgeons on territory within the first 6 months
      4. Become a product expert – Demonstrate full [name of manufacturer] product knowledge by passing the [name of manufacturer] training exam within the first month. Portray further development of portfolio knowledge by graduating from a level 2 Academy course within 18 months
      5. Lead in Theatre Surgical Procedures – spend quality time in threatre with customers, and deliver staff training on a continuos basis, as the business requires. Independently assist surgeons in theatre within the first 3 months
      6. Research, Dvelop and Execute Territory specific business plans – create a working document, aligned to corporate strategic aims, with clear, measurable outcomes. This should ultimately be with the aim to exceed sales targets by Q1
      7. Demonstrate Continous Development – have an agreed Personal Development plan , play a leading role in it and consistently meet and aexceed quarterly and annual sales budgets
      8. Lead development and Iplementation of [name of manufacturer] Strategy – liase and collaborate with other [name of manufacturer] colleagues in your accounts to optimise “One [name of manufacturer]” opportunities and customer relationships.
      9. Implement a Surgical Registrar Program – within 12 months develop close relationships with “Trailblazer” Registrars in your territory with a view to encouraging customer loyalty for furture years.
      10. Develop & Implement a Strategic Plan aligned to making [name of manufacturer] the “Fastest Growing , Most admired Medical Device Company within your territory – develop and execute a plan to achieve the fastest market grrowth, market leadership and sales growth along with being the most admired company among our competitors, within 12 months

  2. eSourcingSensei:

    Having recently met with some of our Procurement collegaues in the Public Service I have an admiriation for what they are faced with day to day in regulatiry and policy restircyions that as you say we just do not see the like in the Private sector.

    I do firmly believe that startegy and tactics and execution of some of the negotiations they have undertaken can be improved but its oh so easy to say that from the outside looking in.

    It may pay for a few more Private sector “experts” to engage with those in the Public sector when such opportunities arise as I think there is a lot to be learned from both sides

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