The Perfect Storm – Recommendations (part 5)

More of our recommendations - in fact, the final three - which form part of the serialisation of our public sector procurement White Paper – “The Perfect Storm”.  Tomorrow will see the final conclusions published.

8.  Slash the cost of procurement

The pressures on procurement to deliver will be intense, yet resources will be squeezed.  We must therefore look at reducing the cost (and the time) it takes to carry out procurement activities.  That will benefit the supply market as well.  A system for suppliers to log their standard pre-qualification information once and once only for instance is one such step; that could be done at low cost by putting the onus on firms to maintain their own information using something along the lines of Google Documents.

Procurement processes must remain compliant to legislation, but within that, clear guidelines should be issued around the time needed to run procurement exercises.  Suppliers can monitor this and could report where organisations are not remaining within guidelines.  Without creating more bureaucracy, it should be possible to ‘name and shame’ those organisations that routinely fail to meet targets.

There should be more use of templates and standard procurement processes, driven by OGC and the national Audit bodies.  And of course, the elephant in the room here is that it is often Ministers, elected officials or Boards who force management into starting projects or procurements before they are ready, “so we can see that something is happening”. This then means delays later in the process; that cannot be allowed to happen; it is the biggest cause of over-running or abandoned procurement exercises.

A set of measures (including those outlined above) should be agreed to reduce the cost, complexity and time needed to run procurement exercises.  And no major procurement should be launched until it has passed the ‘Stopping gate’ review (see point 2).

9.  Measure this properly

We explained in part 1 the dangers of organisations declaring ‘efficiency savings’ that are not credible in an environment of cuts and pain.  That makes it more important than ever that strong and credible methodologies for measurement and reporting of savings are defined and followed.  While processes have been tightened up in recent years, that should go further.  Savings must be defined as the most focused private organisation would; on actions that actually hit the bottom line, and in the case of public sector organisations, that means lower spend, category by category.

Treasury, National Audit Office and the Audit Commission should jointly issue a revised efficiency savings methodology which all public organisations will be required to follow. That should focus on real bottom-line reductions in spend and budgets.  Spend and savings data from public organisations should then be published.

10.  Honesty and openness

Whilst we have doubts about the wisdom of publishing all contracts, the theme of openness and honesty needs to run through public procurement.  In the difficult times to come, that will help achieve change and re-assure the public, and politicians, that public procurement is really doing everything to can to help.

We need openness on spend, processes, and supplier performance; all of which should be better shared around the procurement network and more widely. Open discussion about the optimum levels and type of collaboration.  Credible, transparent processes for measuring savings; about different funding methods (a public debate around PFI for instance, using genuine data); about the likely timescales for procurement processes and subsequent projects, avoiding the craziness of MOD actually planning to delay projects; about the skills that exist in procurement and where external support will be needed; about assessing organisations’ procurement capability with rigour and honesty.

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