UK public procurement – the UK Government and large suppliers fall out

We wrote extensively about the recent Public Administration Select Committee session on procurement, with Bill Crothers (government CPO) and his Cabinet Office colleagues (here is the last of our three posts).

There was some good and interesting debate, but I was left with just a feeling that something had been missing. And when I mulled it over later, it seemed that what was lacking was a sense of suppliers actually being able to help government to achieve key policy goals. That aim sits at the heart of any political party’s agenda when it comes down to it.

Most of the Cabinet Office focus appears to be on deals, lower prices and value (in a fairly basic sense). That’s not to say these are bad objectives, and as a taxpayer I say “well done” on much of their work. But it is a limited focus. I don’t know whether this is in part because it plays to the backgrounds of Kelly and Crothers, as smart and talented deal-makers rather than strategic procurement people, or whether they are reflecting what Ministers want from them?

Linked to this, and worrying in its own right, is the almost hostile attitude to the large suppliers – particularly in the IT area. That was evident in the PASC hearing, and it may be understandable if you think that large IT suppliers have not exactly covered themselves in glory in recent years in the government context. But it might be a little dangerous when we’re still so reliant on them to deliver huge programmes, which will be the case for many years to come.

And as well as the immediate effect of this hostility, it may have longer term implications. If we look at areas as varied as social and health care, offender management, innovative medical equipment, forensic services, even more traditional areas like IT and construction, what we arguably need is innovation from suppliers, and the private sector helping the state to do things differently to make step changes in outcomes and value. That won’t just come from beating large suppliers around the head to extract a few percentage points of margin. I’m absolutely sure that most large suppliers don’t see the UK government and public sector as a preferred customer right now; there are few immediate visible consequences of that, but in the medium term, we could all lose out.

How are we going to use the private sector to look after (in both health and social terms) the ever-increasing number of older people, who will have higher expectations but less in the way of private pensions to pay for them? Can the private sector really get people into jobs, or keep offenders out of trouble, better than the state? What innovative technology and science innovation (3-D printing, nanotechnology or genone mapping) might bring step changes in public services?

Is anyone in Cabinet Office thinking in those terms, I wonder? Or perhaps I’m hoping for too much from what is only a small team in the centre, given the sheer size, scope and complexity of the £200B public procurement landscape.

Voices (14)

  1. Trevor Black:

    I’m not surprised they have fallen out. If a supplier wins a competitive tender and then it is announced that the Government will ‘re-negotiate’ the contract in order to save ‘billions’ (billions is the new millions for political PR purposes) doesn’t it really place the very act of public tendering into disrepute?

  2. MG Man:

    Peter makes a good point. I have a feeling that the large suppliers are treated more as commodities rather than value adding partners.

    I can often see why, but if you have low expectations for your suppliers you won’t get the best results

  3. Dave Orr:

    A Government IT good-ish news story – working IT in HMRC but way, way over budget!

    “Could HMRC have a major IT success on its hands?”

    http://ukcampaign4change.com/2013/04/17/could-hmrc-have-a-major-it-success-on-its-hands/

    1. Final Furlong:

      Is there really a “Chartered Institute of Payroll Professionals”?

      1. Dan:

        They’ll no doubt have a monthly magazine that bemoans the fact the profession doesn’t have anough influence at board level…

  4. Callmecynical:

    Surely the need for innovation and flexibility can be addressed via construction of outcome based agreements; these should become the norm for large public sector contracts……………….

    1. Dave Orr:

      What does “outcome-based agreements” mean?

      How do you predict the outcomes over 10 years if the changes are unforeseen or unexpected?

      For example: A new Coaliton Governmeny has changed the way housing benefits are calculated and the service is being centralised and taken away from local councils. Here in Somerset, in Southwest One (SW1), the Revenues & Benefits service is being taken back into the local District Council (away from SW1) as the contract couldn’t flex.

      New technology?

  5. Dave Orr:

    Partnerships underpinned by complex contracts are inherently inflexible aren’t they?

    How do you draft a fixed, legal contract that then allows for flexibility and innovation over a long period of time?

    In a long-term 10+ year contract, how do you build-in the crystal ball of predicting change?

    Watch this space…………..

  6. Callmecynical:

    Re: “I’m absolutely sure that most large suppliers don’t see the UK government and public sector as a preferred customer right now.”

    On the contrary, I’m absolutely sure that with multi-million pound contracts and profits to be made, most large suppliers do see the UK government and public sector as a preferred supplier and guaranteed income right now during these straitened times.

    The private sector can’t have it all their own way and the expectation is for more flexibility and innovation provided that contracts are framed in the correct way – that is the true challenge for public and private sector to overcome to if true strategic partnerships are to be realised and endured (rather than a sometimes short sighted emphasis on making a quick profit or headline savings return).

  7. Sam Unkim:

    Re: “perhaps I’m hoping for too much from what is only a small team in the centre,

    Surgeon-General Joseph Barnes had similar hopes resting on his shoulders when he”stuck his oar” (and everything else) into Lincolns treatment.

    It didn’t end well either

  8. Dan:

    Whats the benefit for suppliers? If the changes in the contract as a result of the innovation change the contract too much (and with no definition of what consititutes ‘too much’) then it triggers a reprocurement which they might not win. And many of the contracts are framework agreements which have a maximum 4-year lifespan – there is no option for long-term partnering arrangements for these kinds of contracts.

  9. Steve Hartson:

    The current view that big is bad and knocking major suppliers is both dangerous and short-sighted. Whilst major IT suppliers have not necessarily covered themselves in glory on a number of IT programmes, there are a number of very successful IT relationships in place delivering both value and driving innovation and this seems to be totally ignored by the policy makers.

    1. Dave Orr:

      Hi Steve – Can ypu evidence this view please and list some suppliers, projects and successful & innovative delivery please?

  10. bitter and twisted:

    Government-supply market deadlock and no big projects for a bit sounds like a good outcome to me.

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