Does Bill Crothers, Government CPO, disagree with government procurement strategy?

We’ve been promising for a while now to offer some of our thoughts to Bill Crothers, the new Government CPO.  But I think we’ll wait now till after the holiday period and come back with our views in early September .

But in the meantime, he’s been talking to various media folk, including Supply Management and the Guardian. And he’s said more than we might have expected – and some of it is really quite striking in terms of an attempt to head in some different directions.

He does seem very focused on the biggest suppliers to Government, and on fairly straightforward cost saving activities. Given his background with Accenture, then more recently running the “top suppliers” programme in Cabinet Office, that is perhaps not surprising. Those issues would naturally be front of his mind. So there’s been little so far about promoting SMEs, or using procurement to stimulate economic growth, let alone some of the wider public procurement issues around health, social care, localism versus aggregation and so on.

But within the scope he has addressed, we picked out three somewhat novel messages. Here’s his major interview, from the Guardian website.

1. He is encouraging large suppliers to come up with innovative ideas to save government money. He’s frustrated so few ideas are forthcoming.

"I think it's nuts from their position because they have an invitation from maybe their largest client to come up with exactly what their marketing speak would say, which is an opportunity to transform part of your business i.e. government, to take out substantial amounts of money – and along the way, do more business. They're not taking up the invitation."

Although I can see where he’s coming from, can you spot the strategic flaw in this argument? Look at it from the suppliers’ point of view. How do you think they perceive central government at the moment as a client? I won’t sweat this point now, it’s worth a longer piece later.

2. He doesn’t like frameworks! Now that is a bit of a shock as the Government Procurement Service which reports to him.. let frameworks. Huge  frameworks – in Legal Services, Consulting, IT, interim staff to follow soon...

"How do we go about getting the money? I don't necessarily think it's through frameworks. I view frameworks with a caution," he says. "They were essentially a UK invention, a device to deal with slow European procurement rules….. "We've been encouraging the procurement professions and departments to go about procurement in a different way, which means they can buy faster and that should less mean for frameworks."

He explains that departments could have set a framework three or three and a half years ago when conditions and prices were different, and still be buying from it. "I'm particularly sensitive to that given that market conditions have changed so much in the last two years," he says.

Now I agree with him – they have a place in the procurement tool-kit, but see Chapter 3-5 of “Buying Professional Services” where my co-author and I came up with 5 negatives around frameworks:

·         Loss of flexibility and competition

·         Missing out on innovation and new market entrants

·         “Lowest common denominator” frameworks rather than buying  deep competence

·         Commercial issues (lack of committed volume weakens negotiation position)

·         Contractual issues (general terms not meeting specific needs)

I do remember Ian Watmore saying when he first joined government “the argument has been lost on frameworks”.  But he soon changed his tune when he realised that they were probably the only way the centre could “manage” devolved spend and claim lots of apparent savings for itself (he said, somewhat cynically). So it will be fascinating to see if Crothers really follows this through, and what it might mean to the current GPS contracting programme.

3. Crothers  also wants to embrace more flexible pricing models. “For example, guaranteed maximum price is a variation of fixed price; it just means you pay a maximum price, but if it comes in less, you pay less. There is also a pricing method called TCIF – target cost incentive fee. I think us being more thoughtful about pricing methods is something we should be doing”.

I’d heartily agree with that – BUT... how do you get to these models? In a public procurement context, it is most feasible through use of the EU competitive dialogue process, which gives you the chance to explore novel pricing options. But Francis Maude, the Minister overseeing procurement, hates Competitive Dialogue with a vengeance..

So, this is all good thought provoking stuff, but might these ideas put Crothers in conflict with others in GPS (re frameworks) and even the Minister?  Watch this space.

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