Government Procurement Service – we offer a few thoughts..

We featured progress at Government Procurement Service recently (here and here), and promised to come back with some of the risks we perceive to their success and ideas for mitigating those risks.

First of all, there's no doubt that some strong capability has been lost and will be lost with the reduction in staff numbers – that is unavoidable. So morale will need watching and building through what will inevitably be a challenging difficult period. But the mood seemed positive from what I could tell wandering round the office on my recent visit.

But the main success factor will be the strength of the contracts that the team puts in place, and how well they manage the suppliers to deliver. The Buying Solutions reputation was mixed in this area, but as much of the time they were putting in place fairly generic frameworks, their commercial skills were in many cases not really tested. Now we move to a world of mandating use of contracts, and more committed volume, Government Procurement Service needs to show they can make use of that mandate and deliver excellent value. That’s a pretty obvious statement – but making it happen is the challenge. And it needs to start with the right category strategies, then strong execution.

"David" put it very well when he commented on our last piece, highlighting the credibility that Government Procurement Service will have to build with users:

So how can and why should public sector buyers have any real confidence that the latest offerings will actually deliver value? This is particularly poignant when buyers have had no real choice about who they can work with now that the centralisation process in certain categories has taken competitiveness of service delivery providers out of the equation.

In terms of the category strategies, I know the market reaction to a couple of the recent procurement exercises and contracts hasn't been completely positive. So how about exposing the emerging category strategies more overtly to the market during their development phase? There's a number of ways of doing that, and staying within the EU Regs, and it could be a great way of both capturing good ideas from people who truly know the market; and as a way of building buy-in both from suppliers and users (the departments).

A further and slightly separate issue is balancing the obvious value for money imperative with longer term and more subtle objectives, such as supporting smaller firms and innovation. So far, the evidence of the office solutions, print and travel contracts is that they’re going very much for a national approach and a Prime Contractor strategy. An alternative might have been to disaggregate the contracts, perhaps on a regional basis, in order to make them more attractive to smaller firms. Both approaches clearly have both strengths and weaknesses.

There are hints that other categories – like professional services – may take more radical approaches that may be more favourable for smaller firms. But the immediate challenge is to make sure that the Prime Contractor arrangements press two key buttons.

Firstly, if they are to deliver value through the life of the contract, then the ongoing contract and supplier management will have to be an order of magnitude better than the previous Buying Solutions performance – which takes us back to David Shields’ focus on getting data from suppliers. That is a necessary but far from sufficient condition for strong ongoing management. There must be mechanisms in place to ensure that pricing and other value factors remain good through the life of the contracts – and that Primes make a reasonable but not excessive return.

And secondly, the Prime has to be sensitive to the market and the supply chain – if they squeeze smaller / innovative providers out of the market, that won’t benefit the public sector in the longer term. So how Government Procurement Service manages these Primes is absolutely key.

Our final thought – which links with the idea of involving them in category development - is that suppliers need to see and feel it is different. I’m not in favour of hordes of “communications” or PR people springing up again, but there needs to be real change and that change must be communicated to the market.

Suppliers do meet Ministers and Permanent Secretaries. "How are you finding dealing with GPS?” says the Minister, meeting the MD at the charity dinner. There are two answers.

"No change, it’s a pain" is one.

"Much better, we’re more involved, we really feel they understand the market, and the processes are much more effective and efficient" is the other.

Let’s hope it’s the latter.

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