Hughes and Day on Transforming Public Procurement – “Value”

We featured here the launch of  Why Public Procurement is Central to the UK’s Economic Performance.. And How to Transform It,  the recent report from Jon Hughes of Future Purchasing and Professor Marc Day of the Henley Business School which looks at ideas, some radical, for the future of public sector procurement. They got good coverage on launch the other week, including pieces in the Times (behind the paywalls) and the Guardian (available here, not sure about the relevance of the picture)!  We’re going to cover the report in some detail– and you can download it from their Deficit Reduction website here.

It considers 6 ‘pillars’ – Value, Spend, Options, Structures, Processes and People. So we’ll start today with some thoughts on Value.

“More of the same will not do. Nor will the adoption of single, simplistic approaches” is a key overall massage, and that is reflected form the beginning of the report. This section includes a brief general  analysis of the situation facing each part of the public sector, and the implications for procurement. The authors start to explore here some ideas of how the issues can be addressed, although these are expanded upon through the rest of the report. And our summary here is only a taster really, there is a lot more in the report.

In the NHS, the authors believe that savings of 20% are “readily achievable” in view of the “half hearted focus shown to date” in implementing core procurement practices.  I wouldn’t disagree conceptually – but the issues of strategy, structure, clinical preference, independence of Foundation Trusts (many of which we’ve written about at some length here) are not to be under-estimated as barriers.

For local government, procurement needs to be “part of the transformative agenda”, and needs a fundamental re-think, not just cost cutting. That needs to include new models, use of the voluntary sector and similar innovative approaches. I’d fully agree with that – getting better value out of an area with the complexities and sensitivities of social care, for instance, will require a lot more than reverse auctions driving down effective hourly rates for care workers to below minimum wage.

Central Government is “more straightforward” and there are positive comments about initiatives underway there already. Senior leaders in the function should “apply themselves with conviction to aggregation, rationalisation and standardisation of their common subcategories of expenditure, while building greater professionalism...”

The MOD needs “deep changes in strategic leadership, accountability, structure, competence and capability”.  Opportunities exist around driving a new commercial culture, rationalising specifications, and “bilateral co-operation with NATO partners”.  Again, I agree directionally, but I’m not so sure about the last point – the history of collaborative procurement with other countries is not decorated with multiple successes!

Education and Welfare – “excellent blueprints for service delivery are now emerging” but the more autonomous structures that are developing in education will provide interesting challenges in terms of how procurement spend can be leveraged. Very true...

And finally, PFI, which the authors treat as a separate sector, states the “depressing conclusion that there is no leadership and programme management cadre capable of dealing with major projects...”. Well, the whole idea of re-negotiating PFI deals certainly seems to have gone a bit quiet, doesn’t it?

Like all the report, this section is full of interesting thinking and ideas. I don’t think there is much I would  disagree with directionally here, although the theme of the authors perhaps under-stating some of the political (with both a small and large “p”) difficulties in addressing these issues is one we’ll come back to when we move onto the rest  of the report.

But I’d suggest you read this yourself if you have any interest in public sector procurement, and do feel free to comment!  Do you agree with the diagnosis?

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Voices (2)

  1. Tom:

    I understand that “Happy Birthday” is in order. Congrats Peter. Looking forward to meeting you –in the UK. Tom

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