Lowendalmasai report on local authority procurement – better than its headline

We’ve had a dig on a number of occasions at reports that purport to show the huge savings potential in the public sector, but don’t stand up to scrutiny. Sir Philip Green’s was a classic, but there have been others.

(By the way, anyone like to confirm, or deny, that Arcadia, his firm, don’t actually operate the centralised procurement approach themselves that Green pushed for Government? I heard this recently, but it was in a beer-consuming situation so I could do with more confirmation...)

Anyway, one recent report (download here) appeared to fall into this category, so I didn’t actually feature it here as it looked like more of the same.

“A new report by Lowendalmasaï, a procurement and cost management consultancy, has found that London councils could save hundreds of millions of pounds by improving the way they buy services from their largest suppliers. Extending the findings across England suggests that savings of at least £2.9 billion could be found by effective supplier management”.

Lowendalmasia are, I believe, a decent procurement consulting firm, which made me surprised about the sensationalist extrapolation here. But I have finally read the whole report, and there’s more to it than meets the eye. Whoever decided to  lead with the “savings of at least £2.9 billion” line was misguided in my view, because that just loses credibility with everyone in public procurement. That figure is arrived at by some basic extrapolation based on a "our experience shows savings of 15% are available...." which is not very scientific to say the least.

But the full report makes other good points and does deserve to be read. It looks at the use of major common suppliers by London councils, and identifies considerable overlap in areas such as Social Care and Waste Management. It analyses three suppliers in more detail – Veolia (waste management), NSL (parking management) and Medequip (social care equipment).  It analyses their presence across London local authorities and makes some good points about the “joined up” (or otherwise) management of these firms.

The firm did a considerable amount of data gathering for the report and they also make some recommendations as to the transparency agenda – they want the government to -

“Become more prescriptive about the way that spend data must be published by local government. Lack of quality data is one of the biggest barriers to effective procurement”.

As well as a set of recommendations around more joined up management and reduced duplication, they also recommend a CPO for local government, on the grounds that it seems to be working in central government, which arguably shows some naivety about the way local government works. Central government is in some sense a single organisation whereas local definitely isn’t – there is no single person to whom it all reports!  Yet I do understand where they’re coming from on this. I would also like to see somebody with some authority take a bit more ownership for local government procurement improvement – something the coalition government hasn’t looked to do at all.

The final recommendation is: “Focus on 3 key levers: Key Supplier Relationships, Cost and Resource Flow and Contract Simplification – To derive mutual gain through better understanding of specifications, costs and simplified operational and commercial management”.

It’s all a bit more sophisticated than the simple “15% could be saved by collaborative procurement” suggests, so two cheers for Lowendalmasai – it’s worth looking at the report, and I think it would have had more traction had it not been presented with such tabloid, sensationalist headlines!

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Voices (3)

  1. John Diffenthal:

    There is no basis problem with prescriptive requirements about transparency spend data. It has already available for contracts and tenders – http://localnewcontracts.readandcomment.com/files/2010/12/101122-New-Contracts-Data-Practitioners-Guide-V7.pdf

    I can understand what they mean by about the lack of quality data, but that’s an entirely separate issue and legislation or prescriptive descriptions of file layouts isn’t going to solve it in a hurry.

  2. Rob:

    All back office, such as IT, FM, fit-outs: CLAN.
    All front-line, such as stuff sold in shops: FFFA

  3. Navy Cut:

    The proposal of a CPO for local government would have given everyone in Local Government plenty to laugh about.

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