Does public procurement need private sector stars?

The Heseltine report we’ve featured recently - “No Stone Unturned”  - focused on UK economic growth, and suggested that the government needed to pay more to get the “best private sector procurement people” into the public sector.

Now, as regular readers will know, I don’t accept the general premise that public procurement is bad in the UK anyway, West Coast Rail notwithstanding. The main difference between public and private is that the focus is much stronger on the public sector, in a way that BP, Unilever or Novartis just don’t have to worry about. Of course procurement can and should be improved in the public sector  – as is true in any organisation. So as we explore a couple of angles to this, please take these comments in that context.

The first point is the view, which seems to be held by politicians including Heseltine, and often the press, that if we could just get a few of these amazing private sector procurement experts into the public sector, everything would be OK.

“Those responsible for large procurements in the private sector are typically paid more than three times the salary of senior civil servants”,  Heseltine said in his report.

That’s simply not true – the top public procurement people, in central Government at least, are earning between £100 and £150K, and I don’t see too many in the private sector on £300K plus. It’s certainly not “typical”.

But that aside, the idea that getting some private sector people to move ignores one key fact – there has been a constant stream of private sector “experts” coming into government for almost 20 years (including me in 1995, and I wasn’t the first!)

Where do I start?  Of the current procurement leadership, and this is just a few examples, Bill Crothers (and his predecessor, John Collington) came from Accenture. David Thomas, HMRC – ex energy sector. David Shields, GPS, worked in various firms in financial services and print, whilst his Sourcing Director joined recently from Arcadia.  Ann Pedder, Foreign Office CPO, was a GE executive.

David Smith at DWP is a career civil servant, but several of his senior team came in from the private sector. Or take MOD – Bernard Gray famously was private sector through and through before becoming the very top man in Defence Equipment and Support, Les Mosco (effectively the CPO) has a varied public  / private background, and Andrew Manley – famed as “the man who signed the Alix Partners contract” was a senior Shell executive. I could go on...

These people have generally done a pretty good job, but let’s not pretend that this is a new idea, or that a few superstars will suddenly make a material difference. If we accept that there are some issues with public procurement, or potential for improvement at least, real transformation will require something a lot deeper than the odd injection of a CPO from a big-name private firm.

Our second point is the question as to whether paying significantly more would attract a better sort of person into the public sector. I’m not sure about this. It assumes there is a whole cadre of private sector stars in procurement who would jump at the chance of joining, if only a CPO role offered perhaps £250-300K instead of the £120-150K that most of the big hitting CPOs in government are making.

So this in itself is a three part question...

  • Do these people exist?
  • Would their skills be appropriate to the public sector?
  • Is reward the reason they haven’t joined the public sector?

We’ll come back to those question in part 2!

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Voices (5)

  1. David Atkinson:

    If there is an interesting distinction, it’s not between public and private; it’s that between procurement experience in organisations where procurement is genuinely business-critical, and those where success is useful, but not a top priority.

    In the former type of organisation, cross-functional working is the norm; everyone understands the importance of procurement to the business and practitioners are expert in their professional field, as well as comfortable with stakeholder management. Those stakeholders and senior management ‘get it’.

    In organsiations where procurement isn’t so critical its a constant uphill struggle to get attention, co-operation, and an acceptance of a shared destiny. It’s a tougher gig. It’s in these circumstances where you find an obsession with procurement ‘status’, bleating about not being on the ‘top table’ and functional imperialism.

    I’ll leave others to judge which public organisations fit the descriptions above and which are likely to make best use of talent from inside and outside their sector.

  2. Christine Morton:

    Peter – I assure you that the private sector could use some public sector stars, too. I am sick of this .. insecurity… that the public sector has about itself! Come on now!

  3. Chris C:

    The important issue is possibly to import people who have experience in, and licence to, totally rebuild procurement systems and procedures so that they are efficient, fit for purpose and encourage staff to stay in post long enough to become commodity experts, and who have also successfully rebuffed unwanted interference in their activities. I suspect these skills exist in the private sector but possibly not in major corporates.

  4. eSourcingSensei:

    Hi Peter

    I think maybe the point of what is “missing” is being, well, missed.

    You immediately focus your artical on CPO’s and those “at the top”. And maybe that is what Heseltine meant in his statement, but it is not the decision makers or the strategic thinkers that I think needs to be focused on. It is the people that have to carry out the startegy or the processes laid down.

    It’s okay to design a strategy that has a long term plan of re-shaping the GPS process and delivering huge savings and those people can have their £100/200/300k salaries if they can get it, but the man/woman on the ground has to carry out the action that will achieve or not achieve the targets given.

    It is not always the top of the tree that needs changing or improving – sometimes it’s the team on the ground that need the boost and when the good ones are identified (within or without Gov Procurement) salaries ought to be available to attract or retain these people as they are the ones that will eventually be required to deliver the plan. I think it is there that you may well find a 2 or 3 fold salary gap.

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