Readers’ Comments from last week on Spend Matters

We take a look at your comments on our articles from last week.

Bill Crothers gave government IT suppliers a good kicking on BBC Radio 4. We wrote about it and Dan 2 said this - and more, all of it well worth reading:

"What he is talking about is the role of the system integrators. Government load all liabilities onto the SI, ask them to manage the 2nd tier supply chain, deliver the entire IT stack, place a huge negative cash flow on them in early years through ‘service based pricing’ (usually through financial engineering rather than mirroring the costs of the technology). A small company won’t be able to do that as for example (I) cash flow is too important for them; (ii) the level of liability will be untenable and (iii) for certain services e,g, desktop hardware support – I doubt they would have the GB wide presence to meet the hard SLAs that government tends to demand and they certainly won’t have the clout to go toe to toe with other ‘big beasts’ of the IT worl"d.

Legislation to drive use of central purchasing bodies – a very odd idea

Taking a look at the Cabinet Office’s Discussion Paper on the UK Transposition of new EU Procurement Directives, we had a few questions.

Dave said:

"This is very interesting with all sections of the public sector being tasked with increasing the amount of collaborative procurement – which according to Central Government MUST provide better VFM.

It would be interesting to see how this approach will dovetail with Government’s other much publicised policy of increasing the spend with SMEs."

While Dan said:

"This assumes that:

a) Aggregation ALWAYS leads to better value for money
b) A centralised purchasing body is always capable of exploiting that aggregation.

These are fallacies, however:

a) There comes a point where contiued aggregation doesn’t achieve better vfm and just becomes unwieldy
b) It depends on the quality of the procurement staff.

I know there have been instances in the past where we’ve achieved better vfm on our own rather than use an existing framework through a centralised purchasing consortium. A better option would be to mandate the use of a central purchasing body but allow a number of such bodies – this would allow for the benefits of aggregation while maintaining a level of competition. I’m pretty (cynically) sure that this would be one case where Francis Maude isn’t in favour of more competition as it would undermine the vaunted CCS."

We also received a very interesting comment from Phoenix, but Peter’s written a separate article about it, which you can read here.

We love hearing your opinions and getting discussions going about the stuff we write about, so please do leave a comment if you ever have something to say!

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