We Just Don’t Know How Good Public Procurement in the UK Really Is

Spend Matters UK/Europe founder and ex-MD, Peter Smith, revisits with a commentary on public sector procurement. 

How effective is public sector procurement in the UK? That’s a really hard question to answer for a number of reasons. So much of what happens is invisible from the outside, and of course if you are sitting outside, you just get a sanitised view of what really is happening.

The Government Commercial Function (GCF) and Organisation (GCO) have certainly taken some positive steps in terms of professionalisation of the function in the past couple of years under Gareth Rhys Williams. Recent work on the Outsourcing Playbook, training on contract management and an updated self-assessment process for procurement organisations all look pretty impressive too.

But there are often two sides to the story. The handling of the Carillion collapse has been presented as a positive, in that services continued in most cases without too much trouble – but should government as the firm’s biggest client have “allowed” it to happen at all? And the consequences have not been trivial – the Royal Liverpool hospital is late and may well go over budget by £100 million or more.

That all highlights a key problem in assessing the performance of GCO and procurement more generally in the public sector – how do we measure it? I have no idea what the KPIs are for the GCO. Having lots more highly paid and qualified staff is fine, but that is an input, not an output, outcome or result.

Similarly, in the NHS, the central NHS Supply organisation has a “systems problem,” that means they can’t say how much the new procurement strategy will save each Trust, which is worrying to say the least. (It’s also frankly unbelievable that a “systems problem” is the reason for this delay.)

The other factor that makes assessing success tricky is the long lead times on many of the major projects, and the biggest procurement / programme fiascos. The other day, the Daily Telegraph reported on a “NATO row” about the UK Royal Air Force’s transport planes, the Airbus A400M, which has been bought by other countries too, and cost the UK £2.6 billion, given that “only two of the 20-strong fleet are able to fly at any one time.”

But this “new” aircraft was first commissioned in 2003. So you can't really blame the current MOD commercial folk, Andrew Forzani and his team, or even Steve Morgan before that. Or probably Les Mosco before that … and of course, the procurement professionals are only one piece in the jigsaw of military responsibility for huge programmes like this.

Similarly, the disaster that was probation privatisation goes back six years or so. And the Home Office / Emergency Services Network (“Airwave”) fiasco, which is building up to be an all-time top ten public technology disaster, kicked off in 2011.  As National Audit Office said in May this year, “The delays also mean introducing ESN is now forecast to cost £3.1 billion more than planned, and this forecast is highly uncertain.”  Just the odd £3 billion wasted so far, then.

Then we’ve got examples where one assumes politics has played as much of a part as procurement strategy. The Brexit ferries for instance, where words fail me (but this is what Jenny Draper said a few months back). Banning rail firms from franchise competitions because they won’t take on pension liabilities? Well, rail franchising from the start has hardly been a gleaming beacon of commercial excellence.

So, what’s the conclusion?

Two points:
Firstly, it is really difficult to hold people (commercial experts and others, right up to Ministerial level) to account for bad decisions and performance, for a number of reasons  including that elapsed time problem.

Secondly, commercial leaders could still do more to develop and communicate some tangible measures of success, rather than simply telling us that because they’ve spent a lot of money, everything will be fine.

Look at the cost of NHS Supply Chain - £180 million a year -  as well as the Cabinet Office spend on people and skills. Maybe it is all worthwhile, but these are big numbers – what exactly is the UK taxpayer getting for this “investment” in procurement?  More detail and more transparency please.

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Voices (3)

  1. RJ:

    Agree totally with the comments above. Also needs to be borne in mind that many of the issues caused in public sector procurement are down to political decisions being made rather than the actions of buyers (or even their stakeholders). The ferry contract debacle was, I’m convinced, driven by political pressure to “put something in place as quickly as possible,” while from personal experience the heroic efforts of the public sector to comply in a timely fashion with a budget announcement that IR35 would be fully implemented within 6 months went totally unnoticed (note that the private sector has had considerably longer to prepare for this and is, again from personal knowledge, still massively undercooked).

  2. Michael Angel:

    Public sector failures (whether attributed to a failure in procurement) will always garner more attention and higher levels of scrutiny as taxpayers money is much difficult to replenish once lost. It’s not like a good quarter here or there like the Private Sector can rely upon.

    I think there is a huge under appreciation for how well Public Sector buyers perform given the addition hurdles they face with regulation when securing deals for the Public Sector that benefit the wider population. It takes some immense skill and talent to be able to do that.

    You are spot on with the accountability and the time that lapses (you’d have to be a private eye to find anyone associated with the NDA farce), but for the most part procurement in the Public Sector has benefited largely by stringent approval chains that effectively distribute accountability and with that procurement isn’t ever necessarily full accountable for failures.

    I agree with Ian R above. I bet there are some big success stories with major service contracts out there that go above and beyond the deliverables. I am sure in time with the work ongoing with Social Value that additional value will be seen as something new which sadly it isn’t. It’s not further helped by the rag that is Supply Management who toast success of procurement from it being a success within an organisation rather than contracts with much bigger remit’s and impacts that go un-noticed.

  3. Ian R:

    I agree these are some fairly horrendous examples, as you rightly point out, not necessarily wholly down to procurement. But this is the general nature of the magnifying glass public procurement is under. According to Cabinet Office there were 34,000 contract awards last year on Contracts Finder and I bet some of those were real successes. Unfortunately that’s boring and doesn’t attract the same interest a major cluster^*#$ would.

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