How do the Whitehall procurement plans impact the wider public sector?

We've covered the UK government plans for greater centralisation of Whitehall spend and related initiatives extensively over the last couple of weeks.  But how do these plans affect procurement in the "wider public sector" - local authorities, schools, hospitals, police forces...

The simple answer to the above question is 'not much at all' to be frank. The whole thrust of the announcements about the "centralising procurement in Whitehall" initiative  is around sorting out central government spend, and you can absolutely see why that is the focus.  It's a tough enough task without pretending that a team in Cabinet Office can also improve procurement in thousands of schools, hospitals and local authority bodies.  But that does have negative implications; here's the Financial Times:

Mr Maude conceded that the government’s “localism” agenda of turning hospitals, schools and other public bodies into more free standing businesses cut across procurement efficiencies.

But he said the centrally negotiated deals would be made available to them and the spending cuts provided “a burning platform, the hottest there has ever been”. That, he said, would encourage them to take advantage of the central government deals.

Schools are a particularly interesting sector to conisder, as many become Academies with increased autonomy and freedom from local authority control. That may well have positive policy consequences; but it dis-aggregates the market.  It's fine 'making deals available' to schools. But without commitment, as we keep saying, you won't get the best deals, and getting that commitment from thousands of independent schools won't be easy.

In fact, schools are becoming an incredibly unattractive sector for many big suppliers; if you're a global software firm, persuading half the schools in the UK one by one to run your solution just won't be worth the investment. And OPEN has gone, which was to be the national eMarketplace for schools, another sign of the weakening of central influence.

It strikes me that we're moving towards a situation where procurement across the schools sector will become much more like that in the hospitals. We saw the National Audit Office criticisms recently of hospitals not collaborating - as schools are freed from local authority control, the same thing may well happen. Look out for the NAO report in 2013 raising these issues....

Perhaps however this will be an opportunity for local suppliers - will that be an unexpected benefit?  A plethora of local tradesmen, software designers, recruitment agencies, all targeting local Academies? Who knows...

There's no way Michael Gove is going to 'mandate' schools to do anything, including procurement collaboration, as he is focused on freeing them from what he sees as bureaucratic controls.  From a policy point of view, that may have many benefits. But clearly there will be a trade off and there is a potential negative in terms of losing the power of leveraged spend volume across the sector. I don't have any solutions, but we'll keep an eye on the sector as the changes unfold.

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Voices (4)

  1. Huhh?:

    Why don’t Buying Solutions work with private sector companies to come up with solutions that could help the wider Public Sector? It seems madness to me that the NHS reforms (whatever the hell they end up looking like) will push more taxpayer £s into the devolved localism – without any clear support on how this could work?? Distinct lack of any joined up thinking..

    Why hasn’t the government been reaching out to private sector organisations to get them to take the risk/reward in helping the wider public sector to drive out cost in the purchasing chain…

  2. Rob:

    Also, an interesting announcement in respect of the Health system today.

    Health represents a truly enormous spend, yet it hardly ever features on the agenda of ERG and the new CPO. Part of the grand plan to allow the wider public sector – seen as an ‘internal market’ – to sort itself out, no doubt.

    I sense a plethora of competing shared services solutions launched by multiple councils and local authorities are already on their way….

  3. Epoch:

    Hmm, a major conundrum here methinks – just how do you get 24,000 independent organisations to collaborate (or even care about procurement)? The question is, given the landscape, should you even try? We all know that there is never likely to be a mandate for schools to collaborate or even buy more smartly so what will the procurement teams in DfE responsible for getting savings for schools actually do? I also await the inevitable NAO report.

  4. Final Furlong:

    “…he said the centrally negotiated deals would be made available to them…would encourage them to take advantage of the central government deals.”

    Minister Maude needs to immediately implement the following:

    – get a better procurement adviser

    Minister Maude needs to be advised to stop telling everyone that the central government deals can be used by the wider public sector when we all know that they can’t – as we all know – judging by the first two procurements, and as stated clearly in their respective OJEUs, they are all intended for central government departments and ‘named authorities’ only. (He may have simply forgotten that we’re a member of EU.)

    – get a better procurement delivery lead

    He/she would set the procurements up in a way in which they can actually be exploited by the wider public sector from the outset – unlike the first two procurements – thereby ensuring that when Minister goes to press again, he is stating fact

    and finally…

    – get a better public affairs person

    He/she wouldn’t allow Collington, the new CPO, to go to press with this quote….“In my experience to get a real transformation in procurement you need a burning platform so that you simply have to save money, and you need executive sponsorship at the highest level.” after Minister Maude has been quoted in the same article with “a burning platform, the hottest there has ever been”. It is the experience of many experienced practitioners that success in procurement can be measured by many things, but “shaping and delivering great procurements” would be a high priority? If your SRO says that “it’s the hottest it’s ever been” then your procurements need to meet that expectation.

    Judging by the first two woeful procurements, I can’t wait to see what the next one has in store. It will need to be a phoenix out of the ashes of the current burning platform – otherwise it could all go up in smoke for the new CPO.

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