UK Public Sector Procurement News by Colin Cram

Posted on August 24, 2012


UK public sector procurement has been in the news the past two months. The Scottish government (no, Scotland is not an independent country, but it does have a lot of autonomy, rather like the states in the USA) has passed a bill merging its 8 police forces. A detailed business case concluded that merger, as opposed to other forms of collaboration, was the most cost effective option, with savings forecast at around £140m ($200m) a year from year 5. This is about 10% of current costs. The resulting joint procurement organisation is expected to deliver £40m ($65m) a year savings, despite some degree of coordination hitherto.

The security issues created by the failure of G4S to be able to provide enough security guards seem to have been forgotten. No doubt there will be a post-mortem after the Olympics. However, several lessons seem obvious. Firstly, for something as critical as that, only award a contract to an organisation that has had experience on something approaching that scale. In the UK, it is only the army and the police, so outsourcing to a private sector contractor was always going to be a high risk option. Furthermore, G4S was recruiting temporary staff – which is what the security guards were – several months in advance of their requirement. It should have been obvious that many people would apply in case they had no other work. Or, if they were unemployed at the time they applied, would not turn up for duty if they had found a permanent job in the meantime. So why did the risk analysis not flag this up? One reason may have been cost. Soldiers cost many times that of a temporary security guard, so 10,000 soldiers would have far exceeded the budget. In the event, many more soldiers and police were drafted in and finding the extra money became no problem. Lesson 1:  Procurement cannot solve the impossible if a budget is unrealistic. Lesson 2: Cutting corners can end up costing much more in the end than it might otherwise have done.

The scandal of children in care being placed in children’s homes far away from their own homes and inadequately supervised was highlighted through the conviction of a group of men who systematically abused some of them. The problem was created partly because of the uncoordinated way local government purchases care home places. There is no real attempt to manage the market, so that providers choose the cheapest, rather than the most suitable locations. Also, it is impracticable for each local authority to attempt to manage every supplier. A disaster waiting to happen! It is time UK social workers were taught that procuring places for children in children’s homes run by private sector organisations is a commercial activity and needs at least as much skill as procuring photocopiers. There should be one procurement team operating on behalf of all councils.

Finally, the reform of central government procurement continues, albeit falteringly at times. UK central government procurement is the responsibility of individual government departments, several of which, to be fair, have some very good commercial directors. John Collington, whose job it was to try to pull things together – there was much commonality of category and knowledge and skills requirements –resigned, to be replaced by Bill Crothers, who seems to have a wider remit, including the re-structuring of central government procurement. His deputy is the capable Sally Collier. John Collington’s deputy was David Smith, who is also commercial director at one of the major departments. It looks as if he was replaced by Sally Collier almost without so much as a ‘thank you’. That will not make Bill Crothers’ task any easier.

Colin M Cram FCIPS


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