Delivering Government Procurement Policies by Colin Cram

Posted on March 14, 2013


In the 1980s, a TV comedy programme in the UK achieved very high audience ratings. Margaret Thatcher, the then Prime Minister, was an avid fan. It was called ‘Yes, Minister!’ and viewers saw the hapless government minister pitched against the civil servants, led by ‘Sir Humphrey’, who did their best to undermine any ministerial policy or wishes  that did not concur with theirs. Senior civil servants are still frequently referred to as ‘Sir Humphreys’. Unfortunately, the risk is growing that senior procurement professionals may start to be seen as joining the ranks of the ‘Sir Humphreys’. In a separate article I have commented on the problems the government is having in getting government departments to use common purchasing agreements for common goods and services. It is also having problems with other procurement policies.

UK Procurement Reform . . . does life imitate art?

UK Procurement Reform . . . does life imitate art?

The UK government has set itself a target of 25% of its procurement spend being with small to medium sized enterprises, though this applies both to direct spend and indirect, through the supply chain. The policy of increasing expenditure with SMEs was introduced in the mid-1980s following evidence from the USA that SMEs tended to generate more employment and growth than any other business category. I would love to have seen the evidence, as SMEs are more likely to go out of business than any other business category, so I remain unconvinced about the validity of the policy. Nevertheless it has remained policy, but took the UK government 25 years to put a target on it and even longer to measure it.

A report by the National Audit Office, that reports to a Parliamentary body responsible for scrutinising the efficiency and effectiveness of government expenditure, suggested that expenditure with SMEs was increasing and the government had previously claimed credit for this. However, that increase was attributable to the second biggest spending government department, which reported an increase in its procurement spend with SMEs from 9% to 34% – in just 1 year! The percentage of expenditure with SMEs by most other government departments was falling. The alarm bells should have rung that the data was questionable. In fact, it is probable that, despite best intentions and many initiatives to increase spend with SMEs, the percentage is still falling. The UK government seems unable to enforce its will on government departments and the civil servants that run them.

It is for reasons such as this that I have been arguing for an overhaul of UK public sector procurement, creating a single structure with service accountability to internal customers, government departments and, for delivering government policies generally, to a single government department such as HM Treasury. There are risks in creating such a structure, but unless public sector procurement organisations work together in a focused way to deliver government policies, stop  creating duplicate procurement agreements, enable best practice procurement and supply chain management techniques to be used on behalf of all and deliver excellent value for money all round, there would seem little to lose. Oversight by the National Audit Office should prevent complacency within such an organisation.

Collaboration has been given a chance – tried for 30 years and failed to deliver anything like what is required. It has been expensive – I estimate the extra costs of supporting collaboration to have been over $1.5bn over these years. The government has three choices.

  1. It should drop policies that the current structures for procurement will never be able to implement – that means nearly all policies.
  2. It should make the huge structural change to procurement that is necessary to deliver its policies.
  3. It will feel that either of the above two options is unacceptable, will broadly retain the present structures and hope that there will be some improvement.

Despite the enthusiasm and genuine understanding by the government minister responsible for trying to drive through efficiencies, Francis Maude, and his determination to introduce a whole range of valuable initiatives, it may be possible that even he may end up relying on option 3. We are halfway through the life of this elected Parliament. Civil servants may already be betting on there being a change of government in 2 years time to one that will feel less inclined or less capable of reining them in. They may well start to make life even tougher for what is, at heart, a reforming government.

©Colin M Cram FCIPS