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Skills & Capability

June 3, 2013

Francis Maude, head of the UK’s Cabinet Office, recently gave evidence to a Parliamentary Select Committee on the subject of Government Procurement.

While showing some differences in the analysis of causes, the committee has been relatively united in its criticism of public sector procurement. It is of course always easy to focus on highly publicized failures and the media loves nothing more than to point to the waste and incompetence of Government employees and ministers. As I have observed in previous blogs, that analysis is generally unbalanced since private sector shortcomings are not subject to the same external visibility and to some extent poor decision-making is due to aspects of that external scrutiny.

However, Francis Maude was quick to acknowledge the need for further improvement and focused especially on the challenge of improving commercial skills. He rightly highlighted a number of the key challenges – one being the tendency by many Procurement staff to place process before judgment, another being the fact that you cannot centralize all decisions – so commercial judgment must be a quality that is widely dispersed.  In this diagnosis, his evidence accorded strongly with that which I (and several other IACCM members) have provided to the same committee in recent weeks. It also aligns with the realization by many private sector executives that ‘raising commercial competence’ is a critical issue in meeting the challenges of today’s markets.

The challenge for Government remains in part where it should start. As the Minister indicated, a fully centralized procurement service is unlikely to work well, given the size and diversity of the organizations it would cover. But he was right to suggest that there are opportunities to consolidate certain types of spend or certain types of project. Consolidating skills does not mean that decisions are automatically divorced from user needs. This Government has also taken steps to introduce commercial understanding at higher levels of the organization, though I have some concerns that this will lead to frustration rather than change (it is certainly a tendency I have observed when private sector companies try this approach). Inserting private sector ‘experts’ is another recent measure which I suspect may assist diagnosis rather more than generating improvements for specific projects.

From my limited insight, I feel that major issues for Government procurement are based on fragmentation of resources and unclear accountability. Without these issues being addressed, it is not surprising that individuals are more concerned with ensuring they do their part of the process rather than worrying about the ultimate outcome. When it comes to commercialism, I think it is critical to remember that public sector employees largely lack insights to ‘the market’. That is because their survival does not depend on selling things. Many times, private sector Procurement staff are also weak on commercial judgement, but they have other forces throughout the business which ensure the wider market is not ignored.

So perhaps a key thought for Francis Maude – and other public sector leaders – is that seeking to emulate private sector procurement is missing the point. Public sector actually needs a different approach to developing the necessary acquisition skills. Perhaps if we started with training in commercial management and then added the techniques of modern procurement we would see different results.

2 Comments
  1. Owen Davies permalink

    Tim, I have just read comments on this issue from the Sunday Times and OutsourceEye. The issue is that people are equating “commercialisation” (if there is such a word) with procuring at lower costs being fixated on getting less for more and this strikes against the innovation and flexibility aspect that Government procurement should be about.

  2. Owen, I certainly agree that an unerring focus on driving down the price lies at the root of many problems. I am optimistic that this is understood by Francis Maude and many in the Cabinet Office, but you are right that it does not seem to translate in behaviour on the ground. Part of the challenge is that messages from the centre often seem confused; but more to the point is that no one seems to be focusing on the methods that need to be used to transition from input cost to output values. And finally, there is the problem Francis Maude highlighted in his evidence – an army of Procurement staff who have been trained in process, not judgment.

    We (IACCM) are trying to make our voice heard and to offer assistance, but break-throughs are in pockets – and countries like US and Australia currently seem far more receptive to action.

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