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Public Sector Contracting Under The Spotlight – But Offers Lessons For All

July 19, 2013

Today, the UK Government issued a report by the Public Administration Select Committee on Government Procurement.

It highlights weaknesses in commercial understanding and contract capabilities, in particular a failure to learn from past mistakes. “The Committee is concerned that the EU Directives which govern procurement in the UK  reinforce a process-oriented, risk-averse culture in procurement, which in the UK results in delay, increased cost and a failure to focus on outcome”, states the report.

Efforts to improve are under way and in particular, the Civil Service is focusing on steps to improve commercial awareness. Before those in the private sector shake their heads and dismiss this as a purely public sector issue, I must point out that these weaknesses are  in common with a growing number of large, private-sector organizations, struggling to improve cycle-times and to raise the quality of decision-making. IACCM, through its research, advisory and training support, is at the heart of many improvement efforts.

However, in this age of growing specialism and more rigorous performance metrics, it is hard to achieve commercial balance. The ‘generalists’ who provided breadth of view have either been side-lined or eliminated. Because they could not describe precise value-add and were not mandated as a result of external regulation, the ‘commercial expert’ who offered connectivity between functions and experts was seen as superfluous to requirements. Yet in truth, they were often the ‘cross-functional glue’ that enabled faster response times and balanced business judgment.

Today’s Legal, Finance and Supply Management groups do not offer an effective replacement for the role that traditional contract or commercial management teams were (at their best) able to provide. Whether and how quickly we can replace those skills with a more generic approach to ‘commercial awareness’ remains to be seen. I think that the top performing companies are already working to have their contracts and commercial groups operate as ‘knowledge centers’, overseeing increased quality of commercial process, tools and information flows. But in the end, unless performance measures are altered to reflect commercial values, I am not sure much will change.

One Comment
  1. Hit the mark Tim

    “Tell me how you will measure me and I will tell you how I will behave. If you measure me in an illogical way, do not complain about illogical behaviour”

    Contract specialists can do well adapting this quote from systems thinking guru Eli Goldratt. Replace “measure” with “pay”…. and suddenly a lot of problem contractual behaviours are explained.

    IH

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