Negotiation in the Public sector

Negotiation is one of the key skills in business, but it has been mostly excluded from EU public procurement - until now.  The new regulations move negotiation from a "only if you have to" route to a potential alternative to a standard restricted tender.

The intention is clearly to try and get some better value, and to shake things up a bit in the bidding process. 

What concerns me is that the Public Sector might be de-skilled in commercial negotiation.  Now as a trainer, de-skilling is generally accompanied by the sound "Ker-Ching", but in this case I don't have something to sell (at least not yet - we are talking about it).  To me there has got to be a risk that skilled commercial negotiators who did this all day long in the private sector part of the business will have  a real advantage over Public Sector buyers.  Training would help (I would say that, wouldn't I) and so would bringing in people from the private sector (though there are problems with that), but the sort of skill and expertise needed to match the private sector is going to take a long time to build up.  Obviously the regular CIPS negotiation competitions will provide some people with the appropriate battle scars.

I wonder what this will mean, and I don't have any easy answers.  Does it mean that buyers will avoid these routes?  Or that they will try them and be burned?  Or will there just be lots of questions?

I am interested in people's views - and later in the year I hope to be involved in some suitable training targeting public sector buyers.  And possibly private sector sales teams too.  Lots of things in the air.

Consultancy for the Public Sector - 6 to 10 July 2015

It is a big change to move from working in the public sector to working for yourself as a consultant.  If you are interested in doing so then I am happy to chat to you and give you what tips I can, but you might be better off going on a dedicated training course such as the one run by Public Administration International (PAI) in London.

It is particularly useful for international delegates, not just those in the UK, who are interested in working as a consultant with organisations such as the World Bank, United Nations etc.
Full details are here.

PAI are not someone I work for so I am not selling my own training here - it is purely a public service announcement.  They are a very impressive outfit in central London and I have no reservations about recommending them.  The fees are quite reasonable as these things go.

If you are setting up as a consultant - good luck.  It has its ups and downs, but it can be very satisfying and interesting.

Preparing Perfect Tenders - Birmingham 25th March 2015

I am taking over the Preparing Perfect Tenders course in Birmingham from my colleague Eddie, and so I have the opportunity to repeat the event I ran last month in Manchester.  Hopefully with new jokes.

 

Of course, since then the new EU procurement regulations have come into force in England, Wales and Northern Ireland.  How does this change things?  Why not come along to the Novotel and find out?  (Ideally having booked first of course)

 

 

Best Value and Gold Plating of UK Public Sector contracts

Local government minister Kris Hopkins has apparently accused the public sector of "gold plating" procurement requirements in the proposed revision of the Best Value guidance for local authorities.

Article in Supply Management and the proposed revision itself.

His suggestion is to minimise unnecessary paperwork and a tick box mentality, which I think is something that we can all support.  Though to be honest it is not my definition of either Gold Plating or Best Value - it is more about efficient processes.

Whether gold plating is common is something the Minister will have more data on than me, but I think we can consider why it might happen - there is no upside to public sector procurement.  In a commercial environment any savings or added value go through to the bottom line, and add to profits with (hopefully) bonuses all round.  In the public sector any money saved just goes back into government coffers to be used elsewhere.  Any added value is possibly not appreciated (and possibly seen as gold plating itself) (Personal recent example - I bought a First class train ticket for less than the equivalent second class fare.  Don't ask me how that works.  But if I worked in the public sector I bet there would be complaints that "we don't pay for first class travel" regardless of the fact is was actually saving money).

On the other hand any problems in public sector procurement can be very visible, and the procurement professionals might be the ones offered up in sacrifice to the media rather than the relevant Minister or Chief Executive. 

Whenever there is no upside and a very large potential downside then people tend to become risk averse and insist on belt, braces and a second belt just to be sure.   That might lead to gold plating of specifications.

Paradoxically allowing procurement to occasionally fail (a more commercial approach) might actually lead to more success.


Incidentally, the Best Value document mentions British Values - which is one of those things we all know what we mean but is very difficult to put down clearly in words.  Though democracy, the rule of law, individual liberty and mutual respect and tolerance of different faiths and beliefs (all listed) are part of them I am not sure that they are either definitively British or comprehensive.  A topic for another post I suspect.

Professional Purchasing Skills April 2015

I shall be running Professional Purchasing Skills in Dubai 19th to 23rd April 2015.  Details are linked to the title.  Always an interesting event - hope to see you there.

The Impact of the new EU Procurement Legislation

"The impact of the new EU Public Contract legislation" is a new event from PASS, which should be all you need to understand the change in the law from 26th February 2015/1 April 2015.  The good news is that the course is being run in a wide range of locations around the country, from Exeter to Newcastle, Cardiff and Belfast - so there should be one relatively near you.  The bad news (possibly) is that I shall be leading some of those events, but to make it interesting I won't tell you which ones yet.  So there is still a chance you will be lucky and get one of PASS's other tutors. 

Don't want to take the risk?  Well I shall be in Birmingham on 31st March 2015, and a further 5 or 6 during April, May and June  - none of which are actually on the website yet.  So book early and you can avoid me!

Those of you who were at Procurex North recently will I hope have found that this topic  is interesting - the law has changed, and so there will be a whole bunch of new case law to be developed.  And most Buyers will be hoping it is not them that is the basis of that case law.  We hope to point out some of the risky areas. 

And do remember these regulations apply in the UK, excepting Scotland who will have their own legislation later in the year - and yes we shall have events about that too.

Joking aside I hope to see you at one of the events.  You might also want to listen in to Eddie Regan, our in house guru, during his free webinar on Monday 9th March 2015 at 10:30.  I know I shall.

SMEs and UK Public Procurement

SME's are constantly told that the government wants to increase the amount of business that it is doing with them.  This is an important issue, one very dear to my heart, and as Peter Smith of Spend Matters points out the government is not telling the truth about their failure to deliver on this.

Peter links to the latest report which is extremely misleading about some of the key points, and skips over what I think is actually vitally important news about payment terms, and some potentially good news about a revamp of the currently lame Contracts Finder.

Before I rant about the data, let me get to the good news story: from 25th February 2015 everyone in the supply chain to central government must comply with 30 day payment terms.  We can compare this to the Tesco/Sainsbury problems and see how vital this is for SMEs

The government has consistently remembered the importance of this issue, but not delivered - as signified by the changing language.  25% business central government business with SMEs has moved from a commitment to a target to an aim to an ambition and I think it is currently an aspiration.
The concept has suffered from an internal government clash between Mr. Eric Pickles' concept of piling things high (at sub-central level) to get economies of scale, and Mr Maude's more nuanced approach.  But the upshot is that once again support from SMEs has not delivered. 

I used to deliver programmes for BusinessLink operators, so I am probably biased but when these were cut SMEs lost an avenue for support (there are many valid discussions about whether it was the right support to the right businesses, but still).  Directing more procurement to them would have helped them during an incredibly difficult time for many SMEs.

SMEs have been facing a terrible situations with banks not wanting to lend, reduction in public spending programmes (suitable for SMEs), reduction in overall business spending, withdrawal of BusinessLink (ok, maybe not such a loss for many), increased competition (from the many new one man bands and SMEs set up during this time) and exploitation from big customers paying late (if at all).  The good think about Public Procurement is that it does pay, and relatively promptly. 

I think it is great to encourage these business- some of which will grow, and others of which will die with the ones in the middle providing a living for many people.  There are real problems in targeting government contracts to be appropriate for SMEs, and the government should not shy away from discussing that but it should also be honest.

The headline on the report says 25% business with SMEs.  The text says £11.4bn and 10.3% directly (with 15.8% indirectly).  Let us be clear - indirect does not count.  If I buy a sandwich, and the shop owner buys some cheese with the money to make my sandwich, I did not buy some cheese.  I did not say not stipulate where the shop owner bought the cheese, or how much he paid or when he paid, or who he bought it from.  I bought a sandwich. 

If we are going to include the supply chain the number should be a lot higher than 25%, because the shop owner might employ a cleaner - should that count as my spend because I bought a sandwich?  The 25% figure is a nonsense even before you get to the fact that the indirect spend is based on information provided by big suppliers without any actual evidence.  It is only been given so that the Cabinet Office can claim to have met a target (sorry an aspiration) ahead of the election - in doing so it degrades trust in public pronouncements.

In the breakdown there are good news stories: BIS is 34% direct, DCLG is 24%, DFID is 30%.  Why not trumpet those successes and explain why the DWP is only 4%?  And how you mean to address the overall spend?

Remember though that central government procurement at about £100bn is only half the total with the other half spend by sub-central bodies who may be better at engaging with SMEs.

And the last point, which I again I need to declare an interest on, is Contracts Finder.  The revamp is very necessary, as on the old version the search engine did not work on the front page which is a pretty serious flaw (it works on the new version).  More importantly awareness of it was low - one courses rarely did more than half of the delegates know about it before I told them.  It cannot bring in SMEs if they do not know about it.  In the press release Lord Young says that it is unique "in terms of scale and ambition" - well the old Supply2gov (run by BIP Solutions, who [full disclosure] I do work for) had pretty much the same function, the same ambition, a larger scale, and much higher brand recognition.  (Note BIP Solutions now run Competefor which does a similar job on a smaller scale).

OK, what I've been ranting - what do I want?  Honest data about the situation, a renewed commitment to increasing direct SME spend from 10% to 25% (or even 20%) over the next parliament, and a plan for doing so outlining the problems for particular departments and the potential costs (reduced economies of scale) and benefits (innovation, flexibility etc.).  Not too much to ask I hope.

BTW, a year ago I discussed this with a senior Labour politician and they seemed to have no more recognition of this than the current government, so this is not a politically focused rant (and Mr. Pickles and Mr Maude are members of the same party).