Friday, 19 November 2010

Tensions in UK Public Sector Procurement

I recently ran a day long seminar on Category Management for 23 public sector buyers from a wide range of organisations (on behalf of BIPSolutions).

It was an opportunity to take the temperature of public sector buyers – but naturally we should not assume it is totally representative.

First, I have noticed a couple of quite predictable trends in public sector commissioning following the Comprehensive Spending Review by the coalition government. Firstly the overall level of tenders being advertised seems to be lower than previous years – reflecting an anticipated drop in public sector spending. Secondly, some authorities appear to be spending budget in this financial year, with the clear expectation that there is no point in keeping it for next year - and that there will be no money to spend next year. An example is a council who are looking to arrange 18 one day training courses between January and March 2011 – clearly spending money while they still have it.

My delegates reported extensive pressure on budgets and costs. In some cases this accounted for their presence on the seminar – their authorities were looking to reduce spend by introducing category management. However they were also looking to reduce headcount in procurement, which is very contrary to the approach needed for good category management – rather than fewer people you tend need at least the same number of higher skilled staff (probably more). Given that one authority was looking to introduce category management with only 3 procurement people, they will be lucky to get the sort of improved quality and reduced costs that can be achieved.

There was a lively debate about the priorities for public sector commissioning – one view point was that we are going to be focussed only on lowest price. Another viewpoint was that with authority budgets under pressure there was unlikely to be money available for local economic development, inclusion and sustainability projects and these are potentially going to be pushed down to suppliers in the form of the “Economically Advantageous” element of tenders.

All of this highlighted the continuing tension in public procurement between meeting the EU required objectives of open and fair competition, whilst ensuring Value for Money. Category Management whilst capable of achieving good VFM, may be seen as restricting (managing) competition and therefore clashing with the open and fair agenda. And meanwhile it is likely that procurement will be trying to do more with less (or to be more precise fewer). The case for investment in procurement is understood by the Buyers, but there was a general feeling that it was not an argument that at the moment was going to cut ice. However there was a general feeling that their organisations had good and strong management – which is reassuring in a time of great change and turbulence.