George Osbourne has sounded the clarion call to slash public sector spending. In those ‘non ring fenced’ departments, savings of up to 25% are being demanded. Having worked within the public sector (local government) I know there are savings there to be made. I also know how real savings could be achieved – by radically reforming a public sector procurement process that increases costs for no benefit at all.
I have had the frustrating experience of tendering for public sector contracts, where the whole process seems to drive up costs, a sort of unintended consequence of a ‘compliance’ culture, where individuals appear more concerned to cover their backs than to make a decision. The result is that procurement officers place almost impossible barriers to entry to smaller and possibly cheaper suppliers, with demands that only larger and more expensive companies can comply with. For the procurement professionals, the result is that whatever the outcome, they escape blame because they appointed the best/most expensive supplier and its really not their fault if such a reputable company fails to deliver.
Let me give you a recent example. A police authority in central England publish a PQQ for a content management system (cms). They are not a large organisation and their requirements are rather simple and run of the mill. A small, local company might prove to be an ideal supplier. However, the PQQ states that prospective suppliers must have delivered 5 ‘large scale’ cms implementations within the last three years.
‘Large scale’ must imply contracts of at least £100,000 plus, yet their own requirement is not ‘large scale’ – Joomla!, Drupal or Alfresco, at a push, would suffice. Few small companies will have that sort of portfolio, otherwise they will have ceased to be a small company. Straight away these procurement professionals have ensured that this project is going to cost far more than it should.
Prospective suppliers must also have public liability insurance to the value of £10 million! I mean, how much damage could a bodged cms implementation do? This cms is not going anywhere near sensitive information, so why such an exorbitant insurance demand? Once again, the procurement process is upping the costs, for no real benefit at all (except for the procurement professionals, who now have a large scale public sector procurement on their CV).
Cynical? Possibly, possibly not.
1 thought on “Saving Money – Public Sector Procurement”
“Nobody ever got fired for buying IBM”
Nothing has changed and nothing will. What’s the answer for the smaller company? Buy in tendering expertise perhaps. Or prove yourself in the private sector first.
As long as the current procurement cut and paste culture of the public sector exists there is no hope for the smaller specialist company in that market.
Public sector seems attractive because contracts are advertised but it’s frankly too expensive for many to tender. The problem is apparent right the way up the procurement tree even at genuine higher cost projects.
Has anyone contacted their MP on the matter. It would be useful to start a conversation at least. After all they work for us…