PROCUREMENT
A chance to put it right
The UK public sector spends £220bn a year on procurement – equivalent to £3,500 per adult and child, but there is no overall structure for managing this vast resource. Richard Mackillican asks public sector procurement expert Colin Cram how the government can tackle this issue
represents one third of public sector expenditure, it seems an obvious place to start.
T
Colin Cram is public sector procurement advisor to the Institute of Directors
“The problem is that, despite improvements spearheaded by the Office of Government Commerce and by some dedicated public sector procurement professionals, public sector procurement is still very fragmented,” says Colin Cram, who is public sector procurement advisor to the Institute of Directors.
“There is indiscipline and disaggregation within public organisations, with different organisations using different processes, which makes it very difficult for the private sector to engage with them properly.
“There is a multitude of contracts for essentially the same products, a variety of specifications for the same things and purchases on a large scale that would not be necessary were public sector organisations prepared to work more effectively together.
successive
governments have paid insufficient attention to dealing with the issue of how the public sector procures goods and services
26 pse
“Fragmentation means that the expertise of the greatest procurement and product category managers is often available only to the organisations which employ them. Their expertise is often not available to the wider public sector, which means that most procurement organisations have to make do with second or third best when it comes to category management. Even worse, the
he government needs to make major cuts in public spending and as procurement
best category managers may work in organisations that have need for their particular expertise for only a portion, perhaps 10%, of their time. So much of their expertise can be wasted.
“Also, fragmentation means that procurement techniques that are standard in the private sector often cannot be used. There are several thousand procurement organisations with a huge overlap in products and suppliers. It is simply not practicable for them all to try to manage common supply chains, many of which are global. Add to this the limited aggregation of spend. All these factors create unnecessary costs directly for the public sector, for suppliers and for their supply chains, which then get passed back to the public sector.”
Colin attributes the current situation to the way in which the public sector has evolved.
“The public sector has developed in a haphazard way over hundreds of years and the organisation of procurement reflects this. The Office of Government Commerce has assessed that there are several thousand public sector procurement organisations and over 40,000 procurement points. Large parts of the public sector, for example local authorities, are not part of the ‘Crown’, retain a high degree of autonomy and many public sector bodies and individuals within them seem more concerned with demonstrating their ‘independence’ than delivering value for money through working with others.
“The world has changed. Public sector procurement has become increasingly dependent on global supply chains. Yet too many parts of it seem to retain a pre-supermarket era corner shop mentality when it comes to procurement of goods services and works.”
Colin argues that successive governments have paid insufficient attention to dealing with the issue of how the public sector procures goods and services.
“The ‘Thatcher’ government started to take a serious look at central government procurement in the mid-1980s and made some significant changes but failed to keep up the momentum.
“The last Labour government paid much more attention to it but, despite some valuable initiatives such as the creation of the Office of Government Commerce, failed to address adequately some fundamental issues such as the way public sector procurement is organised and the poor quality of information on how and with whom the £220bn is spent.
“Given that all political parties have some of their MPs and House of Lords members from the business world, it is amazing that they tolerate a situation in public sector procurement that they would not remotely countenance for their own businesses and which they know would lead to bankruptcy or takeover.”
Jul/Aug 10
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68