Last Friday, I attended a meeting at the Treasury about SME procurement. It was fascinating, memorable and useful, not least because I got to see David Cameron, our Prime Minister, in person for the first time.
This was the (first?) “SME Strategic Supplier Summit” and it was hosted by Francis Maude who is Minister for the Cabinet Office. The aim of the afternoon debate (which included about 100 representatives of small and medium sized suppliers to the government bodies, as well as press and senior members of the civil service) was to:
- Cover what the Government is currently doing to progress SME-friendly procurement practices;
- Report back on comments received from the SME feedback facility hosted on the No10 Downing Street website;
- Seek our views on what reforms and actions the Government should be prioritising to make the marketplace more attractive to SMEs
Seated in cabaret style, the meeting began with the PM and Francis Maude entering to open up the debate and make some initial speeches. Baroness Eaton, the LGA Chairman also gave a presentation. A number of key initiatives were announced (see here, here, here and here for Government and press reports of them). Also attached is the document we were given to help seed the debate.
The essential message from all the presentations is that the Government is thoroughly committed to making Government procurement more ‘SME friendly’. Their ambition is that around 25% of all government contracts will be with SME suppliers (although one person later questioned whether this was as a % of contracts or a % of value).
People who read my blog will know, I have some strong opinions about procurement! (My humorous rant against the excesses of procurement, my suggestion for what makes an excellent procurement function and the need for more commercial leadership can all be accessed from those hot links.) And so, it was a real pleasure to hear about the Government’s plans to make procurement less onerous and more effective. Moreover, it was great to hear that I am not alone in my views! I was also very impressed that the Minister stayed for the whole afternoon, engaging in the table debates that occurred.
Some selected comments from Francis Maude:
- “We will make it easier for SMEs to do business with government: that is an absolute commitment”
- “Hold our feet to the fire to make sure we follow through on this”
- “Demands for public services are as great if not greater than ever”
- “This is the end of the era of big state, this is now the era of the Big Society”
And very interestingly
- “We are not friends of the idea of framework contracts”
I am watching this space with interest and I have already subscribed to the new and free one stop shop for Government procurement (Contracts Finder). I would recommend all suppliers and buyers do likewise. I am happy to report that SMEs were involved in the development of this new service (we were told this at the event in answer to my question).
So what now? Naturally, I am a little sceptical, although I do not doubt the verve and commitment of David Cameron and Francis Maude. I am sceptical because I have seen much of this before with the Glover report which seems to have only had marginal impact. (As a small example, I am still sometimes asked to provide paper copies of tenders when this report specifically recommended doing away with this.)
I am also cautious in my optimism because I think there are a number of very big dilemmas the Government has to handle in driving forward on this strategy. They will need to find a way to balance:
- The economies of scale with the desire for localism (what might be called the “Sir Philip Green factor”)
- The desire by central government to control and direct with the desire to develop bottom up solutions from SMEs and third sector suppliers
- Big business interests (who currently hold many of the cards with some very large contracts) with the small business aspirations of SMEs who want to slice the marketplace in smaller chunks
- The interests of big third sector suppliers (such as NACRO and Age UK) with small local consortia of SMEs, small charitable bodies and the whole Big Society
- Procurement professionalism with procurement centralism (and what I perceive sometimes as their ‘control freakery’)
- Single client/customer focus with a multiple stakeholder ‘whole chain procurement’ approach (see below)
- Transparency with commercial confidentiality
- Supporting and developing progressive commercial practices (such as encouraging women owned business or ones that have visionary aspirations for health and safety) with making procurement too ‘politically correct’ and insufficiently concerned with bottom line VFM for the public purse
- Suspicion with openness, (or how not to see all commercial suppliers as smooth tongued snake oil sales people and more as partners with whom to collaborate openly, even when some commercial suppliers are...)
- The prevalent idea of submitting one final bid with the (often common in the commercial world) practice of negotiation over a number of iterative conversations
- Fixed and concrete specifications with ones that recognise complexity and change such that service contracts need to allow for emergent solutions rather than ones fixed in aspic
- Due probity and essential risk management with bureaucratic and unwieldy demands
- Methods to provide assurance against corruption with the institutionalising of risk averse and Byzantine processes (I noted that David Cameron mentioned the ‘nobody got fired for buying an IBM’ factor in procurement...)
I could go on (and already this blog post is probably far too long: so thanks for reading to here!) but I will end on one thought. And this picks up on a constant theme of my blog – the need to take a whole system perspective. One point I made at the event, which Francis Maude said was a good one, was the need to involve the end user in the procurement process. I used the example of a soldier sitting for the first time in a newly procured and sparkly tank: the soldier knows immediately that it will not work as well as it should and could have done.
- How many soldiers (and, of course, many other frontline public service officers) are still never involved with a procurement process?
- How many of their insights and ideas could contribute ££ millions in savings and other improvements if they were given the opportunity?
- And indeed, how much more could be achieved if the people who will be receiving the service (the citizens, clients and customers of public services) were also given the chance to offer their ideas?
What we need is (to coin a phrase) “whole chain procurement” that brings people together to co-design and thence procure the services we all need to create a civil society: one that is creative, ambitious and fair!
Watching with interest on how this develops!
ReplyDeleteI work a day a week for an SME in Sussex. We were prevented from being added to an adjacent County Council procurement process because our PL Insurance was set too low. The additional cost (£500pa) was to simply be added to a list that did not in any way guarantee contracts would even be available. Then the same CC offered a public tender which we looked at. It was on behalf of 5 CC's ranging from Dorset to Suffolk. The terms of the tender specified no more than 3 companies in any consortium. Yet the work was a mix of box shifting (ideal for one large supply company) and local installations in schools (ideal for a local company in each area). We chose not to tender. I was then contacted to ask why we did not follow through the process and after I made my comments I was invited to the same event that Jon refers to. Despite my interest in attending, the company quite understandably did not feel it would benefit from the cost of my time in London with Francis and Dave.Much as I would have liked to attend, I guess the starting point for us would have been a response to my concerns with either a commitment to change, or reasons why such change was not going to be possible. To date I have never had a response or request to discuss the specific issues. I took up the Insurance issue with the leader of the Council. He couldn't undertsand why us investing in an Insurance Companies profit margin would not be a good risk. My view is that what is needed is the equivalent to the Compact that the previous Govt established with the VCS with a commissioner that one could appeal to (a sort of quango I guess).Like Sue I too will watch with interestIan
ReplyDeleteJohn, do these measures apply to local government procurement? Very often when 'the Government' refers to 'government' it really means Whitehall departments.....
ReplyDeleteHi Vicky - David Cameron did state that these measures only apply to CG depts & arms length bodies at the moment since that is the under their control. The fact that Baroness Eaton was there though, was an indication of the direction of travel that they hope all this will go in. So I think this is a poltical issue that I hope Conservative, Lib Dem and indeed Labour & other councils will pick up on and make happen in their authorities. The Contract Finder service is very open to LG purchasers as well, I understand.Meanwhile - saw a 40 page / 165 question PQQ again yesterday - all for a job worth around £50K! I would imagine the cost of creating that tender (although they probably cut and pasted much of it from their previous tender for school blackboard rubbers) and then processing all the replies will add up to quite a few thousand itself!
ReplyDeleteI find the government's posturing on this interesting, and am intrigued by figures that are bandied around and where the data comes from.In local government it is common to find SMEs making up 90% or more of the supply base and over 60% of spend.It's not difficult to engage with local SMEs and not-for-profit organisations if you imagine sitting on their side of the fence. My authority does not require a company to have the insurance up front - we require them to get the necessary insurance IF they are awarded the contract. We also waive the requirement for accounts for the first few years if a new start-up and are flexible with payment terms. Every opportunity over £10,000 is advertised on the regional portal and we run a number of engagement events with local companies. We also publish all our rules and guidance for staff on the website along with tips on quoting and tendering so that companies can see what is expected.This is simply good practice to ensure that as many organsiations as possible are aware of opportunities and it improves the qulaity and range of bids received.In terms of local engagement, our strategy has resulted in the proportion of spend in our district nearly doubling over the last five years (and legally at that), with 99% of local suppliers being SMEs.
ReplyDeleteJon, I'm a long-time reader of the CoPs, and you've brought out my first comment, thank you. You are right to point out the many tensions in procurement that create the tightrope on which I feel public authorities are walking right now.As a shared procurement officer for two small District Councils, it is part of my job to improve and communicate the procurement process. I previously worked for the same councils on a business transformation programme that was based on 'Lean principles' (but which has sadly succumbed to the current pressure to cut costs, not waste.) However, I still retain the drive to improve and re-design processes, documentation and communication in procurement, and in the 3 months in my new job have been striving to improve our authorities' procurement already to make the process quicker and easier and the documentation simpler for everyone (including SMEs) to complete. We also run a partnership of other councils in our County - and beyond - to share best practice and aggregate demand where appropriate to achieve the kind of efficiencies Philip Green is after. I do wish that someone in central government recognised that at least some authorities are trying.I am watching intently to lots of well-meaning discussion in central government with frustratingly vague outcomes that range from loose recommendations (such as those from Glover) to pure rhetoric, as is too often the case at the moment. I hope everyone reading communicates the desire for actions not just words on this subject.I would welcome the opportunity for the public sector to share best practice and discuss how to improve procurement in specific, concrete ways on a national scale. I can't find a separate CoP on procurement, does one exist? Should it, or where is the best place to hold this discussion? I've got good examples of improvement, horror stories and questions and problems all to share and discuss.
ReplyDeleteRoger and I are clearly of similar minds - I posted this some months ago about the choice that managers have - to cut waste or cut the good stuff as well:What is your cutting angle?In many organisations there is a great deal of what I call ‘quick fix’ (QF) activity. You can recognise QF by the fire-fighting loop that many parts of an organisation get caught up in going round and round. People come to work and work hard – “bloomin’ hard!” And, every now and then, something goes wrong and there is a mistake. And as we all know, often from a very early age, “you can’t win ’em all!” To err is human, near enough is good enough. But the mistake has to be fixed, using up more time and resources. This only adds to the work load and probably increases the chances that more mistakes happen.... (more on the link above)
ReplyDeleteI don't think that Wakefield is unusual in the Local Government area, Alan's figures of 90% and 60% sound pretty realistic to me. Part of that of course is that the definition of SME is pretty broad and there are certainly many subsidiaries of MNCs which qualify although whether they would be included in the Coalition target of 25% of government contracts isn't clear.On another note, where do you find these enormous PQQs? 40 pages for £50k? Who has time to read the responses (assuming that there are some responses to read ...)? By contrast, our standard PQQ runs to about 7 pages and we modify it as little as possible.
ReplyDeleteHallo John - good to see you here - I promise I am not making the 40 page PQQ up (well OK, it was only 38 pages) - and I lifted it off an e-portal just a few days ago... (I have just sent you a copy privately to save making this public).I do only wish that all the PQQs I saw were only 7 pages long!
ReplyDeleteI have seen a huge number of PQQs that are substantially longer than 7 pages. I suspect that the 60% and 90% figures may be consistent with some District and Boroughs, but would be amazed if this is the case with the Counties or unitaries.
ReplyDeleteTwo points on Tom's comments.Positively - another source of discussion/advice within LGID on procurement you might want to try is Gordon Murray whose name you'll see in People Finder (and on various communities)Less positively - I feel for Tom when he writes "I previously worked for the same councils on a business transformation programme that was based on 'Lean principles' (but which has sadly succumbed to the current pressure to cut costs, not waste.)" Aaaarrgh!!! Do they (let's just leave it at "they") not understand that eliminating waste eliminates costs? It suggests confirmation of what I've always known - just when organisations should be committing themselves wholeheartedly to the likes of lean in times of real challenge they back off and go for traditional x% cuts across the board. Don't feel you have to comment Tom. I know these things can be very sensitive within councils and I have the luxury of being accountable only to myself.
ReplyDeleteAn interesting summary of the meeting with 'Dave and Frances' and the dichotomies that are faced between good control of public money and opening the process up to SMEs. I have been responding to ITTs for over 20 years and there has been considrebale improvement with many now clear and focussed. However, it does not take much work to find long ITTs for small contracts of even lower value than £50K. It seems that many public sector organisations and staff within them are unable to adapt their approach based on a risk assessment of the contract. Being in a risk adverse culture results in every eventuality being covered. They appear to forget why they want to outsource in the first place whether it is to reduce costs, import expertise etc and tie our hands often preventing us from suggesting more effective ways of delivering the service which will save money.
ReplyDeleteI've just had a depressing experience. I read your 38 pager (31 really, the last 7 pages consist of a sector specific form unrelated to the tender and a stats return) - there are swathes of irrelevant questions in each of these sections. Amazingly, some questions which I think important are absent (or maybe I just lost them in the morass). One section has a note that it will be marked on a pass/fail basis but doesn't allow an answer which could result in a fail. Add in the odd homophone and poor punctuation and it's no wonder that putative suppliers throw their hands in the air.
ReplyDeleteI appreciate your sympathies, John! Have a good weekend.And absolutley Marylou - proportionality often seems to be the first casualty of the procurement 'war'!
ReplyDeleteJon,A big 'thank you' for your entry and the information within it. Most of my contracting career has been as an interim, via agencies and framework agreements, I saw those as being useful.I've attempted to get work for service transformation with several autorities who have 'leading lights' in the Lean Systems Thinking world, only to find the procurement routes are so dominated by first past the post on price and size of the company. Knowing I've been second twice is no comfort after two days of wading through very similar, but differently framed 40 page PPQ's.In a holistic sense, having 40 businesses bid for one contract worth about £70K is crazy... if all take two days, the total cost of the bid is around half the worth of the contract...We also have a new wave of councils 'tyre kicking' advertising for interims or new personnel, only to appoint internally, or to award to someone they allready lined up. While the Bristol D CEx exercise may have only cost the council a few thousand not to appoint, there would have been hundreds of days spent by people trying to get that job. 'Appearing to do the right thing' for open and transparent governance, is often the cause for inefficiency. Surely the decision not to proceed can be done earlier?I'll slow down and read your whole entry.... perhaps there is light at the end of the tunnel?
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