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Showing posts from November, 2013

Government Procurement. More work still to do

In the recent PAC meeting of last Monday senior government officials highlighted two distinct and significant problems: 1.  Many government contracts had open book clauses, but few were enacted. 2.  Many government departments lacked the skills, with their current staff, to enforce the open book clauses. There was also some comment about reducing contract duration for more complex contracts.  Whilst this might provide the opportunity to change suppliers it will drive the pricing mechanisms upwards as there is less time to recoup start up costs.  Historically, it has been the latter years where the contracts routine the most profit for the suppliers. http://www.supplymanagement.com/news/2013/only-a-third-of-government-contracts-are-open-book

Scottish Independence and Procurement

In no way is this blog politically motivated but the recent Scottish Government's Independence has a number of bold assertions.  I take issue with the comment regarding increasing procurement on conventional defence systems. http://www.supplymanagement.com/news/2013/significant-investment-in-defence-procurement-for-independent-scotland Firstly, how will the Scottish Government create an intelligent customer in order to buy its coastal patrol boats? The UK MoD has spent years and millions evolving its procurement functionality but yet the Scottish Government will develop this within a few years of independence. Remarkable. Mr Salmond would be well served by taking professional advice on procurement practices, especially on EU compliance. The following extract from the article follows on from the identification of shipbuilding on the Clyde as important to the economy. The white paper added that an independent government would ensure its defence budget will “support the procurement of

Procurement shortcomings in national organisations

A recent article has discribed the use of nationally negotiated contracts by police forces as disappointing http://www.supplymanagement.com/news/2013/inquiry-disheartened-and-dismayed-by-police-procurement Should we be surprised? No. Until theses organisations are measured against their usage of national contracts poor uptake will continue. If the CPOs of these forces were measured on the usage of the contracts and the savings delivered then real progress couild be made. Perhaps the Home Office and MoJ should mandate this. Perhaps if the avoidance of these savings are continued to be avoided the forces should be merged and national contracts imposed upon them.  It is after all tax payers money and best value should be a key parameter on contract award criteria.

Same questions... Same Answers

From the article, link below, the PAC is going to interview senior civil servants on the problems with complex contracts: http://www.independent.co.uk/news/business/news/mps-seek-to-lift-the-veil-on-terms-of-government-outsourcing-deals-8961108.html The finger is being pointed at the complex contracts instigated by contractors  The problem is not with the contractors but with the inability, or unwillingness, by government departments to actively manage the contracts.  Far too many organisations believe that their work is done when the contract is let.  Actually, the work has really only just begun. The Chair of the PAC has the very real opportunity to drive investment in the staff of ministries to ensure that real competencies are imparted.  If the government is to improve the performance of large contracts then real progress has to be made in improving contract managers skills. Lord John Lee of Trafford today criticises the Treasury for restricting the salaries in the Departments ther

Removing competition and resulting consequences

The potential for Serco to be banned from future government contracts has serious ramifications for the government if contract re-let's result in services being brought back in-house. http://www.telegraph.co.uk/finance/newsbysector/supportservices/10469118/Fears-over-contracts-as-Serco-loses-out-on-450m-prisons-deal.html Are government departments capable of mobilising services in time to become operational? What are the implications and costs for staff transferred (via TUPE) in to the public sector? Resolution of the investigation in to Serco and G4S needs to be resolved quickly in order to bring certainty to the sector and ensure that the government's contracted services are unaffected. The article in the Telegraph sums the situation up very well and draws out an interesting point on reduced competition and the resultant value for money. http://www.telegraph.co.uk/finance/newsbysector/supportservices/10469062/Even-after-the-Porridge-treatment-dont-underestimate-Sercos-politic

Reducing procurement bureaucracy

The Welsh government looks to reduce bureaucracy and help SMEs compete for government contracts. http://www.supplymanagement.com/news/2013/welsh-government-to-reduce-bureaucracy-for-suppliers-through-nps Addressing the effectiveness of sole traders and SMEs to compete is extremely noteworthy and highly commendable.  If this is an initiative to award contracts to Welsh companies then all parties would be well served to remind themselves of the main tenet of the OJEU legislation pertinent to open competition.

Electronic Tagging, a failed contract. Is the Supplier at fault?

The very topical issue of supplier performance is perhaps embodied by the current electronic tagging problems that have continued to gain prominence in the press this week. The Telegraph article offers a factual account of the recent admission and mentions contractual interpretation. http://www.telegraph.co.uk/finance/newsbysector/supportservices/10459367/G4S-offers-to-hand-back-24.1m-after-wrongly-billing-for-tagging-contracts.html In this article it is shown that the Supplier, G4S, conducted an independent review on its activities; so it’s not as though they were looking to sweep the issue under the carpet. The following BBC article raises some extremely poignant questions about the capability of the Buyer – The Ministry of Justice and comes very quickly on the back of NAO report criticising government departments on their inability to set robust contracts that they understand. http://www.bbc.co.uk/news/uk-25001800 When selecting the Supplier the Buyer will cert

On Target.... Target Cost

An article from Supply Management by Tom Alford of PPP Management on target cost pricing http://www.supplymanagement.com/analysis/features/2013/on-target/ We might be biased but this is a great article.  If you think so then you'll appreciate our forthcoming articles on incentivisation and the inextricable links between procurement and contract management

More than just Procurement

We commented recently on the excellent report by EY on the integration of supply chain and finance functions to bring real value to the organisation. The article below includes quotes by some "big-hitters" about the future of procurement and what procurement really means. http://www.supplymanagement.com/news/2013/procurement-too-narrow-a-term-in-globalised-world/ Recognising the need to take a more strategic view one commentator recognises the very nature of business focusses on short-term views; hence a fundamental paradigm conflict with taking a longer term perspective. We can expect more on the alignment of procurement with organisational value creation.

PS4 - A better launch

Previously dogged by supply chain issues and the ability to meet customer demand it sounds that the North American launch of the PS4 has gone better than previous console launches.  The bigger challenge of Europe on 29 November will be the litmus test. http://www.ft.com/cms/s/0/1480e760-4f85-11e3-b06e-00144feabdc0.html?siteedition=uk#axzz2kwQ1Jora

Integrating Finance and Supply Chain Functions

A really great article on finance and supply chain integration.  http://www.ey.com/Publication/vwLUAssets/EY-Partnering-for-performance-the-CFO-and-the-supply-chain/$FILE/EY-Partnering-for-performance-the-CFO-and-the-supply-chain.pdf The article is worthy of a good read and identifies the real benefits to organisations from aligning their finance and supply chain functions: CFOs and supply chain leaders are creating alignment between strategy, finance, tax and operations, unlocking hidden value within the organization and strengthening financial performance. Recognising the true value that supply chain and procurement brings helps financiers understand the value that is added and moves away from the accusation of "knowing the cost of everything and the value of nothing".   Disappointingly it is western Europe left trailing in the wake of Asia and the US in recognising the benefits of an integrated approach.  However, on a positive note the integrated approa

Can do better... National enforcement

This article strongly implies that a national body could enforce the use of centrally agreed contracts.  http://www.supplymanagement.com/news/2013/council-buyers-urged-to-get-act-together-or-face-heavy-handed-national-strategy/ I thought that the concept of a blanket enforcement had been proven to acknowledge that a one size fits all approach does not work? "Acting as a single intelligent client" means that the needs of Carlisle are the same as Truro, as Hackney.  Perhaps a more regionalised approached through the creation of regional alliances is more effective. The recent comments of Sir Richard Leese of Manchester City Council are perhaps more applicable.

Getting what you pay for

Here's a really good article that is as applicable to every procurement activity published by the NAO! http://www.nao.org.uk/report/memorandum-managing-governments-suppliers/ This is very much worth a read.  There are three great points to take on board: 1.  Scrutiny and ensuring competitiveness. 2.  Suppliers rights to making a fair profit. 3.  Compliance to standards and control. I've commented before on the need for due diligence and making sure that the buyer gets what they want.  Part of the activity in getting what you want is getting it at the right price.  Many years ago government used a Public Sector Comparator as a benchline.  This has changed over the years and is now effectively an "As-is" cost. The Olympics saw the problems with G4S, with the military stepping in to the breach to provide the service, clearly cost (and by default, profit) was the competitive driver.  Cost drivers limit profit and thereby make margins difficult.  As such suppli

New website

Our new website is now live at: http://www.pppmanagement.co.uk/ # It gives a flavour of our professional offering, please feel free to come and visit our site and all feedback very much appreciated. We are very pleased with the website and would like to thank the team from Discerning Digital for an outstanding job.  Ian Patterson the Project Director was incredible and the support the team provided was unbelievable - thank you.

Due Diligence - Getting the right deal for the organisation

This article regarding Payment by Results (PBR) and its impact on the voluntary sector makes for some interesting reading. http://www.supplymanagement.com/news/2013/payment-by-results-seriously-flawed-says-charity-sector/ Two quotes in particular stand out for me: "Implementing PBR effectively requires intelligent thought and carefully crafted incentives, but many PBR contracts fall well short of this. Crudely designed targets and contracts risk pushing expert voluntary sector providers out of public service provision" and "As PBR proliferates as a payment mechanism, it’s crucial that commissioners seek input from providers and service users on realistic targets and contractual terms at the very start of the process." I recognise that the quotes in the original article could very well be taken out of context but the first quote reinforces the need for the purchasing organisation (who is making the commitment!) to be sure that the offering and the terms a

Professional Procurement and Project Management - Launch

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We have just launched Professional Procurement & Project Management (PP&PM) and would like to thank everyone for their kind words and generous sentiment wishing the business every success.   We will be updating the blog with topical comments on news and developments in the disciplines of procurement and project management. During the coming weeks we will be providing comment and advice on topics including the importance of workscope definition, supplier engagement, incentivisation and the link between effective procurement and successful contract management. We do hope that you will visit the blog to read our articles and see how PP&PM are doing. All our posts will be publicised through Twitter so it would be a great idea that if you are interested in our updates that you follow us on Twitter.   Our website is due to launch very shortly and we are very excited by this fantastic opportunity to bring you more on PP± if there is anything you would