Over the summer holiday period, I have been reflecting on a conversation, which I had a few months ago with a public sector procurement executive.
This procurement professional works for a local authority that, to be fair, has a good reputation for its leadership, management and services. And, like every other local authority, it has had to cut its expenditure greatly and faces the prospect of still more and deeper cuts over the next few years. The authority has contracted ‘some’ of its services to both businesses and charities, although to be honest, its politicians prefer to retain public services ‘in house’ and pride themselves on being exemplary employers, having secured ‘Living Wage’ accreditation and having good relations with the trade unions.
Looking back, that was the easy part. Now, however, the pressure is on to address the really big cuts and yet, ideally, to do so in ways that protect services, even though there is a dawning recognition amongst leading politicians and officers that this may no longer be possible.
The procurement executive has been asked by the chief executive and the council leader what more that individual and their team can contribute towards the corporate planning for managing additional and substantial budget reductions, as well as the council’s wider social, economic and environmental goals.
In the course of our conversation, we identified six critical contributions that the team could potentially make:
1) First and foremost, they had to act strategically and corporately, but in so doing, behave as the servants of the local population, not just a function within the council. They had not only to understand the council’s policy agenda but also to identify how they and their actions could help to deliver it. They had to be ready to offer solutions but also challenge; and, where necessary, to have the confidence to say ‘no’ if what was being proposed was likely to have unintended consequences or simply be impossible.
2) They had to ensure that they deploy their commercial skills and expertise, rather than simply acting as purchasers. This involves ensuring that the council hugely improves its understanding and management of ‘risk’; understands and controls its costs in a manner consistent with sustaining outcomes and quality; and understands the commercial mind, drivers and tolerance of its suppliers and partners. Far too often, local authorities and the wider public sector are very weak at appreciating and applying commercial disciplines, especially in a manner consistent with a public service ethos.
3) They must review every contract to see what scope there is for achieving better value for money and driving down price, wherever feasible, whilst securing social value and wider public policy goals, including excellent employment conditions and promoting local supply to contribute to local economic activity and, in respect of goods, to reduce unnecessary transport costs and environmental detriment. They must, in particular, be resistant to unrealistic demands from senior managers and politicians to drive prices to the point where service quality is adversely impacted (unless this is an explicit, even if ultimately suicidal political choice), and where suppliers may be put at risk. This latter scenario is a particular problem for charities, community groups, social enterprises and SMEs.
4) They must be ready to resist simplistic calls for more traditional outsourcing of services and explain that the national picture suggests a very mixed picture of benefits and results; that it takes time and is costly and may not actually save money; that there needs to a strong service-specific professional client capability in addition to good contract management; that long term contracts in times of uncertainty can inflexibly lock up segments of the budget; and in fact, the wrong form of outsourcing may be inconsistent with the council’s wider policy agenda including employment and social value goals. That said, where it is decided to outsource, the procurement team should insist upon: transparency and accountability; consultation on business cases pre-procurement; adequate risk assessment; and realistic contracts. A good procurement can often offer more to its organisation by resisting outsourcing than executing the process, but where it does, the council has a public duty to it very well and in the public interest.
5) They must work with policy and operational colleagues across the local authority to ensure that procurement and related expertise contributes to commissioning and wider policy and operational activities, including facilitating community development, growing local social capital, promoting SMEs, and supporting the local voluntary and community sector.
6) They must seek to partner with the wider local public sector, community groups, charities, local businesses and citizens to create local purchasing co-operatives for a range of goods and support services. They must also work with colleagues and local community organisations to support the development of effective co-production programmes involving communities, households and individuals.
For far too long, the procurement function across local government and the wider public sector has failed to step up to the strategic platform. It ‘must’ do so now, and absolutely must re-establish itself as more than just a technical support unit. In particular, it must resist being outsourced itself, and must demonstrate its essential being, purpose and role.