Successful Future Procurement

Despite some great successes, the past 18-months have exposed a pressing need to plug the critical commercial skill gaps that exist across the Civil Service in order for the Government to extract the very best from their supply chain. In our debt-laden post-pandemic economy, public money cannot continue to be spent so wantonly on costly external agencies or poorly specified projects with little, to no, oversight, or not offering any real taxpayer benefit. 

Put simply, the civil service needs to drive better supplier performance and greater accountability, boost efficiency, increase value for money and improve its own retained skillset to stem the tide of wasted public money currently spent on third-party suppliers.

The Government Commercial Function (GCF) is striving to address the training needs behind this, and the Cabinet Office is establishing its recently announced civil service ‘Consulting Hub’. However, changing the systemic inability within the largely non-confrontational culture of the civil service to act commercially is a mammoth task which will take a generation to evolve. 

In the meantime, a more rapid interim solution needs to be implemented to limit ongoing calls on the public purse. So, how best to do this? A triple focus on project delivery skills, supplier profitability conflict, and financial accountability, is a great place to start.

Contract management and delivery

The Civil Service employs key operational and front-line expertise with a core of procurement specialists but not enough commercial project delivery specialists to manage external suppliers. Currently, 80% of its commercial effort is spent on just 20% of the commercial lifecycle, the procurement process. And yet there are over 30,000 civil servants managing live commercial programmes. Most of these dedicated people are ill equipped with the necessary experience to deal directly in technically challenging and commercially confrontational environments to wring the best value from their suppliers. Cost overruns and waste are common, with value for money an increasingly distant and vague metric.

The first and most pressing need therefore is to shore up the civil services’ project and contract management capabilities. While often filled by good independent but uncoordinated contractors, smaller, niche consultancies should be used, given a clear remit to manage contract delivery and, critically, pass on the required skillsets to civil servant teams to retain inhouse. This has been proven to be self-funding as a minimum, and in many cases, offering significant multiples return on investment. They should work collaboratively with the civil service to challenge waste and drive value throughout the commercial lifecycle of each supplier, from concept to procurement and, most importantly, throughout contract management to exit. Some risk should be taken by these niche consultancies too, loaded into successes in delivery.

Profitability conflict

Directors and Partners of commercial practices are obligated to act in the best interests of the organisations and shareholders that they represent. This, in its base form, drives a natural conflict between financial success of the private sector and the social obligations of the public sector. Making money rather than social value is their primary goal. There is a similar challenge with the interim contractor market, largely paid on a day rate. This creates, often subconsciously, an unavoidable incentive to prolong delivery.

As a point of principle, these dynamics must change. A cap on the profitability of public sector work would go a long way towards challenging the ‘land and expand’ approach of profit-driven consultancies, rewarding increased project delivery efficiency and penalising time over-runs.

In parallel, public sector workers must start to operate more like their private sector counterparts, understanding that personal accountability in delivery is critical to organisational success. Augmenting civil service teams with niche specialist service providers purely acting in the best interests of the public purse, will provide invaluable insight and learning for their civil servants counterparts, to turbo-charge a revolution in public sector commercial behaviours.

These specialists should be used to better manage the profit conflict, ensuring accountability is understood and delivered by all parties to Government. They should call out whenever and from wherever it is not. They should report independently to escalate where programmes are showing a high risk of overspend and where the taxpayers’ best interests are not being served. And they should ensure these learnings are absorbed by their civil service colleagues, providing role models that can be emulated and standard templates to leave longer-term positive benefits.

Demanding customer

With an annual spend nearing £290BN, the Government, and the civil servants who represent it, should be the most efficient, most robust, keenest commercial customer in the world. Every part of the potential supply chain should be used well where, and only where, they add best value. While not sacrificing civic responsibilities, the civil service must insist on the very best value from each provider, holding them to account, obligating them to act in the best interests of the taxpayer, and refusing to contract again with those companies that do not. 

Post EU-exit, and with the consultation recently undertaken on the Public Contracts Regulations, there is an opportunity to challenge the commerciality of the entire approach, reposition value and accountability, buy better, and therefore manage delivery better. No longer constrained, the UK commercial function should see every pound as their own, questioning the cost of meetings, the cost of governance, the cost of indecision and the cost of poor delivery.

Equipping civil servants with the skills to operate in a commercially astute, fiscally accountable manner, is vitally important. It cannot be put off any longer; the financial benefits to the public coffers demand it. But it requires huge systemic change, significant time and political will to accomplish. The newly proposed civil service Consultancy Hub and similar initiatives will not usher in organisational change overnight. In the meantime, Government needs to very quickly pivot to support the civil service by boosting its urgent commercial delivery skills gaps with publicly motivated specialists who demand the very best from every supplier on every project for every public pound spent, starting right now. Nothing less will do.

If you want more information and advice on how you can make the most of your procurement projects or want to talk about how we can augment your procurement team, contact us on +44(0) 208 154 4057 or email info@augmentasgroup.com