The goods and services that government purchases, the way it buys them and the terms it agrees to are all going to change

Prime Minister David Cameron wants central government buyers to start doing things very differently from now on.

“We need to make the system more open, more competitive and more transparent,” he told a gathering of 100 or so small suppliers and a handful of buyers at HM Treasury last month.

This, he added, “will help us get to grips with our deficit because it will tackle waste, control public spending and light the fires of enterprise in 
our country”.

Central government has already renegotiated deals with 30 or so of its largest suppliers, and is working on an operational plan to buy common goods and services centrally. This latest event, the strategic supplier summit, turned its attention to small and medium-sized enterprises (SMEs), to which government aspires to award 25 per cent of the action in future. Not necessarily 25 per cent of the value of government deals, but 25 per cent of the deals available.

It was among a flurry of announcements to help SMEs (see box below) but this package of measures “will only work if procurers are up to the job,” said Cabinet Office minister Francis Maude, presenting alongside Cameron.

Suppliers have long complained about the capability of public sector buyers and the government believes there’s a case to be heard. On 1 November Maude launched the ‘lean review’ to uncover unnecessarily wasteful and complex procurement practices. This study, the conclusions of which were published in February, agreed that among other problems, “many procurement professionals across government lack process capability and market knowledge”.

As a result, costly outside help is often drafted in. In one department alone £4.7 million was spent on external resources. “The combination of insufficient capacity of capable senior procurement resources with experience of complex projects, a lack of commercial in-house legal advice, and over-reliance on external advisors is all symptomatic of risk aversion,” the study said.

And this is something Cameron hopes to change. He pledged to support purchasers who take a chance on innovative new businesses. “I want you to feel empowered and to know that as long as you follow the right channels I will stand by you if you take risks with young, new, dynamic companies,” he said.

In return he asked for a commitment from procurement managers to open up opportunities to new providers, including SMEs and voluntary organisations. To build capability, the lean review, Accelerating Government Procurement, made two suggestions – the formation of an elite group of commercial professionals who are “licensed to source” and an interchange programme between the private and public sector. The first phase will 
see secondees from some of the government’s biggest suppliers join its procurement teams. Following this, some civil servant buyers will do commercial placements.

“To make [buyers] less risk-averse we need to learn from the best of private sector practice,” 
said Maude.

He told SM: “The idea arose from a meeting with our big suppliers who were complaining about the lack of commercial knowledge. I said to them 
‘divvy some up to us – give us some help’. It’s also useful for suppliers to get more knowledge of how government works and what we care about. They have been very receptive to the idea.”

John Collington, head of procurement for the 
Efficiency and Reform Group (ERG), told the audience at the Treasury: “It’s clear there is a need for us to develop our procurement people to think and act differently. That work is already under way. We’re working in partnership with CIPS to, for 
example, take the lean process forward into a module and to give procurement professionals a ‘licence to source’.

“We’re absolutely committed to changing the mindset of public sector procurers to do things differently.”

The lean review also set out an aim to reduce the turnaround time on competitive dialogue procurements by up to 70 per cent. That means a drop from around 430 to just 130 working days, depending on size, complexity and risk.

The study also highlighted process problems – including too much bureaucracy, OJEU’s started without sufficient preparation and misuse of the correct procurement procedure. It has plans to address all these issues.

One way to bring about improvements is increased transparency. In addition to publishing contracts over £25,000 in full, a ‘mystery shopper’ arrangement will enable businesses to complain if they don’t understand tenders or think buyers could have been more open.

A final change is the end of framework deals: “We’re trying to get rid of the idea of framework contracts,” said ERG COO Ian Watmore. “That’s not an overnight change but it is the direction of travel.”

The government has set out its store, now it will look to procurement to deliver.

Five minutes with Francis Maude

What message do you have for procurement professionals?

There are a lot of very good purchasing professionals around and they tend not to get senior attention, which reinforces risk aversion. Why would a procurement manager put their head above the parapet when they don’t have support from senior leadership? That’s why it’s very important the prime minister said he will back people who make intelligent decisions to back innovative, new providers.

Public sector procurement has been seen to be bureaucratic and process-driven with less scope for purchasing professionals to put their stamp on it. That’s what is changing. We want to raise their status, give them more backing and enable them to do the job in a more interesting and innovative way.

What did you learn from working with Sir Philip Green?

That we procure in a very dispersed, cumbersome way as far as commodity procurement goes. We are inconsistent and don’t get good value. Prices are massively varied, if we procured everything at the lowest price we pay we would save an enormous amount of money.

What was your biggest challenge when meeting with big suppliers?

There was a mixed response. Some of them got it immediately – they didn’t particularly like it but they recognised it was going to happen. For many of them we’re their biggest customer and it’s worth having a strategic relationship with us so we were able to say “we need money off”. They accepted it with more-or-less good grace.

Changes to help SMEs

A number of other announcements were made last month that should help SMEs win government work. These include:

 ☛ Government contracting opportunities of more than £10,000 to go online at www.contractsfinder.businesslink.gov.uk

•  ☛ Stephen Allott named crown commercial representative to help connect government and smaller suppliers

•  ☛ SME product and service innovation surgeries

•  ☛ An extended supplier feedback service

•  ☛ Simplification of the pre-qualification process: government is seeking to eliminate PQQs for all central deals of less than £100,000 so buyers are “free to choose the best route to market for their individual circumstances”

•  ☛ Firms will be able 
to submit a 
pre-qualification 
data just once for all procurements in common commodities