Part 4: The UK Government Procurement Transformation
Deep, Permanent, and Positive Change
Informed partly by the operating standards discussed in part three of this series, it became clear that there was an ongoing reform project to systematically address the elements of procurement capability and process. There are multiple examples of this, but some prominent ones are discussed here.
A new way to deal with big deals
One problem with ‘big deals’ is that the supply of capable, very senior procurement strategists and negotiators to lead on commercial aspects, is limited. At the same time, the reality is that demand for big deal capabilities is inconsistent. Hence, it may not make sense for an individual entity to invest in permanent capability as there will invariably be times when such an expensive resource is not needed.
The response to this was to install a Complex Transactions Team, initially within the Crown Commercial Service (CCS) and subsequently relocated to the corporate centre of the Government Commercial Organisation (GCO). This team was established as a flexible resource pool that could be supplied to departments at a cost considered to be competitive in comparison to external consultants or contingent labour. The experts, often in IT contracting but also across other key category areas, would be deployed on an as-needed basis, injecting expertise at critical points in negotiations and complex transactions. This model remains in place and is used to good effect.
ESG suddenly means something
In the private sector, organisations’ credentials in respect of environmental and social governance (ESG) matters can vary from extremely impressive to non-existent. Indeed, it is often subject to shareholders’ inclinations or demands on such matters. In the public sector, policies vary over time, and clearly, this has an impact on the public procurement community’s ability to make a difference.
Whilst this article makes no attempt to judge or assess the UK Government’s policy credentials or record in this area, it is nonetheless worth noting that a Central Government Social Value Model was launched in 2020 and as a result, there has unquestionably been a marked improvement in the ability to achieve national ESG goals through procurement. These goals include:
- Tackling economic inequality
- Fighting climate change
- Improving equal opportunities
- Commitment to health and wellbeing
A significant policy move in procurement was to require contract award criteria to include a minimum 10% weighting for social value. Overnight, the social value went from something relatively rare to something that features in almost all tenders. Suppliers are now required to build social value considerations into their broader capabilities. Furthermore, the Government Commercial Function (GCF) recently implemented a new policy requiring bidders to commit to net zero emissions by 2050 at the latest and to report their greenhouse gas emissions for the first time.
Through such measures, suppliers’ ESG credentials have been progressively moving from being an interesting topic of conversation to being potentially the difference between winning bids and losing them.
Contract Management capability enhanced
Most organisations rely on operational management of suppliers ‘by the business.’ This typically means suppliers are being managed by people for whom supplier management is not a professional or core competence. Government is no exception.
At the same time, it is often the case that ‘In-Life Management’ of supplier contracts is under-managed to the extent that value leaks away progressively over time. Or even worse, performance failure or critical breakdowns can occur.
The GCO recognised these issues as a particular challenge and saw the need for significant capability uplift in non-professional contract management. The Contract Management Capability Programme was conceived and launched, requiring all ‘contract owners’ overseeing the most critical contracts to undertake a significant training program, with an Assessment & Development Centre (ADC) upon its completion. Only those passing the ADC with an A rating would be permitted to continue to oversee the most critical contracts.
This training program was afforded very significant investment and whilst metrics in respect of the resulting improvement in contract management performance are not published, an unintended favourable consequence of the program has been to shine a light on the In-Life Management of suppliers across government agencies. This has led to helpful decisions in respect of resourcing, technology, and good practice in general.
These three examples of ongoing, iterative reforms, which have built on the bigger structural changes made earlier, remind us that in professional services there is no longer a finish line. Rather, there is always room for improvement and value creation.
“The more effectively the public sector normalises social value in our commercial activity, the more wholeheartedly the supply market will be able to adapt and respond. The result will be a fundamental cultural shift in behaviours and attitudes”.
GCF Guide to using the Social Value model