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GO Interview – Paul O’Brien

Monday April 19th, 2010

By Morven MacNeil, GO Features Editor

Paul O’Brien, Chief Executive of the Association for Public Service Excellence (APSE), speaks to GO Features Editor Morven MacNeil about the key issues that currently need to be addressed within procurement and his thoughts on how to improve the sector over the coming years.

The Association for Public Service Excellence (APSE) is a not-for-profit local government body working with over 300 councils throughout the UK. Promoting excellence in public services, APSE is the foremost specialist in local authority frontline services, hosting a network for frontline service providers in areas such as waste and refuse collection, parks and environmental services, leisure, school meals, cleaning, housing and building maintenance.

GO spoke to the Chief Executive of APSE, Paul O’Brien, about the issues that need to be addressed within procurement today and the changes and challenges that lie ahead for the sector.

What are the most important issues that need to be addressed by the public sector regarding its role as the procurer of goods and services?

The public sector needs to maximise the value from its spend through securing additional benefits. APSE has carried out research on the economic footprint of local government which shows that for every pound local authorities spend directly, about £1.64 is circulated back into the local economy. However, some money does leak from the local economy, and our view is that if you tighten up your procurement practices and deploy measures such as community benefit clauses, then you could actually prevent some of that leakage by involving more local suppliers. Spend in the local economy might then rise from £1.64 to £2 or beyond, which means more money would stay within the local economy.

How important do you believe corporate social responsibility and responsible procurement are in delivering first-class quality services?

For me these themes are vital, but you need to have a clear idea what you are looking for. It is one thing banding these terms about, but another to understand what they mean. It may be difficult to specify what corporate social responsibility should look like. Generally, through the procurement process you start off with a set of objectives, which normally includes CSR. However, we have seen examples of authorities in the public sector getting to the final stages of their procurement process having lost sight of their key objectives. I think it is very important that at each stage of the procurement process you remember to look back and see what it was that you were trying to achieve from the outset, before you progress through the next phase. We carried out research on insourcing local government services which resulted in 50 case studies of authorities that had brought services back in-house because they had failed to deliver what they had set out to achieve. It could be argued that this was the private sector’s failure to deliver, but equally it could be argued that the contracts were not right in the first instance.

There is a problem out there because ‘talk is cheap’ and what is often promised is not delivered when you procure goods and services. At one point I was part of the former Office of the Deputy Prime Minister’s Strategic Management Task Force, and we had 24 pathfinders set up as strategic partnerships. After a few years they all disappeared because they were too difficult and complex to deliver. A lot of strategic partnerships have also been set up with the intention of them becoming regional business centres, aimed at helping regenerate local economies and creating jobs in local areas. Again, no tangible evidence exists to prove that these objectives have been achieved. You can start off with the best of intentions, but if you do not specify properly and if you do not manage your procurement process properly, then you might end up with something that never really delivered what you wanted from it.

What is the most significant change that you have seen in recent years with regard to procurement?

I think probably the notion of procurement itself. We have seen the second coming of the client. I can look back 15 or 20 years to the days of compulsory competitive tendering; you had an artificial client/contractor split as a result of the legislation at the time, that was subsequently repealed by Best Value. It was recognised by the end of this cycle that very little value comes from splitting the client and delivery role within organisations. The costs associated with developing huge client functions basically offset any savings that might be made through the procurement process. Services over the past couple of years have been trying to split those roles out again, so maybe people are not learning the lessons of the past. It is important to understand cost and value and the difference between them.

APSE recently published the report More Bang for the Public Buck: A guide to using procurement to achieve community benefits. What were the key issues the report uncovered?

The report looked at the perceived barriers to achieving community benefits. It was a follow-up to a report published a few years ago with Eversheds, specialists in local government law. We looked at the law around what you could and could not specify in terms of community benefits and the procurement process. This was more designed to identify case studies and best practice where it existed. It started off with those perceived barriers, how they could be overcome, and what the critical success factors were in achieving community benefits. It challenged the risk-averse culture that exists in some authorities that are not sufficiently confident about demanding additional benefits from procurement.

It also looked at some of the innovative ideas that people were implementing around setting performance targets for procurement, completing local procurement audits and skills training. For instance, South Gloucestershire Council’s highways department looked at delivering the core of the service themselves while involving SMEs throughout, so they were engaging with the local supply chain. In Glasgow a lot on training and apprenticeships are under way with regard to the 2014 Commonwealth Games. In Staffordshire and Sandwell they have looked at how they can engage with their local suppliers and are encouraging them to bid for council contracts.

How important do you believe innovative thinking will be in achieving efficiency savings over the coming years?

Over the next four or five years there are going to be constraints on public sector expenditure; how hard and fast that happens depends on who is elected at the General Election. Therefore, innovation is going to be vital. We are going to need to do more with less, to maximise the bang for the public buck. We will need to look at contract packaging and design in order to maximise that expenditure. I believe there will be a lot of work around leaning systems thinking; that approach needs to be looked at closely if we want to dramatically improve the systems and processes that exist at present in order to find the 15 per cent efficiency savings that are going to be required over the next few years.

In terms of procurement, what can the public and private sectors learn from each other?

I think they need to learn a lot from each other. The public sector needs to understand the private sector profit motive and the private sector needs to understand the added value and community role that local government is involved in. It is not just about profit. They need to understand each other’s needs and responsibilities. The private sector is responsible to its shareholders, and the public sector is responsible to the community – but they also have responsibilities to government and audit bodies. There needs to be more communication between the sectors too. Both sides need to get rid of their preconceptions and biases and treat each other as equals. They need to work together in proper partnership in order to achieve both sectors’ objectives. That is the only way a true partnership will work.

What single element would you change in order to improve procurement?

It would have to be the understanding of the difference between cost and value. Procurement is not a blunt instrument; it is not all about cost. Procurement professionals need to understand and ensure that when they are spending millions of pounds of public money, they need to obtain the maximum benefit from that money for the public, both locally and nationally. There is no point in procuring something from hundreds of miles away as it will cut local businesses out of things unless you can find a way for them to be involved. There is also the environmental aspect; if people are travelling from miles away and supplies are being delivered from miles away, we need to understand that there is a difference between public value and cost.

How do you see APSE developing over the next five years?

We will work with our member authorities to try and find ways to help them deliver their efficiency savings targets and continue to deliver effectively the services that they need to provide to local communities.

Profile

Paul O’Brien has been the Chief Executive of APSE for ten years, with overall strategic responsibility for the management and development of all the Association’s activities in the UK.

Over the years, Paul has represented APSE on the Scottish Executive Health and Physical Activity Council, the Office of the Deputy Prime Minister’s Strategic Partnership Taskforce, the Trading and Charging working party and the Local Government Procurement Forum. He is currently the independent chair of the Northern Ireland Local Government Reform Joint Forum. He was also a board member on the partnership between APSE, IDeA and the LGIU which delivered the former ODPM’s National Councillor Mentoring Programme.

Paul was previously APSE’s Principal Advisor (Scotland), and has over 26 years’ experience in local government. He previously worked with South Lanarkshire Council in the areas of CCT and Best Value. Prior to this he was a trainee manager with Strathclyde Regional Council.

For further information, please visit: www.apse.org.uk

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