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To boldly GO…

Sunday September 20th, 2009

By Morven MacNeil, GO Features Editor

As GO celebrates its tenth anniversary this edition, we speak to key procurement figures to find out what they believe will be the biggest challenges to the profession over the coming decade. 

Since the launch of GO in October 1999, procurement has progressed significantly. Whether it has been through changes to legislation, new technologies shaping processes or a growing awareness of the contribution that procurement makes to the effective delivery of public services, the last ten years have seen some dramatic – and for the most part positive – changes.

Technological advances have enabled e-procurement, which is now widespread across both the public and private sectors. Reviews from Sir Peter Gershon and John F McClelland CBE into public procurement for central government and Scotland respectively have led to various reforms and efficiency initiatives, most of which are still ongoing.

Looking back on the last ten years, Mr McClelland said: “There is no doubt that procurement might have been seen as a ‘Cinderella’ profession within the public sector. Recognition of the immense value that professional procurement can bring – something already accepted in the private sector – hadn’t been won across the spheres of central, local or other sections of government. 

“However, in the last few years the seeds sown earlier have started to reap a sustainable future for the profession with the public sector. This is because procurement is now recognised as a critically important activity. Although partially as a result of the priority being placed on capturing savings in cost and best value, there is no doubt that public procurement has not only come of age, it is ready to expand its influence to other areas.”

So, what does the future have in store for procurement over the next ten years? GO spoke to key procurement figures and members of the magazine’s Editorial Advisory Board to canvass their views on the future of the profession.

Delivering policy

John McClelland and Terry Street, Principal Consultant and Procurement and Outsourcing Product Manager at Socitm Consulting, each believe that procurement will play a large role in delivering government policy.

Mr McClelland said: “I envisage that procurement will become a vehicle not only for delivering lowest price and best value but also for delivering policy on behalf of government. In this context, developing and buying from supply chain partners who demonstrate the highest standards of care for the environment; conformance to diversity and equalities principles and a commitment to socio-economic issues will become the norm and through this approach will add to the function’s status within the sector. 

“Overall, I am convinced that there are exciting times ahead for public sector procurement professionals. The challenge will be to capture the opportunities that this changing scene and its additional influence offers.

“Looking ahead, I can see this recognition and influence growing dramatically. In addition to delivering exceptional financial benefits to the public purse, procurement will extend its remit into operations that in the past have been the territory of specialists within public sector organisations such as social care, construction and roads. This will add significant discipline, professionalism and transparency.

“We will also see procurement playing its part in social inclusion with citizens and businesses increasingly playing a direct role as the consumers of services from third parties via electronic channels, the public sector’s role being more one of hands-off commissioning and governance rather than the ‘middle man’ in a supply chain.” 

Terry Street also spoke of the role of procurement in delivering public policy. He said: “Public procurement is a significant theme in the policy of all governments – be they local, national, European or international. Over the time I have been involved in procurement I have seen increasing moves at both European and national level to use procurement to drive other political aims. This trend will no doubt continue with emphasis on environmental factors and carbon emissions from the full life cycle of manufacture, distribution, use and disposal. In addition we will see promotion of SMEs and the policies of local supply being driven through procurement.”

Sustainability

At a time of economic recession, many in business are questioning the demands of sustainable procurement, which require service providers to examine the environmental and social dimensions of procurement alongside traditional economic considerations. 

Barbara Morton, Director of Action Sustainability, offered her view on the future of sustainable procurement: “Over the next ten years – and beyond – we can expect to see a shift towards more efficient and sustainable patterns of consumption and production, because we cannot afford to go on spending what we don’t have. Surely the financial crisis has taught us that. But ‘getting more from less’ is just one benefit of a focus on sustainability in procurement and supply chain management.  

“Nor is this agenda only about climate change and greenhouse gas emissions, important as these issues are for all of us. The last ten years have seen a growing interest in corporate behaviour – and this increasingly includes what goes on in globalised supply chains. Companies can no longer afford to ‘turn a blind eye’ to unsatisfactory or illegal working practices – which can occur close to home as well as in remote parts of multi-tiered supply chains. Being able to demonstrate good practice in what many people call the social aspects of procurement is becoming part of a company’s – or indeed a government’s – licence to operate.”

Ms Morton also commented on the impact of global sustainability: “At an international level sustainable public procurement is beginning to take off in the developing world and in economies in transition. Emerging economies represent a large proportion of the world’s population, all wanting to increase their material wealth and levels of consumption and increasingly having the spending power to do so.

“A current programme of work for the Marrakech Task Force on Sustainable Public Procurement and the United Nations Environment Programme deals with sustainable public procurement in countries from Chile and Uruguay to Mexico and Mauritius. So it is clear that sustainable procurement is now a global concern and that standards are being ratcheted up across the globe. Things may not be happening fast enough for some, but there is little doubt that the next decade will see concern for social and environmental aspects becoming part of the mainstream of good supply chain management practice, alongside more familiar and narrow economic interests. I wonder if the transformation will be complete in another ten years.”

Defence

With regards to defence procurement, a Strategic Defence Review is currently under way examining whether the UK is buying the right equipment for the military campaigns the Armed Forces are likely to be fighting in the future. Tom Logan, Director Commercial, Commands and Centre at the MOD, said: “Recent developments such as the appointment of a third Commercial Director have shown the Department’s intention to place the procurement professional at the heart of its business. The Operational Efficiency Programme has further raised the profile of procurement within the Department and the forthcoming Defence Review will place even greater emphasis on our ability to deliver significant benefits both through the collaborative procurement programme and in other areas of expenditure.

“e-Procurement will play an important part in achieving this agenda. There will be increasing emphasis too on maintaining and improving the skill levels of staff within procurement through improved training, continuous professional development and by encouraging more personnel to achieve professional qualifications. We will also address the need to increase commercial awareness more generally across the department.”

Collaboration

In July 2008 the Government asked Martin Jay, Chairman of Invensys, to lead the collaborative procurement strand of the Operational Efficiency Programme. The review has identified a total of around £6.1 billion of achievable annual value for money savings by the end of 2013-14 through collaborative procurement. So collaboration should take centre stage once again over the coming years. John McClelland commented: “For service providers and suppliers I think the trends towards procurement portals and collaboration will continue to a point where it will become essential to rationalise them and apply some structure to their deployment. Greater collaboration will continue to feature in government policy but the local sector will continue to argue that this puts the rich diversity that local accountability generates at risk and will strive to maintain its autonomy.”

Local government

To gauge the future of local government procurement over the next decade, GO spoke to Peter Howarth, Chief Executive of the Society of Procurement Officers in Local Government. Mr Howarth believes that demand management will play a big part in local government’s future. He explained: “The future for local government procurement could not be rosier, for those prepared to get in where it hurts. The future is not going to be easy as we are forced to grapple with reducing budgets in real terms and increased demand, also in real terms. The battles we face are not just about cost savings but increasingly about demand management  - that means managing the client as well as the supplier – and also about the need to realise a greater range of benefits from our procurement activity than ever before.

“This will mean ensuring that our procurement activity, throughout the multitude of supply chains we operate in, creates a tight fit with the strategic objectives of our organisations, contributing in a cost-effective way to overall policy, sustainability, equality and wider social need. The cry that this is not possible will not be heard by those in power and neither should it be. By addressing these issues through further improvements of procurement techniques and the procurement knowledge base, we will see procurement grow even greater in importance than it is now and continuing to deliver its contribution to service outcomes and the community.”

Supplier engagement

It is essential that communication between buyers and suppliers is effective throughout the procurement process, including providing good quality feedback to unsuccessful bidders.

Launched in June 2006, Supply2.gov.uk is the only official government lower-value contract opportunities portal, created specifically to provide small businesses with visibility of public sector contract opportunities typically below £100,000. The portal is the first major initiative to unite buyers and suppliers in a single location, making it easier for business and government to work together.

In Budget 2008, Chancellor Alistair Darling invited Anne Glover, co-founder and Chief Executive of investment firm Amadeus, to lead an advisory committee and produce a far-reaching examination of how government could better engage with the SME community, in order to build a stronger supply base for the public sector. While these recommendations are starting to be rolled out, Supply2.gov.uk remains a powerful example of effective supplier engagement.

The road ahead

If the last ten years has seen the procurement profession achieve a number of significant milestones, then the decade ahead will only see further major developments determining the course of the sector. Indeed, the next ten years look set to bring the most radical change in direction in procurement to date.

Procurement Top Ten – the most important reviews of the last decade

Gershon Review – The Gershon Review, Releasing resources to the front line, was published in 2004 and examined efficiency in the UK public sector. Conducted by Sir Peter Gershon, then head of the Office of Government Commerce, the report recommended achieving procurement savings for 2005-06 through major changes to the organisation of central government departments.

Sustainable procurement – Social, economic and environmental sustainability can be incorporated into the whole procurement process – defining the need, evaluating options, design and specifying, supplier selection, tender evaluation, post-contract management and supplier development. The Sustainable Procurement Task Force was established in May 2005, charged with drawing up an action plan to bring about a step-change in sustainable public procurement. The National Action Plan, launched in 2006, summarised the views and position of the members of the Sustainable Procurement Task Force.

Legislation updates – The EU Public Sector and Utilities Consolidated Procurement Directives (2004/18/EC and 2004/17/EC) were implemented in UK law in January 2006. The purpose of the EU procurement rules is to open up the public procurement market and to ensure the free movement of goods and services within the EU.

McClelland Review – At the request of the Scottish Government, John F McClelland CBE produced a report on Public Sector Procurement in Scotland in March 2006. Mr McClelland recommended the establishment of a Public Procurement Reform Board and a series of procurement Centres of Expertise. They are now all in operation, with other recommendations also being worked on.

Transforming Government Procurement – Financial Secretary to the Treasury John Healey MP announced the publication of the Transforming Government Procurement report in January 2007. This unveiled a range of public procurement reforms to equip the UK with the capability to deliver world-class public services in the face of the growing challenges of global competition, changing demographics and increasing pressures on natural resources.

Remedies Directive – A new EC Remedies Directive (2007/66/EC) was adopted in 2007. The Directive introduced a standstill period between the award of a contract and its conclusion, and imposed new obligations to render ineffective the illegal direct award of contracts.

Innovative procurement – The White Paper Innovation Nation was published in March 2008, setting out the Government’s aim to make the UK the best place in the world to run an innovative business or public service. An important commitment in the White Paper is for each government department to include an Innovation Procurement Plan as part of its commercial strategy, setting out how the department will embed innovation in its procurement practices and seek to use innovative procurement mechanisms.

Collaborative procurement – Following the Gershon Review identifying collaborative procurement as a key driver in achieving efficiency savings, the Operational Efficiency Programme launched by HM Treasury in 2008 recommended mandatory participation in collaborative procurement for all central government departments, agencies and bodies, with a target of 80 per cent of all available spend channelled through public buying organisations or other collaborative strategies by the end of 2010-11.

Operational Efficiency Programme – The 2008 Budget Report announced that the Government would take action, through the Operational Efficiency Programme (OEP), to ensure that future efforts to drive efficiency in public services kept pace with developments in the private sector. The OEP team identified £15 billion annual savings across a number of areas, around £6 billion of which are deliverable as part of plans in the current Spending Review period, contributing to the £35 billion efficiency target from the 2007 Comprehensive Spending Review, with the rest being delivered by the end of the next spending period.

e-Procurement – e-Procurement is the use of electronic methods in every stage of the purchasing process, from identification of the requirement through to payment and potentially to contract management. The European Commission wants all businesses and public sector bodies to be using e-procurement by the end of 2010.

GO’s tenth anniversary – a decade of excellence

GO magazine, published by BiP Solutions, was launched in October 1999, incorporating the Cabinet Office’s Market Testing Bulletin, and has since established a reputation for providing unrivalled insight and analysis into the complex world of public procurement.

Over the years GO has grown from strength to strength, both in its content and in its design. Procurement is constantly evolving, and as GO keeps abreast of developments, so its editorial content has diversified into new areas of procurement concern. In recent years GO has expanded its private and third sector coverage, and still includes a global news section where the latest EU public procurement infringements are discussed. Its contributors include many of the leading figures within the procurement sector, from both government and industry, including Sir Peter Gershon, John F McClelland CBE and Chief Executive of the OGC Nigel Smith, to name but a few. The magazine has also won several highly acclaimed Awards from the Business Services Association, and last year was Highly Commended in the PPA Awards Scotland.

The launch of the National GO Excellence in Public Procurement Awards in 2002 saw innovation and achievement in the sector recognised in such a way for the first time. The GO Awards are now the most coveted within public procurement, with entries received from all areas of the public sector. Following on from the success of the National Awards, the GO Awards Scotland were launched in 2008; this year’s event takes place on 28 October at the Crowne Plaza Hotel, Glasgow.

The GO procurement website – www.govopps.co.uk – was established in 2006, and provides visitors with access to exclusive editorial features and a range of other procurement resources. The GO eBook is also accessible via the GO website. The eBook follows the same layout as the paper version, with the advantage of being interactive and eco-friendly.

2008 saw the launch of the GO Conferences brand, which brings GO’s unrivalled knowledge and experience of public procurement to bear in a live and interactive environment. Featuring expert speakers from across the sector, GO Conferences events provide delegates with thought-provoking insight into the big issues affecting public procurement in the UK and abroad, and deliver the information they need to make effective and informed decisions.

Government Opportunities spoke to key members from its Editorial Advisory Team to find out their views on ten years of the publication.

Mike Acheson, Head of Procurement Policy and Contracts Division, Department for Transport

“I congratulate GO and the editorial team on achieving this ten-year anniversary. The magazine has considerably improved since it started and is now the primary magazine for public sector procurement professionals. It has news and articles which are relevant, informative and focused. It is also well set out and easy to read.”

Peter Howarth, Chief Executive, Society of Procurement Officers in Local Government

“GO is without doubt the leading magazine in the field of public sector procurement.

“It manages to grasp the current issues facing procurement and related fields by ensuring it communicates up-to-date information which may impact on procurement officers and those working in related fields too.

“It manages this by engaging with those who are active in the field and who are willing to give their own opinions on the topics of the day; and by carrying out in-depth research to get to the real nub of any topic covered. In more recent years it has spread its wings to give a wider picture of what is happening in the numerous marketplaces across the globe in which the public sector is engaged, providing invaluable information to the professional buyer.

“A phrase often found in the magazine is ‘playing to win’; Government Opportunities certainly does.”

Tom Logan, Director Commercial, Commands and Centre, MOD

“GO is an excellent magazine for keeping in touch with what is happening in procurement within the public sector. The news is up to date and relevant, and the in-depth articles and focus sections are well researched and presented. GO covers the latest topics affecting the procurement professional and provides the opportunity for practitioners to provide their views on current issues. The annual GO Awards also provide a great platform to recognise all that is good in procurement.”

John F McClelland CBE, Chairman, NQC Ltd

“For many years it seemed that there was no general structure at all in UK public procurement, and within that overall landscape very little communication or cross-fertilisation of innovation or good practice across the public sector procurement community. Indeed it might be argued that there was no easily identifiable or recognised community of procurement practitioners at all. Certainly, many suppliers to the public sector would have made that claim.

“Years later that community is now well formed and fast gaining credibility and authority. Its development has been assisted by a number of stakeholders not only providing leadership but also supporting the leadership of others.

“And of course, an important ingredient in developing and binding a community is the availability of information and good communications. In this area GO magazine has played an invaluable part. The function it undertakes is a vital one but it also goes beyond the norm in providing quality and dynamism in its content.

“The procurement community is well served by this publication.”

David Smith, Director of Commercial Services, Department for Work and Pensions

“So much has happened in government procurement in the past ten years, from Peter Gershon’s groundbreaking report and the establishment of the OGC, to the more strategic positioning of the profession within public sector service delivery and the recognition that we, in the function, continue to deliver excellence comparable to that of the private sector.

“At the heart of this change has been GO magazine, which has, over this period, grown as much in positioning and excellence as the function that it supports. It has, I believe, become an essential read for both buyer and supplier, offering practical advice, essential news and insightful editorial comment. It has supported National Public Procurement Practitioners Day and, of course, the GO Excellence in Public Procurement Awards, which has become one of the most eagerly awaited events in the procurement calendar.

“I am proud to have been a member of the GO Editorial Advisory Team over this period and very much look forward to the next ten years.”

Terry Street, Principal Consultant and Procurement and Outsourcing Product Manager, Socitm Consulting

“GO magazine provides its readers with a unique commentary on public sector procurement, with insightful features and in-depth interviews. With the increasing expectation that procurement can provide the solution to public sector financial shortfall, it is vital that readers have access to informed commentary and up-to-date information on a range of issues from strategic goals to practical hints and tips.

“GO also promotes best practice via its annual awards, giving recognition to a range of achievements across the public sector. The case studies featured by GO also support best practice by sharing how organisations have applied innovation and imagination to their procurement activity. I am sure over the next ten years GO will increase in relevance as public procurement is a major strategic part of all public service delivery.”

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