Since the government published its Green Paper, Transforming Public Procurement our Director of Procurement, Alan Heron FCIPS has shared his insight on what the future of public procurement could look like and how Procurement Hub is positioned within this.
At this year's Chartered Institute of Housing's annual conference, Alan Heron along with Lindsay Maguire - Head of engagement for the commercial policy team for the Cabinet Office, Rebecca Rees – Head of Public Procurement at Trowers and Hamlins, and John Wallace – Director of Procurement at Clarion Housing Group came together to share insight. Discussing both the technical and operational considerations of how the proposed new legislation in the Green Paper will impact the sector.
Alan addressed some other considerations of ’Creativity’ and ‘Ethics’.
On ‘Creativity’…. The ‘Transforming Public Procurement’ green paper published by the Cabinet Office outlines significant changes for the sector. However, I firmly believe these changes represent a significant opportunity for creativity and innovation to catalyse the Housing Sector.
If the last 18 months has taught us anything, it’s the importance of organisations being fleet of foot, creative, and innovative – able to respond quickly and dynamically to the rapidly changing operating environment. This is as true of the procurement function as it is of the whole organisation. Our procurement functions should be value-adding, not merely administrative…they should be a catalyst for change, not a consequence of it.
The proposed competitive flexible procedure introduced in the ‘Transforming Public Procurement’ green paper is the platform for such dynamism, creativity, and innovation. It provided ostensibly a blank canvas compared to the sometimes over-bearing restrictions imposed under EU influence. Procurement teams still must operate within an environment of transparency, equal treatment, and proportionality – but gone are the shackles of EU bureaucracy that mandated the prescriptive timings and nature of each explicit step in the process, allowing for a more dynamic, creative, and innovative procurement environment.
The flexibility and freedom the new procedure delivers will be welcomed with open arms by some, but others will feel a little hesitant about it. Some procurement staff will simply use it to recreate the existing procedures, following the same prescriptive controls of the current legislation. And that is OK. It’s safe. It’s comfortable. But OK, safe, and comfortable wouldn’t have lit Edison’s lightbulb or fuelled Einstein’s Theory of Relativity – nor would it have transformed Amazon, Facebook, or Apple into arguably some of the most successful commercial organisations in history. And OK, safe, and comfortable will not improve your organisation or give it any competitive edge in the sector.
If your procurement function is technically capable, empower them to make decisions and embrace innovation. If they’re not quite as capable, invest in them, nurture them to become value-adding rather than merely administrative. And if you have no procurement function or need extra capacity – ensure you are very selective about which procurement consortia you engage with.
This brings me nicely onto my second point – ‘Ethics’.
Embedded within the ‘Transforming Public Procurement’ green paper, and the more recent National Procurement Policy Statement is a strong underlying message of Ethical behaviour.
The proposed legislation mandates that any fees charged by a consortium must be transparent, proportionate, and used ‘solely in the public good’. Most procurement consortia charge fees to the suppliers on their frameworks or DPS’s for any contracts you award to them. This means that although you are not directly charged by the consortia – indirectly you will be, because the supplier will have incorporated the fee to the consortia in their pricing to you.
Unfortunately, many consortia still describe their services as completely free with no customer charges. However, as my mother wisely drummed into me as a young boy in Glasgow – “There’s no such thing as a free lunch”. Consortia that charge fees to the supplier are fully aware that it is incredibly likely that the customer will indirectly incur the charge. However, the actions of some consortia that play Victorian parlour games of misdirection and subterfuge with regards to their fees and public money are archaic, and quite frankly insulting. We live in a time where transparency and ethical behaviour are paramount. This simply isn’t good enough anymore.
All fees – either directly or indirectly paid by the customer – should be clearly and openly stated to all parties. Not denied or hidden away on page 73 of a downloadable document somewhere on their website. What’s wrong with clarity and honesty?
The type of procurement consortia we engage with as a sector reflects upon us all. Do you want your organisation to be seen to be working with a private or quasi-private procurement consortium precariously piggybacking on the contracting authority status of another public sector body? Or working with a consortium that doesn’t declare its fee structure, or struggles to justify why they are charging 4,5, or 6% fees when others in the market are charging less than 2%?
The new legislation also dictates that all fees generated should be used solely in the public interest. That is music to my ears, although I fear many other consortia will be burying their heads in the sand over that.
As part of the public sector, it’s critical we protect our reputations by being careful about who we associate with. It can have lasting and damaging consequences if we don’t – just google recent news stories about Mayor Joe Anderson, Prince Andrew or David Cameron if you’re not yet convinced.
So, in summary, the new legislation presents some fantastic opportunities. However, empower your procurement team to be innovative. Choose your partners wisely, and the combination of both can be transformative to any organisation in the Housing Sector.
To find out more about how we're open and honest about our fees, click here.
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The Procurement Bill will represent the single biggest change to public sector procurement legislation in a generation.
Considerations of how the proposed new legislation in the Government's Green Paper will impact the Housing sector.
Our Director of Procurement, Alan Heron shares his insight into the government's green paper, Transforming Public Procurement at this year's Housing 2021 during a panel session.
Formal Consultation Response to the Government's Green Paper
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