There can be no doubt that 2017 will be a tough and challenging year for the public sector, especially local government and the NHS. This means challenges and hopefully opportunities for procurement professionals across the public sector.
There will be less money with further and deeper cuts to expenditure and services.
Over the last decade public sector procurement professionals have been asked or perhaps on many occasions told to respond to financial pressures. In many cases they have responded well; but sadly too often this has not been the case. The pressures and expectations on this cadre of public servants will increase in 2017 and beyond.
There will be political and populist pressure, especially from the media, for the public sector to attempt to stave off some of the worst impacts of the cuts by buying goods and services cheaply but imprudently, and to take ill-considered commercial risks. There will also be exhortations to outsource services when this would not be in the best interests of service quality, staff, service users, the community or, in the long term, the public purse. And for good measure, I expect that some senior executives and politicians will be asking their procurement teams to renegotiate existing contracts in the expectation of reduced prices. At the same time these same senior executives and politicians will almost certainly be promoting service improvements – even expansion – and securing social value through public procurement. There will be contradictions a-plenty! And a lack of realism.
Therefore, the first and most important response that public sector procurement officials should make is to act professionally. This means being ready to challenge flawed policy and executive proposals and decisions; and wherever possible to offer alternative options for achieving the desired goals. There will often be a need to demonstrate the long-term dis-benefits of what may seem like good short-term expediency – be it buying cheap and poorly made goods, procuring poor quality food for schools and hospitals, etc – when this will lead to poorer health outcomes, or outsourcing when this could lead to poorer service quality, reduced employment conditions and in the long term higher costs. Public procurement professionals have to be strategic, not just transactional.
Of course ultimately they should not thwart the political decision makers. It is about ensuring that their decisions are made with the best available knowledge and understanding of the potential risks.
For too long procurement, with some notable exceptions, has been seen as a technical process which should be undertaken off-stage and not involve the executive and political leadership. This has to change. And to change fast.
Public procurement professionals need to develop much more specific skills and ensure that these are recognised by their colleagues and politicians. Such skills include the ability to:
- understand supply markets and their dynamics
- understand the suppliers, their business models and their commercial tolerance and robustness
- achieve social value through procurement
- conduct contract negotiations
- manage clients
- conduct commercial risk assessment and management – these skills can be applied more widely on behalf of a public sector body than simply to procurement
- manage external advisors well when and if they are required to augment the skills and capacity of the public sector team
- act strategically and see the holistic and not just the immediate transactional picture
- ensure that executive and political leaders understand the basics of procurement, markets, etc and recognise the value of the procurement profession
Such skills are required as much for the procurement of goods as they are of services. They are as applicable in times of austerity as they are when expenditure is growing.
There is a case for the public sector to share its procurement and commercial expertise. In 2017 I would hope that this will become an advancing trend.
Procurement professionals should be ensuring that procurement is aligned with and contributes to their organisation’s wider policy goals including social, economic and environmental objectives.
Procurement is not the same as commissioning, although given the way these words and functions are incorrectly defined and used across the public sector one could almost be forgiven for assuming that they were the same. Procurement officials will not normally lead a commissioning process any more than strategic commissioners will undertake procurement. They have to work as a team but commissioning is the fundamentally important approach to defining needs, identifying how to meet these needs and wider policy goals – which may or may not include procurement from third parties, and allocating resources to meet these needs and policy goals.
Procurement professionals have to be ready and willing to tell their commissioning colleagues when procuring public services would be the wrong approach. They have to understand and promote in-house provision, shared public service provision and collaboration with charities and the voluntary and community sector. They should ensure that commissioners understand the value of grant aid and always expect to procure through competitive contracting.
Above all procurement officials in the public sector have to be willing and equipped to say “no” to absurd ideas and propositions. They have to argue from an evidence base, make the case for social value and value for money, and take a long-term view.
In my experience the best public sector procurement professionals understand this and behave in ways which means that they are ever more valued and listened to by commissioners, senior executives and politicians.
2107 will be a very challenging year across the public sector. It could be the year when public procurement professionals demonstrate their great value to their organisations and to the public. It won’t be easy but it will be necessary.