It has belatedly been pointed out to me that this event was Chatam House rules and I have therefore been asked to 'censor' this blog a bit to protect the 'innocents'.
Attended a roundtable event on the Public Services Industry Review at the Department for Business, Enterprise and Regulatory Reform (BERR) in London today. It was a meeting of those involved in public sector commissioning to assess views on how the public services market can be improved to make it an easier place to do business.
The ongoing review is chaired by Dr DeAnne Julius and is due to report its findings to the BERR Minister John Hutton MP in late June prior to being fully published in July. All the main bodies were represented around the table with DCLG, DoH, MoD, 4Ps, Treasury, IDeA etc all present. I thought it would be a 'love in' for those who have policy roles aimed at 'encouraging' the market, however to be fair a number present were pointing to some of the markets limitations and flaws with the contracting process at present.
Key issues likely to be discussed in this type of review are the lack of trust and flexibility in the process when varying contracts due to either environmental or Ministerial changes and the fact that advisors and lawyers over complicate contracts because they make huge fees by doing so. However my view is that when you are charged with looking after the public purse it is important that you have watertight contracts that are transparent and assign responsibility and accountability.
Other key points that could be discussed are the limitations amongst all sides on procurement skills and how capacity and knowledge is often lost as people move on, therefore it is important to specify correctly. Of course the usual accusation will be made of the client being inept at procurement and needing to be more 'commercially' aware like the private sector. My objection to this is on the basis of the recent OFT construction cartels story and wonder if this is the type of 'commercial' skills people refer too when they suggest public sectors procurers should adopt private sector practices.
A big idea that the review may consider and wish to test is the idea of 'bid budgets'. This is where bidders are compensated if there are delays or cancellations in the process. A question I would like answered is will bidders also pay compensation to the clients under this model if they pull out of bids? And when you then start to fundamentally think how this process may work it leads you to think of a 'Columbo' just one more question approach. If the taxpayer gives its money to Government, who then passes it to local government, who then procure services on the taxpayers behalf, how does compensating bidders for failures in the process add up to value for money for the taxpayer. Some may argue that there would be stronger markets and greater competition in the longer term, but I think that this is a highly debatable point.
I know that there are a number of well respected senior figures in Government and the civil service who share my concerns around some of these issues. Sometimes when debating policy areas such as this you realise that you have more in common in the round than individual issues that actually separate you.
The problem with a review such as this is that the Public Services Industry is not one single entity and the assumptions made about the capacity of all sectors within it shows an astonishing degree of ignorance of what is actually happening on the ground. Local government has a well developed supply market, reasonable level of procurement skills, although this could be improved, and a need to be transparent when it comes to spending public money. We should be concentrating on giving the public added value for money not looking at how we can compensate providers so that they have no risk at all or blaming public sector clients for all of their ails.
The whole point of any competition is that there are winners and losers and if competitors are not prepared to take risks or suffer the pain of failure then they shouldn't enter the race. The Public Sector should not underestimate the value of the contracts it awards especially when finances are tight, we should seek to ensure that we get the maximum value for money for what is a guaranteed triple 'A' rated revenue stream, not apologise for doing so.