Paul Lloyd from The Public Purse explores the key issues around cross-sector procurement
Decentralisation and autonomy are vital to our concepts of good and effective local government. It’s also important to all public bodies, such as the blue lights, healthcare and the education sector. The ability to make their own decisions relative to their field of activity means unwelcome restraints are not present and nor should they be.
Over recent years, neighbouring city and county councils have been merging front line and backend services for several years to achieve significant and worthwhile savings. Typically, shared backend services have included HR and finance.
The beauty of cross-sector collaboration as a concept is that it takes the best from both extremes. A form of natural selection takes place whereby birds of a kind flock together. We see joined-up public-sector procurement happening between police forces, between NHS trusts as well as between fire services, education and local authorities, all working in unison.
This takes several forms. There are procurement consortia and procurement hubs, which draw existing procurement resources to a central operation and which are owned and funded by the public bodies they serve. There are also some privately-owned groups, which effectively offer a procurement outsourcing service. Some bodies simply outsource their own procurement to another public body.
The undeniable attractions are the much higher combined purchasing volumes that immediately attract more competitive pricing from suppliers. Furthermore, a joint effort provides more purchasing power to the public sector, therefore, applying more pressure for the suppliers to provide a more valued proposal.
Overall fewer supply chains and suppliers to manage and ultimately, fewer resources are required to execute the procurement function.
There is a cost, of course, and a significant part of that is simply the extra personnel and resources consumed by executing tasks that are duplicated up and down the UK. The other part is the organisations being unaware of the current opportunities that fly by them each day.
The trouble is that organisations will continue to spread one’s wings, occasionally by flying with favourite partners, until the evidence of cross-sector based collaboration concludes with a comfortable flight.
Furthermore, political agendas will always be problematic, even if presented with a saving cost opportunity and therefore organisations lose out on additional funding for improving resources, services and increasing wages.
Presently, the unfair balance of time and money pressure in procurement creates day-to-day challenges and potential rash decisions
So, should the public-sector fly in unfamiliar territories and essentially risk a contract supplier for a cost-saving opportunity? Would public sector procurement increase the percentage of collaborative opportunities with insight into suppliers? Given insight, organisations would benefit from being partners first, sharing best practice and lending a helping hand to each other’s challenges. This would be achieved by sharing real-time supplier information and benefit the process before beginning a framework agreement. Furthermore, organisations would find further cost saving opportunities in the current no-fly zones of cross-sector.
The government would do well to recognise the power of initiative. After all, the end game is to provide public services at vastly reduced costs, achieved by continuously shrinking budgets. No matter how you sugar the pill, that implies job losses and lack of funding for services.
So, is it the case, that the more efficient that procurement officers become at delivering their area of expertise to their public-sector employers and clients, the more they are undermining their own job security as a group?
That is a significant, if a generally unspoken, disincentive to progressive procurement collaboration on a voluntary basis. It is to the credit of the UK’s public servants in the procurement arena that they have already achieved so much and continue to strive for greater efficiencies to stretch the public purse.
After 15th January this year, The Public Purse, United Kingdom-based think tank will begin its journey ‘Whereby birds flock together ‘in a bid to encourage cross-sector collaboration, by providing initial collaboration reports to interested bodies of UK based central & local government, education, blue light and healthcare.
Brand & marketing director
The Public Purse
Tel: +44 (0)845 533 9095