The critical role of procurement in public value outcomes

My ‘opening remarks’ as Chair and session notes from the second day of the Public Sector Show 2021.

You still can watch replays of the sessions — several are highly recommended — by registering:

https://publicsectorshow.co.uk/

Chair’s opening remarks

In public services, we continue to face a cascade of crises:

• the immediate crises of COVID and “Brexit” and their long after-effects
• the slow crises of the climate emergency and social justice, impacting now and growing into the future

Many of our clients face a 40% reduction in net spend compared with twelve years ago, and a massive increase in demands on their organisations.

So it’s easy to get focused on spending ever-decreasing money to meet ever-increasing needs through purchasing goods and services.

It’s easy to get focused on ‘the purchase’, ‘the deal’, category management, ‘the contract’, the procurement itself.

Those are vitally important. But remember that government commercial guidance has always pointed out that the investment, the focus, is all magnetically drawn to the moment of purchase — the deal. And that the real value is not there — the real value is in the broader thinking, the problem framing, the market and relationship building, the specification work we do up front — then in the relationship, the contract management, the learning, the adaptation after.

Where value is created in procurement — and where effort is placed

So, I encourage you today to realise the vital importance of procurement in playing on a wider stage, to think about the sessions and to question our speakers from the perspective of all the many ways we can use our purchasing and our procurement as part of a commissioning approach.

The public sector outcomes we seek are the result of complex adaptive systems.

We’re always intervening in those systems to try to achieve better outcomes.

That means that to maximise public benefit, we need to think about:

• The way our procurement shapes markets, including the community, voluntary, social enterprise and market outcomes we close down through our decisions — and those we open up
• The social value we can generate — primarily through the delivery of the goods and services and their impact
• The long-term relationships we are generating or disrupting
• The learning we are generating, and how we are using it

And we need to think about our practices and competencies and level of thinking as procurement people just as much as, or even more than, the rules and regime — both are critical, of course.

Playing on a wider stage means thinking upstream of procurement, to the systems in which we are intervening — with its own rich resources and learning, which dwarf our spend — and the outcomes we want to achieve — outcomes that can ultimately only be measured by the people we are seeking to help.

And it means thinking downstream of procurement, to the impacts and second-order effects of what we do, to the markets and relationships we build or destroy, to the immediate and longer-term impacts.

Notes from the sessions

The speakers on the day were all rising to that challenge in various ways. We heard:

• About the reforms to the post-EU UK procurement regime and the vital importance of education and practice to make sure the new rules get used properly and to their fullest extent; the potential of the EU legislation has very patchily been fully exploited, so the huge risk is that attention focuses on learning (and gaming) new rules, and compliance, rather than the bigger picture.
• Very frankly about the stresses and special efforts made by the procurement teams at the heart of the COVID-19 response, including the impact of the current negative press coverage. It was powerful to get insights into how the civil service respond to a crisis, and the critical importance of human-to-human connections cross-department, and lessons that apply to all organisations, particularly in the need to explicitly manage the move out of crisis mode. Top takeaways:
• We are stronger together, as people — look, and work, outside your boundaries
• There’s no substitute for real subject matter experts
• Wellbeing of your people has to run through the DNA of the organisations — leaders must walk the walk
• Innovation requires real freedom to fail
• The vital issues of digital accessibility, given the investment and the focus on ‘digital’ and the failure to reap real benefits outside of large-volume rule-based transactional services.
• The very real, close-to-home and worldwide impacts of slavery in our supply chains, our responsibility to deal with it, the current risks of breakdown of those controls due to COVID and “Brexit”, and the potential and limitations of the legislation.
• The ‘art’ of successful contract management, with its deep links to project management and vital role in creating value from procurement:
• It is always about mutual gain — if you want more, think about what you can give
• To really achieve better outcomes, think about capability
• Procurement is racing ahead of contract management, but can’t offer value without it
• We must tolerate more reputational risk in public services to get better results
• The potential for procurement to support the creation of resilient and sustainable local economies and really add value (I feel the concern about it being a ‘zero sum game’ — a form of protectionism where one place benefits at the expense of others still lingers):
• Working on the economy of a local place can allow more of a people-centred, planetary-boundary-respecting approach
• It’s not just ‘boxes at doors’, it’s what the spend does to shape the local economy
• There’s an appetite to go way beyond the social value act in making procurement strategic
• Start with measuring what’s happening and the true local impact of your spend!
• The ability to literally work from anywhere in the world is fantastic for rural economies and in opening up opportunities to people with caring responsibilities and to whom standard work places and hours are not accessible
• The ongoing complications and work and requirements around PFI contract expiry; a policy very good for the public sector balance sheet and work opportunities for consultants, but of dubious value in public outcomes.
• The critical importance of thinking about supply-chain resilience in a COVID/”Brexit” world, and how good management and wise investment can overcome the challenges and get us back to more like a stable position.
• Truly radical, adaptive, value-based collaborative commissioning taking a place or alliance-based approach rather than a self-limiting, narrow contractual one:
• Our practice in public services becomes limited, routinised, and focused on boundaries and threshold because of the standard commissioning/procurement approaches — radical adaptive approaches open this up.
• We need to allow and create permissivie environments — mastery, autonomy, and purpose for staff.
• Moving away from targets requires real rigor to really undertsand how money is being spent appropriately.
• Trauma-informed work is vital, and requires looking at a whole chian of events.
• With a large local authority (Kent is the size of Estonia!), it’s absurd to think that what works on one side will work on the other.
• ‘Labels are for tins’ as Clenton Farqharson says — not for people — our work needs to truly put people at the centre (so much is lip services).
• It doesn’t matter whether providers are in-house or external — they need to be managed in the same way, and providers and their workforces are critical to both service and place outcomes.
• The language and practice of colonialism is deep in our procurement practice — we need to drive it out.
• And a tour de force keynote from Professor Martin Reeves — a passionate call to arms you must watch, including:
• Considering the potential imapct of capital spend on social change.
• The need to avoid ‘depending on our leaders’ and take charge ourselves to think differently about procrurement and commissioning, to shape places, deliver social value, and make markets — not accept the status quo.
• Challenge to the procurement profession to grab the post-pandemic recovery as an opportunity to integrate first-class end to end procurement into the key visions and strategies for our places.

Watch the sessions back at

https://publicsectorshow.co.uk/