Conspicuous consumption: public sector procurement in the new reality
In this exclusive preview from the next issue of FIRE magazine, Correspondent David Wright provides insight into the minefield that is centralised procurement.
The first thing that governments point to when wanting to make savings in the public sector is the matter of procurement. The Police Service could make 'x' billion pounds savings each year if only their procured collaboratively, so could the Fire Service etc. But are the savings identified through desk top exercises carried out by people with limited experience of the services they are talking about realistic and achievable? What are the hidden costs associated with the procurement process that do not get factored into the equation? And, where are the procurement solutions that have worked and are seen as successes?
There are myriad ways in which items can be purchased for the use of the FRSs. Most of these will be governed by the authorities' own financial regulations and systems. Oversight that the rules are followed and mistakes avoided is provided though a hierarchical checking and approval system that follows a golden thread from a crew commander signing off a petty cash application to the sign off for a major contract for a building at tens of millions of pounds. These transactions are monitored internally and externally checked by independent auditors.
When there is a relative abundance of funding within the economy, sloppiness abounds and there is less of an incentive to make best use of resources available. When the chill wind of recession hits, the world changes and scrutiny of spending accelerates. And one of the first things targeted for improvement is the procurement of goods and services. When reductions in funding mean that staffing numbers are to be reduced, the remaining 20 per cent of budget that makes the rest of the budget must be squeezed.
Procurement can be a lean process which delivers value for money for the organisation and the community but it needs to be managed effectively. In many instances effective procurement delivers what the service wants in a cost beneficial manner. Unfortunately - and this is where the media are culpable - a story about good procurement hardly ever makes a headline, and poor procurement practice, (like 'health and safety gone mad' issues) stories tend to dominate. Of course national procurement has not helped itself in the last decade or so, with many projects failing to deliver on savings and customer expectations in the eyes of the media. Procurement has now, once again become a dirty word in the eyes of government and media, but at the same time it is being seen as a way of reducing cost.
National procurement strategies, specifically for the FRS in the post Fire and Rescue Services Act (FRSA) 2004 era, has been focused around regional and national processes through the FireBuy consortia and collaborative purchasing. The failure of FireBuy to deliver on savings anticipated has been addressed and the remnants of its procurement activities have been outsourced to the FRS itself. The reasons for failure of FireBuy were multi-factorial. Government expectations that were too high, the failure of attempt to gain the buy-in of many FRSs, the extended processes which never seem to end and the delivery of a compromise product which satisfied few customers.
The multiplicity of service structures and governance very often mitigates against having a truly national procurement process. As government seeks to wash its hands of excessive control of FRSs (and other local government institutions) in the name of localism, the empowerment of FRSs means that it will become even harder to gain consensus about uniform, appliances and equipment, with each senior officer and authority having its own opinion (and way) over selection and procurement.
The national procurement processes also have a difficult balancing act to achieve. Not only must these processes be seen to deliver best value but there should also be a recognition that a national single supplier of goods or services could also lead to a demise of a wider industry. Potentially, 'also ran' tenderers could leave the market for other pastures and leaving the FRS with a monopoly supplier, that can hold the Service to ransom and potentially stagnate future development of product, knowing that a contract is theirs for anywhere up to 20 years.
Of course there are measures in place to stop individual preferences detracting from the appropriate selecting of equipment etc and these measures include internal procurement rules and European rules in the form of European procurement directives. Essentially, the directives require a public tendering process to be undertaken within the Official Journal of the European Union, if a contract for goods or services exceed a threshold (currently just less than €200,000 or about the base price of a pumping appliance). Evidently this is not a huge sum of money but despite attempts to thwart the rules by all manner of schemes (including buying a chassis bit by bit to keep below the EU threshold), it has opened up the procurement market to a wider supplier base. The second important feature of the directives are that the specification for equipment cannot be drawn up in such a way that it precludes potential tenderers from non UK companies from applying. So far so good: but it gets more complicated.
See November issue of FIRE magazine for full story.
Posted November 11th, 2011 at 1050 by Andrew. Comment by emailing: firstname.lastname@example.org
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