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The Public Sector’s Traditional Approach to Procurement

Willie Sutton, the famous American bank robber was once asked why he robbed banks, and his response was simple and to the point – ‘because that’s where the money is… in its most compact form’. However now, in a sense, the most money in the most compact form is not in financial institutions but in public procurement with the UK public sector spending over £250 billion on goods and services in the year 2016/17. Out of this vast amount of cash, central government accounts for £118 billion, local government £70 billion, the NHS over £66 billion and public corporations £8 billion.  Even a tiny saving on these enormous sums adds up to a great deal of money and perhaps just as significantly, the way this money is spent has great impact on the businesses and third sector organisations that bid for these contracts, the employees who gain their livings delivering these goods and services,  and the communities that they live within.

Local Government Procurement

The public sector’s traditional approach to procurement is to seek the goal of getting ‘value for money’ which is defined by the UK Treasury as ‘Securing the best mix of quality and effectiveness for the least outlay over the period of use of the goods or services bought’ – this is, of course, not necessarily about getting the minimal upfront price but rather a question of determining what is the ‘best’ mix and obtaining this. There is within this idea of having a mix of quality and effectiveness the notion that a variety of public policy benefits can be sought and obtained. Examples may include the goal of developing small and medium sized enterprises, and of achieving local growth and perhaps having environmental gains and sustaining these. Policy goals which may be included in public procurement strategies of environmental, social and local development can certainly be considered by public procurement processes if they comply with the law. How to do this well will involve innovation and new approaches – the outlines of which are hopefully becoming clearer.

This Conference on Local Government Commissioning and Procurement attempts to explore these notions of public section buying moving beyond the sole aim of getting the best price and towards achieving economic as well as social value and environmental goals in innovative ways whilst saving money.  In a series of interesting and informative presentations these ideas will be outlined, explored and discussed. Peter Schofield of the Local Government Association and Tim Bryant of the GM Commissioning Hub are presenting on the idea of spending wisely whilst demonstrating value for money through new approaches and innovative techniques. Ewen Weir of Newcastle City Council and Terry Brewer of the Social Value Portal will explore collaboration and social value – demonstrating how projects can be evaluated in terms of social as well as value for money benefits. Case studies by Melissa Bell of YPO and Elizabeth McKenna of STAR Procurement will show how we all can be innovative in the way we approach commissioning and procurement. Cath Hill of the CIPS will discuss ways of attracting, developing and supporting the best procurement talent and how we can move procurement from being regarded as a cost centre to taking its true role as a profit centre. Sarah Jewell of the Crown Commercial Service will expand on how we can manage supplier performance in a world where local government must reduce costs whilst at the same time as managing growing supply-chain risk. Finally, the day’s learning will be consolidated through question and discussion opportunities and a summing up by Dr Kevin Kane of Salford University who will attempt to help us in formulating profitable ‘takeaways’ from the day; and will also guide us in developing plans for coping with Brexit – the shape of which may or may not be more discernable in late March but which will certainly offer both risk and opportunity whatever the eventual outcome.

Thank you to Kevin Kane for giving us his thoughts. Kevin will be chairing the Local Government Commissioning and Procurement Conference 27th March in Manchester, click here for complimentary tickets to join in the conversation.

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