2.1 There have been a number of recent studies and reports into various aspects of public procurement, including from the CBI, the National Audit Office, and an independent review conducted by Sir George Cox, as described in Box 2.1.
Box 2.1: Public procurement reports As a demonstration of its increasing importance, over the last year the CBI has produced three reports covering various aspects of public procurement: A fair field and no favours; Improving delivery - realising best practice in procurement and contract management; and Innovation and public procurement - a new approach to stimulating innovation. There have been other recent examples including from the National Audit Office, which regularly examines specific procurement projects as well as considering more general aspects of procurement, and from Sir George Cox who looked at innovation in procurement as part of his Review of Creativity in Business in 2005. These reports make a wide range of recommendations to government and the public sector more widely about how to improve public procurement to deliver better public services at good value for money from an efficient process. The Government agrees with much of the analysis and the recommendations in these reports, many of which are incorporated and have helped to shape the detailed plans set out in this document. In particular, the Government accepts that: • there should be a clear framework setting out the standards that procurers and suppliers can expect the Government to uphold; • each procurement should have a clear, fair and transparent process and evaluation criteria; • there should be an informal complaints procedure where suppliers think that the Government has not met the standards it has set itself; • complex projects should be subject to rigorous external scrutiny; • an outcome-based and whole-life value approach should be the norm to encourage more innovative solutions to problems; • there is scope for better early market signals to be sent and for more upfront thinking and discussion with suppliers about potential innovative solutions and approaches at the very outset of complex projects, before they reach the procurement stage; and • procurers need to have better procurement skills at all levels to implement the new approach effectively. |
2.2 These reports, and others, have helped to shape the Government's ideas about how best to make the transformation that is needed to deliver its vision for a procurement function that consistently delivers high quality public services at good value for money, and is better able to take advantage of business innovation to transform service delivery where appropriate (see Box 2.2). The Government conducts some of the most complex and challenging procurements anywhere in the world - including the integrated IT system for the NHS, aircraft carriers and other hi tech military equipment. To meet the expectations placed upon it and take advantage of the opportunities that are available from suppliers to transform public services, the government procurement function itself needs to be world class.
Box 2.2: The government procurement vision A fully working procurement function should have the following characteristics, many of which are already in place but need to be developed further: • procurement at the heart of delivering public service outcomes, so that there is a strong link between policy (what is required), procurement (what is bought, how, on what terms, and how it is managed), and affordability. For policy and service delivery to be effective, procurement issues need to be integrated at an early stage into defining public service outcomes; • clear objectives, so that procurers have a clear focus on delivering value for money on a whole-life costing basis from an efficient procurement process; • the right incentives (performance evaluation, reward, career structures) for procurers that reinforce the importance of successful procurement in delivering the organisation's objectives; • the right contractual arrangements, with a single coherent framework to assess how best to undertake particular types of procurement; • comprehensive procurement and supplier management information, on what is being procured, with whom, for how much and how frequently; • the right skills at all levels within government, with a career and pay structure that reinforces he recruitment and retention of high calibre professionals; • matching skills to projects, ensuring that the most complex and important procurements have the best staff assigned to them; • access to specialist advice (technical, legal or financial), where it is needed but is not cost effective to have in-house; • effective management of contracts in operation, where the right objectives, incentives, people and support need to be in place for contract managers to deliver public services outcomes; • effective development of the supplier base, with a good understanding and communication between the buyer and supplier before and during procurements, and consistent management of suppliers across different projects and sectors; • a commitment to continuous improvement, resulting in an increasingly better performing procurement function; • welcoming of innovative solutions where they can deliver the best whole-life value for money; and • disciplines and incentives on departments to deliver efficiency savings and sustainability, meet requirements and gain rewards. Where departments achieve further savings than assumed within the budgetary levels set in the 2007 Comprehensive Spending Review, these will be retained by departments and redeployed into priority areas of service delivery. |