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Private Eye Identifies Covid Profiteering and Procurement Naivety

In the current issue of Private Eye magazine  – only on sale for another few days so hurry if you want to buy it – there is a special 8 page supplement titled “Profits of Doom”, covering the “bad buying” that went on in UK government around the pandemic, principally PPE (personal protective equipment), but also test kits and the track and trace programme.

Several procurement leaders get a mention, including Gareth Rhys Williams, Government’s Chief Commercial Officer, and Steve Oldfield and Ed James at the Department of Health.  I suspect there are others who actually had more to do with the PPE procurement waste but have escaped that attention …

If you have followed these stories in the media and on this website to some extent, much of the Private Eye report won’t be new to you.  But putting it all together does increase the sense of anger that most of us will feel about the vast sums of money extracted from the British taxpayer by certain firms and individuals, in return for very little effort. According to the magazine, one firm, Primer Design Ltd, went from a profit of £1.3m a year before Covid to making £178.2 million in the first Covid period.

Individuals did well too. Andrew Mills, who had been an adviser to government himself, made £32.4 million for doing very little as a middleman for Ayanda Capital, whose bosses also made tens of millions on PPE supply. Even the consulting firms raked in the cash working on various covid related tasks including the pretty useless track and trace programme, with Deloitte partners making record earnings of around £1 million each last year.

It is clear that cost really didn’t matter when the PPE shortage was at its worst last year, and to some extent that is understandable.  There is still some mystery about the demand forecasts that led to chronic over-ordering; that factor alone cost the taxpayer billions, but there has been little real insight into what went wrong there.

But why the procurement teams didn’t at least try and examine the margins made by the middlemen and agents, I don’t know. If the buyers had insisted on seeing a price breakdown, or set a maximum mark-up over factory gate prices, would Andrew Mills and others really have walked away from the deal?  They won the contracts in the first place because of their political connections that got them onto the “VIP route”, which gave priority to their supply proposals, so it is hard to see that they could have instantly taken their offer to another country.

Instead, they were allowed to make tens or hundreds of millions in profit by exploiting the naivety of the procurement operation, which seemed to focus almost entirely on just buying as much stuff as possible. Then we have the Randox contracts for test kits and analysis, where the picture is even murkier. Member of Parliament Owen Patterson was paid as an adviser by that diagnostics firm, and records of calls between him, the firm and health Minister Lord Bethell, have been “lost” apparently.  Randox was given £600 million worth of contracts without any tendering or competitive process. And it won a testing contract worth £133m, just days before government officials confirmed it did not actually have enough equipment to deliver the work, according to documents now released.

It would be good to think that some of those who profited from the pandemic and in effect took advantage of the taxpayer might lose friends because of their actions. But the culture in the financial world and “the city” is such that I suspect they will be celebrated as great examples of entrepreneurial spirit, exploiting a situation (and their connections) cleverly to make money.

Even if there wasn’t overt brown-paper-envelopes-type corruption here (or none that has been discovered yet, at least), sometimes it is just very easy to hate capitalism!

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CIPS Explains Governance Changes – and More To Come (We Hope!)

You may have seen the email from Malcom Harrison, CEO, and the information on the CIPS (Chartered Institute of Procurement and Supply) website concerning some of the governance changes being enacted and proposed by the Institute.

It is good to see CIPS communicating like this and the note does answer many of the questions about the replacement of Congress by the Membership Committee. It was good to understand more too about the Volunteer Engagement Group – and to see some contrition for the variable  communication of the changes over recent months.

The “Q & A” section in that communication also briefly addressed the President issue, although again it talks about other ambassadorial roles, which we have seen little evidence of in recent times.

The big gap was the lack of mention of the Global Board of Trustees (GBT) and Nominations Committee, and how abolishing Congress also means that CIPS members at the moment have no vote and no influence on those two central governance groups. That also brings about the issue of the “circularity” I highlighted previously, with those two committees nominating each other, which I still think is unwise and unsatisfactory.

However, I do understand GBT is actually discussing (as we speak, as it were) whether there might be some alternative approach here that would preserve democracy. So I’m going to hold off the trouble-making for a few days and see if white smoke and some alternative proposals emerge from the Easton chimney. If not, I’ll be back on the campaigning trail shorty, with the aim of preserving some sort of democracy for CIPS and its members.

In the meantime, do make your views known to CIPS directly, using the address they have set up for that purpose – haveyoursay@cips.org. I have passed on the comments I received when I ran our quick survey last week, but if you feel strongly about this, then obviously it would help for you to express your views directly – whether about Congress, the potential disenfranchisement, the Presidency or whatever!

I would stress though that I don’t believe the changes are down to CIPS management, which some of you have suspected. It is the Board of Trustees who are making these decisions; the senior team at Easton may not disagree with them, but we should be clear that these issues fall firmly into the Board’s area of responsibility.

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CIPS Members’ Survey – Results Show Overwhelming Concern About Proposed Changes

Thanks so much to everyone who responded to the CIPS members’ survey I launched on Monday. We had 100 responses by 3pm on Monday and I closed it last night with around 180 replies. Here are the basic results. I will comment on them more in a further article. However, the main reason for doing this was to check whether other members felt as strongly as I do about the changes being proposed. It seems pretty clear that my views are not unique!

More to follow, as I say, including “comments on the comments”, as it were – respondents made many interesting remarks in the free text part of the survey!   And thanks again for your participation.

Do you agree that the elected Congress should be replaced by an appointed Membership Committee directly reporting to the Board of Trustees?

Yes                                                                  6%

No                                                                  76%

Not sure / need more info                          15%

Don’t care – no strong view                         3%

Are you happy with members losing their democratic vote and the chance to choose at least some of the people involved in the running and governance of  CIPS?

Yes                                                                    2%

No                                                                  94%

Not sure / need more info                           3%

Don’t care – no strong view                         2%

Are you comfortable with the Board of Trustees appointing the Nominations Committee, which then appoints members of the Board of Trustees (with no elected members on either body)?

Yes                                                                  2%

No                                                                  92%

Not sure / need more info                            5%

Don’t care – no strong view                         2%

Do you agree that the role of CIPS President should be abolished?

Yes                                                                  3%

No                                                                  71%

Not sure / need more info                         21%

Don’t care – no strong view                         6%

On a scale of 1-10, how well do you think CIPS has engaged with and communicated to members in terms of these proposed (and implemented) changes?  (1 = not impressed at all,  10 = delighted)

Score 1  66%

2              22%

3              7%

4              1%

5              1%

9              1%

10           1%

The sample was heavily weighted towards more senior members of CIPS, with no less than 28% Chartered Professionals (and MCIPS / FCIPS of course). 26% were MCIPS and the same percentage exactly were FCIPS.  Over 80% were UK based.

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CIPS Implements Major Structural Change Without Member Communication or Agreement

The Chartered Institute of Procurement and Supply (CIPS) is currently making major changes to how the Institute is run, its governance and structure. Unfortunately It is implementing the changes after only limited consultation with selected members, and without communicating openly what it is doing, let alone asking for members’ approval to the changes. The most significant change would remove members’ voting rights; a disenfranchisement of 20,000 CIPS full members.

I know this has been a difficult time for all organisations, and I’m sure the CIPS Board believe they are doing the right thing. But as a member for 30 years, a Fellow and a Past President, I do not think this approach has been appropriate, and CIPS could lose a large number of members if it does not handle this well. So it feels like time for an open debate about exactly what has been going on here “behind closed doors”.  

There is undoubtedly a need for some review of CIPS structures; for instance, I don’t believe that the Congress has established a clear role since it was formed.  But change must be managed properly, and members must be involved and treated with respect. 

The major changes in progress

  • The Congress, which advises the Board, and is elected by members voting on a regional basis, has already been abolished – without communication to members. In its place, a global Membership Committee is being appointed, reporting into the Global Board of Trustees (GBT), which is the ultimate governing body of CIPS. The Membership Committee will be appointed following applications and interviews carried out by the Nominations Committee (NC), which itself is a sub-committee of the GBT.

  • Currently, half the members of GBT are appointed by the NC and half are elected by Congress from amongst Congress members. This means all full members have at least an “indirect” say in GBT membership – we vote for Congress representatives, and Congress elects half the Board from its own membership. Under the new proposals, the NC will appoint all members of the GBT following an interview-type process.  There will be no member voting.

  • The position of President is being abolished – a move which in my opinion seems to be based as much as anything on the last Presidential appointment not working out as well as was hoped.  

What does this mean?

  • CIPS members will no longer have a democratic vote of any kind to elect the people who run CIPS.  We will only be a “membership” organisation in the sense that the AA is a vehicle recovery “membership organisation” – we will simply be consumers of a service. That will be a different model from pretty much every other professional Institute as far as I know. All that I have checked retain some sort of membership democracy.   

  • There is a worrying ‘circularity’ in that the Global Board of Trustees (GBT) is appointed by the Nominations Committee (NC), but the NC itself is appointed by the GBT and largely consists of GBT members anyway. This does not appear to represent any sort of good governance.  I appoint you, you appoint me, I appoint you, and so on and so on!  

  • Making appointments purely via the NC and eliminating all democratic voting could easily lead to cliques, “chumocracy” and conflicts of interest.  Such a move seems unlikely to give members a greater sense of ownership, belonging or commitment to CIPS.

  • In terms of the Presidency, there will no longer be a professional leader for the Institute, a respected professional who can speak on our behalf. The CEO takes on some of those responsibilities but we can’t always guarantee that the CEO will be a credible procurement professional themselves (as our last two have been) and their core role is pretty demanding in itself.  There has been vague talk about “regional ambassadors” being appointed but no concrete proposals for replacing the President.

In conclusion

In my opinion these changes have not been fully considered, members have not been properly consulted, and I believe the disenfranchisement of members is simply wrong.  I fear the changes could lead to many members leaving the Institute.  If we want to get formal about matters, proposals and indeed actions already taken also appear to be in breach of CIPS Regulations and Charter.  Finally, the lack of communication to members so far is disturbing. If the Board has a case to make for the changes, it should make it openly and in consultation with members. And members must be given a vote on any proposals that fundamentally change the way a 90-year-old, globally respected and influential professional Institute is run and governed.

Survey

So, in the absence of CIPS consultation, I believe it might help move this situation forward if members follow the link below and complete a brief survey form. It will only take 5 minutes and will be strictly confidential. The results may prove me wrong – perhaps members think all of the ideas are fine and democracy is over-rated. I will happily shut up if that is the case. I have tried to make the questions unbiased, and I know some members, including a couple of Past Presidents I have spoken to, just don’t really care, so I have included that as an option for responses.

I will publish the results (anonymised of course). Please follow the link and give your views now. In the absence of CIPS pro-actively involving members in these important decisions, this approach seems like a sensible option to test views and indeed to provide some feedback to the CIPS Board. 

Link –

https://www.surveymonkey.co.uk/r/7C7NGYD

SURVEY NOW CLOSED – THANKS TO EVERYONE WHO REPLIED!

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