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Will My Supplier Deliver? Lotteries, Camelot and Challenges

In part 1 here I discussed the reports that Camelot, the current operator of the UK National Lottery, is going to challenge the government’s decision to award the contract for management of the Lottery to a different firm, Allwyn, headed by a Czech tycoon. That decision follows a lengthy and no doubt exhaustive “procurement” process.

There are suggestions that Allwyn have offered to make more money for charitable causes than Camelot included in their proposal. According to reports, that amount is not contractually  guaranteed, but may have played a major role in the selection decision.  Which leads us into the question of confidence – how do we know that supplier really will deliver what they promised?

There was a great comment on LinkedIn related to the part 1 article. The writer told of a major NHS procurement where a US supplier came in with a knockout bid, which led to other potential suppliers simply pulling out. Then, literally on the day the new service was due to go live, “At the eleventh hour the supplier had withdrawn, admitting that they couldn’t deliver the brief and make the savings claimed”.

There is a huge difference between what suppliers (some suppliers at least) will claim they can do and what they actually can deliver. There are no magic answers to this, but in my book “Bad Buying” I suggest thinking about “analyse, reference, test”.

Analyse means looking into the firm, the product or service that you’re going to buy, doing your research on the supplier and on whatever you are buying. The amount and depth of research needs to be proportionate to how much you’re spending and how critical what you’re buying is.

Reference means asking other customers of your potential supplier or users of the product or service you are buying about their experience. It’s an obvious step, yet it is amazing how many organisations don’t bother with this step. I was asked for input on a legal case in 2018 where an incumbent supplier challenged the decision by a large government body to award a contract to several other firms, meaning that the incumbent was going to lose all its business. This was a really sensitive service; if it went wrong, you might well see reports on newspaper front pages.

Yet when the incumbent firm asked questions about how the procurement decision was made, it became clear that the government organisation had done virtually nothing to check out what other suppliers were claiming in their bids. They had not researched the track record of the firms; they had not taken up references from other customers; they did not even seem to have checked whether the directors of bidding firms had criminal records! The buyer was simply believing the bidders and hoping for the best. The competition was eventually re-started as I assume the lawyers told the contracting authority they were going to lose in court.

Test means using techniques such as pilot programmes or small-scale rollouts that enable you to get a sense of the supplier and their capability, without immediately betting the farm on a particular approach. In a large organisation, you could run a geographical experiment with a new supplier or product. Give it a try in an area, region, an office or a factory, rather than moving immediately to handing over your entire business. Or you might initially use a supplier on a relatively unimportant piece of work.

In the case of the lottery, I assume that Allwyn’s references have been thoroughly checked out. Perhaps most critical – if this comes to court – will be how the projections of the money to be made for charity have been developed and verified. I’m sure the buyer would be expected to analyse Allwyn’s assumptions and proposals very carefully to assess the level of confidence in their figures. If they did not, that could spell trouble.

The final point to make here is that one report quoted Camelot as saying the evaluation had not been carried out as described in the tender. Now if that is the case, the lottery folk are in real trouble.

In terms of public sector tender evaluation, not doing what you told the bidders you would do is in most cases enough for a challenge to succeed.

You simply can’t introduce new factors once bids have been received evaluation; or even use factors that aren’t explicit. Don’t make assumptions. You can’t mark down a bidder for not providing a detailed quality plan if your question simply said, “tell me how you will deliver this work”. If the quality plan matters, tell them to provide it.

Enough of my ranting about evaluation processes (a favourite topic of mine, and we haven’t even got onto evaluating and scoring “price”). We will await the next stage of the Camelot story with interest.

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Efficiency Savings – UK Government Looks for a Few Billion

It’s usually  a sign of desperation in terms of the public finances (in the UK anyway)  when politicians suddenly start talking about “efficiency savings”. It’s even more serious when they start building them into future forecasts of public expenditure before identifying where the “savings” might actually come from.  

There is nothing wrong with looking for savings from procurement or internal efficiencies, an any good manager should be doing so continuously. But if you really wanted to run such a proper programme across the UK government, you would need to plan and think carefully about how you structure and resource that, which areas you will focus on and so on.  I was involved in the Gershon efficiency programme way back in the mid-noughties and whilst it probably did not deliver everything it wanted to, it was a serious attempt to address difficult issues such as cross-departmental collaboration and a structured category management approach to central government buying.

Last week, Rishi Sunak, the Chancellor, announced a new efficiency drive. “The drive will be spearheaded by a new Chancellor-chaired “Efficiency and Value for Money Committee” that will cut £5.5 billion worth of waste – with savings used to fund vital public services”.

Set up a committee – I’ve always found that’s a great way of making savings! But when you look closely at the announcement, it seems to apply mainly to the NHS and the arm’s length bodies (“Quangos”).  They “will be expected to save at least £800m from their budgets”.  The Arm’s Length Body Review will see savings supposedly come from “better use of property, reduced reliance on consultants, increased digitisation and greater use of shared services, as well as the use of benchmarking to drive efficiencies”.

What has the last government been doing all these years to leave these savings on the table?!  It’s a good job the Conservatives are now in power to sort it out!  Hang on a minute – they’ve been in office for over a decade now. It’s taken quite a while to realise that issues such as “reliance on consultants” are costing the taxpayer a fortune.  

Meanwhile, the “£4.75 billion worth of savings agreed with the Department of Health and Social Care will come into effect financial year 2022/23.”  So together that gives us £5.5 billion in “savings”, which more than covers the £5.5 billion target previously mentioned. So are central departments not covered by this? It’s not clear.  We may come back to where exactly these huge health savings are going to come from.

The other element of the announcement is this. “The Treasury will also launch a new Innovation Challenge to crowdsource ideas from civil servants on how government can reduce waste and improve public services, with winners selected this Summer and best ideas becoming Government policy…. A 2015 Innovation Challenge received 22,000 responses with 16 measures implemented”.

I predict there will be many ideas from civil servants, and the most common will be “stop Ministers coming up with stupid f***ng policy ideas that will never work and cost a fortune”.

Consider great historical examples such as NPfIT in the NHS, ID Cards, privatisation of probation, FireControl, Universal Credit, most PFI programmes, the aircraft carrier programmes … etc.  Maybe it would also help if we didn’t give PPE contracts to friends of friends and then waste billions because of over-buying and not checking the specification.

But back to the new “efficiency programme”. We’ll know quickly if it really means anything when we see if and how it is to be resourced, and how often this committee is going to meet. The methodology of measuring “savings” is also key. I’m sure the DHSC will find a way of showing Treasury that it made the “savings”, yet somehow it managed to overspend its budget at the same time… and yes, I am deeply cynical about all this!

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New Public Procurement Rules – Government Takes Suggestions Onboard

In early December the UK Government Cabinet Office published its response to its consultation on proposed new UK public procurement regulations. I was hoping to see what the real experts (Arrowsmith, Telles, Sanchez-Graells etc) thought of the response before going into print, but let’s give it a shot anyway! 

These new regulations in the UK will supersede the previous EU Regs, and will define the way that over £300 billion a year is spent by public sector organisations. The rules may seem unimportant to the average citizen, but getting value for money from this huge spend (£6,000 per year for every adult in the country), and avoiding fraud and corruption are fundamental issues – they have a direct impact on how much tax we all pay, for a start!

The first point to make about the Government’s response is that those who participated in the consultation exercise weren’t wasting their time.  We’ve seen past consultations in different areas of policy where the government seemed to be just ticking the box (“we’ve consulted”) and showed no real desire to change initial proposals or listen to advice. But in this case, credit to the Cabinet Office procurement policy folk – and their political masters – for taking on board many of the most significant points raised by respondents.

That includes for instance retaining the “light touch” regime (with some improvements) for certain procurements, an approach that was seen as helpful by many local authorities and health bodies. Whilst the specific Utilities Regulations will still go, that sector will be able to continue with some of the special “flexibilities” buyers there find useful – the original proposal would have abolished those.

The central governance of the new regime has been watered down after many who commented (including me) expressed concern about an over-powerful new Cabinet Office unit sitting in judgement over buyers, with the ability to intervene or effectively even take over a procurement function that stepped out of line. The new proposals pull back from that, looking instead to build on current powers, although there will be “a duty for contracting authorities to implement recommendations to address non-compliance of procurement law, where breaches have been identified”, which seems reasonable.

The proposal to cap damages where buyers break the rules and get sued by bidders has been dropped – to me, that seemed to be largely addressing a non-existent problem in any case. But the government is still looking at “other measures aimed at resolving disputes faster which would reduce the need to pay compensatory damages to losing bidders after contracts have been signed”.

Transparency is a key issue. The proposals certainly should help in some areas – for instance, by increasing disclosure when contracts are extended or varied.  Following consultation, “we intend to ensure the transparency requirements are proportionate to the procurements being carried out and are simple to implement”. That is hard to argue with, and of course focusing on the most significant contracts is understandable.

But I do still worry that the barriers provided by exemptions from Freedom of Information rules could make it difficult for spend to be properly scrutinized. The reluctance of politicians recently to tell us what went on across a whole range of pandemic-related contracts shows why this is so important. We can’t let UK public procurement slip into the morass of cronyism and corruption that many countries around the world experience, and the last two years have shown we are not immune to that threat.  

Perhaps the biggest question about the proposed changes is around the basic strategy of freeing up contracting authorities from highly structured processes, Instead, buyers will have more scope to design their own processes, within certain broad parameters around fairness and (to some extent) transparency. But that might increase the burden on suppliers if they have to cope with many different approaches and processes when they want to bid for government work, rather than just a handful of set procedures.

However, I don’t think in practice that politicians would have accepted a UK regime that was largely unchanged. “We need to show that we can do things better than the EU” would have been the (not unreasonable) objective behind the new rules. So that additional freedom was always likely to be part of the package – whether it “reduces bureaucracy” or increases it (from the supplier perspective) remains to be seen.

Similarly, we will have to see whether that freedom leads to more commercial approaches to procurement, better use of negotiation and ultimately better value for the taxpayer. Or will it mean  more corrupt procurement, with the flexibility used to give contracts to friends, relatives, cronies, attractive blond American IT experts and random pub landlords? 

That uncertainty means we won’t know for several years whether the new regulations are a success or not. And that leads to a final question – how will we know?  What are the critical success measures, the results, outputs or outcomes that would lead us to say, “yes, the new procurement regulations really have made a difference”?   I’ll leave that question for another day.

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Don’t Assume You Can Always Find a Good Supplier Out There!

I met an old friend – and consummate procurement professional – this week for the first time in several years. He is working in a very important and sensitive area of government, and this article is in his honour!

It is an extract from Bad Buying –  How Organisations Waste Billions Through Failures Frauds, and Fu*k-ups, where I discuss an approach we’ve seen quite regularly in the public sector. Sometimes private sector firms make the same mistake, but often I have to say it is politicians who make the assumption that there will always be a supplier out there who can successfully deliver the services (or goods) they require. Unfortunately, that is not always true…

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“In the government sector, many failures can be tracked back to an assumption that there will always be a range of credible suppliers who can execute the contract, whatever the organisation looks to buy. But that may simply not be true. If the buyers’ requirement is unique, as government work can often be, a market may need to be created from scratch. Even if there is some capability already, a sudden increase in demand, from a major government programme for instance, will put pressure on the market and it may take considerable time to reach a viable state.

The UK government decided in 2013 to outsource much of its probation services work, despite warnings from experts that it would be “highly problematic”. The work included the management and rehabilitation of offenders, combining an element of punishment, such as monitoring the conditions of prisoners’ release, with the desire to reduce re-offending and help the offender make a useful contribution to society. The Ministry of Justice, then under the command of minister Chris Grayling, created 21 Community Rehabilitation Companies (CRCs) to manage offenders who posed low or medium risk, and in February 2015, the CRCs were transferred to eight, mainly private sector, suppliers working under contracts that were to run to 2021-22.

However, a National Audit Office (NAO) report from March 2019 reported that implementation was rushed, there was little of the innovation that was promised from suppliers and, while the number of offenders has reduced, 19 of the 21 companies ultimately involved failed to meet targets for reducing the frequency of re-offending. Probation services have clearly not been transformed, and in July 2018, the Ministry announced it would terminate its contracts with CRCs 14 months early, in December 2020.

Suppliers didn’t do well either. The NAO report estimated cumulative losses of £294 for the firms if contracts continued to the end date, and Working Links, one of the providers, collapsed into administration in February 2019 because of its probation contracts.  Finally, David Gaulke, by now the Minister in charge, announced in May 2019 that the contracts would not be offered to private firms – probation services was in effect re-nationalised after one of the highest profile UK buying failuresin recent years.

There were clearly many problems here, but fundamental is the issue of an entirely new “market” being created, without real understanding upfront of what the work involved, what capabilities would be needed by the winning firms, how the right commercial models would be constituted or how competition could be maintained and stimulated.  The organisations that won CRC contracts ranged from those with experience in vaguely associated areas (Sodexho was a catering firm originally) to new partnerships such as Purple Futures, which involved Interserve, an outsourcing firm which eventually entered administration in early 2019 after financial problems, along with charities such as Shelter.

“If you build it, he will come”, the tagline from the legendary film Field of Dreams, seems to be how some governments think when it comes to creating markets. And generally, some entities will emerge from the undergrowth, bidding to carry out pretty much whatever government asks them to  – drawn by the potential rewards, of course. But this does not create vibrant, sustainable, successful markets in itself”.

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Children’s Social Care – A Broken Market

Sometimes Bad Buying stories are amusing, or we can learn from events without feeling too emotionally involved. But reports last week about the procurement and management of children’s care services brought just rage and sadness.

These are children who don’t have parents to look after them, or have been placed in care. Many have behavioural issues, or addiction problems.  So keeping them safe and providing an environment where they can learn and thrive is far from easy, and perhaps that is why public sector bodies (local councils) have over the years increasingly outsourced provision of residential facilities and care. The work goes to private sector firms, ranging from very small (individual foster parents at the extreme) to larger firms, including those funded or owned by private equity.

The Times reported problems both with the performance of some firms plus what looks like a rip-off in terms of the prices charged. The average cost per week is now £4,130 per child, and there is evidence that through the pandemic, new “get rich quick” firms have come into the scene, providing poor care and facilities but taking advantage of the lack of physical inspections by the regulators.

The Times highlighted cases reported by Ofsted (the regulator):  

  • Children were able to steal knives from one home and take them to school.
  • Staff dropped a young person off at the home of a drug dealer despite being warned by police to avoid the area; at another run by the same company a child was discovered riding a bike on a motorway hard shoulder.
  • A young person at a third home was found weaving through traffic and high on drugs. On another occasion inadequately trained staff locked themselves in a car when a resident became violent. One of the three people who set up the home was a scaffolder prosecuted for having an eight-inch knife behind the sun visor of his van.

A government review of children’s social care services is underway, and an interim report was also issued last week. The review is being chaired by Josh MacAlister, the founder of Frontline, a charity that has developed a scheme for fast-tracking bright graduates into children’s social work – similar to the Teach First scheme in the education world. I have worked with Frontline a number of times, and MacAlister is one of the most impressive people I have ever met. If anyone can address these seemingly intractable issues, it is him.

However, I did smile at his comment last week (made in a conference speech) when he appealed for large firms to moderate their prices and margins.

“I would implore those of you who are owners of private children’s homes, particularly large groups, to act with responsibility to bring down costs and reduce profit-making and to be responsive to the needs of children. It is better that plans to make this happen are started now”.

Asking firms with private equity behind them to reduce profits is like asking a spider to stop making webs or a fish to stop swimming.  Josh, it’s what they do. I think we can confidently predict that his appeal will have no effect at all.

In his speech, MacAlister also cited figures published in 2020 by the National Centre for Excellence in Residential Child Care (NCERCC) and Revolution Consulting, which identified a 40% rise in independent children’s home prices from 2013-19. The 20 biggest independent children’s social care providers were making combined annual profits of £265m, at a margin of 17.2%. However, the private sector argues it provides care that is as good as that provided by councils directly, at a lower cost.

Coming back to Bad Buying though, this strikes me as both market failure and a failure of procurement strategy. When we look at which services can most sensibly be outsourced, we should consider factors such as:

  • Are the services strategically critical for our organisation?
  • Is there a healthy, dynamic market out there to buy from, open to new entrants?
  • Could we move our business between suppliers or back in-house if we needed too?
  • Will there be a reasonable power balance between us and our suppliers, enabling us to exert  some negotiation leverage?

If we carried out this analysis on these services, I’d argue that this is basically not a suitable spend category to outsource. It is very sensitive, it is difficult to switch suppliers, with limited supply in some parts of the country. Once a child is being cared for, the provider has the upper hand in negotiations, as changing suppliers is difficult.  

I don’t know whether there has ever been a national procurement strategy here, or whether every council has developed its own. I suspect the current situation has just evolved, and now we have the taxpayer spending £500,000 a year per child in some cases, and not even being sure the service is up to scratch.

There is also a market study into children’s social care provision underway, led by the Competition and Markets Authority (CMA). Maybe that – as well as the MacAlister review – will lead to a new approach to the procurement issues around children’s care. This really does need some serious thought and a national strategy. That doesn’t necessarily mean big national contracts, I would add, but it does need considering strategically, rather than dozens of individual councils trying to do their best individually.

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The Post Office and Fujitsu Horizon Case Shows Bad Buying at Its Worst

Many of the Bad Buying stories featured here or in my book have an element of levity to them. Some are decidedly humorous even. But sometimes there is a case where it is impossible to feel anything other than horror, anger and amazement at the behaviour of the parties involved.

The case of the Post Office, their postmasters and the Fujitsu Horizon IT system is a case in point. Last month,  39 people had their criminal convictions quashed in the High Court, the latest in a series of legal cases which have finally ended up clearing these individuals and exposing the appalling actions of Fujitsu and the Post Office.

Without going through all the details, the Horizon system appeared to show discrepancies in the finances of Post Office branches. That was blamed on the people running those branches – they were accused of stealing money or at best mismanaging post office funds. Many of those accused dipped into their own pockets to make up the supposed shortfalls. Eventually, the Post Office prosecuted hundreds of post office managers for theft – many went to prison. Some were ostracised by friends and neighbours; at least one committed suicide.

And all the way through this the Post Office and Fujitsu insisted that the Horizon system could not be wrong.  But eventually, after investigations and court actions, it became clear that the system was flawed and could well make the errors that led to the numbers not adding up. Even then the Post Office keep fighting for years, putting the postmasters through more pain.

There is a chapter in my book which is all about “believing the supplier”, and how Bad Buying can result from exactly that. That seems to have been one problem here. The Post Office initially at least believed Fujitsu when the supplier said the system was foolproof. No doubt there were careers and sales bonuses on the line for senior Fujitsu staff. Then when the integrity of the technology was called into doubt, we saw greed, fear, arrogance and stupidity from Post Office management, who refused to admit they might have been wrong. Instead, they continued to harass and prosecute innocent people, failing to take responsibility until the very end. 

So Bad Buying on the Post Office side, a poor product from Fujitsu and morally bankrupt behaviour from many of those involved on both sides of the supplier/buyer relationship. Fujitsu witnesses were also made to look stupid in court as they defended their system. Indeed, as Computer Weekly reported, after a 2019 hearing, “The Director of Public Prosecutions (DPP) has referred information to the police relating to a High Court Judge’s concerns about the accuracy of evidence given by Fujitsu staff in criminal trials”.

The least the firm – along with the Post Office itself – can do now is offer a large sum of money to compensate those affected. (Fujitsu has continued to win huge government contracts, by the way). There may be charges of “malicious prosecutions” to be brought against Post Office executives too.

Well done to Alan Bates, the postmaster who initially took on the Post Office,  Computer Weekly and Tony Collins, the first to pursue the technology aspect of the story, and to Private Eye magazine which regularly investigated and reported on the whole affair over the years. It’s a lot more than simply bad buying and the story of another dodgy IT system of course – and it all adds up to one of the most distressing stories about corporate behaviour that I’ve heard in a long time.

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More on the NAO Pandemic Procurement Report – Failure in the Cabinet Office

The NAO report on UK government procurement through the pandemic came out recently and we wrote about it here, focusing mainly on the PPE (personal protective equipment) issues it identified and analysed.

Today, we’ll look at some of the other non-PPE contracts that the NAO investigated. It’s worth highlighting that the auditors looked at 20 contracts and did not find problems with all of them by any means. So their list includes examples from the Department of Work and Pensions and different bodies within the health sector for instance, and in most cases, there were no serious issues identified.

However, the real villains sit in Cabinet Office, where three contracts were examined and each was a case study of (certainly) incompetent and (arguably) unethical procurement. That is ironic, as that Department also houses the HQ of the Government Commercial Organisation and Gareth Rhys-Williams, the government’s Chief Commercial Officer. His role is to promote better procurement across the whole of central government and his influence runs even more widely. But it appears to be a case of, “listen to what I say, don’t look at what we actually do in the Cabinet Office” if the NAO report is anything to go by.

The three contracts were for £3.2 million with Deloitte, the consulting firm, for support to the PPE programme. The second was a contract for a maximum of £840,000 with Public First, for running focus groups around the pandemic – although there were stories initially that there was some link with Brexit work too. Then the third was worth £1.5 million and was awarded to Topham Guerin for “publicity campaign coordination services”.    

The first problem is that in all three cases, the supplier was engaged and indeed started work some months before a contract was actually put in place, without any form of competitive process to support the choice of supplier. Work started in March but contracts weren’t in place until June or July.  

I suspect anyone reading this will understand why this is bad news; if you haven’t formally agreed what the supplier is going to do, how they will be rewarded, how any risks will be managed (from confidentiality to termination provisions), then you shouldn’t be starting the work really. We can only assume our old friend “urgency” is again the excuse here. But doing a few focus groups or a bit of publicity is hardly the same level of urgency as finding life-saving PPE.

Then we have faults that are familiar from our previous article covering the PPE issues in the NAO report. There was no documentation available in each of the three cases to explain why and how the supplier was chosen. The cynics amongst you might say the answer is clearly “because they were our mates” but I couldn’t possibly comment. Again, it is bad practice at best, and something more sinister at worst.

Then we have the conflict of interest issues. Topham Guerin and Public First have previously worked with Cabinet Office Ministers such as Michael Gove and advisers including Dominic Cummings. According to the Guardian, Public First “is owned by the husband-and-wife team James Frayne, previously a long-term political associate of Cummings, and Rachel Wolf, a former adviser to Gove who co-wrote the Conservative party manifesto for last year’s election”.  But in that case, the NAO “found no documentation on the consideration of conflicts of interest, no recorded process for choosing the supplier, and no specific justification for using emergency procurement”.

So procurement process, policy and propriety in the Cabinet of Office, at the centre of government, has been corrupted. It appears that somebody senior – that could be a Minister, a special adviser, or a civil servant – either just engaged supplierd themselves with no procurement input, or told procurement to “JFDI”.  Either procurement is not in the loop and doesn’t even know what has happened till after the event, or the function and procurement leadership is too weak to say to the budget holder, “that’s not the way we should do things”.

In either case, it does not speak well of the Cabinet Office’s own procurement team, I’m afraid. Even more embarrassingly, we have the fact that the department is supposed to be showing the rest of government how procurement should be done. But Rhys-Williams, the government’s Chief Commercial Officer, is going to struggle now I suspect when he tries to tell other departments how they should be doing procurement. Yes, they’ll say, we’ll follow the best practice guidelines – just like your lot did on that Public First contract …

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UK Government Spends Millions with Consulting Firms – Did Buyers Know What They Were Doing?

UK government procurement related to the pandemic continues to be a source of some concern and confusion. More consulting contracts were published on the Contracts Finder website last week, showing the vast sums of money that are finding their way into the pockets of the partners at major consulting firms.

Deloitte were awarded two further consultancy contracts, via a call off from a Framework Agreement, worth a total of £8.7 million for:  “Buy Support for Ventilators – ICU equipment & consumables, ventilator sourcing, hard to source products” (£6.7m) and  “Support programme delivery including the identification and procurement of PPE” (£2.2m).

Two other unusual consultancy contracts were awarded to Boston Consulting Group to support the chaotic Test & Trace programme. That represented £4,992,059 for “strategic support” and £4,996,056 for “digital support” (very precise values!)

We don’t know whether there was any competitive process – for those of you who aren’t public procurement experts, you are not allowed to simply choose a “random” or favoured supplier from a “Framework” in most cases without running a competition between firms who are listed on it. Did that happen here? I have my doubts but we don’t know. There have also been comments from within the NHS suggesting that no-one quite knows what Deloitte actually did in terms of ventilator procurement. But hey, it was only £6.7 million.

But there was some good news as well. Gareth Davies, who heads up the UK National Audit Office, was interviewed by the Guardian and amongst other points, he confirmed that a report into government procurement processes during the coronavirus pandemic would be published later this year.

“We’re looking at the procurement process, a lot of public comments and concern about the transparency of some of the procurement contracts around PPE and other areas. We’re doing a detailed piece of work,” he said.

So here are a few of the questions NAO might like to ask the buyers of those consultancy services if they choose to examine that area in particular.

  • Did you understand what it was you really wanted to buy?
  • Did you consider the market in an appropriate manner, and use competition to arrive at the best fit / best value supplier to meet your needs?  
  • Do you understand the difference between the three basic reasons or needs behind buying consulting services – specialist knowledge & skills, intellectual horsepower, or execution / implementation capability?   
  • Did you think about the different commercial mechanisms and models – fixed price, time and materials, target pricing and all the variations? Are you clear you chose the most appropriate for your contract?
  • Do you understand the economics of consulting firms and therefore did you use that to negotiate confidently on daily rates (or fixed price)?
  • If you didn’t use competition, how did you arrive at a fair price for the work?
  • Did you make the deliverables, outputs or outcomes that you were expecting very clear?
  • Did you define the contract management process and the interim reporting that you wanted to see from the firm, and then follow through with professional contract management practice?

Let’s hope those responsible for spending money with these firms avoided Bad Buying and can answer these questions confidently and robustly.

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The Chris Grayling Probation Services Farewell Tour Rumbles On ….

The Guardian newspaper reported yesterday: “Ministers are considering renationalising the entire probation service in England and Wales, the Guardian understands, in the latest twist in a long-running saga to unwind Chris Grayling’s disastrous changes to the sector”.

You may not be surprised by that, or shocked to learn that the probation services outsourcing is a case study in my forthcoming book, Bad Buying – How Organisations Waste Billions Through Failures, Frauds and F**k-ups.

The analysis sits in a chapter that looks at failures caused by the buyer failing to understand a market or markets. Or, as in this case, having a foolish belief that entirely new markets can be created by sheer willpower – and throwing some government cash at the private sector, of course.

A bit of history first. The UK government decided in 2013 to outsource much of its probation services work, despite warnings from the well-respected Institute of Government that it would be “highly problematic”. The work included the management and rehabilitation of offenders, combining an element of punishment, such as monitoring the conditions of prisoners’ release, with the desire to reduce re-offending and help the offender make a useful contribution to society.

The UK Ministry of Justice, then under the command of minister Chris Grayling (who, you may also not be surprised to learn, crops up several times in my book), created 21 Community Rehabilitation Companies (CRCs) to manage offenders who posed low or medium risk. In February 2015, the CRCs were transferred to eight, mainly private sector, suppliers working under contracts that were to run to 2021-22.

But the implementation was rushed, there was little of the innovation that was promised from suppliers and 19 of the 21 companies ultimately involved failed to meet targets for reducing the frequency of re-offending. In July 2018, the Ministry announced it would terminate its contracts with CRCs 14 months early, in December 2020.

Suppliers didn’t do well either. The National Audit Office estimated cumulative losses of £294M for the firms if contracts continued to the end date, and Working Links, one of the providers, collapsed into administration in February 2019.  Finally, David Gaulke, by now the Minister in charge, announced in May 2019 that the contracts would not be offered to private firms.

Most probation services were in effect re-nationalised after one of the highest profile UK public sector buying failuresin recent years. At that point, some minor services such as the provision of unpaid work and accredited programmes were to be offered up to the private and voluntary sectors. But that now appears to have been abandoned too.

There were clearly many problems here, but fundamental is the issue of an entirely new “market” being created, without real understanding upfront of what the work involved, what capabilities would be needed by the winning firms, how the right commercial models would be constituted or how competition could be maintained and stimulated. 

“If you build it, he will come”, the tagline from the legendary film Field of Dreams, seems to be how some governments think when it comes to creating markets. And generally, some entities will emerge from the undergrowth, bidding to carry out pretty much whatever government asks them to  – drawn by the potential rewards, of course. But this does not create vibrant, sustainable, successful markets in itself.

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Have You Heard the One About the Irish Government Printer?

The state-of-the-art, whizz-bang, latest technology printer that the Irish government bought in 2018 was going to produce wonderful documents at, one assumes, a competitive cost. The Komori equipment is highly rated, but there was only one problem for the government. 

When it arrived in Dublin, in December 2018, it simply didn’t fit into the building where it was supposed to be housed.  It had to be shipped off to a storage unit at Ballymount Industrial Estate, where it languished until September 2019 at a cost of €2,000 a month while building works were carried out – to “tear down walls and embed structural steel” to make room for the behemoth.  Now a report on the fiasco by Dail (the Irish parliament) clerk Peter Finnegan has revealed the cost of the episode, which seems to grow every time it is reviewed.

€230,000 (excluding VAT) was spent on “unanticipated renovations to the printing room” because the equipment just wouldn’t fit, because “ the requirements of the building and other regulations in relation to ‘head height’ were neither understood nor examined during the early critical stages of the project”. The cost of the printer itself and associated equipment reached €1,369,605.

There have also been reports that staff haven’t been happy about the new equipment, asking for further training and (rumours say) more money for operating it. The Register also reported that the “IT department is hesitant to grant access to the printer, making it difficult to print documents from official government computers”.

All in all, this is a great example of Bad Buying caused by failing to check in detail the specifications for what you’re buying and how that relates to the environment around what you’re buying.  And remember, even in the case of complex equipment, it is not just the technical specifications that matter – mundane issues such as size can cause just as many problems as some obscure technological flaw or failure!

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