A few weeks ago now, CIPS (the Chartered Institute of Procurement and Supply) announced the result of the consultation process on proposed governance changes. It proved to be a vindication and a victory for the Board of Trustees, with over 75% of those who responded agreeing with the Board’s recommendations. That means no more democratic voting for members to elect Congress and (indirectly) Trustees, and no more CIPS Presidents.

I campaigned for a proper consultation to be held, as it looked at one point that CIPS might just force through the  changes – and indeed had already made some (such as abolishing Congress) which it should not have done without such consultation. I wanted to retain some democracy, which I genuinely thought would be the result of the consultation. I also wanted CIPS to retain the President’s role, which I thought might be a close call in terms of wider opinion.  I “lost” convincingly on both those counts.

One learning from this is to beware of the positive reinforcement or “echo chamber” effect. The vast majority of people I spoke to – and who responded to my quick survey I ran here – agreed that democracy should be retained. I can only assume they were generally people similar to me, perhaps a lot of older members, Fellows or perhaps just liked-minded folk –  which is why they read my stuff here or on LinkedIn. But I really thought I would “win” on that point, only to find a clear majority disagreed with me.

What is really disappointing is that only one person ever debated with me publicly and was prepared to discuss the issues a little on LinkedIn. So either those who voted with the Board don’t hold very strong views or are terrified of my amazing debating powers… who knows! But my point is that it’s easy to think that “everyone agrees with me”. We must be careful not to fall into that trap when it comes to important business decisions too. Look for the contrary view, for the person who doesn’t agree with you.

So, CIPS members, you no longer have a vote. CIPS is similar now to your gym or the AA, where your “membership” means you are a customer with a right to use the service, not the National Trust or CAMRA (just to take two organisations I’m a member of) where you have a vote and hence play a (minor) role in the running and governance of the organisation.

Nothing wrong with that, but you might feel differently when you don’t have that role. You certainly expect a good product (service) from the gym or the AA – you act like a buyer, not a “member”, I suspect.  So this change might just focus CIPS members’ minds on what they get from the Institute, which would not be a bad thing.  

And CIPS faces a challenging competitive situation. There have never been as many options for professionals wanting to feel part of a community, or to access useful intellectual property, information and knowledge, or to participate in events.  Much of what is available in those areas is free to users too. Even on the qualification side, which is CIPS’ main area of competitive advantage, new options are emerging.

The other point I’ve been considering is how will the CIPS Board measure the success of these changes? Here are some suggestions.

  1. The new appointment process will lead to better people sitting on the Board, says CIPS. OK, that is somewhat subjective, but lets compare the Board membership in 2 years’ time with where it was in 2021. But I’d also want to know how active Board members are. How many meetings or  CIPS events (both large-scale and branch type meetings) did they attend? It is no good having high profile global CPOs as Board members if they never turn up or actively support CIPS and its members.
  2. CIPS will appoint a range of people to fulfil representational roles instead of a President, they say. So let’s measure media coverage of CIPS “representatives” as a reasonable proxy for activity.  In my opinion, CIPS really missed out by not having a Presidential figurehead as a spokesperson during the pandemic.  The CEO did his bit, but he had a business to run in difficult circumstances too.  
  3. Another aim of the new structures is to improve member engagement. So let’s see the number of branch and other meetings organised by or for members, including virtual gatherings of course, and number of attendees – those seem like good measures. Plus perhaps number of “projects”, task forces, groups or whatever set up for particular purposes or to carry out a piece of work.
  4. Ultimately, the best measures are probably the core metrics – full members of CIPS and total revenues.

We won’t be able to judge whether the changes have paid off for a while, so let’s see where the Institute is in two years’ time. Put May 2024 in your diary. Whether I will still be interested enough in procurement matters to be writing about it then is another matter altogether!

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.

Over the weekend, we saw 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. This is from The Times (behind the paywall unfortunately).

The Czech bid, led by Sir Keith Mills, the man behind the London 2012 Olympics, and the former J Sainsbury boss Justin King, was deemed to have had an inferior business plan but managed to pip Camelot at the post by promising to deliver a much higher sum for good causes. There are suggestions that Allwyn’s bid was based on a forecast that it would raise £38 billion over the ten-year licence, which starts in 2024. This is believed to be a much higher figure than the forecast included by Camelot … Bidders were asked to supply a detailed forecast of how much they expected to raise, but with no obligation to achieve it or any form of penalty for failing to do so.

So this may come down to an issue that sits behind one of the common causes of “Bad Buying”.  In my book of that title it has its own chapter – “Believing the Supplier”.

That can relate to suppliers actually lying or deliberately misleading the buyer. It’s the tech firm that says they can develop and install the new software for you in six months, when they know its going to be more like 18.  Or the consulting firm that tells you they have lots of experience running M&A studies in Spain, when in fact they have one junior analyst in the London office who has a girlfriend in Madrid.

But more often it is suppliers whose intentions are good, but make promises and offers that they can’t really deliver on. They really do believe that software will be ready in six months; but they don’t actually have the experience or expertise to make it happen.

This leads to a particular issue in public sector procurement. Because that relies on formal tendering processes (for larger contracts anyway), we see a real difficulty for buyers in assessing two different aspects of the proposals received. They have to evaluate the apparent value of the solution proposed, which is what the legal procurement framework focuses on. But they should also assess the credibility of the proposal – the confidence the buyer can have in its actual delivery.

You might remember the “scandal” back in 2008 when the UK’s Qualifications and Curriculum Authority (QCA), which managed the school ‘national curriculum’ and associated testing process, terminated a contract it had put in place with ETS Europe to deliver tests for schoolchildren.  ETS failed to meet agreed timescales and the whole thing was a bit of a shambles.

The case illustrated a central challenge in many buying situations – how the buyer can assess whether proposals can actually be delivered by a potential supplier, even if they sound credible. It is relatively easy to write a convincing proposal to carry out services-type work or even to deliver certain physical items. I might tell you in beautifully written prose that my firm can supply you with the finest cocoa beans, or handle your outsourced pension administration absolutely brilliantly. Or even build a nuclear submarine … But how do you know I can actually do it? Here is an extract from Bad Buying that explains what went wrong with ETS, following an independent review into the case. 

“The Sutherland Review found that in many ways the procurement (buying) process in this case wasn’t run badly– the authors called it ‘sound’. ETS won with the lowest price, but also scored better than the alternative bidder on non-cost factors. The ‘Gateway reviews’ undertaken by the Office of Government Commerce were in general positive, too. However, the contract and the supplier clearly failed to deliver what was required. Why was that?

Issues were identified by the report around governance, the contract- management approach, some legal issues in the contract and specifications. But the report suggests that the weakness in the selection process came from two key factors. First, the QCA and the consultants running the process did not fully check out the history of previous contracts delivered by ETS. That might have picked up warning signals, as there had been issues with contracts in the United States. Basic financial health checks were done, but not an extensive reputational and performance due diligence.

Second, the buying process did not check that the assumptions about capacity made by ETS in their bid were realistic and accurate. The firm should have been challenged more strongly on its staffing plans. There were also concerns about the ‘end-to-end’ solution proposed and whether the firm really understood how different elements needed to fit together. Those issues appear to have been at the heart of subsequent problems.”

So it is this “confidence in the supplier’s ability to deliver” that has to be assessed somehow, and whether the supplier’s assumptions and plans are “realistic and accurate”. It is not just their conformance to the specification, the elegance of their proposed solution, or indeed the apparent financial benefits they might be offering.  

Going back to where we started, it is this issue that may come to the fore in the UK National Lottery case, assuming the decision is challenged. More on that in part 2.

Last week, CIPS (the Chartered Institute of Procurement and Supply) launched a consultation with members in connection with the Institute’s proposed governance changes.  After our campaign to make sure members were properly involved, it is good to see CIPS consulting on a range of options, even if (as you might expect) the Institute does argue the case for its own preferred position.

For each of the four issues, you are invited to “vote” for your preferred. Whilst this is not a formal voting process, clearly CIPS will be heavily influenced by the numbers, so if you feel strongly about these issues, please do take 15 minutes to complete the consultation.

So here is my brief summary of the issues and my own personal thoughts.

Point 1 – The abolition of Congress and its replacement by a new “Membership Committee”.

I voted for OPTION 1 (the recommended option).  I think the abolition of Congress was handled badly and arguably should not have happened until after this sort of consultation.  However,  Congress never really established a clear role and, in any case, it would be hard to re-create it now. So we should give the Membership Committee a try, although I have some reservations about its role, which is to provide oversight of the Executive (CIPS staff) who will actually be responsible for member liaison. I worry that CIPS may not have the resource or skills to take on that wide-ranging responsibility, and I’d want to see proper plans if I was a Trustee … but we’ll see! 

Point 2 – Appointing or electing the GBT (Global Board of Trustees)

I voted for OPTION 3  (not the Board preferred option).  On balance, I believe that as a membership organisation, some democratic voting and election process remains important.  So if members no longer elect Congress, then we should have some ability to elect Trustees.  I appreciate that in CIPS preferred option, “all Members eligible to vote would be invited to approve the appointment of all Trustees at the Annual General Meeting”  but this would be rubber-stamping rather than a democratic process. I would also point out that no other professional Institute I’m aware of has moved to an all-appointed Board, and if half the Board is still appointed (rather than elected), I don’t see a problem with getting diversity and the “right people” in as Trustees.  Finally, if we have a combination of appointed and elected Trustees, we can assess which route brings in the best people over the next 2 or 3 years. If there is a clear “winner”, then there could of course be a future change.

Point 3 – The composition of the Nominations Committee

I voted for OPTION 1 (the recommended option). This is a no-brainer in my opinion. The Nominations Committee is very powerful now and will be even more so in the new structure. So it must be more independent of the Board than currently; but equally there should still be Board (Trustee) representation on it too.

Point 4 – Whether CIPS has a President (or multiple ambassadors, or a Patron)

I voted for OPTION 2  (not the recommended option).  This is a difficult question and caused me most thought.   I do see advantages to the multiple ambassadors option, which CIPS supports, but I also feel something important has been lost since we stopped having a President.  We should have had stronger representation and presence during the pandemic, when our CEO had enough on his plate managing the core organisation through difficult times.  Indeed, generally, I feel the lack of a President puts too much responsibility onto the CEO. The CIPS recommendation to abolish the post may be driven by one or two recent bad experiences with Presidents rather than clear logic, and I’d also argue that there is nothing to stop CIPS having multiple ambassadors as well as a President!

I reject the Patron idea – all that needs saying really is “Prince Andrew”. Finally, I don’t buy the argument that having ambassadors will save CIPS money compared to a Presidents.  CIPS does not have to fund a President to fly around the world. Again, that relates one bad experience, I believe (and I’ve heard there’s this neat tool called “Zoom” too …)  And surely managing “multiple ambassadors” has a cost anyway?  So on balance, I vote to retain the role.   

That’s it from me –if you are a CIPS member please do use your vote – and show that CIPS members are interested in the future of our profession and our Institute!

What, you may ask, has been going on with CIPS and the debate about the proposed changes to governance of the esteemed Chartered Institute of Procurement and Supply? (Start here if you are new to this topic).

You may remember I raised concerns about the way members were losing their right to vote (directly and / or indirectly) for members of the Global Board of Trustees (GBT), who ultimately bear responsibility for the Institute. That followed the abolition of Congress and its replacement by a Membership Committee – a step that, whatever you think of its merits, was not particularly well handled or communicated. Under the proposed model, Trustees would be appointed following an application and interview process, run by the Nominations Committee (NC).

As well as the issue of member democracy, many of us were also concerned about the power these changes vested in the NC, which did not appear to have the independence required if it was to play such a key role.  (I didn’t agree with the abolition of the President role either, but I didn’t feel so strongly about that).

I ran a quick survey that showed many other members shared my concerns, but then I had positive discussions with CIPS leadership on these topics in December. Critically, we agreed there would be a genuine and open consultation with members on the voting issue. That led to the Chair, Paul Thorogood, sending me an email in mid-December, laying out what he and the team had agreed would be the next steps. He agreed on a consultation in late January, which would address a number of issues, including, “The mix of trustees – appointed vs elected – on GBT and the process for appointing/electing members”. He also said that “Options will be proposed for each, together with pros and cons.  Members will be asked to select their preferred option in each case”.

I was happy with that, and backed off from my campaign whilst the consultation was being prepared; hence my silence on the issue recently.

I was therefore surprised – and annoyed – when I saw the communication from the CIPS CEO (Malcolm Harrison) to members last week and the new message on the website. That extolled the benefits and virtues of the process for appointing Trustees based on an application and interview process. It did reflect our discussions about the NC at least – but made no mention of member voting being retained.

Hang on, I said to Paul and Malcolm, that’s not what we agreed you would do.   Sorry, they said, the consultation is coming soon, this was just a communication about what is already happening now that Congress has been abolished – so new appointments to the GBT in recent months have gone through the interview process.  And we didn’t mean to go back on our agreement, they said, we didn’t think this communication was anything to do with the forthcoming  consultation.

The problem, as I pointed out, is that members would read the new note and feel the interview route and resulting dis-enfranchisement of members was a fait accompli. You’ve said all these positive things about the interview option – that is not exactly the level playing field we had agreed for the consultation.   

So in this week’s communication – mainly about ambassadorial roles – it was good to see some acknowledgment of that, as Malcolm says this about the Trustee issue.  

“In my message to you last week, I covered the proposals to open up the recruitment process for the trustees on our Global Board of Trustees which we had already communicated last year…. We wish to consult with members on several options, not just the proposal which we communicated last year. These options will be laid out in the consultation document which will be issued by the end of January”.

Confused? So just for the avoidance of doubt, the consultation, when it comes, is still important. If you feel strongly about preserving democracy in some form as a CIPS member, please make your voice heard. Personally, I would go for a mix of directly elected and appointed members for the GBT – but I accept that members may choose to support the 100% appointed route. No other major Institute has done this, as far as I can see, but CIPS could be a pioneer.  My main interest through this whole process has been to give the full membership a proper voice in the discussion, rather than just see a small group driving vital decisions.

The changes already made and proposed to the democratic process, to Congress, the Presidency and the GBT are really fundamental and change the whole nature of CIPS as it is currently described in our Charter. So it’s vital that CIPS does take governance – and the views of its members – seriously.

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.

The arrest of Steve Bannon, President’s Trump ex-adviser, hit the headlines this week. Along with several other men, he is accused of siphoning off funds that were given to a charity which sought private donations to support the building of the Trump-promoted wall (fence, barrier, whatever) between Mexico and the USA.

Without getting into the mentality of the donors who would give their hard-earned cash for that cause, the case does point out the difficulties of knowing exactly where you money is going when you had it over to any charity.  There have been many examples over the years of charities that do genuinely support good causes, but appear to be just as interested in spending money on fancy offices and big salaries for executives.

Even an organisation as reputable as the Australian Red Cross ran into controversy recently when it had to defend its decision to spend up to 10% of bushfire relief donations on administration costs. That doesn’t seem too unreasonable to me, but in the past, it had promised to put 100% of all money raised directly to a cause.

Then there are the actual fraudulent “charities” that act as a front for criminal activities. For instance, four men were found guilty recently of fraud in the UK when they expropriated over £500K of donated money rather than using it for genuine purposes.  Collectors in camouflage trousers and “Save Our Soldiers” shirts rattled collection tins and conned people at railway stations into thinking they were giving to support disabled troops. But the  money went to fund the lifestyles of David Papagavriel, Terence Kelly,  Ian Ellis and Peter Ellis. That’s the reason I never put money in collecting tins if I don’t know the charity, by the way, even if it looks like a great cause.

The third type of charity-related fraud comes when a charity itself is the victim. Every organisation that sees large amounts of money flowing through it can be a target for what I define as “procurement related fraud”, and charities are no exception. There are some interesting examples of this in my new book, Bad Buying – How organisations waste billions through failures, frauds and f*ck-ups (to be published by Penguin Business on October 8th).

The fraud may originate from outside the organisation, but often there are insiders involved, or in some cases it can be a purely internal affair. For example, one story in my book covers the exploits of the CEO of an education charity, Philip Bujak. He was sentenced to six years in jail in 2018 at Southwark Crown Court in London for swindling some £180,000 out of his organisation. Using a company credit card, false invoices to Fake “suppliers” and other routes he got the charity to fund his honeymoon, and family events at hotels. One bill for a “charity conference” was really his mother’s 80th birthday party, and he was also keen on buying and restoring paintings.

So don’t think that everyone who works within a charity is automatically a good person. There can be the odd bad apple, which means that charities (like every other organisation) need to take strong anti-fraud measures to protect against internal or external villains. I haven’t got the space here to go through all those suggested steps, but my book goes into that in more detail, with seven key principles to avoid buying-related fraud and corruption listed and explained.  And we will come back to those here at a later date as well.

Meanwhile we will watch the Bannon case with interest …