As a public procurement official in the NHS I can only agree with this whole post.
In my experience trying to support procurement I can add one huge issue to the pile- the under resourcing of procurement and management functions. There is a vast public narrative saying that all management is wasteful. However procurement - done right - and contract management - again done right - with the time and headspace to look ahead and do things right is in fact a massive saving.
I read once that as a rule of thumb, about 10% of the contracts value is the right amount of resource to put towards managing to and I can say that the NHs is absolutely nowhere near that level!
However, it is considered boring and process and can slow things down and stop desired outcomes from happening automatically. And so it is after the first team on the chopping block
I'd add another factor, at least as important as your points, and which many ways underlies and enables your points: the uncertainty of the specification of the products and services being procured
As a consultant working both sides (by turns, not simultaneously, tho one employer wanted just that) the uncertainty creates additional risk, historically managed as exceptions to the contractual process
But of course, such exceptions are a feature of any contract whose period extends beyond a few weeks
Consequently, suppliers are able to increase the value of a contract, often by factors rather than mere percentages
(There was a story, likely apocryphal but with enough plausibility, that a supplier promoted the bid leader to partner for winning a public sector contract. Subsequently, the leader of the delivery team earned partnership by doubling the billing over the period)
Therefore one might conclude that variations should not be exceptions, but the norm. Exceptions should be handled within the contractual delivery process, without generating additional payments
This begs the question of what value to then place on the contract
That should be determined by the business case - the buyer cannot justify spending more than the prospective savings or increases in productivity
The joint teams should therefore be constrained, absolutely, to work within the budget, to deliver the best solution to meet the overall requirement
That requires the client side team to understand the benefits demanded of them and to make routine decisions about how to deploy the supplier team (and their own team) to meet the requirements as best they can
Or, to stop the project before incurring excessive costs to the public purse
I’m a retired Consultant in Communicable Disease Control, and I have observed many problems associated with public sector commissioning and contracting.
Part of my remit related to the prevention of infections. When the NHS was a monolith, it was relatively easy to manage this. You could put resources where they were needed, change ways of working, etc., without having to write new contracts with providers. Once the purchaser provider split was introduced, this became much harder. From my point of view, matters relating to infection control were often (inaccurately) perceived as, well, the icing on the cake. Nice to have, but relatively unimportant. The lines would be there in the contract; but when we became aware of problems – patients becoming ill or dying from preventable infections – little would be done. We would tell the commissioners that the providers were failing to implement their contracts correctly; and the commissioners would respond that they had bigger fish to fry, and there was nothing they were going to do about it.
As more care was outsourced the problems got worse, and much harder to manage. When, say, a renal dialysis service was outsourced to a private contractor, which had a contract with the building where the dialysis happened, and a cleaner, subcontracted by the landlord infected patients with hepatitis because they hadn’t had proper occupational health screening… There were layers and layers of subcontracts, all specifying what should happen, and establishing accountability when things fell through the gaps – or were systematically left undone – was a problem.
“Value for money” also became an issue. Where there were good contractors, who fulfilled the contract properly, contracts had to be opened to competition. The providers who won the contracts would agree fully specified contracts, but would often cut costs – reducing staffing to unsafe levels, while paying them far less and getting staff who were less skilled and less motivated; and systematically failing to comply with the the irritating details in the contract that were designed to prevent infections. It wasn’t just the “health” sector – some small care homes were excellent; others were money-making scams; and if taken over by large providers, these were often more like the latter than the former.
We also saw this in government. Take HPV vaccination. When the HPV vaccines were first introduced, there were two products available. One “bivalent” vaccine contained antigens from two vaccine strains, preventing the two strains that caused a large proportion of cases of cervical cancer. The other “quadrivalent” vaccine contained antigens that would also prevent nearly all cases of genital warts: a very large and quick to achieve financial benefit for the NHS, which spent a lot of money on treating these (and a major source of distress for patients. Nearly all public health professionals assumed that the quadrivalent vaccine would be commissioned; but, for the first few years of the programme the bivalent vaccine was used instead. The Department of Health’s rationale for this was a “commercial confidentiality” secret, unavailable for scrutiny by a puzzled public health community.
And I won't start, now, on the scandalous VIP lane for PPE commissioning, other than to comment on all the providers with a good track record who offered to provide PPE at competitive prices, but who were ignored in favour of… well, don't get me started!
There is another issue I intended, but forgot to mention. When HPA was created, many health protection teams had to move out of their former, usually NHS, accommodation. Many had to find commercial office space.
I was aware of several teams who identified excellent locations, and agree good rates with landlords. But all such non public sector contracts had to be agreed centrally "to ensure good value for money". This process took months - and many prospective landlords let their vacant space to people who could move in now. This "value for money" requirement had the perverse effect that several teams ended up in unsuitable accommodation for which they paid far more than they would have needed to if they had been permitted to move more swiftly.
Even in ''emergency'' procurement, due diligence rules apply, and proof of prior fulfilment of contract is a requirement. The Johnson government broke the law. The MOD is terrible at procurement.
It can also be (expensively) performative. For example, an operational team needs to buy a tool or service or product. That team are not procurement specialists, but have to run the procurement, being advised by their organisation's separate, central, procurement function. The team knows what they want, but have to run an "open" procurement. So the requirements, budget and service levels are carefully calibrated to get the answer from the market that they wanted in the first place. Expensive for the buyer, having to go to so much trouble to "tune" the procurement, but even more expensive for the potential suppliers who respond to procurements in good faith that an "open procurement" is actually open.
As a public procurement official in the NHS I can only agree with this whole post.
In my experience trying to support procurement I can add one huge issue to the pile- the under resourcing of procurement and management functions. There is a vast public narrative saying that all management is wasteful. However procurement - done right - and contract management - again done right - with the time and headspace to look ahead and do things right is in fact a massive saving.
I read once that as a rule of thumb, about 10% of the contracts value is the right amount of resource to put towards managing to and I can say that the NHs is absolutely nowhere near that level!
However, it is considered boring and process and can slow things down and stop desired outcomes from happening automatically. And so it is after the first team on the chopping block
And yes, I realise I have a certain self interest. I believe my point still stands, but your mileage may vary
I once met such a contractor. Lived in a large mansion.
I'd add another factor, at least as important as your points, and which many ways underlies and enables your points: the uncertainty of the specification of the products and services being procured
As a consultant working both sides (by turns, not simultaneously, tho one employer wanted just that) the uncertainty creates additional risk, historically managed as exceptions to the contractual process
But of course, such exceptions are a feature of any contract whose period extends beyond a few weeks
Consequently, suppliers are able to increase the value of a contract, often by factors rather than mere percentages
(There was a story, likely apocryphal but with enough plausibility, that a supplier promoted the bid leader to partner for winning a public sector contract. Subsequently, the leader of the delivery team earned partnership by doubling the billing over the period)
Therefore one might conclude that variations should not be exceptions, but the norm. Exceptions should be handled within the contractual delivery process, without generating additional payments
This begs the question of what value to then place on the contract
That should be determined by the business case - the buyer cannot justify spending more than the prospective savings or increases in productivity
The joint teams should therefore be constrained, absolutely, to work within the budget, to deliver the best solution to meet the overall requirement
That requires the client side team to understand the benefits demanded of them and to make routine decisions about how to deploy the supplier team (and their own team) to meet the requirements as best they can
Or, to stop the project before incurring excessive costs to the public purse
Thank you for this very considered opinion on a field that has revealed some heartbreaking scandals.
I’m a retired Consultant in Communicable Disease Control, and I have observed many problems associated with public sector commissioning and contracting.
Part of my remit related to the prevention of infections. When the NHS was a monolith, it was relatively easy to manage this. You could put resources where they were needed, change ways of working, etc., without having to write new contracts with providers. Once the purchaser provider split was introduced, this became much harder. From my point of view, matters relating to infection control were often (inaccurately) perceived as, well, the icing on the cake. Nice to have, but relatively unimportant. The lines would be there in the contract; but when we became aware of problems – patients becoming ill or dying from preventable infections – little would be done. We would tell the commissioners that the providers were failing to implement their contracts correctly; and the commissioners would respond that they had bigger fish to fry, and there was nothing they were going to do about it.
As more care was outsourced the problems got worse, and much harder to manage. When, say, a renal dialysis service was outsourced to a private contractor, which had a contract with the building where the dialysis happened, and a cleaner, subcontracted by the landlord infected patients with hepatitis because they hadn’t had proper occupational health screening… There were layers and layers of subcontracts, all specifying what should happen, and establishing accountability when things fell through the gaps – or were systematically left undone – was a problem.
“Value for money” also became an issue. Where there were good contractors, who fulfilled the contract properly, contracts had to be opened to competition. The providers who won the contracts would agree fully specified contracts, but would often cut costs – reducing staffing to unsafe levels, while paying them far less and getting staff who were less skilled and less motivated; and systematically failing to comply with the the irritating details in the contract that were designed to prevent infections. It wasn’t just the “health” sector – some small care homes were excellent; others were money-making scams; and if taken over by large providers, these were often more like the latter than the former.
We also saw this in government. Take HPV vaccination. When the HPV vaccines were first introduced, there were two products available. One “bivalent” vaccine contained antigens from two vaccine strains, preventing the two strains that caused a large proportion of cases of cervical cancer. The other “quadrivalent” vaccine contained antigens that would also prevent nearly all cases of genital warts: a very large and quick to achieve financial benefit for the NHS, which spent a lot of money on treating these (and a major source of distress for patients. Nearly all public health professionals assumed that the quadrivalent vaccine would be commissioned; but, for the first few years of the programme the bivalent vaccine was used instead. The Department of Health’s rationale for this was a “commercial confidentiality” secret, unavailable for scrutiny by a puzzled public health community.
And I won't start, now, on the scandalous VIP lane for PPE commissioning, other than to comment on all the providers with a good track record who offered to provide PPE at competitive prices, but who were ignored in favour of… well, don't get me started!
There is another issue I intended, but forgot to mention. When HPA was created, many health protection teams had to move out of their former, usually NHS, accommodation. Many had to find commercial office space.
I was aware of several teams who identified excellent locations, and agree good rates with landlords. But all such non public sector contracts had to be agreed centrally "to ensure good value for money". This process took months - and many prospective landlords let their vacant space to people who could move in now. This "value for money" requirement had the perverse effect that several teams ended up in unsuitable accommodation for which they paid far more than they would have needed to if they had been permitted to move more swiftly.
Even in ''emergency'' procurement, due diligence rules apply, and proof of prior fulfilment of contract is a requirement. The Johnson government broke the law. The MOD is terrible at procurement.
It can also be (expensively) performative. For example, an operational team needs to buy a tool or service or product. That team are not procurement specialists, but have to run the procurement, being advised by their organisation's separate, central, procurement function. The team knows what they want, but have to run an "open" procurement. So the requirements, budget and service levels are carefully calibrated to get the answer from the market that they wanted in the first place. Expensive for the buyer, having to go to so much trouble to "tune" the procurement, but even more expensive for the potential suppliers who respond to procurements in good faith that an "open procurement" is actually open.