Good Practice
National Audit Office Best Practice (Part 2) – Make Time To Develop Commercial Strategy

 At the end of last year, the UK’s National Audit Office issued a very useful document titled “Commercial and contract management: insights and emerging best practice”. We did provide an initial overview of it here, and then last week started a more detailed review of its content and findings. For each area the NAO has covered, we will look at their content and then give any additional analysis or thoughts we would add to the mix. Today, we will take a look at the first of the NAO insights (as they call them) – “Make time to develop strategy”.

Few would disagree with the importance of this, in public sector or indeed private sector organisations. As the NAO says;

“If time is not invested early in developing a strategy, the foundation for success will not be in place.

We believe that many, and perhaps most, of the problems we see across commercial and contracting activities result from a failure to plan how best to achieve operational requirements through commercial arrangements. In other words, departments jump to buying without developing a full commercial strategy”.

It is not just about taking time, of course; it is about spending that time wisely. The NAO suggests that for the most complex projects and procurement, that time might be a year or more; during which period the contracting authority should be engaging with the market as well as making sure there is clear internal understanding of what is wanted and what will work in terms of the solution to be purchased. Once that is done, an options appraisal should be carried out and documented, leading to an agreed strategy, and “be clear about what the contract is and is not trying to achieve”.

Some of the warning signs in this area include different internal interpretations of what is needed and subsequent tension, insufficient engagement with users and markets and simply insufficient time allowed for thinking and discussion.

The NAO report then gives some short case studies, generally highlighting where things have gone wrong – these are fascinating. For instance:

“The shared service programme (2016 report) planned to bring back-office services together across many departments into two shared centres. We found that when it launched the programme in 2013, the Cabinet Office did not develop an integrated programme business case that consolidated the cases for each shared service centre and all potential customer departments. The lack of an integrated programme strategy meant that there was no clear overall commercial strategy, with responsibility for different aspects held by different departments… ”

The guidance also contains the “NAO audit framework”, which gives the questions that the auditors will consider to see if these guidelines are being followed if they are assessing a project– more essential reading, particularly if your project is going to get reviewed!

Public Spend Forum Comments

This is all very sensible thinking. However, there is one substantial elephant in the room which does not really get covered by the NAO, perhaps because there are no easy answers. When adequate time is not allowed, that is often because of political imperatives. It may be that Ministers have promised a certain course of action and timescale that they feel must be followed. It may even be that they have announced an initiative that is basically unfeasible or impossible yet has to be followed though.

Or it might just be their impatience to get things done; the shared service example above was driven by Francis Maude as the Minister, assisted by senior civil servants he brought in with a private sector background, and the mentality was very much one of “JFDI” (just ‘flipping’ do it). Consultation and business cases were seen as old-fashioned public sector delaying tactics.

Whilst a certain amount of that urgency and drive is often important to make things happen in what can be a risk-averse and slow-moving system, it has its downsides too, as is too often seen in these major public sector projects that don’t turn out so well – like the shared service programme.

So, what is the answer? At least with NAO laying down this guidance, there is something that officials can point to if they are asked to do the impossible by Ministers. But do we need a proper education programme for politicians so they understand how to run effective programmes and procurements? Maybe that is a dream, but unless we get to the point where that community – as well as senior public sector managers – understand these issues, we will continue to find that “make time to develop strategy” does not happen as often as it should.

 









First Voice

  1. Digby Barker says:

    A propos your closing question “But do we need a proper education programme for politicians so they understand how to run effective programmes and procurements?”, only yesterday I came across the US-based NIGP document “The Public Procurement Guide for Elected and Senior Government Officials” at http://www.nigp.org/home/find-procurement-resources/public-procurement-guide. This prompted me to think that we could do with something similar in the UK: I’ve yet to enquire of our own NIGP near-equivalent, The Institute of Government, whether they would be inclined to lead on this……

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