Member Article

Desperately seeking enlightenment - in the public sector?

Apologies to Madonna - she was only desperately looking for Susan. But it has happened again…

As always, I approach businesses with a view to looking at their growth and development to find again and again they have already fallen foul of the system. Once again a meeting with another managing director highlighted how many businesses are fighting shy of ever considering bidding to public sector tendering processes. The probity is too exacting, the meticulousness of the procurement process, designed to protect public money, turns into a mind-numbing use of time and resources.

Organisations ultimately feel that they must conform to the probity of process, rather than demonstrating true flair, true avant-garde, or true innovation, for fear this frightens the commissioners off. The separation between public service procurement and the private sector is at an all-time high.

Many organisations attempt to “tool up” for the task using a training industry generated on how to write an effective bid, to little avail. There are a number of companies in the ascendant on developing expertise in bid preparation as a business to business service offering this function. Nonetheless, when I talk to many companies they simply would not bother to exert the time and effort to get involved in a public service procurement contract, accepting that these go to the great and the good, the favoured, the connected or those who can simply manage the bureaucracy with sufficient in-house resources and meticulousness as to not lapse into coma during the writing process!

It strikes me as ironic that local authorities in particular who are keen to attract jobs and wealth, will not even place a contract with a company that they have offered accommodation, offered start up grants and other facilities to. They are keen to attract the businesses to their community, but simply are too risk averse to allow those businesses a chance to invest in them.

There is a fundamental contradiction for organisations mandated to stimulate local economies and accounting for the use of public money. They talk up local business, even grant aid it whilst simultaneously being so risk averse that they do not get involved in the very processes of economic exchange that truly facilitate growth. They “fail to safety”, lest the public purse is in any way exploited by the incompetent, ill resourced or dishonest. Now of course, we don’t want wasted public money, but let’s face it it’s a daily occurrence.

One only needs to look at various government departments’ penchant for computer systems to see that billions are squandered by processes of procurement that are designed to eliminate risk. The old adage, of “the operation was a success, but the patient died” springs to mind here. If public bodies are serious about taking their part and stimulating the local economy then their procurement processes have to encompass a number of things; primarily, risk.

Beyond a reasonable discipline, procurement processes need to accept that companies are in different stages of evolution; simply placing contracts with the safe bets will only support the larger well-heeled companies that have the economic might to partake in the game and will strangle at birth smaller entities that are seeking to become significant players in, and ultimately stimulate the local economy, creating employment then adding to prosperity.

Second, so called “buy local” initiatives have by and large failed. Local authorities seem to disagree with this but ask the business community and it is very difficult to find people who have won work via these policies. Third, those involved in procurement need to develop elements of specialism rather than simply focus upon procurement as a generic art. Indeed a radical suggestion would be that those involved in procurement have private sector experience as an essential requirement to their appointment. Notions of public and private sector divides are artificial.

The private sector inevitably depends on elements of public sector commissioning in a substantial way. Current government policy is encouraging greater involvement of the private sector. However, the probity bar is raised so high that only larger players can enter this arena. Both sectors have a key interplay in the development of any evolving growing economy. Both sectors must embrace risk and celebrate diversity in the provision that is available.

My meeting ends and once again I see very innovative products and services that will be unlikely to see the light of day in the public sector as the MD of the company has simply chosen to stick with a primary marketing focus of B2B because of the hoops. How can the public be getting a good deal on that basis? In my own case, as small business involved in the care of people, I find it very difficult to think that I may be entering public service procurement up against the might of organisations such as Group 4.

However integral and sincere my service is, however community focused and ethical it is, however I reinvest in the local community and have a sense of stakeholdership in an interdependent economy, I know and I think you know who is most likely to be able to invest enough to win that fight. So what does business do? Well, some play the game and some leave the field, the problem is those that leave the field often take with them innovation, economy and vision, because to them business never was a game.

As a result we all lose. The sociologist Max Weber talked about bureaucracy expanding to provide a form of universal fairness. In its current form it’s the logic of having the beans counted and shared equally, without any knowledge that caviar was available for all.

David Cliff is Managing Director of Gedanken and Vice Chairman of the Institute of Directors’ County Durham and Sunderland Committee.

This was posted in Bdaily's Members' News section by David Cliff .