Daily Archives: August 30, 2011

Good Public Procurement Recommendations from the McClelland Report, Part I

It may have been written five years ago, but the recommendations from the McClelland Report, which inspired Scotland Public Procurement to new levels of efficiency and performance, are as poignant today as they were then. These recommendations include:

  • The optimum reporting line for the Head of Procurement is directly to the Chief Executive but at a minimum he or she should report to an Officer or Executive who reports to the Chief Executive. The Procurement Function should not have a less senior reporting line than this minimum.
    Procurement must have visibility at the highest level.
  • Contractual commitments on behalf of all organizations should be executed by a “Procurement Officer”. The Procurement Officer should have the sole authority to make these legal commitments on behalf of the organization.
    Large procurements must go through the Procurement function.
  • Procurement activities and transactions should be conducted by the appropriate staffed and skilled procurement function and its procurement officers. It should not be undertaken by non-procurement staff located either in central structures or employed in other (e.g. operational) sub-sections of the organization.
    Procurement must be done by procurement personnel with the skills.
  • In some cases internal business practices inadvertently facilitate the ease of unofficial buying. All organizations should review controls and practices with this in mind.
    Processes must be reviewed to insure that they do not facilitate maverick buying.
  • Where the procurement of low-value goods or services creates anomalies in administration cost versus value procured, then alternative methods such as payment on receipt should be developed and introduced within the principles of full procurement and financial controls.
    A buy that costs money is not a good buy. A buy should reduce costs.
  • A business conduct guideline document should be developed and issued for all of the Public Sector.
    Standard procurement processes should be developed, clearly documented, and distributed.

Where’s Our McClelland Report?

Given the combination of expenditure levels, complexity, vulnerability and criticality to operations, it should be expected that extremely high priority be given to procurement by the most senior levels of management and others responsible for governance within public sector undertakings.

In addition, it is obvious that those involved in the day-to-day conduct of procurement operations have an important and highly professional role to perform. The procurement function and its organisation should be regarded as one of the most important in the undertaking and its status should rank with that of other professional functions such as finance. Indeed, given its dynamism, variability and external perspective, not only should those involved have the backing of professional training and accreditation they should preferably have interpersonal skills which support their externally facing roles as the delegated legal and commercial representatives of their organisations as they place business with suppliers. Also, there is a growing requirement for knowledge of and ability to satisfy legal and other corporate and social responsibilities such as sustainability.

I believe that one of the keys to progress is the definition and pursuit of a vision of the ideal model for procurement including its optimum characteristics

Truer words, as penned by John F. McClelland in his 2006 Review of Public Procurement in Scotland (known as the McClelland Report), could not be said.

But what I can’t understand, is how these words, spoken for over a decade, by Procurement visionaries, were taken as inspirational by the Scottish people and turned into the success story recounted in the recent CPO Agenda Executive Debate. As per Cuts from the Centre,
which documents the success of the Public Procurement Reform Board ( PPRB ) in Scotland (which is centralizing Procurement in the Public Sector), which was formed in recognition of the importance of procurement by the administration in response to the McClelland Report, In the first two years of the programme, as independently reported by Audit Scotland, there was £327 million attributed to the program itself, and there were further efficiency savings, in
terms of the way we would understand efficiencies, reported through efficient government returns of about £200 million. Given that public sector spending on goods and services across Scotland amounts to about £9 Billion, that’s a saving of over 5%, which isn’t bad at all for a new program in the private sector (which is getting compliance of almost 90% without a mandate).

The public procurement world needs more success stories like this. How do we get them?