Met Office has IBM secondee as CIO

Posted on 25/08/2011 | 2 comments

By Tony Collins

The Met Office gained ministerial approval to appoint an IBM employee for a year as secondee CIO, until the end of October 2011, according to information released under the FOI Act.

It appears that the salary of the IBM executive David Young is being paid, at least in part, by the Met Office. In documents released under the FOI Act the Met Office has redacted [edited out] details of Young’s proposed remuneration and performance bonus.

As a trading fund within the Department for Business, Innovation and Skills, the Met Office is required to operate on a commercial basis. It was part of the Ministry of Defence at the time of Young’s appointment. His recruitment was approved by the Secretary of State.

Internal emails show that the Met Office apparently overcame a recruitment ban and constraints on secondments.

Having your CIO seconded from your biggest IT supplier may be novel but it could be controversial because of the perception of a potential conflict of interest.

It would not the first time a public authority has been involved in a controversy after seconding an IBM employee as head of IT.

In 1993 a report of the district auditor criticised the then Wessex Regional Health Authority after it transpired that a member of the health authority was a director of IBM. The IBM director at Wessex promoted a controversial and successful bid for core systems to be supplied to the health authority by IBM and Andersen Consulting (later Accenture). The director later asked that his letter lobbying for the contract be destroyed.

The auditor also found that the Wessex authority bought an IBM mainframe without proper legal authority, the members of the authority having not been informed. The authority paid an unnecessarily high sum for the mainframe and there were doubts the machine was needed. A decision to proceed with the purchase of the mainframe at Wessex was made on the advice of the regional health authority’s new regional information systems manager who was an IBM secondee.

The Met Office, however, has given full consideration to the potential for a conflict of interest in appointing Young as its CIO. It said in a statement this week:

“Full consideration of any potential conflicts of interest regarding David Young’s appointment were fully considered prior to his appointment and his terms of engagement specifically cover these.

“The Met Office complies with specific rules set by the government with regard to procurement and purchases of IT equipment must be agreed by the Met Office Executive.”

The Met Office is one of IBM’s biggest customers. It says on its website: “We are now using an IBM supercomputer which can do more than 100 trillion calculations a second. Its power allows it to take in hundreds of thousands of weather observations from all over the world which it then takes as a starting point for running an atmospheric model containing more than a million lines of code.”

The Met Office reports that Young is responsible for the organisation’s IT strategy and ensuring that it adapts to support the business strategy.

Its website says that Young worked for IBM but does not make it clear he is still employed by the company while on secondment to the Met Office. It says that before joining the Met Office he “held a number of executive position within the IT industry, working for IBM, CSC and Siemens”.

Young’s Linked In profile says he is CIO at the Met Office and Director, System zStack and Mainframe Platform, Central Eastern Europe, Middle East and Africa at IBM.

In response to an FOI request by Dave Orr, the Met Office has released internal emails relating to Young’s recruitment and later appointment. Young is described in the Met Office’s Register of Interests 2010/11 as an “Executive, IBM UK Ltd (non-active)”.

The email exchanges show that the Met Office was keen and anxious to employ Young. Talks over Young’s recruitment, initially as Chief Technology Officer, began in July last year and took several months to conclude.

In August 2010 John Hirst, Chief Executive at the Met Office, wrote to Young mentioning, among other things, a ban on recruitment.

“It was good to talk to you on the phone this afternoon. This is to confirm that you are interested in joining us at the Met Office and we are interested in offering you a post.

“As we discussed there are issues of the recruitment ban, terms of secondment and security clearances amongst others but we have both declared an intent to try and get something organised between us.”

Also in August 2010 Diana Chaloner, the Met Office’s Director of Human Resources, emailed IBM on the costs and restrictions relating to the “possible secondment of David Young”.

Her email said: “I will need to get confirmation from John Hirst (our CE) before committing to the costs as outlined below. Whilst I don’t see it as a problem, I do also need to seek a way to overcome external secondee restrictions placed on us by central government recently. I will attempt to get this moving as quickly as possible at this end.”

In another email to IBM in August 2010, Chaloner referred again to the costs of seconding Young. She said:

“Following John’s earlier meeting with David (in his garden!) Alan Dickinson [then the Met Office’s Director of Science and Technology] and I met him last week. John has now spoken to David and is keen to try to progress a secondment. I know David is very keen too, but inevitably, with all the various restrictions placed on us, cost may be an issue, as will enabling the secondment contract to be approved.

“Whilst this might be quite challenging , I think there are usually ways to manage these things, so would really like to understand cost and timing…”

The following month, September 2010, Chaloner emailed Hirst on the need for Young’s appointment to be approved.

Her email has in the subject heading: “IBM Confidential: Secondment of David Young to the Met Office”.  Says the email: “At the moment we cannot give a precise date for David to start his secondment. I did mention in an earlier email that there are some added constraints across Government, and one of those is around recruitment and secondments…”

In October 2011 Hirst emailed IBM about a possible delay in appointing Young. “I am sorry this has taken so long and been more complex than anticipated but the rules of engagement have changed at least twice over the last couple of months and therefore keeping things moving forward steadily has been more difficult. I am still confident we can conclude this although I have suggested to David we might need a weeks (sic) delay in starting … the contracts are signed and sitting in my draw awaiting final clearance of the admin hurdles so there is no decrease in my intent to make this happen.”

On 29 November 2011 Chaloner wrote to Hirst saying that Young’s appointment needed the approval of the Secretary of State. “… The situation is looking very positive but we require final approval from Secretary of State. I was told that there seemed no reason for the secondment not to be approved, but it has to go through the appropriate channels. I can only apologise in the delay in David starting, and continue to nudge it from this end, almost on a daily basis.”

Young was appointed by the end of December 2010. The business case for a new Chief Technology Officer (which became a CIO role) says the secondment from IBM would finish on 31 October 2011. It says there is a “need to bring a professional IT expert into the organisation, to reshape the function in order to achieve greater efficiency in delivery of information technology, as well as ensure it is fit for purpose in the future, hence the need, at this time, to manage this as a short term secondment.”

The Job Description, which is headed “Management in Confidence”, says the IBM secondee will “lead the IT function in the effective delivery of 24/7 IT services and enhance our world leading supercomputing and infrastructure capabilities to secure achievement of future corporate objectives.” The main responsibilities will include directing and co-ordinating 300 information technology, programme/project management professionals, and support staff…”

The job also involves overseeing the “selection, acquisition, development and installation of major information systems”. It further includes the need to “determine and manage all outsourced  external IT service provision as appropriate to meet service level agreements.”

Comment:

There is nothing wrong with the Met Office’s decision to hire an IBM secondee except perhaps that it underlines the reliance of the public sector on its major suppliers.

It’s clear that the Met Office has struggled hard to employ David Young because of his expertise. Nobody would understand the Met Office’s IBM systems better than IBM.

But we have seen evidence from the National Audit Office that suppliers all too often understand customer installations in the public sector better than the civil servants know their own systems. In the case of the NPfIT, auditors had to rely on suppliers to explain what they had been paid and why.

It’s time for the civil service to build up its expertise so that it ceases to rely on suppliers that dominate government IT.

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Posted in change management, Government IT, managing change, npfit, public sector, public services, supplier relationships, Uncategorized

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Could mutuals and co-operatives be the future of NHS care?

Posted on 25/08/2011 | Leave a comment

By David Bicknell 

A BBC website article has set a scenario where mutuals and co-operatives could be more widely used in the NHS.

The piece quotes the example of Sandwell Community Caring Trust, and contrasts the spread of social co-operatives in Italy, where  there are more than 7,000, covering  care for the elderly and disabled, to jobs for ex-offenders.

“Each co-operative is made up of paid staff, users and their families, volunteers and investors. Some or all of those put in their own capital to get it off the ground, but what’s absolutely crucial, is the big leg-up that Italian co-operatives get from the system,” the piece says.

“They pay reduced corporation taxes, have access to specialist banks and are linked together in consortia so they can wield more clout when tendering for public contracts.”

The article suggests that one of the biggest challenges faced by co-operatives is recruiting senior managers with good business acumen and a social conscience – not least because co-operatives are often seen as offering insufficient status and salaries.

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CSC optimistic on new NPfIT deal – officials less so

Posted on 24/08/2011 | 1 comment

By Tony Collins

CSC is due to meet officials from the Cabinet Office next month to discuss a possible new deal over the company’s £3bn worth of NHS IT contracts. Proposals from the Cabinet Office’s Efficiency and Reform Group have gone to the Department of Health and Downing Street for approval.

Nobody seems to know yet what the ERG has proposed but CSC remains confident that a new NPfIT deal will be signed that is good for the supplier’s finances and for the NHS.  Not all Whitehall officials share CSC’s confidence, however.

A new deal may be signed – but perhaps without the exclusive arrangements in the original contracts and the NHS commitments to place a minimum amount of business with the company.

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Posted in NHS, npfit, outsourcing, procurement, public sector, public services, risk

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Capita says govt can save billions but frontline cuts are “criminal”

Posted on 24/08/2011 | 1 comment

By Tony Collins

Paul Pindar, Chief Executive of Capita, makes the valid point that billions of pounds can be cut from the costs of government back offices without the need for “criminal” cuts to frontline services such as police, libraries, youth centres or healthcare.

The Financial Times today quotes Pindar  as saying: “When you can see local authorities closing libraries, swimming pools, it’s criminal. It’s a political agenda. Billions of pounds could be saved and the public wouldn’t notice the difference.”

He said Capita, for example, could cut £2.5bn from the costs of police IT and human resources, without putting at risk uniformed jobs.

Comment:

Pindar sounds as if he’s making a pitch for more government work, which he probably is. But it’s hard to argue with what he says. Except that the savings can be made by SMEs rather than the big suppliers, like Capita, that already dominate government IT spending.    

It may cost more for the civil service to handle SME contracts rather manage a single large deal – but the savings may be greater through an imaginative use of IT and changes in working practices.

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Posted in change, change management, innovation, managing change, outsourcing, procurement, public sector, public services, reforms

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One reason it’s hard for civil servants to innovate?

Posted on 24/08/2011 | Leave a comment

By Tony Collins

James Gardner has seen for himself the institutional obstacles to innovation. . He was, in effect, chief innovator [CTO] at the Department for Work and Pensions. He now works for Spigit.

In a blog on the need for innovators to have “courageous patience” he quotes the British politician Tony Benn who used to be Minister of Technology in the Wilson government:

“It’s the same each time with progress. First they ignore you, then they say you’re mad, then dangerous, then there’s a pause and then you can’t find anyone who disagrees with you.”

He also quotes Warren Bennis who, he says, established leadership as a credible academic discipline:

“Innovation— any new idea—by definition will not be accepted at first. It takes repeated attempts, endless demonstrations, monotonous rehearsals before innovation can be accepted and internalized by an organization. This requires courageous patience.”

Patience comes easily in the civil service but courage? The courage to spend a little with inventive SMEs rather than a lot with large systems integrators? Perhaps this is why it’s so hard to get central departments to innovate.

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Posted in change, change management, EU procurement, Government IT, innovation, managing change, procurement, public sector, public services, reforms, risk, SME

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Councils consider mutuals and social enterprises among new funding models for youth services

Posted on 24/08/2011 | Leave a comment

By David Bicknell

The London Borough of Hammersmith & Fulham has  proposed a pilot scheme to set up an employee-led mutual to deliver services to schools and the council, with the council commissioning some services from the mutual for a four year period.  But what are other councils doing in the area of children and youth services?

This article about youth services on the Children & Young People Now site suggests that according to a recent study, when questioned about alternative funding models for funding youth services, 34 per cent of local authorities say they are considering social enterprises, 20 per cent are looking into youth mutuals and 15 per cent say they are currently considering outsourcing their entire youth service to another provider. Overall, only 37 per cent are considering any alternative models of funding.

The article quotes Sue Payne, chair of the Confederation of Heads of Young People’s Services, which brings together council youth chiefs, saying that CYP Now’s study highlighted that councils are “increasing the number of services they are commissioning.”

Payne said the study showed encouraging signs that authorities are seeking new funding avenues. “There are quite a lot of moves towards social enterprises and youth mutuals,” she said, adding that only a year ago very few youth services would have considered these options.

She added the point that that “You can’t just create good delivery systems overnight”. Although external providers had a strong track record in delivering information, advice and guidance, she said, this was not the case in areas such as targeted youth support.

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Posted in mutualisation, mutuals, social enterprise

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Some ways to change government practices

Posted on 23/08/2011 | 1 comment

By Tony Collins

Mark Foden, a consultant to the public sector, says that transformation is much more likely to come about through collaboration and small incremental changes than strong-arm tactics such as mandation and regulation.

He also suggests that rather than pay high-cost contractors, government should pay more for talented specialists – and possibly pay them much more than their managers.

Foden has worked within government for many years and has seen some of what works and doesn’t. He advocates the use of internal social networks within and across departments.

He sets out his views in a critique of a report of the Public Accounts Committee on Information Communications and Technology in government.

Foden’s views are to some extent in line with the so-called “nudge” non-regulatory approach to behaviour change. Nudge was used originally by Richard Thaler and Cass Sunstein who define it as:

“… any aspect of the choice architecture that alters people’s behaviour in a predictable way without forbidding any options or significantly changing their economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid. Nudges are not mandates. Putting the fruit at eye level counts as a nudge. Banning junk food does not”.

These are some of the points Foden makes:

– Systemic change. It isn’t enough to change policy, process and structure and hope that deeper, more systemic, changes will naturally follow.

Targets. There is a deep-grained, almost unquestioned, culture of using targets to control performance. “Often, targets drive target-meeting behaviours rather than performance-improving ones…Measuring, on the other hand, is crucial; but it must be used in the spirit of learning and developing rather than explicitly for controlling…”

Language. Be careful how you use expressions such as “buy-in” and “deliver”.  Buy-in suggests something that is decided by one group of people then ‘sold’ to another. This is just not a great model for helping civil servants feel involved and empowered. “If people are going to play an important part in achieving something then they must be, and feel, involved from the beginning. Just using terms like this creates the wrong dynamic. Rather than cautioning about not achieving buy-in the Public Accounts Committee should be encouraging more-open, more-inclusive behaviours.” Deliver, says Foden, is too transactional. “I just can’t get the ‘deliver a parcel’ sense out of my head: something neatly packaged then sent to a recipient at a specific time. Managing change is just not about this.”

SMEs. “To get benefit from working with SMEs Government will need to bend, in perhaps significant ways; and people will need to behave differently. This is new territory: time should be taken to experiment and find out what approaches flourish. The useful approaches should be developed – incrementally – in much the same way the strategy proposes IT be developed. And this may take years.

Lean. “Change cannot be made by feeding new policy into an old machine. “Government will need to reshape (and that’s not ‘reorganise’) itself dramatically – perhaps using ideas like Lean – and, to do that, it will need to foster new behaviours; like being more open, being naturally collaborative and being more entrepeneurial. The Efficiency and Reform Group [of the Cabinet Office] should attend explicitly to nurturing such new behaviours.

Pay specialists more than their managers? “If government wants more talent, then it must be able pay the market rate for the people it needs and then provide them with hugely satisfying work in an affirming, supportive environment so that they stay around. This will be far cheaper and, in most cases, better than hiring long-term contractors. If this means paying specialists (sometimes considerably) more than their managers, so be it. There’s a real cultural hump to be got over here.”

More on Mark Foden’s views

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Posted in Agile, Campaign4Change, change, change management, collaboration, Government IT, innovation, Lean, managing change, public sector, public services, reforms, SME

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Hammersmith & Fulham provides strategic rationale and thinking behind the creation of a mutual

Posted on 23/08/2011 | 1 comment

By David Bicknell

In yesterday’s article on the London Borough of Hammersmith & Fulham’s plans to create a mutual Pathfinder, I referred to the  recent report on the mutual plan published by the Council.

In that report are some useful thoughts on the rationale for developing a mutual as well as an insight to what needs to be discussed around procurement.

The strategic rationale for launching the mutual includes: 

• Confidence of the services that they could deliver more effectively as a private company

• Commitment at a political level to explore new ways of working

• As an alternative approach to deliver the challenging financial targets required and maintain/ further commercialise existing services

Hammersmith & Fulham insists that it “will not simply be outsourcing the services currently delivered, but will be piloting an innovative way of the future delivery of in scope services, at a costreduction (and possible profit making) to the Council in headcount and overheads. The delivery of these services via the pilot scheme will have no negative impacton the service as they  will continue to be undertaken by the existing staff who have extensive knowledge and expertise in these areas. All clients will benefit from a reduced cost of service, whilst maintaining continuity of staff and services.”

Benefits to the Council

• A significant reduction in costs through the development and extension of the business

• Reduction in headcount for the Council

• Piloting a new unique approach on the delivery of existing council services

• Front Line services to schools being developed

• Staff commitment to the venture and commercialisation seen as an opportunity

• Seen by the school community as an opportunity, not a threat (as identified in the informal consultation).

• Demonstrates LBHF commitment to the schools

• 50% of net profits shared by the local authorities to allow more freedom to the Councils to target new priorities

The Council admits there are many challenges to overcome for the final business case of the potential pilot scheme, including:

• Finalisation of the scope

• Capacity issues of staff members in the transition

• TUPE issues

• Pension issues

• Independent Legal advice

• Independent Financial advice

• Procurement

• Legalities on novation of contracts and risk of OJEU

• Venue for the additional staff from RBKC and Westminster

• Corporate recharges

• Support, marketing, sales and communications

On procurement, Hammerwmith & Fulham says it was initially envisaged that the Council would have the option of entering into a time limited relationship with the Mutual as part of the National Pathfinder. However, current Pilots have all been either NHS related(different legal framework) or where the services involved are classified under OJEU as “Part B” and as such the risks to the Council’s involved are minimal. It adds:

“The proposal in this report contains some “Part A” services and as such a full OJEU procurement exercise is likely to be required by law. In order to comply with the regulations and mitigate potential risks, it is proposed that the Council carries out an EU compliant procurement exercise to secure an external partnering organisation. Such an exercise should remove potential risks for future challenges based upon the relationship between the Council and the mutual.

“The first stage would be to place a compliant OJEU Contract Notice seeking expressions of interest from the market to assist in the establishment of a mutualised company. The controlling shares in the company would be on a ratio to be determined as part of the tendering process.

“Depending upon the nature of the mutualised company, the trading arrangement may not only be about service delivery, but consideration may e given to the supply of goods that would otherwise need to procured in accordance with the Public Contracts Regulations. In this case the mutualised company becomes both a supplier and service provider.”

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Posted in mutualisation, mutuals, procurement, public sector, public services, Uncategorized

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Hammersmith & Fulham mutual Pathfinder expected to launch in January 2012

Posted on 22/08/2011 | 1 comment

By David Bicknell

One of the Government’s flagship employee-led mutual Pathfinder pilots is now expected to be launched in January 2012 and be up and running by Spring next year.

The mutual, which is being led by the London Borough of Hammersmith & Fulham, but is part of a tri-borough business model with Kensington and Chelsea and Westminster, will have ‘social enterprise status’ and will deliver existing education support services to schools and some services back to the Local Authority.

A recent report on the mutual plan published by Hammersmith & Fulham proposes a pilot scheme to set up an employee-led mutual to deliver services to schools and the council (with the council commissioning some services from the mutual for a four year period). These services are currently delivered by schools resources division within the Children’s Services Department. The pilot proposal follows the council’s five stages of transition for staff wishing to develop so-called “New Ways of Working.”

The guiding principles of the proposed scheme are that:

• Staff and financial risk are transferred out of Hammersmith & Fulham

• The pilot will have the opportunity to develop its market share not only within the three boroughs, but much wider, such as with Independent Schools and Free Schools. The council says this will enable a more robust delivery model and further financial benefits through economies of scale

• A form of Mutual (John Lewis Partnership) model of staff ownership encourages business focus. It is intended that all staff will become shareholders, with shares allocated proportionally to responsibility/commercial value

• The mutual offers more than just delivery of the council’s medium term financial strategy plans, but presents opportunities for the Council to further benefit from the outset and again if the venture proves highly successful

• The mutual is part of the tri-borough merger and follows the principle of removing the direct delivery of discretionary services

One of the key drivers for the mutual is the council’s desire to drive a more “commercial” approach to service delivery whilst delivering efficiencies in line with its medium term financial strategy. It has  proposed that the Schools Resources Division which currently offers support to the Council as well as trading directly with Schools, offers a unique opportunity to pilot these ‘new ways of working’ whilst further driving efficiencies in Children’s Services.

To put the drivers into context, Hammersmith’s Schools Resources Division must deliver annual reductions totalling £475k of savings over the next three years; a 34% reduction in its baseline spending. It says, “Maintaining the confidence of schools through effective service delivery efficiencies requires creative solutions. This proposal provides an opportunity for piloting a ‘New way of Working,’ whilst exceeding the proposed medium term financial targets. It offers a broad package of services that by externally trading provide opportunities for expansion to deliver savings, whilst taking advantage of additional opportunities available through the tri-borough merger.”

It adds, “As part of the development of the business model, tri-borough partners in Westminster (WCC) and Kensington and Chelsea (RBKC) have identified opportunities to expand the scope of the mutual to provide IT services to schools in RBKC and WCC. Any tri-borough partnership will be subject to all the respective Cabinets’ approval, although the opportunity supports the joint strategy of progression for the three directly managed services.”

Although it is possible numbers might change, the report indicates that the proposed mutual “will be comprised of 21 Hammersmith & Fulham staff from the onset, with the additional inclusion of 12 ICT staff from Kensington and Chelsea (subject to RBKC Cabinet), and a further 7.8 ICT staff from Westminster (subject to Westminster Cabinet and further due diligence). Both Councils are expected to join the proposal between January 2012 and April 2012, depending upon the most appropriate timings for their respective Councils.”

The anticipated launch date of the proposed mutual is 9 January 2012. Hammersmith & Fulham says this date is a realistic one and is confident of an April 2012 start although further work is being undertaken to establish if the timescale can be accelerated. Hammersmith & Fulham says the inclusion of the other two boroughs will significantly develop the schools market and provide the business with a larger base to manage its operations from.

Some other points are covered in the report:

  • “The Council envisages that all staff will transfer from the Council(s) to the new company under TUPE (The Transfer of Undertakings (Protection of Employment)) Regulations with the possible indemnity for the first twelve months redundancy in line with other outsourced contracts”
  • “In addition, the mutual will reinvest a percentage of its net profit back to the local authorities(where the business is receiving income) for the enhancement of learning for young people, as identified by the Councils. This will be enshrined within the contractual relationship between Hammersmith & Fulham (and other Councils) and the mutual for the four years of the pilot phase where the Council(s) is also commissioning services.”
  • “For the first four years of the mutual the other 50% net profit will be retained by the business to provide a profit for any partners and develop a growth fund and develop the business on a secure footing. Given the national circumstances it is envisaged that there is unlikely to be any pay awards or dividends to the mutual staff in the first few years of the business, although this will be determined by the business and its partner in line with the business progress.”
  • “At the end of the four year period the Council will be tendering the strategic contract and the mutual would be able to compete with other providers and may or may not win the contract. By allowing the mutual four years it can effectively build its client base and develop its offer to schools, such that it should have sufficient capacity to re-direct resources should it be unsuccessful in the Hammersmith &Fulham contract.”

Andy Rennison, Hammersmith &Fulham’s assistant director for schools’ funding and the future director of the mutual, said: “What we do makes a big difference for schools and while we have solid systems, a solid approach and strong brands as boroughs, the status quo is no longer an option for us. We are working against a backdrop of massive financial pressures and that, along with changes in government policy around academies and free schools, means we must fundamentally change the way we deliver our business if we are to survive and grow. Becoming an employee-led mutual gives us a real opportunity to take control of the agenda and further develop a strong and sustainable service going forward.”

Questions and Answers

Q. Who is the lead council on this?

A. Hammersmith & Fulham Council

Q.Do staff from all councils get the opportunity to go into the mutual to work? 

A. Staff from the three boroughs who are engaged in this specific area of work will get the opportunity to go in to the mutual

Q. Are the timings in the report up to date – i.e. when it is planned to be set up (September 2011) and begin (April 2012)? 

Yes, we aim to have it running by April 2012.The mutual social enterprise is currently in the process of being set up and the council plans to go to market in September to procure a private sector partner to assist with its establishment. The tri-borough mutual social enterprise plans to go live from the start of April.

Q. Has this been approved by all three councils and what are the next steps?

A. The proposal to set up a mutual social enterprise was part of the tri-borough implementation plans in education services for all three boroughs. H&F council has approved the option appraisal and initial business plan, which includes authority to go to market to procure a private sector partner. Discussions are still taking place in the Kensington and Chelsea and Westminster boroughs about the final arrangements and staff affected. A tri-borough staff consultation is planned to take place in October.

Hammersmith & Fulham Mutual Proposal Report

Tri-borough Proposals Report

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Posted in Campaign4Change, mutualisation, mutuals, public sector, public services

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Mutuals and SMEs remain at risk of EU procurement rules despite government calls for change

Posted on 22/08/2011 | 3 comments

By David Bicknell

A recent article on EU procurement has raised the possibility of the risk of a challenge to the government’s plans to make procurement easier for fledgling mutuals and social enterprises still trying to get their feet off the ground.

There are also implications for SMEs battling to gain a foothold in government procurement.

The piece  argues that even though the govenment is trying to change EU procurement laws, that itself is likely to take a couple of years. So, it asks, if the UK government is making a proposal around mutuals now, what will it do regarding procurement in the meantime?

In the UK government’s recent formal response to the European Commission Green paper on the modernisation of EU public procurement policy, the government said:

The UK welcomes the Green Paper on modernising public procurement, and the commitment that proposals to simplify the public procurement directives will be published at the end of 2011 or early 2012. The UK strongly agrees with the Commission’s comment on the need for streamlined and flexible procurement procedures, so that purchasers can obtain high quality goods and services, while delivering value for money for the public purse. Radical simplification is needed for the benefit of small and medium-sized enterprises (SMEs), other suppliers and public purchasers alike.

The main priorities in the revision of EU public procurement policy should be:

To make clear that contracts could be awarded directly for a period of, for instance, three years, to employee led organisations/mutuals, to enable employees to gain experience of running public services prior to full and open competition

Reducing lengthy and burdensome procurement processes that add cost to business and barriers to market competition

Providing more flexibility for purchasers to follow best commercial practice, so that the best possible procurement outcomes can be achieved, and

Supporting measures to enhance SME access to public procurement, where such measures are non-discriminatory and are consistent with a value for money approach.

The full response is available here

The article goes on to suggest that changes should be made to simplify and harmonise ‘dynamic purchasing’ techniques such as framework purchasing agreements, which need to be made more flexible to benefit SMEs.

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Posted in Campaign4Change, EU procurement, mutuals, public sector, public services, SME

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