Select Committee on Public Accounts Twenty-First Report

Examination of Witnesses (Questions 120-139)



  120. And you think that is going to change?
  (Mr Barrett) We have a mechanism in place to make sure that does change.

  121. Mr Gershon, could I ask you about the top of the office comments made at the beginning. What do you think government could be doing to improve further the strategic assessment of procurement issues? What more could be done to encourage more commitment at the top of the office than is currently the case, in other words to push it up the agenda further?
  (Mr Gershon) I do not think there is any single answer to that. Departments are responding to some of the aspects of the OGC agenda in different ways. Some departments have made a decision that they are going to increase the seniority and the reporting level of the departmental heads of procurement. We can see that happening now in a number of departments. In some cases it is clear that strategic procurement issues are being discussed more than they have ever been in the past at departmental management board level. For example, I have been giving presentations to a number of departmental management boards in conjunction with the departmental head of procurement and that has triggered on-going discussion about what that department ought to do itself to be getting a better handle on procurement. Over the last 18 months we have put an awful lot of new things in place and we have got to get more experience of how well those are working before I would be confident in saying whether there were other generic, government-wide measures that ought to be taken. There is very positive support from all the permanent secretaries to the OGC agenda.

  Chairman: Thank you, Mr Bacon. Brian Jenkins?

Mr Jenkins

  122. Mr Gershon, I have found your answers this afternoon as illuminating as the Report; I have really enjoyed it.
  (Mr Gershon) You are the only member of the Committee who has!

  123. It has reinforced what I have felt and known for a long time, namely that the Cabinet Office efficiency recommendations in 1994 were unobtainable because of a lack of understanding of the management techniques in place and a lack of ability to quantify what they were doing, it was a figure picked at random out of the air. Is that not the case?
  (Mr Gershon) No, I do not think it was picked at random. Talking to some of the people who were involved in that study, I think they had a good basis for estimating the potential savings. It was not that the savings were unachievable, it was for the sorts of reasons that occurred after the 1994 report which are set out in the NAO Report that the departments gave as to why there was not full implementation.

  124. There was not full implementation because they did not want to do it. The culture was such that they felt they could carry on and the taxpayer would dip further into its pocket. The fact is basic management techniques were non-existent. I find that amazing. I would not have allowed it on a council because if my departments were like that I would reduce their budget by two per cent a year for five years to make sure they achieved their targets. Why was it not done?
  (Mr Gershon) As was identified at the time I did my review, in my view, looking at this from a private sector perspective, if the government wanted to get a strategic handle on procurement there were certain management activities that needed to be put in place both organisationally, like putting in place some better processes like the Gateway Review process, trying to get some measurement techniques in place, and those are now either in place or in the process of being implemented.

  125. So we can look forward to some rapid progress?
  (Mr Gershon) It is a matter of record that the OGC's target in the first three years of existence is to work with departments to unlock the £1 billion of value-for-money improvements from what government is purchasing.

  126. Excellent!
  (Mr Gershon) I believe that that will create a momentum so that we can look towards a more challenging target in the second period of the OGC's existence.

  127. One of the reasons we bring in contractors is because we lack the skills in-house. A lot of the answers you have given in the report show that we lack certain management skills to allow us to quantify and to act upon some the decisions taken.
  (Mr Gershon) Clearly the answer to that question historically is yes.

  128. You did say that one of the reasons we lacked these skills is that the public sector could not pay the same money as the private sector. Is it not true that people work in the public sector for a range of reasons, one of them being they would rather work in an environment where as individuals they are treated far better and allowed more scope to work and allowed more risk-taking, and the culture in the public sector is such that it nullifies any young person's enthusiasm or ability and they fit into a model of take no risk, make sure things go on nice and steady, and own up to nothing?
  (Mr Gershon) The only thing I can say is I cannot reconcile that with the experience I have now had of dealing with many civil servants across government. I recognise that that is a widely held perception. I think people are doing some very difficult and challenging jobs, they approach them with great commitment and dedication, and that is what we are trying to do through some of the mechanisms that help them do those jobs better and get better value for money for the taxpayer.

  129. Outside in the private sector there are firms who run purchasing contracts where they know exactly, because there is a procedure laid down, what each contract entails and its outcome. It is not a difficult process and yet you say that we are going to have difficulty implementing this in each department.
  (Mr Gershon) Having the data in your financial and management accounting systems that enables you just by pressing a button to produce analyses of procurement expenditure which tells you how much money was spent on what and with whom is not something that is available with the desired level of granularity in many of today's systems across government.

  130. Do you think it is a good idea to have one in each department or should we centralise this?
  (Mr Gershon) Because of the way some of these systems are tightly integrated into the overall work of the departments, I would be quite hesitant about having some very big centralised system. I think what we need to get sharper at, as we begin to understand the aggregation of government requirements, is for example ensuring that if we need a particular modification done to a standard industry off-the-shelf system to meet the needs of a particular departmental requirement that we look to make sure the appropriate contract is in place so, for example, that the modification can be used at no additional expense by other government departments who use the same software. That is the sort of area where we should apply ourselves. Clearly in some departments they have identified a common need. A lot of payroll is out-sourced, but I do not have enough evidence to say strongly that I would be recommending that there should be a single financial and management information system to meet the needs of all government departments. I think they are too diverse.

  131. So we have a situation where department A purchases a service, department B purchases exactly the same service—
  (Mr Gershon) Usually they are purchasing a system rather than a service.

  132. Within their purchasing procurement they both purchase professional services at different rates. Why are we not talking to each other as departments?
  (Mr Gershon) As we utilise the head of procurement network to get better sharing of information along the lines of the NAO Report, we will be able to better see whether there are areas where suppliers are trying to divide and conquer.

  133. But procurement is passed down in departments. We get middle management making decisions as to which contractors they are going to use.
  (Mr Gershon) As I have already said, what we are trying to do as part of the package of improvements to get better in this area is to get the much stronger involvement of professional procurement staff to work alongside the users who have the need for these professional services.

  134. So any member of staff can access the database?
  (Mr Gershon) Which database?

  135. The one we are going to set up.
  (Mr Gershon) We have not agreed yet with departments who will have access to it. The departmental head will clearly have access to it. Ubiquitous access is something we would need to consider carefully.

  136. Surely the person who is actually doing the purchasing will need access to it?
  (Mr Gershon) What we are trying to get at is that purchasing these sorts of services should not be done by a single person. You have to involve both the person who has a business need for those services and somebody who is professionally qualified to do procurement and they need to work together, individually or organisationally, to get a high-quality procurement done which meets both the user's needs and delivers value for money.

  137. So no individual in a department should be allowed to approach a professional service and say, "I want you to come and do this work because you are a well-known and well-loved trader" without going through a procurement officer?
  (Mr Gershon) That is what we are trying to aim at, yes.

  138. Excellent. If we have got key procurement officers in place in each department and we have not got them integrated across departments, we have the basis for an information bank, albeit in their heads?
  (Mr Gershon) Departments today do have professional procurement people but, as was identified both in mine and others' reports, in some departments the professional procurement people are not being involved in the high value-added activities. They have been spending too much time at the routine transactions, which are much more susceptible these days to catalogue-type arrangements and use of the government procurement card which ought to be left more in the hands of the end users, and the skilled procurement resources available need to be focused more tightly on areas like the procurement of professional services and some of the complex PFI-type projects where they can add real value. That is the shift I am trying to achieve.

  139. And that is great. Where is the rationale that is being used recorded, the reason why they are using a particular contractor, how they the contractor's performance met up with expectations and the debriefing at the end? Where is all this recorded?
  (Mr Gershon) That will be recorded in departments and we then have to find mechanisms in which that information can be shared.

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