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Procurement: Improving the Outcomes of Procurement

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Procurement: Improving the Outcomes of Procurement The University of Hull Faculty of Business Law and Politics Business School Public Sector (PS) Procurement: Improving the Outcomes of Procurement Supervisors: Professor Christopher Bovis Professor (Retired) David Grant Candidate Name: Stuart Nigel Addy Submitted for: PhD Management Present degrees: MSc Management, Manchester Student No: 201114205 Word Count 96,474 90,786 Excluding Bibliography Date of submission: August 2020 1 ABSTRACT The UK public sector spends approximately 12.5% of GDP buying goods and services. Failures in procurement activity are not uncommon. The economic shock of 2008 and now the consequences of Covid-19 mean that preventing failure with better value for money matters more than ever. Failures usually lead to Government inquiries and studies by appointed ex-civil servants or businessmen and women. However, the ‘lessons learned’, recommendations and methods used to reach them are seldom subjected to academic scrutiny. The lessons are consistent and while some recommendations have been implemented, many have not. There appears to be an assumption that the lessons re-shape strategy and that revised policy mandated from ‘the centre’ will then result in beneficial change. One of the key theories in this study is that strategy must be generated simultaneously from top and bottom if it is to be effective, and the input from the bottom has been missing. Most academic studies into public sector procurement have focussed on a single subject in a reductionist manner. Whilst that may be helpful, only an analysis at the macro- level, throughout the structures of procurement is likely to highlight obstacles preventing beneficial change. Critical realism offers an ontology and emerging methodological approach that can tackle such a broad subject at the macro level. This study adds to academic knowledge because by taking a ‘bottom up’ approach using a critical realist methodology, it illuminated obstacles to beneficial change. It finds that the vital role of ‘commissioner of procurement’ is neither defined nor properly being undertaken. This missing role prevents a vital feedback loop and so prevents beneficial change. It also highlights that the increasingly devolved nature of procurement further diminishes the power of the ‘top-down approach’ and that there is a strong case for the professionalisation of the commissioning and procurement function. 2 ACKNOWLEGEMENTS I am indebted to my supervisors, Professors Christopher Bovis and David Grant for their advice, help and guidance as I finalised my thesis. Christopher for his sage advice, depth of knowledge and understanding of the subject, and David whose expertise in logistics chimes with much of my work and who having been my supervisor, left the University of Hull but agreed to read and comment on my thesis until ready for submission. In what has been a long journey as a part time research student, I also had the benefit of input and supervision from Professors David Menachof and Terry Williams and Doctors Ricardo Mogre and Stephen Allen who were at times supervisors and mentors of my work, and informally guides and sounding boards of some of my wilder ideas. I would also like to acknowledge a greater debt to the University of Hull in accepting multi-disciplinary approaches to research and, in particular, to Professor Gerald Midgley who accepted me into many ‘systems’ sponsored seminars and discussion groups. I also thank Dr Dyonisios Demetis (Independent Chair), Professor Dermot Cahil (External examiner), and Dr Michael Varney (Internal examiner) whose questions and comments during my Viva Voce led to amendments that have improved the final version of this work. Beyond the academic arena, I must of course thank the Minister for Defence Procurement, the staff of the Crown Commercial Service, NHS Logistics and Chartered Institute of Purchasing and Supply for their assistance and co- operation. Most of all I am indebted to the individuals in procurement roles in the County and City Councils, Police and Fire and Rescue services who allowed me to speak to them, learn from them and then, give me more time as they scrutinised and validated my conclusions. Ultimately, I hope that my work helps them to see that their voice is heard, and that change can occur. 3 Last and by no means least, I must thank my family for indulging me as a mature student attempting to ‘scratch an itch’ that existed from 1987 when I finished my MSc but, because of work and life, was unable then to complete a PhD. Without all of those persons this work would not have been possible. 4 Contents Section and Title Pages 1.0 Chapter 1 - Introduction 11 - 20 1.1 The Problem 11 - 13 1.2 Government intent and related problems 13 - 18 1.3 Aims and ambitions 18 - 20 1.4 Summary 20 2.0 Chapter 2 – Research Question 21 -32 2.1 Macro Question 21 Definitions 21 - 25 2.2 Focusing the Question 25 – 28 Non-governmental trends and themes that 27 influence procurement Industry 27 Austerity and the impact of COVID-19 27 The EU 28 Media and value for money 28 2.2.1 Analysis and Implications of the 29 Focused Research Question 2.2.2 Implications of the External Trends 30 - 31 that Impact on the PS Procurement Process 2.3 Summary 32 3.0 Chapter 3 – Related Research (Literature Review) 33 - 110 3.1 Opening thoughts 33 -36 3.2 Classification of related research and 36 -39 definitions of sections Trends in industry 37 Trends in the public sector 37 -38 UK Government activity affecting 38 -39 procurement 3.3 Trends in industry 39 - 53 3.3.1 Summary of the trends 39 -40 3.3.2 Implications 40 – 42 5 Effect of the dis-integrated supply chain 40 Integrator role in industry 40 -41 Open dialogue 41 Complexity 41 - 42 3.3.3 Discussion 42 – 53 The Dis-integration and Re-integration 42 -43 of the supply chain The integrator role 43 -45 Practical examples of the rise of the 45 integrator Why be an integrator? 46 -48 Driving profit in the dis-integrated 48 - 49 supply chain Securing value in the dis-integrated 49 – 51 supply chain Partnering amongst suppliers 52 Conclusions 52 - 53 3.4 Trends in the Public Sector 53 - 83 3.4.1 Summary of trends in the public 54 - 55 sector 3.4.2 Guiding principles and weaknesses 55 - 57 – Small to Medium Enterprises (SME) 3.4.3 Legislative response 57 – 64 The intention behind revised legislation 59 - 60 Consequences of revision 60 – 62 Views about framework agreements 62 -63 Consultancy services 63 - 64 3.4.4 Risk, incentivisation and innovation 64 -73 Capability statements and ‘packaging’ of 65 – 67 contracts Knowledge and skills 67 Perverse incentives and outcomes 67 – 68 Bundling and packaging 69 - 73 3.4.5 Outsourcing services 73 - 74 3.4.6 Responding to the supplier base 74 - 78 6 3.4.7 Strategic and political procurement 79 - 82 3.4.8 ‘Green’ and ‘sustainable’ 83 3.5 UK Government activity affecting 84 - 107 procurement 3.5.1 Summary of UK Government 84 - 85 activity 3.5.2 Studies, reviews, and inquiries 85 - 99 3.5.3 Taking control 99 - 103 3.5.4 Procurement and commissioning – 103 - 107 the purchasing and commissioning cycles 3.6 The individual and the ‘body corporate’ 107 - 108 3.7 Summary of the literature review 108 -110 4.0 Chapter 4 – Research Methodology 111 - 167 4.1 Chosen Research Methodology 111 4.2 Philosophical positions 112 - 126 4.2.1 Objectivist, Positivist, Empiricist 112 - 113 (Quantitative) 4.2.2 Subjectivist, Interpretivist 113 - 115 (Qualitative) 4.2.3 Critical Realism (CR) 115 - 124 4.2.4 Using Critical Realism in research on 124 - 126 Public Sector (PS) Procurement 4.3 Boundaries 126 - 127 4.4 CR and Methodologies 127 - 131 4.5 Systems and Systemic Thinking 131 - 136 4.6 Case Study 136 – 142 Defining the case 136 – 137 Implications 137 – 139 Signs to look for after defining the case 139 - 142 4.7 Action Research 143 - 149 4.8 Grounded Theory 149 - 152 4.9 Quantitative Methods 152 - 154 4.10 Other Qualitative Methods 154 - 160 4.10.1 Ethnography 154 - 156 7 4.10.2 Phenomenology 156 - 157 4.10.3 Narrative Research 157 - 160 4.11 Ethics 160 - 167 5.0 Chapter 5 – Research, Data and Analysis 168 - 287 5.1 Theories to be tested 168 - 170 5.2 Personal challenges 170 - 172 5.3 Sample Size 172 - 175 5.4 Depicting the Problem 176 – 181 Figure 1 The Top-Down View 176 Figure 2 An alternative Hypothesis 178 Figure 3 Procurement Relationship to the 179 UK Government 5.5 BREXIT 181 -182 5.6 Conceptual Maps of PS Procurement at 182 - 209 Various Levels within the Structure 5.6.1 The EU Regulatory System 183 – 184 Figure 4 The EU Dimension 184 5.6.2 The National Policy and Procurement 185 – 188 Dimension Figure 5 The National Policy Dimension 185 Figure 6 The National Procurement 187 Dimension 5.6.3 Departmental Level 188 – 193 Figure 7 Departmental Level 188 Figure 8 Departmental Level (revised) 193 5.6.4 The Industry Dimension 194 – 196 Figure 9 Industry Dimension 194 5.6.5 Civil and Public Service Dimension 197 – 202 Figure 10 Civil & Public Service Dimension 198 5.6.6 Individual Dimension 202 – 209 Figure 11 The Individual Dimension 203 5.7 Analysis of the Mapping Activity 209 – 212 5.7.1 Location of staff 209 5.7.2 Devolution 209 -210 8 5.7.3 Professional procurers 210 5.7.4 Political influence 210 – 211 5.7.5 Flow of information 211 5.7.6 Commissioners of procurement 211 – 212 5.7.7 Market management 212 5.8 Topics and Questions that Emerged from 212 - 213 Discussions about the Maps 5.9 Availability and Content of Training 214 - 217 5.10 ‘Three Boxes’ of Research Oct 2016 to Mar 218 - 251 2020 5.11 Analysis and Themes from Mapping 252 - 270 5.11.1 The Desire for Change 252 - 254 5.11.2 Structural Issues 254 - 258 5.11.3 Professionalisation 258 – 262 5.11.3.1 Benefits of Professionalisation 258 – 260 5.11.3.2 Problems of Professionalisation 260 - 262 5.11.4 Summary on Professionalisation 262 5.11.5 Links within the Strata of PS 263 - 265 Procurement between CCS, CS and Devolved Authority 5.11.6 Risk 265 - 267 5.11.7 Political Influence 268 - 269 5.11.8 Contract Award 269 - 270 5.12 Analysis and Conclusions Concerning 270 - 275 Methodology and Ontology 5.13 Analysis and Conclusions concerning 275 - 284 Professionalisation 5.13.1 Summary of the statements of the 275 - 277 procurement officers.
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