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\ CIPFA EDUCATION AND TRAINING CENTRE \central government procurement.

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Presentation on theme: "\ CIPFA EDUCATION AND TRAINING CENTRE \central government procurement."— Presentation transcript:

1 \ CIPFA EDUCATION AND TRAINING CENTRE \central government procurement

2 \ CIPFA EDUCATION AND TRAINING CENTRE Objectives: To understand:  Procurement – what is it?  What makes procurement a topical issue in central government?  What is the Office of Government Commerce (OGC) and its role?  What is the OGC Procurement Cycle?  Practice: A procurement skills exercise

3 \ CIPFA EDUCATION AND TRAINING CENTRE OGC Procurement Cycle

4 \ CIPFA EDUCATION AND TRAINING CENTRE An Effective Procurement Strategy– why important in the Public Sector?  Annual procurement spend  Public sector £125 billion+  Central Govt & Agencies £15 billion+  Management of procurement and commercial activities -> savings  Programmes and projects (e.g. OGC Gateway™ method for scrutinising project progress largely involves assessing procurement processes)

5 \ CIPFA EDUCATION AND TRAINING CENTRE What is Procurement Good Practice? Economy  Get the price down  Savings for front-line services Efficiency  Balance whole life cost – fitness for purpose  Embed efficient ways of working  Coordinate public sector procurement

6 \ CIPFA EDUCATION AND TRAINING CENTRE What is Procurement Good Practice Cont’d Effectiveness  Procure fit-for-purpose goods/services  Public/ private partnerships  Treat suppliers fairly  Open government markets to competition Other Sustainable procurement practices (e.g. carbon neutral government estate by 2012) Meet EU rules

7 \ CIPFA EDUCATION AND TRAINING CENTRE The OGC  Established post Gershon Review (1991)  A “one stop shop” central procurement organization  Powers to set high performance standards on procurement/project management  Monitor Departmental performance  Facilitate inter-departmental collaboration  Develops relations between public sector buyers and suppliers  Government Procurement Service (GPS) represents and supports procurement professionals across government.

8 \ CIPFA EDUCATION AND TRAINING CENTRE OGC Procurement Cycle

9 \ CIPFA EDUCATION AND TRAINING CENTRE Relationship Management Adequate resources required ‘Overhead' in-house resource (estimated 2% contract value) Aspects of contract and relationship management include…

10 \ CIPFA EDUCATION AND TRAINING CENTRE Relationship Management Planning Resource considerations (for goods/services) to achieve completion within timescale Procurement plan Effective lines of communications Contract manager Methods of contract monitoring and reporting

11 \ CIPFA EDUCATION AND TRAINING CENTRE \the red and blue exercise A Procurement Skills Exercise

12 \ CIPFA EDUCATION AND TRAINING CENTRE Objective:  The objective of the exercise is for your group to end up with a positive score

13 \ CIPFA EDUCATION AND TRAINING CENTRE Procedure:  Each team plays either a red or a blue card in each round by giving it to their team rep (Nicola or Amana)  The choice will not be announced until both teams have played  There will be TEN rounds  After the FOURTH round – possible conference  After the EIGHT round – possible conference  The NINTH and TENTH rounds score double points

14 \ CIPFA EDUCATION AND TRAINING CENTRE Remember:  The objective of the exercise is for your group to end up with a positive score. Scoring: Group 1 plays Group 2 plays The score is: Group 1 Group 2 RED +3 REDBLUE-6+6 BLUERED+6-6 BLUE -3

15 \ CIPFA EDUCATION AND TRAINING CENTRE Conclusion  Decisions that were dominated by competitive ‘winning’ psychologies were counter productive  Aggressive and competitive negotiations were experienced within and between the teams  It’s very easy to be ‘led astray’

16 \ CIPFA EDUCATION AND TRAINING CENTRE Conclusion  Maximum score 72 points  Minimum score -72 points  Total points in game is zero  Lowest risk strategy 36 points each  Total points in game is 72  Successful negotiation should end in a ‘win-win’ situation  Too aggressive - the negotiation could fail  Too passive – does not achieve best value

17 \ CIPFA EDUCATION AND TRAINING CENTRE \negotiation skills

18 \ CIPFA EDUCATION AND TRAINING CENTRE Goals  What do you want to get out of the negotiation?  What do you think the other person wants?

19 \ CIPFA EDUCATION AND TRAINING CENTRE Relationships  What is the history of the relationship?  Could or should this history impact the negotiation?  Will there be any hidden issues that may influence the negotiation?  How will you handle these?

20 \ CIPFA EDUCATION AND TRAINING CENTRE Trades  What do you and the other person have that you can trade?  What do you each have that the other wants?  What are you each comfortable giving away?

21 \ CIPFA EDUCATION AND TRAINING CENTRE Alternatives  If you don’t reach agreement with the other person, what alternatives do you have?  Are these good or bad?  How much does it matter if you do not reach agreement?  Does failure to reach an agreement cut you out of future opportunities? And what alternatives might the other person have?

22 \ CIPFA EDUCATION AND TRAINING CENTRE Style is key  For a negotiation to be 'win-win', both parties should feel positive about the negotiation once it's over.  Displays of emotion are inappropriate because they undermine the rational basis of the negotiation and because they bring a manipulative aspect to them.

23 \ CIPFA EDUCATION AND TRAINING CENTRE Successful negotiation  The negotiation itself is a careful exploration of your position and the other person’s position.  The goal is finding a mutually acceptable compromise that gives you both as much of what you want as possible.  In an ideal situation, you will find that the other person wants what you are prepared to trade, and that you are prepared to give what the other person wants.

24 \ CIPFA EDUCATION AND TRAINING CENTRE Successful negotiation  If this is not the case and one person must give way  It is fair for this person to try to negotiate some form of compensation for doing so – the scale of this compensation will often depend on the many of the factors we discussed above.  Ultimately, both sides should feel comfortable with the final solution if the agreement is to be considered win- win.

25 \ CIPFA EDUCATION AND TRAINING CENTRE Successful negotiation  Only consider win-lose negotiation if you don't need to have an ongoing relationship with the other party  Having lost, they are unlikely to want to work with you again.  Equally, you should expect that if they need to fulfill some part of a deal in which you have "won," they may be uncooperative and legalistic about the way they do this.  Reputation is at risk


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