\central government procurement

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

OGC Procurement Cycle

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)

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

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

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.

OGC Procurement Cycle

Relationship Management Adequate resources required ‘Overhead' in-house resource (estimated 2% contract value) Aspects of contract and relationship management include…

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

\the red and blue exercise A Procurement Skills Exercise

Objective: The objective of the exercise is for your group to end up with a positive score

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

Scoring: Remember: Group 1 plays Group 2 plays The score is: Group 1 RED +3 BLUE -6 +6 -3 Remember: The objective of the exercise is for your group to end up with a positive score.

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’

Conclusion Maximum score 72 points Lowest risk strategy 36 points each 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

\negotiation skills

Goals What do you want to get out of the negotiation? What do you think the other person wants?

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?

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?

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?

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.

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.

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.

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