How JAGGAER and the UK Ministry of Justice Exceed Public Procurement Demands
- Public Sector
Public sector procurement is stuck in limbo – frequently the differences between public and private sector seem enormous, but they’re often exaggerated or misunderstood. We sat down with Richard Hogg, Managing Director, JAGGAER UK, and Jim Rawlings, Commercial Director, UK Ministry of Justice, to talk through the challenges and misconceptions about digital procurement in the public sector.
One common fallacy about public procurement, Rich Hogg states, is that it has a more relaxed, less cost-driven atmosphere than private industry. However, that couldn’t be further from the truth. “The public sector is arguably under more pressure and more intense scrutiny today than ever,” he explains. In an era of austerity, procurement teams are facing increasing demand to save taxpayer pounds. That scrutiny is just one piece of what makes public procurement uniquely challenging. Another misunderstanding, Hogg continues, is the idea that the private sector is more evolved and strategic than government. “Those that look at the private sector and say, ‘this is a much better environment, a better example of procurement’ perhaps don’t understand the environment that public sector operates in.” Instead, government organizations see just as much opportunity in cutting edge technology as private corporations. From spend categories to regulations, responsibilities, and solutions, public sector procurement seems like a whole different animal, but at the end of the day it’s still procurement.
What Governments Are Buying
A primary area of difference for the public sector is simply in where they spend money. While some spend categories, like travel, rent and services, fleet management, or IT very closely mirror the private sector, governments also face spend categories unfamiliar to most corporations. In particular, social programs, education and infrastructure construction costs are unmatched by even the world’s largest companies. For example, the United States spends nearly half a trillion dollars annually on infrastructure at the federal level alone. In the UK, PwC and Oxford Economics predict infrastructure costs to soar to £ 110 billion by 2025.
Importantly, these categories often vary significantly based on what level of government purchasers are operating at. As Rich Hogg says, “What civil central government is doing may have different demands and may be very different to, for example, local government or fire and rescue . ” National military spending is very different to local police forces or rescue services, creating specific needs for different public sector organizations.
The Regulations & Social Responsibility of Public Procurement
While private companies face scrutiny from their board members or stockholders, governments are in the unique position of being accountable to all taxpayers. Jim Rawlings, a government Commercial Director himself, feels that sense of responsibility daily. “It is incumbent upon us, as civil servants, to always ensure that we are providing best value for money in a transparent way, and we will always have a requirement to provide best value for the public purse.” Hogg also points to legal requirements and regulations, which can be much stricter for public funds, as a main difference from the private sector. “A lot of the drivers within the public sector are much more oriented around ensuring compliance, ensuring that taxpayers’ money is spent transparently, effectively, efficiently.” This compliance is essential, as different regulations may impose penalties on procurement teams that fail to abide by the requirements.
Moreover, Hogg notes the importance of presenting yourself well in the eyes of the public. “As a government, as a public sector body, it’s not only doing the right thing but being seen to do the right thing.” The result of failing to please the taxpayers can be quick, and elections can spell doom for many high-level procurement experts, so meeting those standards is a matter of self-preservation, as well.
As a solution, Rawlings suggests that visibility is key. “I do believe there is a need for a greater transparency of supply chains for the public sector.” Hogg emphasizes that being able to track every poundFrom start to finish is essential, not only to guarantee compliance but to ensure that spend is continuing to generate social value. “How do we understand where the taxpayers’ pound is going? Where the taxpayers’ dollar is going? How much of that is actually ending up in the local economy? What kind of social value are we creating? “
At the end of the day, Rawlings says, transparency is the most fundamental aspect of the job. “It’s very much in our base care of the marketplace, to understand the full supply chain from which we procure.”
Leveraging Software to Improve Transparency and Compliance
To achieve that kind of transparency, an operation the size of a government branch needs to be leveraging technology at every opportunity. As Rawlings says, “Technologies are clearly allowing people and individuals to become much more efficient in their day-to-day activities… Technology and commercial systems provide us with a very real ability to improve the outcomes of the procurements we run.” He notes that the Ministry of Justice is continually looking for new opportunities to improve their efficiency, security, and safety with advanced software systems.
Procurement systems don’t only assist with transparency, but also with contract compliance. Rawlings says that JAGGAER’s solutions “enable us to understand the risk areas but also to enable us to look at central government, and indeed public sector contracts, in a way that enables us to test our contractual commitments.” By examining contract compliance, public procurement teams can better control the use of taxpayer pounds.
We’re Not So Different, You and I
Ultimately, public sector procurement is remarkably similar to any other procurement function. Transparency, efficiency, and cost savings are key to any organization. “Regardless of whether you’re in private or public sector you should always have that robustness of process,” says Rawlings.
Hogg concurs, saying that cost savings is the ultimate goal regardless of industry. “Within all public procurement functions, but specifically within government, there are enormous opportunities to reap significant benefits and returns to the taxpayer.”