Can Procurement beat ‘The Brexit Effect'?
Proxima details how, under Brexit, the Government's commercial function is experiencing similar challenges to the rest of the Civil Service and Whitehall
In March 2019 the Institute for Government released a report on ‘The Brexit Effect. How government has changed since the EU referendum’. It provides a balanced analysis of the changes in Government as a whole since June 2016, focusing on the impacts in the following six areas: ministers, the civil service, public bodies, money, devolution, and parliament.
The effects are broad ranging, far reaching and have arguably changed the political landscape of the future. Moreover, Brexit has changed the relationship between ministers and the civil service immeasurably. With the surge of ministerial resignations at key decision junctures in the process, some critical discussions and negotiations have required civil servants to ‘step up’, play key roles, and offer stability.
The key takeaway impact for the Civil Service, and Whitehall, is that Brexit is reversing years of cuts. There are now 400,000 people in the civil service, with 16,000 working on Brexit related activities. In many cases, these growing figures are not enough to satisfy demand, and non-critical work is being put on hold.
UK Government’s commercial function is experiencing the same challenge: too much work, and not enough people or time to do it. Senior staff and specialists are being repurposed to support special and strategic work, which includes Brexit planning – for all eventualities. As a consequence other day-to-day or ‘lower priority’ activity is left to languish at a much slower pace. The report suggests that capacity to work on non-Brexit work will be a challenge for a long time to come.
In parallel, the Government Commercial Function is trying to future-proof procurement and commercial across all Departments to cope with the demands of a post-Brexit landscape. The Cabinet Office continues to work closely with Commercial Directors to assess their commercial capability and develop action plans to upskill. Key areas of development and capability improvement that are on the radar will be even more critical if there is a no deal or a disorderly exit from the EU. These include:
- - Improving relationships with key stakeholders, focusing on engagement, business partnering and influencing across the Department
- - Clearly identifying and interpreting requirements – and challenging ‘want’ vs ‘need’ to write quality specifications and drive value throughout the life of a commercial arrangement
- - Managing third parties (suppliers) effectively, assuring their ability to provide the goods and services which have been procured at the best possible value
- - Managing performance of third parties to contractual commitments, making changes to relationships where they can cost less and/or deliver more.
It seems that a number of these skills would be valuable in other areas of the UK Government and Civil Service and they represent good practice right across commercial.
'The Government Commercial Function is trying to future-proof procurement and commercial across all Departments to cope with the demands of a post-Brexit landscape'
If a Brexit deal is agreed, the civil service will continue to be absorbed in negotiating and implementing the detail until 2020/2022. It’s a tough timeline for most Departments who, due to the political uncertainty to date, are almost universally behind in their preparations. If there is no deal, the foreseeable future will see those same individuals attempting to minimise economic disruption. Whilst the perception is that this will be more chaotic, the likelihood is that it will be the same 16,000 (or more) resources working on Brexit related initiatives.
Current relative ‘paralysis’ on non-Brexit matters will hopefully reduce as 2019 moves past April, or June, or...? In the meantime, flexibility and innovative thinking is needed to drive the commercial agenda forward, or at least being ready to move quickly once the direction becomes clear.
Government is still operating in a frugal environment. Any additional allocation of funds has had to be covered by additional taxes, or from money saved from other activities. It’s not just resources that are in short supply. So how can the commercial function help?
- - Understanding what a requirement is, vs a desire. Commercial can teach other functions how to procure for the best value over time – something that will be critical to account for a changing macro-economic landscape
- - Assessing and evaluating make or buy options. The UK will have to take on responsibilities which were formally held within the EU. There will be many decisions to be made which commercial can independently drive or contribute to
- - Designing and implementing controls on non-urgent spending. This is more than just reducing or fixing a Department’s budget envelope – it’s managing this as a ‘contract’ which has obligations for return on investment
In conclusion, the role of commercial is just as critical in a post-Brexit environment as it is now. The question is whether strength of character and capability to drive real change in money-management will function in times of seismic political shift.