Procurement Intelligence Unit

In the UK's West country, a joint venture between the private and public sectors is lowering tax-payer buying costs. The Southwest One partnership is a collaborative project between governmental entities and IBM, and is delivering real savings to local community through procurement intelligence.

Yesterday, I spoke to the Chief Procurement Officer of Southwest One about his partnership with IBM in reducing shared services costs in local and police authorities in Somerset. The discussion also involved Simon Terry, the procurement lead at the IBM consultancy, and revealed that public sector was significantly behind the private sector in delivering best value in procurement practices.

Interestingly, our discussion focused upon the need to create 'buy-in' from staff during procurement restructuring processes. "Procurement is something that you do with people," said Ian Connor, "not something you do to them." It seemed somewhat unexpected that the lessons of collaboration and employee engagement came from the private sector, where government is often derided for its excessive consultation procedures. It appears that the private sector has a lot to teach government procurement practitioners. 

A White Paper produced recently by the PIU on public procurement assesses the value of government entities working closely together. By aggregating demand on common areas of spend, for items such as stationery and cleaning products, government bodies can negotiate a better price through higher volume. The US State of Minnesota, for instance, has saved up to US$246 million since implementing its collaborative procurement programme in 2005. Governmental entities in Minnesota are now entitled to join Master Contracts, which enable the negotiation of cheaper for members.

Similarly in Southwest One, the involvement of multiple partners do generate savings for all the members. Furthermore, the presence of IBM provides access to a wide international body of procurement knowledge and management consultancy capacity that can support the public bodies with a layer of expertise to produce additional savings.

The full results of the IBM research will be published in a Case Study later this month, which will look more closely at private sector partnerships within government.