Procurement reforms by universities in England have led to over £1bn of efficiencies. Other parts of the public sector can learn from these changes that made this possible.
In an era of austerity, which has seen many headlines about multi-million pound savings from public sector efficiency drives, it is easy to become blasé about the achievements behind the numbers.
Perhaps it is no surprise then that the second report by Sir Ian Diamond, the Principal & Vice-Chancellor of the University of Aberdeen, on efficiency in the higher education sector was published with little fanfare.
However, the report, which examined progress since his first report in 2011, revealed that universities have collectively delivered more than £1bn in efficiencies in the last three years. It’s a huge achievement and demonstrates that higher education procurement in this country is a world leader.
Back in 2011, the sector was challenged by Diamond’s first report to up its game and, in particular, collaborate more on procurement to deliver better value for money. Out of that £1bn figure, some £435m has been achieved through procurement efficiency and cost savings predominantly driven by universities joining forces on numerous areas of spend.
The levels of collaboration we now see are unprecedented and come at a time when universities are also competing with each other for students, academics and funding in an increasingly tough market.
In England, universities now receive relatively little money via direct grants and the Diamond report shows that despite there being very little political direction, the sector has still striven to deliver efficiency and effectiveness in the current austere climate and can act as an exemplar to other parts of the public sector.
Indeed, Diamond’s two key recommendations relating to procurement could just as easily be applied to the wider public sector. Firstly, it calls for more universities to demonstrate ‘mature procurement’ by achieving the highest possible level in their Procurement Maturity Assessments – ‘superior’.
My own organisation, North Western Universities Purchasing Consortium, which is co-owned by 22 institutions, has paid for all its members to go through the PMA process and has itself achieved a superior rating. It is a way to gauge the degree to which procurement has support at the highest levels of the organisation – and influence over every area of spend. In Scotland there are moves to extend its equivalent of the PMA, Procurement Capability Assessments, to the whole of the public sector. It’s something we should be doing in England.
These assessments – along with the Diamond reports themselves – have acted as a catalyst for senior management that perhaps were not so engaged in procurement and needed to become more so. In NWUPC’s case, we back them up with training and advice and help universities to share best practice.
It’s a big part of the reason why many of our members have hit the original Diamond report’s target for 30% of non-pay spend to be delivered collaboratively.
The second recommendation was for Procurement England – an umbrella body formed as a result of the first Diamond report – to continue to develop and build on progress made in the higher education sector. PE sits above England’s four regional consortia and it is the continuity that this infrastructure provides that forms the bedrock of success.
The regional consortia have been around since the 1960s and 1970s and we are close to our stakeholders. We know what they want and how to tailor our contribution to what works for them.
However, in other parts of the public sector that relationship is too distant. Worse still, too often you have non-operational people meddling in areas they do not understand. NWUPC has a heads of procurement group made up of senior operational staff to provide expertise at the sharp end and a board made up of university finance directors who can see the bigger picture and guide the strategy.
As the marketplace becomes more competitive and past successes become embedded, it will be harder for the higher education sector to advance this trend of growth in savings. However, the way in which smarter procurement practice has been established means it will continue to make a contribution to ensuring our higher education remains the best in the world.
Paul Tomany is managing director of North Western Universities Purchasing Consortium, one of England’s four regional higher education purchasing consortia.
