Transparency is now king - redefining higher education procurement

Universities are under real pressure to make savings. Changing procurement practice can help them find efficiencies, says Steve Malone.

Litigation involving procurement tenders in the higher education sector has increased by 500% in the last three years. That's an extraordinary figure but it tells a tale of how much buying in universities has changed since the recent period of austerity began. Previously, the relationship between supplier and HE institution was often cordial. Not any more. Companies that provide services to universities are becoming increasingly adversarial if they lose contracts. Where before they might not have challenged award decisions, thinking they would win next time, now, at a time when business growth is more challenging, suppliers may choose to bring the lawyers in to look for holes in how an institution has run the procurement process.
I've witnessed first hand how universities across the country are tightening up their purchasing practice in response to the growing threat of court proceedings. Transparency is now king. HE procurement staff are much more robust and realistic about their relationship with suppliers. Any act – an email, phone call, meeting or tweet – that might hint at bias or favouritism is being eliminated. The race is on to close all chinks in the armour. But it's not just supplier relationships that are being rethought. Compliance is another lesson that has to be learned now pressure is mounting to make savings.
For years, purchasing outside of framework and institutional agreements has gone on in some, but not all, higher education institutions. But finally this is changing. There is more awareness that if someone orders goods or services from suppliers not approved by their university and the approved supplier challenges this, then it could prove expensive in legal fees. Rogue spending here and there was tolerated in the past, but with departments being squeezed there is more acknowledgement of the role compliance can play in achieving targets. I hope such changes in behaviour spread until the use of approved suppliers is standard practice. Another area of change is how the procurement function is perceived. Previously, some university departments have hidden behind specialisms to prevent the central purchasing office playing a serious role in buying goods. Staff have claimed that the corporate procurement team can't purchase certain items through framework agreements because only departmental employees have the knowledge to get the buying right.
Today university and consortium procurement teams are highly skilled with experience of buying items and services across a wide range of industries, from medical equipment through to engineering machinery. Procurement teams are accomplished at bringing together and benefiting from departmental employee knowledge and then taking these specifications and creating a robust and compliant procurement solution. For example, there is now a framework for high-value laboratory equipment covering the whole sector. Reduced budgets due to cuts in government spending have highlighted just how important the roles of HE purchasing officers are. They have also led to increased support for collaborative spend within universities. Quite simply, more people understand that by combining demand right across an institution, facilitated by the central procurement function, they can maximise departmental savings.
But what about collaboration outside the four walls of a university? A recent report by the Universities UK efficiency and modernisation task group, Efficiency and effectiveness in higher education, stated that the full potential of the HE sector to use its size and purchasing power to generate additional savings had not yet been realised. The task group recommended that by 2016, 30% of university expenditure should be delivered via collaborative agreements. At the moment, in some universities, that figure only stands at 10%. I know that many HE institutions do already aggregate demand with other universities to get better supply chain terms. But if the sector wants to ensure that about a third of its buying is done collectively within the next few years, this requires major changes in the culture of HE buying. We need a firm commitment from universities to use shared back-office support and joint frameworks across a significant proportion of their expenditure. Not just a few agreements here and there.
If you look across the public sector, it's probably universities that are facing the greatest pressure to make savings and increase service quality. As a result HE procurement professionals have had to act quickly and dig deep when it comes to generating new efficiencies. There is a wide range of very good practice happening in the sector when it comes to procurement. But as the Universities UK report suggests, it needs better dissemination.
Steve Malone is the managing director of CEL Procurement. He will be discussing these issues at the procurement event, PfH Live, from 12 to 14 June.