John Oughton, the mandarin in charge of government procurement, is determined to slash the time and money spent on the bidding process. But can he overcome a creaky civil service and an overstretched construction industry?
The press officers are edgy. This interview has taken months to set up. The Office of Government Commerce is not a fan of Building. It is almost two years to the day since the magazine’s disastrous interview with the previous chief executive, Sir Peter Gershon.
In the space of that 45-minute conversation it was clear that here were three men who should not have been stuck in the same room together: the interviewer had missed a key piece of OGC work – the standardisation of PFI contracts – in his research; the press officer was patronising, then slashed the interview time in half without warning; and an irritated, media-unfriendly Gershon stormed out on the photographer in mid-shoot. The resulting article did not please the OGC; a rival publication described it as “disgraceful”. Ouch.
This time round, things look even more ominous. One of the press officers tells the photographer that he’ll have one minute to take a portrait of Gershon’s successor, John Oughton. “Ridiculous,” mutters the photographer under his breath. He had twice as much time and infinitely greater courtesy shown to him when he photographed Oughton’s political master, Gordon Brown. While they wait for the interviewee to arrive, the press officer stares at the journalist, his hand on his tape recorder. Nobody is going to take a shot at Oughton on his watch, and nobody is looking forward to finding out what happens next.
Then, Oughton arrives. He may not be hugely charismatic, but he is smiley, friendly, and – thankfully – willing to give the photographer a decent amount of time to do his portrait. It’s quite a relief.
He starts with a little light banter: “You called me Sir John Oughton [in an email]. Thank you for giving me a knighthood, but I think you were thinking of my esteemed predecessor.” From then on it’s pretty serious, which is unsurprising given that this is a Treasury agency devoted to dry issues of procurement and efficiency, but at least the tone is clear: Oughton isn’t about to leave the room if he gets into a bit of a huff.
Oughton has been chief executive at the OGC since March, having been Gershon’s deputy for the previous 12 months. He has a tough act to follow: whatever Gershon’s failings when dealing with the media, he made quite a name for himself last year when his review identified £21.5bn of potential savings in public expenditure. The OGC is one of the key agencies implementing his recommendations; it has the job of saving £6bn over the five years to 2008, much of which is in the procurement of construction and related professional contracts.
This is to be achieved by making the government a better client. Oughton deftly sidesteps the obvious question: why has it been such a bad one up until now? “The government is a good client in one sense – it is a major client of the construction sector. It has put business in when the private sector hasn’t.”
But he admits that the state must get smarter. It has to look at its contracts in commercial terms and thereby secure value for money. It also helps officials to understand the commercial needs of the contractor.
“Time is money,” he declares. “The procurement process needs to be tightly controlled.”
It is important for anyone bidding for complicated refurbishment contracts that they price realistically. This is the challenge
The length of the procurement process, particularly in the case of the PFI, has been one of the greatest concerns of the industry. The OGC is looking to cut this 25% by 2006, which would mean that financial close on a typical PFI contract would happen within a year of its being put to the market. OGC officials admit that there is little data to illustrate the correlation between the reduction in time and that reduction’s impact on bid costs, but there is little doubt that this will be one way of drawing cost-conscious contractors into a market that is struggling to find buyers.
This lack of market capacity is one of the greatest challenges to the government’s massive investment programme. Last year the OGC published the Kelly review, which looked at ways of speeding up public investment. That put forward the idea of working out the public sector’s total demand and the industry’s total capacity between now and 2009. The OGC is presently doing this, and will share its findings with the industry in the first quarter of 2005.
“We’ve had a round of meetings with the chief executives of leading construction companies,” says Oughton, by way of explaining how accurate the results will be. Some industry figures who have attended consultation meetings have been dismissive of the OGC’s work, but Oughton talks a good game, explaining how he is now better informed of the construction sector’s needs. “Some of the capacity constraints are actually around the bidding process [as opposed to skills shortages of trades], such as shortages of lawyers and architects – it’s been useful to talk about it.” He then says, a little less believably: “Actually, as far as trades are concerned, the industry message is that they think there
are ways of expanding capacity. Extended European Union space allows us some room.” Tellingly, he does not believe that the government will have to slow down its building programme, suggesting that it may be expecting the industry to adapt to its needs.
Another criticism of the state-as-client has been that it has too few civil servants who are up to the job of making deals and improving the procurement process. Oughton agrees. “Generally all the top civil service jobs were given to policy makers. We recognised that was an old-fashioned view.” The message, he says, was that specialising in procurement was not the way to become a permanent secretary, or even a grade four official. Now the civil service has effectively been broken into three: policy and analysis, operational delivery and corporate service support. As this provides clearer career paths, it is hoped that ambitious people will be able to seek out titles such as “head of department procurement” without it preventing them from ultimately sitting at the top table: “They should now be able to get beyond grade five,” he says.
Oughton, 52, has been a civil servant since he graduated from Oxford in 1974. His background was in the Ministry of Defence, where he was director of procurement policy in the late 1980s. In the mid-1990s, he joined John Major’s efficiency unit in the Cabinet Office. Having dealt with competition issues at the MoD, Oughton has experience of government waste. This may explain why he refuses to rule out the controversial and anti-competitive notion of single-tender bidding. It has been rumoured that the Department of Health was considering adopting the policy earlier in the decade, when it was unsure if it could attract more than one tender for the £620m St Bartholomew’s and Royal Hospitals project. Oughton says: “The right procurement strategy depends on the project. I’m not ruling out other approaches.”
As the interview comes to a painless end, and with the press officer’s tape recorder still whirring, there is one final issue to address: the plight of Jarvis. Oughton refuses to talk about the contractor’s plight directly, but hints that he thinks firms have bought big PFI contracts: “It is important for anyone bidding for complicated refurbishment contracts that they price realistically. This is the challenge for contractors undertaking refurbishment work.”
The tape recorder stops. No blood has been spilled this time. Nice photograph, too.
Who is in your family? I have a long-term partner who lives in Jersey. It’s run extremely well; we have a planned commuting service
What do you like to drink? A nice glass of Burgundy red wine
Who would you like to see put in I’m a Celebrity … Get me out of here? That’s very tempting. You mean getting ritual humiliation? Arsene Wenger
Silly question, but what football team do you support? Tottenham Hotspur. That was easy, wasn’t it?