Government may be exchanging more than it plans to

The Cabinet Office is once again making the news with its Commercial Interchange Programme where suppliers – large and small – can develop closer ties with government by both parties seconding staff into each other’s domains.

The idea is that commercial skills and knowledge are developed, with the Cabinet Office’s Frequently Asked Questions (FAQs) circular suggesting that ‘the initial focus is on developing commercial capability with government procurement teams’. The concept emerged from a Strategic Supplier Summit held last December and a number of high profile organisations have already volunteered to join the programme, including Accenture, Atos, BT, Deloitte, Fujitsu, Serco, amongst others.

Although there is no fee arrangement, as at least one other commentator has observed that the programme does favour larger organisations in that these have the scale to distribute bright people into government departments where there is shared interest for months on end; something smaller suppliers simply can’t afford to do.

The FAQs go on to address concerns over potential conflicts of interest, commercial advantage gains, inappropriate access to confidential government information, with a range of safeguards such as non-disclosure agreements, procurement regulations etc. Nevertheless, I have serious misgivings on whether this approach will work for government and for the benefit of UK citizens.

My favourite old professor once suggested that most profit generated between businesses is borne of information asymmetry (one party knows something the other doesn’t). It’s the gaps in knowledge that allow one party or the other to benefit in their tenders, proposals and negotiations.

I’m fortunate to regularly work with sales and account management professionals and I would imagine the commercial interchange programme would be an absolute delight to them if they worked for one of the volunteering suppliers. I’ll go as far to say that they’d rip their right arm off to gain unfettered access to specifiers, decision makers and other key stakeholders in the customer organisation. It is the account manager’s job (and often their biggest challenge) to access these stakeholders and ‘farm’ the account with their (legitimate) ‘up-selling’ and ‘cross-selling’ activities. We can rest assured that any person placed by one of the suppliers into this programme will be a top professional, and will be very adept at developing insight, identifying opportunities and nurturing key relationships.

There’s nothing in this programme that suggests sharp practice or favouritism and I can see why a deeper understanding of each other’s organisations will increase the knowledge of both. I just want to be assured that past performance, commercial risk and the long term implications for relationship dependency have been comprehensively considered and that future performance will be rigorously managed to a standard apparently absent from major government IT programmes in recent years.

This blog was first published in Supply Management magazine in September 2011.

By David Atkinson

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