Asked about reports that the DfT’s experience has weakened procurement reform and innovation across the civil service by encouraging officials to conduct buying processes ‘by the book’, Philip Rutnam replied that “it’s not right to say: ‘We will no longer do risky things.’ We as an organisation have to do things which are difficult and innovative and challenging if we are to fulfil the remit which ministers and the public have put on us. That’s our job. We can’t shy away from it: we have to take risks.
“We have to be very methodical, very thoughtful, very thorough about the way we reduce those risks over time so that we maximise the chances of successful delivery – but I’m not interested in this department becoming less innovative,” he said. “If anything, we need to be a little bit more innovative; but we also need to be very rigorous; very insistent on the principles of good programme and project management.”
Rutnam’s comments signal his commitment to the procurement reform agenda, which involves civil servants running faster, more flexible buying processes – an approach which could expose departments to greater risk of challenge by losing bidders, as occurred in the West Coast Mainline (WCM) case. The permanent secretary has already decided to dump the DfT’s ‘anonymisation’ system – heavily criticised by the Public Accounts Committee (PAC) in its report last month – under which top officials and ministers didn’t know which companies had submitted each bid.
This system “caused some problems for us on West Coast”, Rutnam told CSW, adding that “DfT was very unusual in Whitehall in the lengths that it went to in order to shield the identity of bidders at all stages in the procurement process”. Asked whether removing bidders’ anonymity has been a difficult change to make to procurement systems, Rutnam commented that “it wasn’t a difficult change for me to make, as I’d always thought after my arrival in the department that the approach it took was unusual; and given the experience that we’d had in [WCM] franchising, it was clear to me that it wasn’t only unusual – it was in some ways unwise.”
The PAC also said that the DfT “needs a greater understanding of... risk transfer to the industry”. But the government struggles to transfer reputational or service continuity risks to private contractors: asked whether it’s worth trying to transfer risk, Rutnam argued that cost and service quality risks can indeed be passed to contractors. In many cases “government must bear some of the risk,” he said, but it can transfer “some significant risks to do with the efficiency of operations, the extent to which revenue is generated. Transfer risks in such a way as to create really strong incentives for the private sector operator to do a good job, to provide a good service, to be innovative”.
Read the full interview here