Characterising (and closing?) the accountability-capability gap in complex procurement

The role of procurement in the Grenfell fire can be explored in a variety of ways. First, the outsourcing of complex work is increasingly common in private and public-sector procurement. Although the primary strategic rationale for the ‘make-or-buy’ decision remains efficiency maximization, a range of factors, including core competencies and greater technological complexity have shifted the scale and scope of outsourcing. Given the knowledge asymmetries and asset specificities inherent in complex procurement, it seems certain that Grenfell’s procurement professionals found themselves facing the complexity of 'buying more than they knew’, which has demonstrated insufficient procurement capability. Furthermore, replacing internal production by outsourcing (for example, outsourcing auditing to fire services) without considering the loss of internal knowledge, further exacerbated the issue of Grenfell’s lack of capability to buy and monitor complex work. Goal incongruency is also clearly an issue - i.e. the buyer focused on achieving high quality, while the contractors’ goal was to minimise the costs incurred. Well-established behavioural insights indicate that the goal incongruity can, especially if not aligned to an explicit/formal governance system, leads to dysfunctional outcomes. The paper also proposes some ways in which the procurement accountability and capability gap could be addressed. First, adoption of long(er)-term, relational contracts might go some way to resolving the goal congruency issue and incentivise contractors to provide high quality service while reducing monitoring costs. Second, and more fundamentally, public sector contracting organisations need to think much more carefully about outsourcing decisions and consider hybrid mechanisms that both leverage external specialised competencies and limit the loss of control and monitoring capability. Finally, such sophistication likely requires greater professionalisation in the public/construction procurement space with greater emphasis on ethical conduct. Although not without its own challenges, greater professionalisation may be useful for upholding explicit (for example, ethical) and implicit norms