Time for a change – transforming procurement in the public sector
Public procurement accounts for roughly a third of all public expenditure every year, at around £300bn. Intuitively, we all know that with sums that vast, there must be room to improve to ensure that taxpayer money is being spent wisely, public services are improving and all regions of our four nations are thriving.
This premise is the basis of the Procurement Bill. Every day, small and medium businesses have to fight just to get on the radar of public contracting authorities. The default seems to be a growing overreliance on a select grouping of players who are invariably overseas-based and fail to invest in the local economy or resilience of critical British infrastructure.
To take one example, according to data from public sector analyst house Tussell, one large American company has been awarded more than 100 contracts since 2015, with the biggest including one for £120m in November 2020, and another for £94m the following March. This happened within a procurement framework that claims to be designed to help smaller providers win deals with the public sector: clearly, the system is broken.
But the proposals to extend the circumstances under which a contract can be directly awarded to protect human, animal or plant life requires clear definitions if we are to have any chance of breaking the grip of a select few players. In particular, when awards are doled out under the auspices of “urgency”, the public deserve there to be transparency over both the reason for that urgency and how long the contract will be in place. We only need to look at the chaotic approach to personal protective equipment and the money wasted there to know we need a steady hand guiding these decisions. So we welcome the increased transparency measures that are set out within the bill.
Additionally, the Government is introducing clearer grounds that would exclude a company from being able to win a new contract. This is obviously a good thing, but policing the exclusions must be backed up by the whole of Government’s resources. Committing offences like tax evasion and modern slavery should obviously prohibit a company from winning public sector contracts, but for the tech sector it is the proposal to ban suppliers that undermine “effective competition for contracts” that is most important.
If that ban is going to mean anything, the Competition and Markets Authority must be given more power to prevent Big Tech from abusing its position and squeezing smaller players. Its deliberate strategy of locking in public sector clients means that the taxpayer is worse off, as are local suppliers who can deliver world-class services.
Finally, the principles guiding what’s known as “most advantageous tender” provides a welcome opportunity for public departments to look at more than just price when assessing a company’s bid. The “public good” question is an important one, because it enables us to look at the companies that not just offer a competitive price, but those who are investing any revenues from that contract back into their local community. An international company will be able to point to job creation, likely in greater sums. But we should look at what types of jobs they are and crucially, where those jobs are.
The opportunity to change procurement rules isn’t about doing anyone any favours, it’s about creating a level playing field and a transparent framework. Doing so will enable businesses to play hard for contracts that could benefit not just their own income, but the income of our local communities.
The test now is for government to reorient the way it looks to the market; much of the time, the best option will be the one just down the road.