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Public procurement should be proportionate to risks – not fuel insatiable bureaucratic appetites

Friday March 31st, 2017

Public procurement regulations, whether at a European, national or organisational level, are very important and have huge impact.

John Tizard

John Tizard

They should safeguard public interests and ensure public value, which should include ensuring value for money is secured. They should also guarantee probity and ethical standards. And they should, in my view, promote wider public policy including social, economic and environmental goals. They are also vital for ensuring equity, fairness and, where appropriate, competition between providers.

However, there is a very big ‘however’.

What follows is primarily about public procurement of services rather than of goods, although there can and should be some read-across.

Public procurement practice based on regulation should always unequivocally be facilitative and never bureaucratic. It should most certainly not deter smaller potential providers, whether they are businesses, social enterprises, voluntary organisations or charities – or, indeed, other public sector bodies.

Unfortunately, far too often one hears, experiences or reads reports of ridiculously over-engineered, heavily bureaucratic and sometimes extraordinarily bizarre processes and procedures, which simply make it impossible for smaller organisations and new entrants to the market to bid.

This is nonsense and contrary to sound and effective public procurement. I strongly believe that some of the practices and processes that I witness are both nonsensical and bring the public procurement profession into disrepute. It needs to stop!

These undesirable practices and processes can take many forms – and ‘forms’ may indeed be the operative word given the volume of detail that can be required from bidders, even when only expressing an interest and/or applying to be on a framework agreement. And as for when it comes to responses to actual tenders, the problems and challenges / barriers / hurdles are, far too often, simply further amplified. Again I repeat, this has to stop!

For example, why would any supposedly rational organisation require a sole trader or small organisation to have to submit the same information and demonstrate the same robustness as a multinational company; or expect a consultant involved in recruitment to submit the same information and evidence as would be expected of a company bidding to construct a tram system?

Other disincentives and barriers include requiring bidders to demonstrate balance sheets that only multinational corporates could ever possess; decades of experience and previous contracts, which bars new entrants; and levels of insurance and other cover that are totally disproportionate to the size and risks of the potential contracts. Yet another unfortunate practice is to set the size and scope of specifications so large that small organisations could never be serious bidders or providers. The litany of such poor practice could be much longer and I could go on, but the thrust of the issue I am striving to highlight should, by now, be apparent. Many ‘professional’ procurement staff should be red-faced with shame.

If political or senior executive leaders are requiring officials to procure in this manner, the professional response should be to push back and argue for a change in policy. Ironically, and all too frequently, some of the worst examples of bad practice occur in the very same public bodies that declare ‘in bold’ their policy commitment to using public procurement to secure social value, and to enable charities, social enterprises and SME businesses to win the very same contracts that procurement is preventing them from bidding for. What a nonsense!

Of course, when seeking to work with charities and voluntary sector organisations, public bodies have the option of avoiding competitive procurement and funding services through grants. I firmly believe that public procurement professionals should promote this approach whenever this would be the best way of securing policy goals and value for money. It can, absolutely, reduce the costs to the public sector considerably – as well as avoiding significant (and all too often wasteful) tendering expenditure by potential providers.

Clearly, this article has deliberately focused on the public sector, but lest you suspect I have some kind of bias, let me be clear: the business sector can be just as bureaucratic and have procedures just as non-aligned with business objectives. The fact is that no one sector gets this right!

My plea (and it is a genuine ‘plea’) to procurement professionals across the public sector is to review your current processes and procedures, and honestly reflect on their impact on smaller bidders. Of course, such review and reflection should involve conversations with providers and their representative trade organisations (just as designing delivery of services should involve conversations with those who will use those services).

I urge public sector leaders and professional procurement officials at all levels and across all sectors, in every public sector organisation, to adopt policies, practices and procedures which:

  • are SME, sole trader, charity and voluntary and social sector friendly
  • enable pre-tender dialogue
  • facilitate innovation and not over-prescription of inputs and processes
  • focus on outcomes rather than inputs, and encourage innovation
  • secure economic, social and environmental value and goals; and ensure decent employment practices
  • minimise public sector procurement costs, subject to risk assessment
  • and, above all, are proportionate to the financial value and risks associated with the service being contracted

Let me leave you with this thought: we need public procurement to be SME, sole trader, charity and voluntary and social sector friendly – and not solely designed for major corporates. This means we need public procurement to be ‘proportionate’ to risks and aligned with political goals – not focused on fuelling what seem to be insatiable bureaucratic appetites.

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