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EU can help shift public procurement towards social outcomes

Tuesday November 5th, 2013

The European Union is developing new public procurement regulations. Many in the public sector and many service providers from the business, social enterprise and voluntary and community sectors have long argued that a major overhaul was necessary.

Further there is a need to consider how the UK legislators have incorporated the current regulations into domestic regulations and how they are applied by so many public sector procurers. There is a general belief that the UK is more rigid in its interpretation of and compliance with the EU regulations than many other EU Member States. There may be some truth in this but it may also be a case of ‘the grass being greener over the hill’!

John Tizard

John Tizard

However, the current regulations by general agreement are no longer fit for purpose in respect of procurement for complex public services. And there is a growing political and popular interest in public services, when they are subject to contracting, being undertaken by social enterprises and the voluntary and community sector rather than major corporates.

The former are forced to compete with the latter. They are also all too often forced to do so on the same terms, which in reality excludes them from serious bidding. There has to be a change of approach. The public sector does not have to always use competitive procurement to work with voluntary and community or social sector organisations. When there is a demonstrable public benefit they can collaborate, establish alliances and use grants rather than traditional contracts. For political or ideological reasons, or sometimes due to a lazy default to competitive procurement or an even lazier failure to design the right procurement and contracting processes, too many services are being put out to tender and being won by large businesses rather than the social sector or even SMEs.

Of course, this is very often in direct contradiction to stated political commitment to greater opportunities for the very organisations that these actual processes are excluding! It is amazing, but sadly true.

Whilst the emerging new EU public procurement regulations in themselves will not stop this behaviour they could instil new thinking and new approaches into public procurement for services. Specifically they allow public bodies to:

  • take the social and environmental value created by a service provider into account when awarding contracts;
  • consider poor performance by bidders under previous contracts; and
  • reserve the awarding of health, social and cultural service contracts exclusively to social enterprises and voluntary and community sector organisations for a time-limited period.

These new powers will build on the Public Services Social Value Act and enshrine some of its ambition in EU law. They will also enable those public bodies – and there have been some heroic ones – that have already found ways (devious or otherwise) to ensure that such factors have influenced their procurement processes.

Given some of the current high-profile cases of business sector service and contract failure, and potentially unethical behaviour in the UK and elsewhere, it surely is right to take ethos, value and past record into account before awarding high-value public sector contracts.

There is no reason why a procuring body should not seek to extend its selection criteria to include issues such as corporate and senior executive tax practice; remuneration policy and practice; employment practices; social impact; and much more.

Equally there should be no assumption that all or any service should be procured or delivered by external bodies. The public sector can and does deliver some exceptional services, innovating and rising to meet user and wider stakeholder needs and aspirations. The issue is that when procuring following a comprehensive and strategic commissioning process – which of course could result in ‘in-house’ services or some other means of securing desired outcomes – wider public and social value is taken into account.

Above all there must be public legitimacy for decisions taken which is why the ‘Public Service Users Bill’ being proposed by, amongst others, ‘We Own It’ could be so powerful.

I detect a major change in attitudes to public procurement for public services. The days of the default large-scale competitive procurements leading to large-scale contracts with a handful of providers may be waning.

The new emphasis has to be on accountability, social responsibility and social value.

The EU proposals together with the Public Services Social Value Act plus some effective political leadership across the public sector could accelerate that waning of the market-based approach. A real sense of public service ethos could again be dominant.

John Tizard
Twitter: @johntizard
Linked In: John Tizard


Gov Opps training partner, PASS (Procurement Advice Support Service) runs relevant training courses on public and private sector procurement. To get more info on the courses, and all other PASS courses, click the links below:

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