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John Tizard: Is there a chance for one thin silver lining post-Brexit in public procurement?

Tuesday January 5th, 2021

Many commentators and analysts are trying hard to find many if any benefits of the Brexit deal agreed between the UK Government and the EU on Christmas Eve. I could be tempted to use this article to add my disappointment and concerns about a trade deal that actually diminishes our trading relationship with our biggest market and transforms a domestic market participation through the Single Market into a third party relationship with the same market, and whichh has other short and long term negative consequences. I am not going to allow myself to be tempted beyond these few words, but I am seeking a silver lining.

John Tizard
John Tizard

This could come in the opportunity to reform the UK’s public procurement legislation and regulation. The Government has published a Green Paper on the subject and has set out some ambitious goals. This is good news though it should be said that the EU regulations were often unfairly maligned by those even driven by suspicion of any EU rules and/or those too lazy to use them in ways that both offered pragmatism and the chance to secure social, environmental, and economic goals by using public procurement spend.

The UK can develop and implement public procurement standards that are designed to maximise effectiveness, efficiency, and wider policy goals.  Or it could throw away this opportunity and reinforce a low regulation approach that is based on market and small state inspired ideology. Despite some fine words in the Green Paper there is a big risk that the government reverts to type and clings on to such ideology. This would be a big mistake. It has the chance for it to rise to occasion and its rhetoric about Brexit and ‘levelling up’ by setting ‘world beating’ goals and progressive regulations. The government is committed to ‘building back better’ post-Brexit and Covid-19, and I hope that it will extend this ambition to include ‘building back fairer and more sustainably’.

It can use public procurement to drive wider policy goals. It can end the reliance on a small number of large market dominating suppliers. It can widen participation in public supply markets. Of course, public procurement can be used in this way under the EU regulations as those local authorities and others pursuing a programme of Community Wealth Building have ably demonstrated.

To realise the benefits of such an approach the government has to abandon its love in with marketisation, outsourcing and deregulation to achieve beneficial change; and it could have done this within the EU so what will it do now?

It has an opportunity to live up to its stated aims of ‘building back better’ and reforming public procurement. It could do this in a transformative fashion but will it?

Below I set out an approach that would be truly radical and in the public interest.

I propose that the UK government in consultation with the devolved governments and administrations, local government and the wider public sector should have a duty to ensure that all public procurement expenditure secures long-term public benefit.  And that prior to all significant procurement exercises public bodies should assess the public benefit and publish these assessments, which in turn should be subject to independent audit including testing if the stated benefit has been realised over time.

I would go further and require public bodies to have a duty to

  • put the quality of services and goods, and the wider public interest ahead of lowest price driven procurement  
  • consider wider local and national economic, social and environmental impact of contracting including any costs or other consequences for the wider public sector and local economy
  • only contract with providers of goods and services that meet high standards of employment practice including for example in the Real Living, no involuntary precarious employment contracts, quality pension entitlements, apprenticeships, and employee development programmes, as well trade union recognition, access, and facilities
  • set maximum remuneration ratios within contracting companies – for example, the ratio between the highest remuneration and the median and/or the lowest
  • take into account when evaluating bids to
    • governance arrangements within bidding companies and others
    • bidders’ previous performance in public service contracting and other activities
    • bidders’ market share so as to avoid over reliance on suppliers which are ‘too big to fail’
    • bidders’ record and policy on environmental sustainability and set targets for those awarded contracts
    • tax policy and practices
  • ensure full transparency of contracting arrangements, operational and financial performance of contracts, and the client’s assessment of providers’ performance against the wider suite of indicators as set out above
  • undertake a strategic ‘make or buy’ assessment and decision having consulted staff, unions, and service users prior to any outsourcing procurement with a clearly nationally set default of ‘inhouse publicly owned and managed’ delivery
  • prioritise social enterprise, community organisations and local SMEs where contracts for services and goods are let 
  • require all the above to apply throughout the supply chain including international supply chains
  • establish consultative fora involving service users, staff and unions, and other stakeholders to oversee all significant procurement

The government should underpin this approach by introducing independent audit arrangements and parliamentary or local government scrutiny for all significant public procurement, and consequential delivery and client management at both the national and local level.

Of course, the UK regulations should acknowledge the desirability for the application of such an approach to be proportionate and ensure that it does not create barriers for SMEs, social enterprises, and community groups to bid for contracts where appropriate.

When involving charities and the voluntary and community sector (VCS) in public service delivery the regulations should allow and encourage the public sector to avoid competitive procurement and contracting, and to adopt a relational partnership approach with accountabilities. The regulations should provide protection to ensure that charitable and VCS organisations delivering public services are guaranteed their right to offer voice for communities, campaign, and challenge even when in receipt of public money.

Finally, the government should ensure if future trade deals with any country or group of countries require restrictions or changes to public procurement regulations – as they well might – that there will be full transparency and consultation before deals and treaties are signed.

The next year and indeed the next few years are going to be incredibly challenging as a consequence of leaving the EU and especially doing so on the basis of the deal struck this December. Therefore, it is vital that the government ensures that the £292 billion public procurement spend is used in such a way that it mitigates the impact and furthermore contributes to building back in a better and fairer way.

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