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John Tizard: Let’s be very cautious before abandoning the EU public procurement regulations.

Monday March 2nd, 2020

At the end of this year, the UK is almost certainly going to be outside the formal structures and membership of the European Union.

John Tizard

John Tizard

At present no one knows what any final deal will contain, or indeed whether there will be any deal, though the Government seems to be heading for and comfortable with the prospect of ‘no deal’. Consequently, the UK public sector and its suppliers currently have no clarity on how much longer the EU public procurement rules will apply in the UK.

That said, I have previously expressed my opinion that existing EU regulations form the basis for effective procurement, and that any trade deal is likely to require the UK to continue to adopt them or something very similar. WTO rules would also require domestic public procurement regulations consistent with its own regulations. Therefore, the UK is likely to have to adopt many externally based public procurement regulations. The EU’s regulations are better than many alternatives and fundamentally are sound.

One of the challenges to date has been that UK interpretation of EU regulations has too often been over-prescriptive – indeed more so than in many of the other 27 EU member states. And as with so much of the EU’s regulations and policies, a mythology has grown around the public procurement rules. They have been regarded as: very bureaucratic; expensive for both public sector client and supplier; undermining of attempts to build social value and wider social and environmental goals into the procurement process; and discriminatory against small companies, social enterprises and charities as well as place-based public policies. All this despite the fact that the EU rules are, in reality, pretty flexible and designed to accommodate sensible political goals for central government, local government and the wider public sector. In fact, it is my belief that these goals have often not been pursued because there is no political will in the UK to do so, and the EU regulations have been commonly used as an excuse.

If the UK does devise its own public procurement legislation (and the Government says it wishes to do so), this will inevitably take time. Any review and reform needs to involve the wider public sector, drawing upon its policy, operational and procurement expertise, plus harnessing the contributions of representatives of large and small businesses, social enterprises and the voluntary and community sector. It is my earnest hope that imagination, innovation and sheer practicality will guide any such review and reform.

Further, such a review and any consequential new regulations must ensure that probity is maintained to the highest standards. The UK rightly prides itself on its probity standards but this is an opportunity to strengthen these still further rather than be complacent.

State aid must be considered in a balanced way, and any public procurement legislative requirements should, of course, be proportionate to the size of contracts and the risks involved.

Were I drafting the terms of reference of such a review and reform, I would be minded to include consideration of how best to maximise public benefit (including value for money, equity, social and environmental policy goals, excellent employment standards and public accountability) through the procurement of goods and services. Furthermore, in respect of bids for services and goods, I would wish to consider how best to take into account:

  • the holistic financial, social and environmental costs of bids
  • local economic and social benefits
  • bidders’

o   governance standards

o   tax policies and practice

o   remuneration policies and practice

o   environmental standards and record

o   employment standards

o   business models

o   ownership

Any review and set of reforms could also consider matters such as:

  • raising the threshold for when national procurement regulations have to apply – allowing for more relational partnerships (see below) and less expense for both small providers and public bodies
  • allowing devolved governments and administrations to have the legal competency to set their own specific detailed rules
  • promoting the use of grants and relational partnering between the public sector and the voluntary and community sector and similar community-based and focused groups
  • ensuring transparency and accountability at all stages – including pre-procurement, procurement and contract operation and management – transparency and accountability of client, provider and supply chains
  • allowing or preferably requiring procuring bodies to take bidders’ previous track record into account

In the case of procurement of services, I would set the default as publicly managed and publicly owned services with a requirement for public bodies to publish and apply criteria for ‘make or buy’ decisions, so as to demonstrate the public benefit of outsourcing. Of course, many of these factors can already be deployed by public bodies under existing EU regulations. Contrary to some mythology the EU does not require public bodies to outsource and never has done.

Above all, any changes must not result in more complex and expensive arrangements – nor in greater timidity amongst procurement professionals and/or politicians.

My plea is for the Government to consult widely before proceeding with any review and not to rush into mending something which is not fundamentally broken. Surely it is better (and cheaper and faster) to build on what we have than to replace it simply because it has the letters ‘EU’ on the title page?

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